Exhibit 10.1


 


EXECUTION COPY


 


AMENDMENT NO. 13 TO SALE AND
SERVICING AGREEMENT 

(VFCC Transaction with Ares Capital
CP Funding LLC)


 


THIS AMENDMENT NO. 13 TO THE SALE AND SERVICING AGREEMENT, dated as of May 7,
2009 (this “Amendment”), is entered
into in connection with that certain Sale and Servicing Agreement, dated as of November 3,
2004 (as amended, modified, waived, supplemented or restated through the date
hereof, the “Sale and Servicing Agreement”), by and among Ares Capital
CP Funding LLC, as the borrower (together with its successors and assigns in
such capacity, the “Borrower”),
Ares Capital Corporation, as the originator (together with its successors and
assigns in such capacity, the “Originator”)
and as the servicer (together with its successors and assigns in such capacity,
the “Servicer”),
each of the Conduit Purchasers and Institutional Purchasers from time to time
party thereto, each of the Purchaser Agents from time to time party thereto,
Wachovia Capital Markets, LLC,  as
the Administrative Agent (together with its successors and assigns in such
capacity, the “Administrative Agent”) and as the Purchaser Agent with
respect to Variable Funding Capital Company LLC (f/k/a Variable Funding Capital
Corporation), as Conduit Purchaser (together with its successors and assigns in
such capacity, the “VFCC Agent”), U.S. Bank National Association, as the
trustee (together with its successors and assigns in such capacities, the “Trustee”), and
Lyon Financial Services, Inc. (d/b/a U.S. Bank Portfolio Services) as the
backup servicer (together with its successors and assigns in such capacity, the
“Backup Servicer”).  Capitalized terms used and not otherwise
defined herein shall have the meanings given to such terms in the Sale and
Servicing Agreement.


 


R E C I T A L S


 


WHEREAS, the above-named parties have entered into the Sale
and Servicing Agreement;


 


WHEREAS, the parties hereto desire to acknowledge that Ares Capital CP Funding
II LLC, a Delaware limited liability company, has become a party to the Sale
and Servicing Agreement as a guarantor (in such capacity, a “Guarantor”)
and hereby assumes its obligations as a Guarantor pursuant to and in accordance
with the Sale and Servicing Agreement; and


 


WHEREAS, pursuant to
and in accordance with Section 13.1 of the Sale and Servicing Agreement,
the parties hereto desire to further amend the Sale and Servicing Agreement, in
certain respects as provided herein;


 


NOW,
THEREFORE, based upon the above Recitals, the mutual premises
and agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the undersigned,
intending to be legally bound, hereby agree as follows:


 


SECTION 1.         AMENDMENTS.


 


The Sale and Servicing
Agreement, including all exhibits and schedules thereto, is hereby amended such
that, after giving effect to all such amendments, it shall read in its entirety
as Exhibit A attached hereto.


 

















 


SECTION 2.         SECURITY INTEREST.


 


(a)           The parties to this
Amendment intend that the conveyance of the Collateral by the Borrower to the
applicable Purchasers be treated as sales for all purposes other than financial
accounting purposes.  If, despite such
intention, a determination is made that such transactions not be treated as
sales, then the parties hereto intend that this Amendment and the Sale and
Servicing Agreement constitute a security agreement and the transactions
effected hereby constitute secured loans by the applicable Purchasers to the
Borrower under Applicable Law.  In
addition to, and not in limitation of, any ownership interest now or hereafter
acquired by any Purchasers, the Borrower hereby transfers, conveys, assigns and
grants as of the Thirteenth Amendment Effective Date to the Trustee, for the
benefit of the Secured Parties, a lien and continuing security interest in all
of the Borrower’s right, title and interest in, to and under (but none of the
obligations under) all Collateral (including any Hedging Agreements), whether
now existing or hereafter arising or acquired by the Borrower, and wherever the
same may be located, to secure the prompt, complete and indefeasible payment
and performance in full when due, whether by lapse of time, acceleration or
otherwise, of the Aggregate Unpaids of the Borrower arising in connection with
this Amendment, and the Sale and Servicing Agreement and each other Transaction
Document, whether now or hereafter existing, due or to become due, direct or
indirect, or absolute or contingent, including, without limitation, all
Aggregate Unpaids.  The assignment under
this Section 2(a) and under Section 9.1 of the Sale and
Servicing Agreement does not constitute and is not intended to result in a
creation or an assumption by the Trustee, the Administrative Agent, the
Purchaser Agents, any Hedge Counterparty, the Liquidity Banks or any of the
Secured Parties of any obligation of the Borrower or any other Person in
connection with any or all of the Collateral or under any agreement or
instrument relating thereto.  Anything
herein to the contrary notwithstanding, (a) the Borrower shall remain
liable under the Collateral to the extent set forth therein to perform all of
its duties and obligations thereunder to the same extent as if this Amendment
and the Sale and Servicing Agreement had not been executed, (b) the exercise
by the Trustee, for the benefit of the Secured Parties, of any of its rights in
the Collateral shall not release the Borrower from any of its duties or
obligations under the Collateral, and (c) none of the Administrative
Agent, the Trustee, the Purchaser Agents, any Hedge Counterparty, the Liquidity
Banks or any Secured Party shall have any obligations or liability under the
Collateral by reason of this Amendment or the Sale and Servicing Agreement, nor
shall the Administrative Agent, the Trustee, the Purchaser Agents, any Hedge
Counterparty, the Liquidity Banks or any Secured Party be obligated to perform
any of the obligations or duties of the Borrower thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.


 


(b)           Notwithstanding the
grant of the security interest in Section 2(a) above, it is
not the intent of the parties hereto that this Amendment terminate, renew,
change or modify the security interest that was granted under the Sale and
Servicing Agreement as of the Closing Date, and the parties hereto hereby
affirm that the security interest granted under the Sale and Servicing
Agreement as of the Closing Date remains in full force and effect.  It is the intent of the parties hereto that
all obligations are secured by the Collateral pursuant to the grants of the
security interest in both Section 2(a) above and in the Sale
and Servicing Agreement.


 


(c)           The Borrower
authorizes the Trustee (acting at the direction of the Administrative Agent) to
file one or more financing statements (each, a “Financing Statement”)
describing the 


 


2

















 


Collateral,
in any filing offices where the Administrative Agent deems it appropriate.  Any Financing Statement may describe the
Collateral as “all assets” or “all personal property, whether now owned or
later acquired” or a similar general phrase.


 


SECTION 3.         WAIVER.


 


Solely with respect to the Loans listed on Exhibit B
attached hereto (the “Participation Loans”), each of the Borrower, the
Servicer, the Administrative Agent, the Trustee and each Purchaser and its
related Purchaser Agent hereby agree to a one-time waiver of clause (ff) of the
definition of Eligible Loan as set forth in Section 1.1 of the Sale and
Servicing Agreement and agree that the Participation Loans shall be subject to
the grant in Section 2(a) of this Amendment and shall be
included in the Collateral as of the date hereof; provided that any Participation Loan that subsequently
complies with clause (ff) of the definition of Eligible Loan (without giving
effect to this waiver) shall, at such time, no longer be a “Participation Loan”;
provided, further, that if (i) on May 15,
2009, the aggregate Outstanding Loan Balance of the Participation Loans
included in the Collateral exceeds $50,000,000 and (ii) on May 30,
2009, the aggregate Outstanding Loan Balance of the Participation Loans
included in the Collateral exceeds $20,000,000, in each case then the
Administrative Agent may, in its sole discretion, deem (by written notice to
the Borrower and the Servicer) one or more Participation Loans to be Warranty
Loans in a sufficient amount to reduce the aggregate Outstanding Principal
Balance of the Participation Loans included in the Collateral to not exceed
$50,000,000 (in the case of clause (i) hereof) or $20,000,000 (in
the case of clause (ii) hereof). 
This waiver shall expire on June 6, 2009, at which point all
Participation Loans included in the Collateral shall, without any further
action by any party, be deemed to be Warranty Loans.


 


SECTION 4.         CONSENT.


 


(a)           Pursuant to Section 5.2(j) of the Sale and
Servicing Agreement, the Administrative Agent and each Purchaser Agent hereby
consent to the amendment to the operating agreement of the Borrower as set
forth on Exhibit C attached hereto.


 


(b)           Pursuant to Section 5.2(j) of the Sale and
Servicing Agreement, the Administrative Agent and each Purchaser Agent hereby
consent to the amendment to the Sale Agreement as set forth on Exhibit D
attached hereto.


 


(c)           The Administrative Agent and each Purchaser Agent hereby
consent, direct and authorize the Trustee to enter into this Amendment.


 


SECTION 5.         Agreement in Full Force and Effect as AMENDED.


 


Except as specifically
amended hereby, all provisions of the Sale and Servicing Agreement are hereby
ratified and shall remain in full force and effect.  After this Amendment becomes effective, all
references to the Sale and Servicing Agreement, and corresponding references
thereto or therein such as “hereof,” “herein,” or words of similar effect
referring to the Sale and Servicing Agreement shall be deemed to mean the Sale
and Servicing Agreement as amended hereby. 
This Amendment shall not be deemed to expressly or impliedly waive,
amend or supplement any provision of the Sale and Servicing Agreement other
than as expressly set forth herein, and shall not constitute a novation of the
Sale and Servicing Agreement.


 


3

















 


SECTION 6.         Representations.


 


(a)           Each of the Originator, the Servicer and the Borrower,
severally for itself only, represents and warrants as of the date of this
Amendment as follows:


 


(i)            it is duly incorporated or
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization;


 


(ii)           the execution, delivery and
performance by it of this Amendment and the Sale and Servicing Agreement as
amended hereby are within its powers, have been duly authorized, and do not
contravene (A) its charter, by-laws, or other organizational documents, or
(B) any Applicable Law;


 


(iii)          no consent, license, permit, approval
or authorization of, or registration, filing or declaration with any
governmental authority, is required in connection with the execution, delivery,
performance, validity or enforceability of this Amendment and the Sale and
Servicing Agreement as amended hereby by or against it;


 


(iv)          this Amendment has been duly executed
and delivered by it;


 


(v)           each of this Amendment and the Sale
and Servicing Agreement as amended hereby constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally or by general principles of equity;


 


(vi)          it is not in default under the Sale
and Servicing Agreement, as amended hereby; and


 


(vii)         upon giving effect to this Amendment,
there is no Termination Event, Unmatured Termination Event, or Servicer
Default.


 


(b)           Each of the Originator, the Servicer and the Borrower,
severally for itself only, represents and warrants as of the date of this
Amendment that there are no court or administrative orders, writs, judgments or
decrees specifically directed to any of the Originator, the Servicer and the
Borrower that are material to the financial condition or results of operations
of any of the Originator, the Servicer and the Borrower.


 


(c)           Each of the Originator, the Servicer and the Borrower,
severally for itself only, represents and warrants as of the date of this
Amendment that, to its respective knowledge, there are no legal or governmental
proceedings pending or threatened (i) asserting the invalidity of any of
this Amendment, the Sale and Servicing Agreement, Amendment No. 1 to Sale
Agreement dated as of the date hereof, the Sale Agreement and the Third
Amended, Restated and Substituted Variable Funding Certificate dated as of the
date hereof (collectively, the “Operative Documents”), (ii) seeking
to prevent the consummation by any of the Originator, the Servicer or the
Borrower of any of the transactions contemplated by the Operative Documents or (iii) which
might materially and adversely affect the performance by any of the Originator,
the Servicer or the Borrower of its respective obligations under the Operative
Documents.


 


4

















 


SECTION 7.         Conditions to Effectiveness.


 


The effectiveness of this
Amendment is conditioned upon: (i) payment of the outstanding fees and
disbursements of the Purchasers; (ii) payment of the outstanding fees and
disbursements of Dechert LLP, as counsel to the Administrative Agent and the
Purchasers; (iii) delivery of executed signature pages by all parties
hereto to the Administrative Agent; (iv) delivery of the duly executed
Third Amended, Restated and Substituted Variable Funding Certificate in the
name of “Wachovia Bank, National Association, as the Institutional Purchaser”
and in the face amount equal to $225,000,000; and (v) delivery of
favorable opinions of counsel for the Originator, the Borrower and the Servicer
in form and substance reasonably satisfactory to the Administrative Agent.


 


SECTION 8.         Miscellaneous.


 


(a)           Without in any way limiting any other obligation hereunder
or under the Transaction Documents, the Borrower agrees to provide, from time
to time, any additional documentation and to execute additional
acknowledgements, amendments, instruments or other agreements as may be
reasonably requested and required by the Administrative Agent to effectuate the
foregoing.


 


(b)           This Amendment may be executed in any number of
counterparts (including by facsimile), and by the different parties hereto on
the same or separate counterparts, each of which shall be deemed to be an
original instrument but all of which together shall constitute one and the same
agreement.


 


(c)           The descriptive headings of the various sections of this
Amendment are inserted for convenience of reference only and shall not be
deemed to affect the meaning or construction of any of the provisions hereof.


 


(d)           This Amendment may not be amended or otherwise modified
except as provided in the Sale and Servicing Agreement.


 


(e)           The failure or unenforceability of any provision hereof
shall not affect the other provisions of this Amendment or the Sale and
Servicing Agreement.


 


(f)            Whenever the context and construction so require, all
words used in the singular number herein shall be deemed to have been used in
the plural, and vice versa, and the masculine gender shall include the feminine
and neuter and the neuter shall include the masculine and feminine.


 


(g)           This Amendment and the Sale and Servicing Agreement
represent the final agreement between the parties only with respect to the
subject matter expressly covered hereby and may not be contradicted by evidence
of prior, contemporaneous or subsequent oral agreements between the
parties.  There are no unwritten oral
agreements between the parties.


 


(h)           THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE CHOICE OF 


 


5

















 


LAW
PROVISIONS SET FORTH IN THE SALE AND SERVICING AGREEMENT AND SHALL BE SUBJECT
TO THE WAIVER OF JURY TRIAL AND NOTICE PROVISIONS SET FORTH IN THE SALE AND
SERVICING AGREEMENT.


 


[Remainder of Page Intentionally Left Blank]


 


6

















 


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


 


 


	
  THE BORROWER:

  	
  ARES CAPITAL CP FUNDING LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Richard S. Davis

  
	
   

  	
   

  	
   Name:  
  

  	
  Richard
  S. Davis

  
	
   

  	
   

  	
   Title:

  	
  Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THE ORIGINATOR  AND THE SERVICER:

  	
  ARES CAPITAL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Michael Arougheti

  
	
   

  	
   

  	
   Name:
  

  	
  Michael
  Arougheti

  
	
   

  	
   

  	
   Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THE GUARANTOR:

  	
  ARES CAPITAL CP FUNDING II LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Joshua M. Bloomstein

  
	
   

  	
   

  	
   Name:
  

  	
  Joshua
  M. Bloomstein

  
	
   

  	
   

  	
   Title:

  	
  Authorized
  Signatory

  



 


 


[SIGNATURES
CONTINUED ON FOLLOWING PAGE]


 


Ares
Capital CP Funding LLC

Amendment No. 13 to Sale and Servicing Agreement


 

















 


	
  CONDUIT PURCHASER:

  	
  VARIABLE FUNDING CAPITAL 

  COMPANY LLC (f/k/a Variable Funding 

  Capital Corporation)

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Wachovia
  Capital Markets, LLC, 

  as attorney-in-fact

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Haojin Wu

  
	
   

  	
   

  	
   Name:

  	
  Haojin
  Wu

  
	
   

  	
   

  	
   Title:

  	
  Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THE ADMINISTRATIVE AGENT  AND THE VFCC AGENT:

  	
  WACHOVIA CAPITAL MARKETS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Kevin Sunday

  
	
   

  	
   

  	
   Name:
  

  	
  Kevin
  Sunday

  
	
   

  	
   

  	
   Title:

  	
  Director

  
	
   

  	
   

  	
   

  



 


 


[SIGNATURES
CONTINUED ON FOLLOWING PAGE]


 


Ares
Capital CP Funding LLC

Amendment No. 13 to Sale and Servicing Agreement


 

















 


	
  THE TRUSTEE:

  	
  U.S. BANK NATIONAL ASSOCIATION, not in its
  individual capacity but solely as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  John T. Edwards

  
	
   

  	
   

  	
   Name:  
  

  	
  John
  T. Edwards

  
	
   

  	
   

  	
   Title:

  	
  Assistant
  Vice President

  
	
   

  	
   

  	
   

  



 


Ares
Capital CP Funding LLC

Amendment No. 13 to Sale and Servicing Agreement


 

















 


EXHIBIT A


 


CONFORMED SALE AND SERVICING AGREEMENT


 
















EXECUTION COPY


 


Conformed Copy

(through Amendment No. 13)


 




 





U.S. $225,000,000


 


SALE AND SERVICING AGREEMENT


 


by and among


 


ARES CAPITAL CORPORATION,

as the Originator and as the Servicer


 


ARES CAPITAL CP FUNDING LLC, 

as the Borrower


 


ARES CAPITAL CP FUNDING II LLC,

as the Guarantor


 


EACH OF THE CONDUIT PURCHASERS AND INSTITUTIONAL
PURCHASERS 

FROM TIME TO TIME PARTY HERETO,

as the Purchasers


 


EACH OF THE PURCHASER AGENTS FROM TIME TO TIME PARTY
HERETO,

as the Purchaser Agents


 


WACHOVIA CAPITAL MARKETS, LLC, 

as the Administrative Agent


 


U.S. BANK NATIONAL ASSOCIATION,

as the Trustee


 


and


 


LYON FINANCIAL SERVICES, INC. (D/B/A U.S. BANK
PORTFOLIO SERVICES),

as the Backup Servicer


 


Dated as of November 3, 2004


 




 





 

















 


TABLE OF
CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  I

  	
  DEFINITION

  	
  2

  
	
   

  	
   

  	
   

  
	
  Section 1.1.

  	
  Certain Defined Terms

  	
  2

  
	
   

  	
   

  	
   

  
	
  Section 1.2.

  	
  Other Terms

  	
  50

  
	
   

  	
   

  	
   

  
	
  Section 1.3.

  	
  Computation of Time
  Periods

  	
  50

  
	
   

  	
   

  	
   

  
	
  Section 1.4.

  	
  Interpretation

  	
  50

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II

  	
  THE VARIABLE FUNDING
  CERTIFICATES

  	
  51

  
	
   

  	
   

  	
   

  
	
  Section 2.1.

  	
  The Variable Funding
  Certificates

  	
  51

  
	
   

  	
   

  	
   

  
	
  Section 2.2.

  	
  [Reserved]

  	
  52

  
	
   

  	
   

  	
   

  
	
  Section 2.3.

  	
  Procedures for Advances by
  Conduit Purchasers and Institutional Purchasers

  	
  52

  
	
   

  	
   

  	
   

  
	
  Section 2.4.

  	
  Reduction of the Facility
  Amount; Optional and Mandatory Repayments of Advances

  	
  53

  
	
   

  	
   

  	
   

  
	
  Section 2.5.

  	
  Determination of Interest

  	
  54

  
	
   

  	
   

  	
   

  
	
  Section 2.6.

  	
  Required Advance Reduction
  Amount Payments

  	
  54

  
	
   

  	
   

  	
   

  
	
  Section 2.7.

  	
  Notations on Variable
  Funding Certificates

  	
  54

  
	
   

  	
   

  	
   

  
	
  Section 2.8.

  	
  Principal Repayments

  	
  55

  
	
   

  	
   

  	
   

  
	
  Section 2.9.

  	
  Settlement Procedures During
  the Term Period

  	
  55

  
	
   

  	
   

  	
   

  
	
  Section 2.10.

  	
  Settlement Procedures
  During the Amortization Period

  	
  57

  
	
   

  	
   

  	
   

  
	
  Section 2.11.

  	
  Collections and
  Allocations

  	
  59

  
	
   

  	
   

  	
   

  
	
  Section 2.12.

  	
  Payments, Computations,
  Etc.

  	
  59

  
	
   

  	
   

  	
   

  
	
  Section 2.13.

  	
  [Reserved]

  	
  60

  
	
   

  	
   

  	
   

  
	
  Section 2.14.

  	
  Fees

  	
  61

  
	
   

  	
   

  	
   

  
	
  Section 2.15.

  	
  Increased Costs; Capital
  Adequacy; Illegality

  	
  61

  
	
   

  	
   

  	
   

  
	
  Section 2.16.

  	
  Taxes

  	
  62

  
	
   

  	
   

  	
   

  
	
  Section 2.17.

  	
  Assignment of the Sale
  Agreement

  	
  64

  
	
   

  	
   

  	
   

  
	
  Section 2.18.

  	
  Substitution and
  Repurchase of Loans

  	
  64

  
	
   

  	
   

  	
   

  
	
  Section 2.19.

  	
  Optional Sales

  	
  68

  
	
   

  	
   

  	
   

  
	
  Section 2.20.

  	
  Discretionary Sales

  	
  71

  
	
   

  	
   

  	
   

  
	
  Section 2.21.

  	
  Lien Release Dividend

  	
  73

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III

  	
  CONDITIONS TO CLOSING;
  ADVANCES

  	
  76

  
	
   

  	
   

  	
   

  
	
  Section 3.1.

  	
  Conditions to Closing and
  Initial Advance

  	
  76

  



 


i

















 


TABLE OF CONTENTS


(continued)


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 3.2.

  	
  Conditions Precedent to
  Repayments

  	
  77

  
	
   

  	
   

  	
   

  
	
  Section 3.3.

  	
  Custodianship; Transfer of
  Loans and Permitted Investments

  	
  78

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV

  	
  REPRESENTATIONS AND
  WARRANTIES

  	
  80

  
	
   

  	
   

  	
   

  
	
  Section 4.1.

  	
  Representations and Warranties
  of the Borrower

  	
  80

  
	
   

  	
   

  	
   

  
	
  Section 4.2.

  	
  Representations and
  Warranties of the Borrower Relating to the Agreement and the Collateral

  	
  90

  
	
   

  	
   

  	
   

  
	
  Section 4.3.

  	
  Representations and
  Warranties of the Servicer

  	
  91

  
	
   

  	
   

  	
   

  
	
  Section 4.4.

  	
  Representations and
  Warranties of the Backup Servicer

  	
  94

  
	
   

  	
   

  	
   

  
	
  Section 4.5.

  	
  Representations and
  Warranties of the Trustee

  	
  95

  
	
   

  	
   

  	
   

  
	
  Section 4.6.

  	
  Representations and
  Warranties of the Purchasers

  	
  96

  
	
   

  	
   

  	
   

  
	
  Section 4.7.

  	
  Representations and
  Warranties of the Guarantor

  	
  96

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  V

  	
  GENERAL COVENANTS

  	
  98

  
	
   

  	
   

  	
   

  
	
  Section 5.1.

  	
  Affirmative Covenants of
  the Borrower

  	
  98

  
	
   

  	
   

  	
   

  
	
  Section 5.2.

  	
  Negative Covenants of the
  Borrower

  	
  101

  
	
   

  	
   

  	
   

  
	
  Section 5.3.

  	
  Covenants of the Borrower
  Relating to the Hedging of Fixed Rate Loans

  	
  103

  
	
   

  	
   

  	
   

  
	
  Section 5.4.

  	
  Affirmative Covenants of
  the Servicer

  	
  104

  
	
   

  	
   

  	
   

  
	
  Section 5.5.

  	
  Negative Covenants of the
  Servicer

  	
  107

  
	
   

  	
   

  	
   

  
	
  Section 5.6.

  	
  Affirmative Covenants of
  the Backup Servicer

  	
  109

  
	
   

  	
   

  	
   

  
	
  Section 5.7.

  	
  Negative Covenants of the
  Backup Servicer

  	
  109

  
	
   

  	
   

  	
   

  
	
  Section 5.8.

  	
  Affirmative Covenants of
  the Trustee

  	
  109

  
	
   

  	
   

  	
   

  
	
  Section 5.9.

  	
  Negative Covenants of the
  Trustee

  	
  109

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VI

  	
  ADMINISTRATION AND
  SERVICING OF CONTRACTS

  	
  110

  
	
   

  	
   

  	
   

  
	
  Section 6.1.

  	
  Designation of the
  Servicer

  	
  110

  
	
   

  	
   

  	
   

  
	
  Section 6.2.

  	
  Duties of the Servicer

  	
  110

  
	
   

  	
   

  	
   

  
	
  Section 6.3.

  	
  Authorization of the
  Servicer

  	
  112

  
	
   

  	
   

  	
   

  
	
  Section 6.4.

  	
  Collection of Payments;
  Accounts

  	
  113

  
	
   

  	
   

  	
   

  
	
  Section 6.5.

  	
  Servicer Advances

  	
  115

  
	
   

  	
   

  	
   

  
	
  Section 6.6.

  	
  Realization Upon
  Charged-Off Loans

  	
  115

  
	
   

  	
   

  	
   

  
	
  Section 6.7.

  	
  [Reserved]

  	
  116

  
	
   

  	
   

  	
   

  
	
  Section 6.8.

  	
  Servicing Compensation

  	
  116

  



 


ii

















 


TABLE OF CONTENTS


(continued)


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 6.9.

  	
  Payment of Certain
  Expenses by Servicer

  	
  116

  
	
   

  	
   

  	
   

  
	
  Section 6.10.

  	
  Reports

  	
  116

  
	
   

  	
   

  	
   

  
	
  Section 6.11.

  	
  Annual Statement as to
  Compliance

  	
  118

  
	
   

  	
   

  	
   

  
	
  Section 6.12.

  	
  Annual Independent Public
  Accountant’s Servicing Reports

  	
  118

  
	
   

  	
   

  	
   

  
	
  Section 6.13.

  	
  Limitation on Liability of
  the Servicer and Others

  	
  118

  
	
   

  	
   

  	
   

  
	
  Section 6.14.

  	
  The Servicer Not to Resign

  	
  119

  
	
   

  	
   

  	
   

  
	
  Section 6.15.

  	
  Servicer Defaults

  	
  119

  
	
   

  	
   

  	
   

  
	
  Section 6.16.

  	
  Appointment of Successor
  Servicer

  	
  121

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VII

  	
  THE BACKUP SERVICER

  	
  123

  
	
   

  	
   

  	
   

  
	
  Section 7.1.

  	
  Designation of the Backup
  Servicer

  	
  123

  
	
   

  	
   

  	
   

  
	
  Section 7.2.

  	
  Duties of the Backup
  Servicer

  	
  124

  
	
   

  	
   

  	
   

  
	
  Section 7.3.

  	
  Merger or Consolidation

  	
  125

  
	
   

  	
   

  	
   

  
	
  Section 7.4.

  	
  Backup Servicing
  Compensation

  	
  125

  
	
   

  	
   

  	
   

  
	
  Section 7.5.

  	
  Backup Servicer Removal

  	
  126

  
	
   

  	
   

  	
   

  
	
  Section 7.6.

  	
  Limitation on Liability

  	
  126

  
	
   

  	
   

  	
   

  
	
  Section 7.7.

  	
  The Backup Servicer Not to
  Resign

  	
  127

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII

  	
  THE TRUSTEE

  	
  127

  
	
   

  	
   

  	
   

  
	
  Section 8.1.

  	
  Designation of Trustee

  	
  127

  
	
   

  	
   

  	
   

  
	
  Section 8.2.

  	
  Duties of Trustee

  	
  127

  
	
   

  	
   

  	
   

  
	
  Section 8.3.

  	
  Merger or Consolidation

  	
  130

  
	
   

  	
   

  	
   

  
	
  Section 8.4.

  	
  Trustee Compensation

  	
  131

  
	
   

  	
   

  	
   

  
	
  Section 8.5.

  	
  Trustee Removal

  	
  131

  
	
   

  	
   

  	
   

  
	
  Section 8.6.

  	
  Limitation on Liability

  	
  131

  
	
   

  	
   

  	
   

  
	
  Section 8.7.

  	
  The Trustee Not to Resign

  	
  132

  
	
   

  	
   

  	
   

  
	
  Section 8.8.

  	
  Release of Documents

  	
  132

  
	
   

  	
   

  	
   

  
	
  Section 8.9.

  	
  Return of Required Loan
  Documents

  	
  133

  
	
   

  	
   

  	
   

  
	
  Section 8.10.

  	
  Access to Certain
  Documentation and Information Regarding the Collateral; Audits of Servicer

  	
  133

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IX

  	
  SECURITY INTEREST

  	
  134

  
	
   

  	
   

  	
   

  
	
  Section 9.1.

  	
  Grant of Security Interest

  	
  134

  
				



 


iii

















 


TABLE OF CONTENTS


(continued)


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 9.2.

  	
  Release of Lien on
  Collateral

  	
  135

  
	
   

  	
   

  	
   

  
	
  Section 9.3.

  	
  Further Assurances

  	
  135

  
	
   

  	
   

  	
   

  
	
  Section 9.4.

  	
  Remedies

  	
  135

  
	
   

  	
   

  	
   

  
	
  Section 9.5.

  	
  Waiver of Certain Laws

  	
  135

  
	
   

  	
   

  	
   

  
	
  Section 9.6.

  	
  Power of Attorney

  	
  136

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  X

  	
  TERMINATION EVENTS

  	
  136

  
	
   

  	
   

  	
   

  
	
  Section 10.1.

  	
  Termination Events

  	
  136

  
	
   

  	
   

  	
   

  
	
  Section 10.2.

  	
  Remedies

  	
  138

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XI

  	
  INDEMNIFICATION

  	
  141

  
	
   

  	
   

  	
   

  
	
  Section 11.1.

  	
  Indemnities by the
  Borrower

  	
  141

  
	
   

  	
   

  	
   

  
	
  Section 11.2.

  	
  Indemnities by the
  Servicer

  	
  144

  
	
   

  	
   

  	
   

  
	
  Section 11.3.

  	
  After-Tax Basis

  	
  144

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XII

  	
  THE ADMINISTRATIVE
  AGENT AND PURCHASER AGENTS

  	
  145

  
	
   

  	
   

  	
   

  
	
  Section 12.1.

  	
  The Administrative Agent

  	
  145

  
	
   

  	
   

  	
   

  
	
  Section 12.2.

  	
  Additional Agent

  	
  147

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XIII

  	
  MISCELLANEOUS

  	
  149

  
	
   

  	
   

  	
   

  
	
  Section 13.1.

  	
  Amendments and Waivers

  	
  149

  
	
   

  	
   

  	
   

  
	
  Section 13.2.

  	
  Notices,
  Etc

  	
  150

  
	
   

  	
   

  	
   

  
	
  Section 13.3.

  	
  Ratable
  Payments

  	
  150

  
	
   

  	
   

  	
   

  
	
  Section 13.4.

  	
  No Waiver; Remedies

  	
  150

  
	
   

  	
   

  	
   

  
	
  Section 13.5.

  	
  Binding Effect; Benefit of
  Agreement

  	
  150

  
	
   

  	
   

  	
   

  
	
  Section 13.6.

  	
  Term of this Agreement

  	
  151

  
	
   

  	
   

  	
   

  
	
  Section 13.7.

  	
  Governing Law; Consent to
  Jurisdiction; Waiver of Objection to Venue

  	
  151

  
	
   

  	
   

  	
   

  
	
  Section 13.8.

  	
  Waiver of Jury Trial

  	
  151

  
	
   

  	
   

  	
   

  
	
  Section 13.9.

  	
  Costs, Expenses and Taxes

  	
  151

  
	
   

  	
   

  	
   

  
	
  Section 13.10.

  	
  No Proceedings

  	
  152

  
	
   

  	
   

  	
   

  
	
  Section 13.11.

  	
  Recourse Against Certain
  Parties

  	
  152

  
	
   

  	
   

  	
   

  
	
  Section 13.12.

  	
  Protection of Right, Title
  and Interest in the Collateral; Further Action Evidencing Advances

  	
  154

  
	
   

  	
   

  	
   

  
	
  Section 13.13.

  	
  Confidentiality.

  	
  155

  



 


iv

















 


TABLE OF CONTENTS


(continued)


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 13.14.

  	
  Execution in Counterparts;
  Severability; Integration

  	
  156

  
	
   

  	
   

  	
   

  
	
  Section 13.15.

  	
  Waiver of Setoff

  	
  156

  
	
   

  	
   

  	
   

  
	
  Section 13.16.

  	
  Assignments by the
  Purchasers

  	
  157

  
	
   

  	
   

  	
   

  
	
  Section 13.17.

  	
  Heading and Exhibits

  	
  157

  
	
   

  	
   

  	
   

  
	
  Section 13.18.

  	
  Loans Subject to Retained
  Interest Provisions

  	
  158

  
	
   

  	
   

  	
   

  
	
  Section 13.19.

  	
  Non-Confidentiality of Tax
  Treatment

  	
  158

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XIV

  	
  GUARANTY

  	
  158

  
	
   

  	
   

  	
   

  
	
  Section 14.1.

  	
  The Guaranty

  	
  158

  
	
   

  	
   

  	
   

  
	
  Section 14.2.

  	
  Bankruptcy

  	
  159

  
	
   

  	
   

  	
   

  
	
  Section 14.3.

  	
  Nature of Liability

  	
  159

  
	
   

  	
   

  	
   

  
	
  Section 14.4.

  	
  Independent Obligation

  	
  159

  
	
   

  	
   

  	
   

  
	
  Section 14.5.

  	
  Authorization

  	
  160

  
	
   

  	
   

  	
   

  
	
  Section 14.6.

  	
  Reliance

  	
  160

  
	
   

  	
   

  	
   

  
	
  Section 14.7.

  	
  Waiver

  	
  160

  
	
   

  	
   

  	
   

  
	
  Section 14.8.

  	
  Limitation on Enforcement

  	
  161

  
				



 


v

















 


EXHIBITS


 


	
  EXHIBIT
  A-1

  	
  [Reserved]

  
	
  EXHIBIT
  A-2

  	
  Form of
  Repayment Notice (Reduction of Advances Outstanding/Pledge of Eligible Loans)

  
	
  EXHIBIT
  A-3

  	
  [Reserved]

  
	
  EXHIBIT
  A-4

  	
  Form of
  Borrowing Base Certificate

  
	
  EXHIBIT
  A-5

  	
  [Reserved]

  
	
  EXHIBIT
  B

  	
  Form of
  Variable Funding Certificate (Conduit Purchaser or Institutional Purchaser)

  
	
  EXHIBIT
  C

  	
  Form of
  Servicing Report

  
	
  EXHIBIT
  D

  	
  Form of
  Hedging Agreement (including Schedule and Confirmation)

  
	
  EXHIBIT
  E-1

  	
  Form of
  Officer’s Certificate as to Solvency (Ares Capital CP Funding LLC)

  
	
  EXHIBIT
  E-2

  	
  Form of
  Officer’s Certificate as to Solvency (Ares Capital Corporation)

  
	
  EXHIBIT
  F-1

  	
  Form of
  Officer’s Closing Certificate (Ares Capital CP Funding LLC)

  
	
  EXHIBIT
  F-2

  	
  Form of
  Officer’s Closing Certificate (Ares Capital Corporation)

  
	
  EXHIBIT
  G-1

  	
  Form of
  Power of Attorney (Ares Capital CP Funding LLC)

  
	
  EXHIBIT
  G-2

  	
  Form of
  Power of Attorney (Ares Capital Corporation)

  
	
  EXHIBIT
  H

  	
  Form of
  Release of Required Loan Documents

  
	
  EXHIBIT
  I

  	
  Form of
  Assignment of Mortgage

  
	
  EXHIBIT
  J

  	
  Form of
  Servicer’s Certificate

  
	
  EXHIBIT
  K

  	
  Form of
  Transferee Letter

  
	
  EXHIBIT
  L

  	
  Form of
  Certificate of Closing Attorneys

  
	
  EXHIBIT
  M

  	
  Form of
  Joinder Supplement

  
	
  EXHIBIT
  N

  	
  Form of
  Confidentiality Provision

  
	
  EXHIBIT
  O

  	
  Form of
  Notice and Request for Consent

  
	
   

  
	
  SCHEDULES

  
	
   

  	
   

  
	
  SCHEDULE I

  	
  Condition Precedent Documents

  
	
  SCHEDULE
  II

  	
  Concentration
  Account Bank and Concentration Account

  
	
  SCHEDULE
  III

  	
  Location
  of Required Loan Documents

  
	
  SCHEDULE
  IV

  	
  Loan
  List

  
	
  SCHEDULE
  V

  	
  Agreed-Upon
  Procedures For Independent Public Accountants

  
	
   

  	
   

  
	
  ANNEXES

  
	
   

  	
   

  
	
  ANNEX
  A

  	
  Addresses
  for Notices

  
	
  ANNEX
  B

  	
  Lender’s
  Pro Rata Share

  



 

















 


THIS SALE AND SERVICING AGREEMENT (as amended, modified, waived, supplemented, restated or replaced from
time to time, this “Agreement”) is made as of November 3, 2004, by
and among:


 


(1)           ARES
CAPITAL CORPORATION, a Maryland corporation (“Ares Capital
Corporation”), as the originator (together with its successors and assigns
in such capacity, the “Originator”), and as the servicer (together with
its successors and assigns in such capacity, the “Servicer”);


 


(2)           ARES
CAPITAL CP FUNDING LLC, a Delaware limited liability company, as the
borrower (together with its successors and assigns in such capacity, the “Borrower”);


 


(3)           ARES
CAPITAL CP FUNDING II LLC, a Delaware limited liability company, as
the guarantor (together with its successors and assigns in such capacity, the “Guarantor”);


 


(4)           EACH
OF THE CONDUIT PURCHASERS FROM TIME TO TIME PARTY HERETO,  as a Conduit Purchaser;


 


(5)           EACH
OF THE INSTITUTIONAL PURCHASERS FROM TIME TO TIME PARTY HERETO, as
an Institutional Purchaser;


 


(6)           EACH
OF THE PURCHASER AGENTS FROM TIME TO TIME PARTY HERETO, as a
Purchaser Agent;


 


(7)           WACHOVIA
CAPITAL MARKETS, LLC, a Delaware limited liability company (together
with its successors and assigns, “WCM”), as the administrative agent
(together with its successors and assigns in such capacity, the “Administrative
Agent”);


 


(8)           LYON
FINANCIAL SERVICES, INC., a Minnesota corporation, doing business as
U.S. Bank Portfolio Services (“Lyon”), not in its individual capacity
but as the backup servicer (together with its successors and assigns in such
capacity, the “Backup Servicer”); and


 


(9)           U.S.
BANK NATIONAL ASSOCIATION, a national banking association (“U.S.
Bank”), not in its individual capacity but as the trustee (together with
its successors and assigns in such capacity, the “Trustee”).


 


R E C I T A L S


 


WHEREAS, the
parties hereto, other than the Guarantor, previously entered into the Sale and
Servicing Agreement dated as of November 3, 2004 (such agreement, as
amended, modified or waived prior to the date hereof, the “Existing
Agreement”);


 


WHEREAS, Section 13.1 of the Existing Agreement provides that no amendment shall be effective
without the written agreement of the Borrower, the Administrative Agent, the
Trustee and each Purchaser and its related Purchaser Agent;


 

















 


WHEREAS, on the
Thirteenth Amendment Effective Date, the parties hereto wish to amend the
Existing Agreement in order to make certain changes agreed to by the parties
hereto, including the addition of the Guarantor as a party hereto; and


 


WHEREAS, all other
conditions precedent to the execution of this Agreement have been complied
with.


 


NOW, THEREFORE, based
upon the foregoing Recitals, the mutual premises and agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:


 


ARTICLE I



DEFINITION


 


Section 1.1.                                Certain Defined Terms.


 


(a)           Certain capitalized terms used
throughout this Agreement are defined in this Section 1.1.  As used in this Agreement and its schedules,
exhibits and other attachments, unless the context requires a different meaning,
the following terms shall have the following meanings:


 


“1940 Act”:  The Investment Company Act of 1940, as
amended, and the rules and regulations promulgated thereunder.


 


“Account”:  Any of the Collection Account, the Principal
Collections Account, the Interest Collections Account and any sub-accounts
thereof deemed appropriate or necessary by the Administrative Agent or the
Trustee for convenience in administering such accounts.


 


“Accreted Interest”:  Interest accrued on a Loan that is added to
the principal amount of such Loan instead of being paid as interest as it
accrues.


 


“Accrual Period”:  With respect to each Advance (or portion
thereof), (a) with respect to the first Payment Date, the period
commencing on the Closing Date and ending on the last day of the calendar month
preceding the first Payment Date, (b) with respect to the final Payment
Date, the period commencing on the first day of the calendar month in which the
preceding Payment Date occurred and ending on the final Payment Date, and (c) with
respect to any other Payment Date, the period commencing on the first day of
the calendar month in which the preceding Payment Date occurred and ending on
the last day of the calendar month immediately preceding the month in which the
Payment Date occurs.


 


“Additional Amount”:  Defined in Section 2.16.


 


“Adjusted Eurodollar Rate”:  For any Accrual Period, a per annum interest rate equal to a
fraction, expressed as a percentage and rounded upwards (if necessary) to the
nearest 1/100 of 1%, (i) the numerator of which is equal to the LIBOR Rate
for such Accrual Period and (ii) the 


 


2

















 


denominator
of which is equal to 100% minus the Eurodollar Reserve Percentage for
such Accrual Period.


 


“Administrative Agent”:  WCM, in its capacity as administrative agent
for the Purchaser Agents, together with its successors and assigns, including
any successor appointed pursuant to Article XII.


 


“Advance”: Defined in
Section 2.1(b).


 


“Advance Rate”:  With respect to any type of Loan on any
Measurement Date, the corresponding percentage for such type of Loan (such type
to be determined as of the applicable Cut-Off Date of each Loan) set forth
below:


 


ELIGIBLE
LOANS


 


	
  TYPE OF ELIGIBLE LOAN

  	
   

  	
  ADVANCE RATE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  First Lien Loans

  	
   

  	
  60

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Last-Out First Lien Loans

  	
   

  	
  50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Second Lien Loans

  	
   

  	
  40

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Subordinated Loans

  	
   

  	
  35

  	
  %

  



 


For the avoidance of doubt,
with respect to any Agented Notes, the applicable Advance Rate will be
determined by reference to the type of the applicable underlying Loan.


 


“Advances Outstanding”:  On any day, the aggregate principal amount of
all Advances outstanding on such day, after giving effect to all repayments of
Advances on such day.


 


“Affected Party”:  The Administrative Agent, each Purchaser
Agent, each Purchaser, each Liquidity Bank, all assignees and participants of
each Purchaser and each Liquidity Bank, any sub-agent of the Administrative
Agent and any successor to a Purchaser Agent.


 


“Affiliate”:  With respect to a Person, means any other
Person that, directly or indirectly, controls, is controlled by or is under
common control with such Person, or is a director or officer of such Person; provided, however,
that for purposes of determining whether any Loan is an Eligible Loan or any
Obligor is an Eligible Obligor, the term Affiliate shall not include any
Affiliate relationship which may exist solely as a result of direct or indirect
ownership of, or control by, a common Financial Sponsor.  For purposes of this definition, “control,”
when used with respect to any specified Person means the possession, directly
or indirectly, of the power to vote 20% or more of the voting securities of
such Person or to direct or cause the direction of the management or policies
of such Person, whether through the ownership of voting securities, by contract
or otherwise.


 


“Agented Note”:  Any Loan (a) originated as a part of a
syndicated loan transaction that has been closed (without regard to any
contemporaneous or subsequent syndication of such


 


3
















 


Loan)
prior to such Loan becoming part of the Collateral and (b) with respect to
which, upon an assignment of the note under the Sale Agreement to the Borrower,
the Borrower, as assignee of the note, will have all of the rights but none of
the obligations of the Originator with respect to such note and the Related
Property.


 


“Aggregate Outstanding
Loan Balance” or “AOLB”:  On any date
of determination, the sum of the Outstanding Loan Balances of all Eligible
Loans included as part of the Collateral on such date, minus the
Outstanding Loan Balances of any Charged-Off Loans.


 


“Aggregate Unpaids”:  At any time, an amount equal to the sum of
all unpaid Advances Outstanding, Interest, Breakage Costs, Hedge Breakage
Costs, Call Premium and all other amounts owed by the Borrower to the
Purchasers, the Purchaser Agents, the Administrative Agent, the Backup
Servicer, each Hedge Counterparty and the Trustee hereunder (including, without
limitation, all Indemnified Amounts, other amounts payable under Article XI
and amounts required to be paid under Section 2.9, Section 2.10,
Section 2.14, Section 2.15 and Section 2.16
to any Indemnified Party) or under any Hedging Agreement (including, without
limitation, payments in respect of the termination of any such Hedging Agreement)
or by the Borrower or any other Person under any fee letter delivered in
connection with the transactions contemplated by this Agreement (including,
without limitation, each Purchaser Fee Letter, the Backup Servicer Fee Letter
and the Trustee Fee Letter), in each case whether due or accrued.


 


“Agreement”:  Defined in the Preamble.


 


“Alternative Rate”:  For any day during any Accrual Period, (i) with
respect to any Institutional Purchaser, an interest rate per annum equal to the LIBOR Rate and (ii) with
respect to any Conduit Purchaser, an interest rate per annum equal to the Adjusted Eurodollar Rate; provided that the Alternative Rate shall
be the Base Rate if a Eurodollar Disruption Event occurs.


 


“Amortization Period”:  The period beginning on the date on which the
Termination Date is declared or occurs automatically pursuant to Section 10.2(a),
and ending on the Collection Date.


 


“Applicable Law”:  For any Person or property of such Person,
all existing and future laws, rules, regulations (including proposed, temporary
and final income tax regulations), statutes, treaties, codes ordinances,
permits, certificates, orders and licenses of and interpretations by any
Governmental Authority which are applicable to such Person or property
(including, without limitation, predatory lending laws, usury laws, the Federal
Truth in Lending Act, and Regulation Z and Regulation B of the Board of
Governors of the Federal Reserve System), and applicable judgments, decrees,
injunctions, writs, awards or orders of any court, arbitrator or other
administrative, judicial, or quasi-judicial tribunal or agency of competent
jurisdiction.


 


“Appraisal”:  With respect to any Mortgaged Property as to
which an appraisal is required or permitted to be performed pursuant to the
terms of this Agreement, an appraisal performed in conformance with the
guidelines established by the Appraisal Institute.


 


“Appraisal Institute”:  The international membership association of
real estate appraisers.


 


4

















 


“Approved Valuation Firm”:
Each of (i) Houlihan Lokey Howard & Zukin, (ii) Lincoln
International LLC (f/k/a Lincoln Partners LLC), (iii) Duff &
Phelps Corp. and (iv) Valuation Research Corporation, and any other
nationally recognized valuation firm approved by the Administrative Agent in
its sole reasonable discretion.


 


“Ares LIBOR Rate”:  The rate per annum appearing on Reuters
Screen LIBOR01 Page (or on any successor or substitute page of such
service, or any successor to or substitute for such service, providing rate
quotations comparable to those currently provided on such page of such
service, as determined by the Administrative Agent from time to time for
purposes of providing quotations of interest rates applicable to dollar
deposits in the London interbank market) at approximately 11:00 a.m.,
London time for such day, provided, if such day is not a Business Day, the
immediately preceding Business Day, as the rate for Dollar deposits with a
one-month, a two-month or a three-month maturity, as applicable, as and when
determined in accordance with the applicable Underlying Instruments.


 


“Ares Prime Rate”:  The rate designated by certain reference
lenders in the Underlying Instruments from time to time as its prime rate in
the United States, such rate to change as and when the designated rate changes;
provided, however, the Ares Prime
Rate is not intended to be lowest rate of interest charged by the Originator in
connection with extensions of credit to debtors.


 


“Asset Coverage Ratio”:
The ratio, determined on a consolidated basis, without duplication, in
accordance with GAAP, of (a) the fair market value of the total assets of
Ares Capital Corporation and its Subsidiaries as required by, and in accordance
with, the 1940 Act and any orders of the Securities and Exchange Commission
issued to the Originator, to be determined by the Board of Directors of the
Originator and reviewed by its auditors, less all liabilities (other than
Indebtedness, including Indebtedness hereunder) of Ares Capital Corporation and
its Subsidiaries, to (b) the aggregate amount of Indebtedness of Ares
Capital Corporation and its Subsidiaries.


 


“Assigned Value”: The
value assigned to each Loan included in the Collateral by the Administrative
Agent in its sole reasonable discretion as of the Thirteenth Amendment
Effective Date and any applicable Cut-Off Date, and amended by the
Administrative Agent in its sole reasonable discretion at anytime following an
Assigned Value Adjustment Event; provided,
however, that (a) the
Assigned Value of any Priced Loan shall not be less than the price quoted
therefor (if any) by such pricing service as selected by the Administrative
Agent and (b) the Assigned Value shall not be based upon the practices set
forth in FASB Statement No. 157 or any pronouncement, statement, rule or
amendment with respect to GAAP-mandated mark-to-market requirements, but rather
shall be based on the amortized cost adjusted for any credit impairment of such
Loan.  In the event the Borrower
disagrees with the Administrative Agent’s determination of the Assigned Value
of a Loan, the Borrower may (at its expense) retain any Approved Valuation Firm
to value such Loan and if the value determined by such firm is greater than the
Administrative Agent’s determination of the Assigned Value, such firm’s
valuation shall become the Assigned Value of such Loan; provided that the Assigned Value of such
Loan shall be the value assigned by the Administrative Agent until such
valuation firm has determined its value. 
The value determined by such firm shall be based on the amortized cost
adjusted for any credit impairment of such Loan.  The Assigned Value of any Loan may be
increased at the sole 


 


5

















 


reasonable
discretion of the Administrative Agent upon improvement in the Net Leverage
Ratio or the Interest Coverage Ratio of such Loan, as the case may be, as part
of an Assigned Value Adjustment Event; provided
that such Assigned Value may not increase above the Assigned Value given to
such Loan on the Thirteenth Amendment Effective Date or any applicable Cut-Off
Date.  The Administrative Agent shall
promptly notify the Servicer of any change effected by the Administrative Agent
of the Assigned Value of any Loan.


 


“Assigned Value
Adjustment Event”: With respect to any Loan, the occurrence of any one or
more of the following events:


 


(i)            a Material Modification (in accordance with clauses
(b)-(c) and clauses (e)-(g) of the
definition thereof) occurs with respect to such Loan;


 


(ii)           the Net Leverage Ratio for any Relevant Test Period of the
related Obligor with respect to such Loan is more than 0.50x higher than such
Net Leverage Ratio as calculated on the Thirteenth Amendment Effective Date or
any applicable Cut-Off Date; or


 


(iii)          the Interest Coverage Ratio for any Relevant Test Period of
the related Obligor with respect to such Loan is less than 90% of the Interest
Coverage Ratio with respect to such Loan as calculated on the Thirteenth
Amendment Effective Date or any applicable Cut-Off Date.


 


“Assignment of Mortgage”:  An assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to effect
the assignment of the Mortgage to the Trustee, which assignment, notice of
transfer or equivalent instrument may be in the form of one or more blanket
assignments covering the Loans secured by Mortgaged Properties located in the
same jurisdiction, if permitted by Applicable Law.


 


“Attached Equity”:
With respect to any Loan, any stock, partnership or membership interest,
beneficial interest or other equity security, warrant, option, or any right,
including, without limitation, any registration right, with respect to the
foregoing received by the Originator in connection with the origination or
acquisition of such Loan.


 


“Available Funds”:  With respect to any Payment Date, all
immediately available amounts on deposit in the Collection Account (including,
without limitation, any Collections and Servicer Advances).


 


“Average Life”:  For any Loan, as of any date of
determination, the number determined by multiplying the amount of each
Scheduled Payment of principal to be paid after such date of determination by
the number of years (rounded to the nearest hundredth) from such date of
determination until such Scheduled Payment of principal is due.


 


“Backup Servicer”:  Defined in the Preamble.


 


“Backup Servicer Fee
Letter”:  The Backup Servicer Fee
Letter, dated as of the date hereof, by and among the Servicer, the
Administrative Agent, the Trustee, and the Backup Servicer, as such letter may
be amended, modified, supplemented, restated or replaced from time to time.


 


6

















 


“Backup Servicer
Termination Notice”:  Defined in Section 7.5.


 


“Backup Servicing Fee”:  The fee set forth as such in the Backup
Servicer Fee Letter.


 


“Bankruptcy Code”:  The United States Bankruptcy Reform Act of
1978 (11 U.S.C. § 101, et seq.),
as amended from time to time.


 


“Base Rate”:  On any date, a fluctuating per annum interest rate equal to the
higher of (a) the Prime Rate or (b) the Federal Funds Rate plus
1.5%.


 


“Benefit Plan”:  Any “employee benefit plan” as defined in Section 3(3) of
ERISA in respect of which the Borrower or any ERISA Affiliate of the Borrower
is, or at any time during the preceding six years was, an “employer” as defined
in Section 3(5) of ERISA.


 


“Borrower”:  Defined in Preamble.


 


“Borrower Guaranty”:  The guaranty executed by the Borrower in
favor of Wachovia Bank, National Association on behalf of the “Secured Parties”
(as defined in the CP Funding II Financing) in connection with the CP Funding
II Financing.


 


“Borrowing Base”:  As of any Measurement Date, an amount equal
to (i) the Aggregate Outstanding Loan Balance, after giving effect to all
Loans added to and removed from the Collateral on such date, minus (ii) the
Outstanding Loan Balances of all Delinquent Loans; provided, however,
that with respect to each date that is a Measurement Date solely as of a result
of clause (vi) of the definition thereof, the Borrowing Base will only be
modified by the change in the Assigned Value of the related Loan.


 


“Borrowing Base
Certificate”:  Each certificate, in
the form of Exhibit A-4, required to be delivered by the Borrower
with each Borrowing Notice or each Repayment Notice, as applicable, on each
Measurement Date.


 


“Borrowing Notice”:  Each notice required to be delivered by the
Borrower prior to the Thirteenth Amendment Effective Date in respect of the
Initial Advance and each incremental Advance.


 


“Breakage Costs”:  With respect to any Purchaser, any amount or
amounts as shall compensate such Purchaser for any loss, cost or expense
incurred by such Purchaser (as determined by the applicable Purchaser Agent on
behalf of such Purchaser, in such Purchaser Agent’s sole discretion) as a
result of a prepayment by the Borrower of Advances Outstanding or
Interest.  All Breakage Costs shall be
due and payable hereunder upon demand, in accordance with the terms hereof.  The determination by the applicable Purchaser
Agent of the amount of any such loss, cost or expense shall be set forth in a
written notice to the Borrower and shall be conclusive absent manifest error.


 


“Business Day”:  Any day (other than a Saturday or a Sunday)
on which commercial banks are not required or authorized to be closed in New
York, New York, Charlotte, North Carolina, Boston, Massachusetts, Minneapolis,
Minnesota or Florence, South Carolina.


 


7

















 


“Canadian Dollar”:
The lawful currency of Canada.


 


“Call Premium”: An
amount equal to 1.00% of the Facility Amount.


 


“Capital Lease
Obligations”: With respect to any entity, the obligations of such entity to
pay rent or other amounts under any lease of (or other arrangement conveying
the right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases
on a balance sheet of such entity under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP.


 


“Certificated Security”:  The meaning specified in Section 8-102(a)(4) of
the UCC.


 


“Change of Control”:  Any of the following:


 


(a)           The Management Agreement shall fail
to be in full force and effect;


 


(b)           the creation or imposition of any
Lien on any limited liability company membership interest in the Borrower;


 


(c)           the failure by the Originator to own
100% of the limited liability company membership interests in the Borrower; or


 


(d)           the dissolution, termination or
liquidation in whole or in part, transfer or other disposition of all or
substantially all of the assets of, Ares Capital Corporation.


 


“Change of Tax Law”:  Any change in application or public
announcement of an official position under or any change in or amendment to the
laws (or any regulations or rulings promulgated thereunder) of any jurisdiction
in which an Obligor is organized), or any political subdivision or taxing
authority of any of the foregoing, affecting taxation, or any proposed change
in such laws or change in the official application, enforcement or
interpretation of such laws, regulations or rulings (including a holding by a
court of competent jurisdiction), or any other action taken by a taxing authority
or court of competent jurisdiction in the relevant jurisdiction, or the
official proposal of any such action.


 


“Charged-Off Loan”:  A Loan as to which any of the following first
occurs:  (i) the Servicer has
determined in accordance with the Servicing Standard that such Loan is not
collectible, (ii) the Loan has been a Delinquent Loan for a period of 60
days or more (without giving effect to any Servicer Advance thereon or any
grace period permitted in the related Underlying Instruments), (iii) the
related Obligor is subject to an Insolvency Event or (iv) the related
Obligor is not Solvent or such Loan is on non-accrual status, as reasonably
determined by the Servicer in accordance with the Credit Policy and the
Servicing Standard.


 


“Clearing Agency”:  An organization registered as a “clearing
agency” pursuant to Section 17A of the Exchange Act.


 


“Clearing Corporation”:  The meaning specified in Section 8-102(a)(5) of
the UCC.


 


8

















 


“Closing Counsel”:  Legal counsel responsible for closing the
origination or acquisition of any Loan on behalf of the Originator which is
sold to the Borrower under the Sale Agreement and financed by the Borrower
under this Agreement.


 


“Closing Date”:  November 3, 2004.


 


“Code”:  The Internal Revenue Code of 1986, as amended
from time to time.


 


“Collateral”:  All right, title, and interest (whether now
owned or hereafter acquired or arising, and wherever located) of the Borrower
in the property identified in clauses (i) - (iv) below and all
accounts, cash and currency, chattel paper, tangible chattel paper, electronic
chattel paper, copyrights, copyright licenses, equipment, fixtures, contract
rights, general intangibles, instruments, certificates of deposit, certificated
securities, uncertificated securities, financial assets, securities
entitlements, commercial tort claims, deposit accounts, inventory, investment
property, letter-of-credit rights, software, supporting obligations,
accessions, and other property consisting of, arising out of, or related to any
of the following (in each case excluding the Retained Interest and the Excluded
Amounts):


 


(i)  the Loans, and all
monies due or to become due in payment under such Loans on and after the
related Cut-Off Date, including, but not limited to, all Collections, but
excluding any related Attached Equity;


 


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


 


(iii)  the Accounts and
all Permitted Investments purchased with funds on deposit in the Accounts; and


 


(iv)  all income and
Proceeds of the foregoing.


 


“Collection Account”:  Defined in Section 6.4(h).


 


“Collection Date”:  The date following the Termination Date on
which the Aggregate Unpaids have been reduced to zero and indefeasibly paid in
full.


 


“Collection Period”:  With respect to the first Payment Date, the
period from and including the Closing Date to and including the Determination
Date preceding the first Payment Date and with respect to the last Payment
Date, the period from but excluding the Determination Date preceding the
previous Payment Date to and including the last Payment Date; and at any other
time, the period from but excluding the Determination Date preceding the
previous Payment Date to and including the Determination Date preceding the
current Payment Date.


 


“Collections”:  (a) All cash collections and other cash
proceeds of any Loan, including, without limitation or duplication, any
Interest Collections, Principal Collections, amendment fees, late fees, waiver
fees or other amounts received in respect thereof (but excluding any Excluded
Amounts), (b) interest earnings on Permitted Investments or otherwise in
any Account, (c) any cash proceeds or other funds received by the Borrower
or the Servicer with respect to any Related Security (including from any
guarantors) and (d) all payments received pursuant to any Hedging
Agreement or Hedge Transaction.


 


9

















 


“Commercial Paper Notes”:  Any short-term promissory notes of any
Conduit Purchaser issued by such Conduit Purchaser in the commercial paper
market.


 


“Commitment”:  With respect to each Purchaser, the
commitment of such Purchaser to make Advances in accordance herewith in an
amount not to exceed such Purchaser’s Pro Rata Share of the aggregate Advances
Outstanding.


 


“Concentration Account”:  The account maintained at the Concentration
Account Bank, subject to the Intercreditor Agreement, for the purpose of
receiving Collections, the details of which are set forth on Schedule II,
as such schedule may be amended from time to time.


 


“Concentration Account
Bank”:  U.S. Bank National
Association, a national banking association.


 


“Conduit Purchaser”:  VFCC and each other commercial paper conduit
as may from time to time become a Purchaser hereunder in the sole discretion of
the Administrative Agent by executing and delivering a Joinder Supplement to
the Administrative Agent and the Borrower.


 


“Contractual Obligation”:  With respect to any Person, any provision of
any securities issued by such Person or any indenture, mortgage, deed of trust,
contract, undertaking, agreement, instrument or other document to which such
Person is a party or by which it or any of its property is bound or to which
either is subject.


 


“CP Funding II Financing”:  The senior secured revolving financing
transaction between Ares Capital CP Funding II LLC, Wachovia Bank, National
Association and the other parties thereto, to be entered into on or about June 30,
2009.


 


“CP Rate”:  With respect to any Conduit Purchaser for any
day during any Accrual Period, the per annum
rate equal to (a) the rate (expressed as a percentage and an interest
yield equivalent and calculated on the basis of a 360-day year) or, if more
than one rate, the weighted average thereof, paid or payable by such Conduit
Purchaser from time to time as interest on or otherwise in respect of the
Commercial Paper Notes issued by such Conduit Purchaser that are allocated, in
whole or in part, by such Purchaser’s Purchaser Agent to fund the purchase or
maintenance of the outstanding Advances made by such Purchaser (and which may
also, in the case of a pool-funded Conduit Purchaser, be allocated in part to
the funding of other assets of such Conduit Purchaser and which Commercial
Paper Notes need not mature on the last day of any Accrual Period) during such
Accrual Period as determined by such Conduit Purchaser’s Purchaser Agent, which
rates shall reflect and give effect to (i) certain documentation and
transaction costs (including, without limitation, dealer and placement agent
commissions, and incremental carrying costs incurred with respect to Commercial
Paper Notes maturing on dates other than those on which corresponding funds are
received by such Conduit Purchaser) associated with the issuance of such
Conduit Purchaser’s Commercial Paper Notes, and (ii) other borrowings by
such Conduit Purchaser, including borrowings to fund small or odd dollar
amounts that are not easily accommodated in the commercial paper market, to the
extent such amounts are allocated, in whole or in part, by such Conduit
Purchaser’s Purchaser Agent to fund such Conduit Purchaser’s purchase or
maintenance of the outstanding Advances made by such Purchaser during such
Accrual Period; provided that, if
any component of such rate is a discount 


 


10

















 


rate,
in calculating the applicable “CP Rate” for such day, such Conduit Purchaser’s
Purchaser Agent shall for such component use the rate resulting from converting
such discount rate to an interest bearing equivalent per annum rate or (b) such other rate as may be set
forth as such in such Conduit Purchaser’s Purchaser Fee Letter.


 


“Credit Policy”:  The written credit policies and procedures
manual of the Originator provided to the Administrative Agent on the Closing
Date, as such credit policies and procedures manual may be as amended or
supplemented from time to time in accordance with Section 5.4(f).


 


“Cut-Off Date”:  (a) With respect to each Loan added to
the Collateral prior to the Thirteenth Amendment Effective Date, the Funding
Date of the Advance in respect thereof, (b) with respect to any additional
Eligible Loan pledged pursuant to Section 2.6(a), the Pledge Date
in respect thereof, (c) with respect to any Substitute Loan added to the
Collateral pursuant to Section 2.18(a), the Substitution Date in
respect thereof and (d) with respect to any Substitute Loan added to the
Collateral for a Warranty Loan pursuant to Section 2.18(b), the
Retransfer Date in respect thereof.


 


“Defaulted Loan Sale”:  Defined in Section 2.18(c)(i).


 


“Defaulted Loan Sale Date”:  The Business Day identified by the Borrower
to the Administrative Agent and the Trustee in a Defaulted Loan Sale Notice as
the proposed date of a Defaulted Loan Sale.


 


“Defaulted Loan Sale
Notice”:  Defined in Section 2.18(c)(i)(1).


 


“Delinquent Loan”:  A Loan (other than a Charged-Off Loan) as to
which any of the following occurs:  (a) all
or any portion of any one or more payments of principal or interest thereunder
remains unpaid for at least five (5) days from the original due date for
such payment (without giving effect to any Servicer Advance thereon or any
grace period permitted in the Underlying Instruments); (b) a Material
Modification of the type described in clause (b), (c) or (f) of the
definition thereof has occurred with respect to such Loan; (c) the related
Obligor is not paying any of the accrued and unpaid interest on a current basis
for at least five (5) days from the original date for such payment
(without giving effect to any Servicer Advance thereon or any grace period
permitted in the Underlying Instruments); or (d) consistent with the
Servicing Standard, such Loan would be classified as delinquent by the
Servicer.


 


“Determination Date”:  The last day of each calendar month.


 


“DIP Loan”:  Any post-petition loan to any obligor that is
a debtor-in-possession pursuant to the Bankruptcy Code.


 


“Discretionary Sale”:  Defined in Section 2.20(a).


 


“Discretionary Sale Date”:
The Business Day identified by the Borrower to the Administrative Agent and the
Trustee in a Discretionary Sale Notice as the proposed date of a Discretionary
Sale.


 


11

















 


“Discretionary Sale
Notice”:  Defined in Section 2.20(a)(i).


 


“Dollars”:  Means, and the conventional “$”
signifies, the lawful currency of the United States.


 


“EBITDA”: With
respect to any period and any Loan, the meaning of “EBITDA,” “Adjusted EBITDA”
or any comparable definition in the Underlying Instruments for each such Loan,
and in any case that “EBITDA,” “Adjusted EBITDA” or such comparable definition
is not defined in such Underlying Instruments, an amount, for the principal
obligor on such Loan and any of its parents or Subsidiaries that are obligated
pursuant to the Underlying Instruments for such Loan (determined on a
consolidated basis without duplication in accordance with GAAP) equal to
earnings from continuing operations for such period plus interest expense,
income taxes and unallocated depreciation and amortization for such period (to
the extent deducted in determining earnings from continuing operations for such
period), and any other item the Borrower and the Administrative Agent mutually
deem to be appropriate.


 


“Eligible Bid”:  A bid made in good faith (and acceptable as a
valid bid in the Administrative Agent’s reasonable discretion) by a bidder for
all or any portion of the Collateral in connection with a sale of the
Collateral in whole or in part pursuant to Section 10.2.


 


“Eligible Loan”:  On any Measurement Date, each Loan:


 


(A)          for which the Administrative Agent, the Trustee and the
Backup Servicer have received, no later than 12:00 p.m. on the day prior
to the applicable Cut-Off Date, the following:


 


(1)           a faxed or e-mailed copy of the duly
executed original promissory note for the Loan (other than in the case of a
Noteless Loan) and if any Loan is closed in escrow, a certificate in the form
of Exhibit L from the closing attorneys of such Loans certifying as
to their possession of the Required Loan Documents; provided that, notwithstanding the foregoing, as to any Loan
acquired after the initial Funding Date, the Required Loan Documents shall be
in the possession of the Trustee within five Business Days of the applicable
Cut-Off Date; and


 


(2)           a Certificate of Assignment in the
form of Exhibit A to the Sale Agreement, including Schedule I
thereto, and


 


(B)           that satisfies each of the following eligibility
requirements:


 


(a)           such Loan is underwritten as (i) a
cash flow loan where the source of repayment is ongoing cash flow of the
Obligor, (ii) an asset-based loan where the source of repayment is
liquidation of collateral (including real estate), or (iii) some
combination thereof;


 


(b)           such Loan is evidenced by a
promissory note (other than in the case of a Noteless Loan), a credit agreement
containing an express promise to pay, a security agreement or instrument and
related loan documents that have been duly authorized and executed, are in full
force and effect and constitute the legal, valid, binding and absolute and
unconditional payment obligation of the related Obligor, enforceable against
such Obligor in accordance with their terms (subject, as to enforcement only,
to applicable bankruptcy, insolvency, moratorium 


 


12

















 


or other similar laws
affecting the rights of creditors generally and to general principles of
equity, whether considered in a suit at law or in equity), and there are no
conditions precedent to the enforceability or validity of the Loan that have
not been satisfied or validly waived;


 


(c)           such Loan does not contravene any
Applicable Law (including, without limitation, laws, rules and
regulations, if applicable, relating to usury, truth in lending, fair credit
billing, fair credit reporting, equal credit opportunity, fair debt collection
practices, licensing and privacy) and no part thereof is in violation of any
Applicable Law;


 


(d)           such Loan is denominated and payable
only in Dollars in the United States and does not permit the currency or
country in which such Loan is payable to be changed provided that certain Loans
may be denominated in Sterling, Euros or Canadian dollars but payable in
Dollars subject to currency hedging approved by the Administrative Agent (in
its sole discretion);


 


(e)           such Loan (i) was originated and
underwritten, or purchased and re-underwritten, by the Originator including,
without limitation, the completion of a due diligence and, if applicable, a
collateral assessment and (ii) is fully documented in a manner consistent
with the Credit Policy and such Loan is being serviced by the Servicer in
accordance with the Servicing Standard;


 


(f)            such Loan (i) if a First Lien
Loan, Last-Out First Lien Loan or Second Lien Loan has an original term to
maturity that does not exceed 96 months and (ii) if a Subordinated Loan,
has an original term to maturity that does not exceed 120 months;


 


(g)           all of the original or certified
Required Loan Documents, acceptable to the Administrative Agent and the
Originator, with respect to such Loan have been, or will be, delivered to the
Trustee on or prior to the applicable Cut-Off Date, except as otherwise
provided in Section 3.2(c), and all Servicing Files are being or
shall be maintained at the principal place of business of the Servicer in Los
Angeles, California in accordance with documented safety procedures approved by
the Administrative Agent;


 


(h)           as of the applicable Cut-Off Date,
such Loan is not delinquent in payment and, since its origination by the
Originator or, in the case of any Loan not originated by the Originator,
acquisition by the Originator, such Loan has never been more than 30 days
delinquent in payment of either principal or interest;


 


(i)            such Loan is not a Materially
Modified Loan (in accordance with clauses (a) and (d) of
the definition of Material Modification) and such Loan is not a loan
(including, without limitation, a new loan that replaced a prior loan by the
Originator or any of its Affiliates to the Obligor that was a Delinquent Loan
or a Charged-Off Loan) or extension of credit by the Originator to the Obligor
for the purpose of (i) making any past due principal, interest or other
payments due on such Loan, (ii) preventing such Loan or any other loan to
the related Obligor from becoming past due or (iii) causing a Delinquent
Loan or a Charged-Off Loan to cease to be so classified;


 


(j)            [Reserved];


 


13
















 


(k)           such Loan is eligible under its
Underlying Instruments (giving effect to the provisions of Sections 9-406 and
9-408 of the UCC) to be sold to the Borrower and to have a security interest
therein granted to the Trustee, for the benefit of the Secured Parties, and
such Loan does not contain any restrictions on further assignments or
transferability to the related special purpose entity issuer in connection with
any Permitted Securitization other than the execution of an assignment
agreement;


 


(l)            such Loan either (i) contains
the confidentiality provision set forth on Exhibit N or (ii) does
not contain a confidentiality provision that restricts or purports to restrict
the ability of the Trustee or any Secured Party to exercise their rights under
this Agreement, including, without limitation, their rights to review the
related Loan File;


 


(m)          such Loan provides for periodic
payments of a portion of accrued and unpaid interest in cash on a current
basis, no less frequently than quarterly;


 


(n)           all material consents, licenses,
approvals or authorizations of, or registrations or declarations with, any
Governmental Authority or any other Person required by the Originator or the
Borrower to be obtained, effected or given in connection with the Originator’s
or the Borrower’s making, acquisition, transfer or performance of such Loan
have been duly obtained, effected or given and are in full force and effect;


 


(o)           such Loan does not permit interest to
be capitalized in its entirety or contain payment obligations relating to “put
rights” by the related Obligor;


 


(p)           such Loan is an “Eligible Asset” as
defined in Rule 3a-7 under the 1940 Act;


 


(q)           such Loan is Registered;


 


(r)            such Loan, together with the Related
Security, has been sold to the Borrower pursuant to (and in accordance with)
the Sale Agreement, and the Borrower has good and marketable title, to such
Loan and Related Security, free and clear of all Liens (other than Permitted
Liens);


 


(s)           the Loan (together with the
Collections and Related Security related thereto), has been the subject of a
grant of a valid and first priority perfected security interest by the Borrower
in favor of the Trustee, on behalf of the Secured Parties;


 


(t)            the Obligor with respect to such
Loan is an Eligible Obligor;


 


(u)           all information provided by the
Borrower or the Servicer to the Administrative Agent or the Trustee in writing
with respect to the Loan is true and correct in all material respects as of the
date such information is provided;


 


(v)           such Loan (A) is not an Equity
Security and (B) does not provide for the conversion or exchange into an
Equity Security at any time on or after the date it is included as part of the
Collateral;


 


14

















 


(w)          such Loan does not require the Borrower
to make future advances to the Obligor under the related Underlying Instruments
(which, for the avoidance of doubt, shall not include advances or Loans allowed
to be made at the discretion of the Borrower and/or the other lenders for such
Loan);


 


(x)            such Loan is not a Loan with respect
to which interest required by the Underlying Instrument to be paid in cash has
previously been deferred or capitalized as principal and not subsequently paid
in full, unless the Obligor has commenced paying in cash current interest
required to be paid in cash;


 


(y)           no selection procedure adverse to the
interests of the Administrative Agent, the Purchaser Agents or the Secured
Parties was utilized by the Borrower or the Originator in the selection of such
Loan for inclusion in the Collateral;


 


(z)            the acquisition of such Loan will
not cause the Borrower or the pool of Collateral to be required to register as
an investment company under the 1940 Act and if the issuer of such Loan is
excepted from the definition of an “investment company” solely by reason of Section 3(c)(1) of
the 1940 Act, then either (A) such security does not constitute a “voting
security” for purposes of the 1940 Act or (B) the aggregate amount of such
security held by the Borrower is less than 10% of the entire issue of such
security;


 


(aa)         such Loan does not constitute Margin
Stock;


 


(bb)         such Loan is not subject to withholding
tax unless the Obligor thereon is required under the terms of the related
Underlying Instrument to make “gross-up” payments that cover the full amount of
such withholding tax on an after-tax basis in the event of a Change of Tax Law;


 


(cc)         the proceeds of such Loan will not be
used to finance activities of the type engaged in by businesses classified
under NAICS Codes 2361 (Residential Building Construction), 2362
(Nonresidential Building Construction), 2371 (Utility System Construction), or
2372 (Land Subdivision);


 


(dd)         such Loan has been purchased or
acquired by the Originator (or directly by the Borrower) for an amount not less
than 65% of the par value of such Loan outstanding as of the date of such
purchase or acquisition unless otherwise approved in writing by the
Administrative Agent in its sole discretion;


 


(ee)         [Reserved];


 


(ff)           such Loan is not a Participation;


 


(gg)         if such Loan is an Agented Note:


 


(i)            the related Underlying Instruments
shall include a note purchase or similar agreement containing (x) provisions
relating to the appointment and duties of a payment agent and a collateral
agent (which, in the case of a Loan originated by the Originator, shall be the
Originator or a wholly-owned Subsidiary of the 


 


15

















 


Originator) and in such
capacity such agent has the right to receive and collect payments and to
enforce the Obligor’s obligations on behalf of all holders of the Obligor’s
underlying indebtedness at the direction of the requisite majority of the
underlying lenders and (y) if such Agented Note was issued in a
transaction involving more than one class of notes, intercreditor provisions;


 


(ii)           if the entity serving as the
collateral agent of the security for all notes of the Obligor issued under the
applicable Underlying Instruments has or will change from the time of the
origination of the notes, all appropriate assignments of the collateral agent’s
rights in and to the collateral on behalf of the noteholders have been executed
and filed or recorded as appropriate prior to such Agented Note becoming a part
of the Collateral;


 


(iii)          all required notifications, if any, have
been given to the collateral agent, the payment agent and any other parties
required by the Underlying Instruments of, and all required consents, if any,
have been obtained with respect to, the Originator’s assignment of such Agented
Note and the Originator’s right, title and interest in the Related Property to
the Borrower and the Trustee’s security interest therein on behalf of the
secured parties;


 


(iv)          the right to control the actions of
and replace the collateral agent and/or the paying agent of the notes is to be
exercised by at least a majority in interest of all holders of such Agented
Notes; and


 


(v)           all notes of the Obligor of the same
priority are cross-defaulted and the Related Property securing such notes is
held by the collateral agent for the benefit of all holders of the notes and
all holders of such notes (A) have an undivided pari passu interest in the Related Property securing such
notes, (B) are secured by, and share in the proceeds of the sale or other
disposition of, such Related Property on a pro
rata basis and (C) may transfer or assign their right, title
and interest in the Related Property;


 


(hh)         if such Loan is a Material Mortgage
Loan:


 


(i)            the Loan is secured by the related
Mortgage, which has been properly recorded (or, if not properly recorded, has
been submitted in proper form for recording) and establishes and creates a
valid, enforceable and subsisting first priority security interest on the
related Mortgaged Property subject only to the following permitted
encumbrances: (a) the Lien of current real property taxes and assessments;
(b) covenants, conditions and restrictions, rights of way, easements and
other matters of public record as of the date of recording of such Mortgage,
such exceptions appearing of record being acceptable to mortgage lending
institutions generally in the area wherein the Mortgaged Property is located or
specifically reflected in the Appraisal obtained by the Originator in
connection with the origination of the related Loan; and (c) other matters
to which like properties are commonly subject which do not materially and
adversely interfere with the value of 


 


16

















 


or current principal use of
the related Mortgaged Property or the benefits of the security intended to be
provided by such Mortgage;


 


(ii)           the Lien of the related Mortgage is
insured by a Title Policy or its equivalent, issued by a nationally recognized
title insurance company licensed to do business in the state in which the
Mortgaged Property is located, insuring the Originator of such Loan, its
successors and assigns, as to the first priority Lien of the related Mortgage
in the original principal amount of such Loan after all advances of principal,
subject only to customary Liens permitted under the Mortgage (or, if a Title
Policy has not yet been issued in respect of such Loan, a policy meeting the
foregoing description is evidenced by a commitment for title insurance “marked-up”
at the closing of such loan); (ii) each Title Policy (or, if it has yet to
be issued, the coverage to be provided thereby) is in full force and effect,
all premiums thereon have been paid and no material claims have been made
thereunder and no claims have been paid thereunder; (iii) the Originator,
the Borrower and the Servicer have not, by act or omission, done anything that
would materially impair the coverage under such Title Policy; (iv) the
Title Policy is freely transferable or assignable by the Originator, and the
Borrower; and (iv) immediately following the transfer and assignment of
the related Loan to the Secured Parties, such Title Policy (or, if it has yet
to be issued, the coverage to be provided thereby) will inure to the benefit of
the Secured Parties without the consent of or notice to the insurer;


 


(iii)          any related Mortgage contains
customary and enforceable provisions, which render the rights and remedies of
the holder thereof adequate for the realization against the Mortgaged Property
of the benefits of the security, including, (x) in the case of a Mortgage
designated as a deed of trust, by trustee’s sale, and (y) otherwise by
judicial foreclosure, and there is no homestead or other exemption available to
the Obligor which would materially interfere with the right to sell the
Mortgaged Property related to such Loan at a trustee’s sale or the right to
foreclose the Mortgage;


 


(iv)          all escrow deposits relating to such
Loan that are, as of the applicable Cut-Off Date, required to be deposited with
the mortgagee or its agent have been so deposited;


 


(v)           there is no delinquent tax or
assessment Lien on any Mortgaged Property which is the primary Collateral for
the related Material Mortgage Loan, and each such Mortgaged Property is free of
material damage and is in good repair;


 


(vi)          there are no material defaults in
complying with the terms of any applicable related Mortgage, and all taxes,
governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and
owing have been paid, or an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid and which has been
assessed but is not yet due and payable;


 


17

















 


(vii)         the related Loan File contains a valid
Appraisal, an Environmental Site Assessment, and, in the case of any Loan
either (x) having an Outstanding Loan Balance of $5,000,000 or greater or (y) with
respect to which the related Mortgaged Property is at least 25 years old, an
engineering report;


 


(viii)        the terms of such Loan require that
improvements on the related Mortgaged Property be insured by a generally
acceptable carrier against loss under a hazard insurance policy with extended
coverage and conforming to the requirements of the Agreement, and all such
insurance policies are in full force and effect;


 


(ix)           no proceeding for the condemnation of
all or any material portion of the related Mortgaged Property has commenced or
been threatened;


 


(x)            the related Mortgaged Property was
subject to one or more Environmental Site Assessments (or an update of a
previously conducted Environmental Assessment), which were performed on behalf
of the Originator, or as to which the related report was delivered to the
Originator in connection with its origination or acquisition of such Loan, and
the Originator, the Borrower and the Servicer have no knowledge of any material
and adverse environmental conditions or circumstance affecting such Mortgaged
Property;


 


(xi)           none of the Originator, the Borrower or
the Servicer have taken any action with respect to such Loan or the related
Mortgaged Property that could subject the Secured Parties, or their respective
successors and assigns in respect of such Loan, to any liability under CERCLA
or any other applicable federal, state or local Environmental Law, and none of
the Originator, the Borrower or the Servicer have received any actual notice of
a material violation of CERCLA or any applicable federal, state or local
Environmental Law with respect to the related Mortgaged Property;


 


(xii)          the interest of the related Obligor in
the related Mortgaged Property consists of an Interest in Real Property
constituting part of such Mortgaged Property;


 


(xiii)         based on surveys and/or the related
Title Policy obtained in connection with the origination of such Loan, as of
the date of such origination, no improvement that was included for the purpose
of determining the Appraised Value of the related Mortgaged Property at the
time of origination of such Loan lay outside the boundaries and building
restriction lines of such property to any material extent (unless affirmatively
covered by the Title Policy), and no improvements on adjoining properties
encroached upon such Mortgaged Property to any material extent; and (ii) based
upon opinions of counsel and/or other due diligence customarily performed by
the Originator, the improvements located on or forming part of such Mortgaged
Property comply in all material respects with applicable zoning laws and
ordinances (except to the extent that they may constitute legal non-conforming
uses);


 


18

















 


(xiv)        as of the date of origination of such
Loan, the related Obligor or operator of the related Mortgaged Property was in
possession of all material licenses, permits and authorizations required by
Applicable Law for the ownership and operation of the related Mortgaged
Property as it was then operated;


 


(xv)         the related Mortgage provides that
Insurance Proceeds and condemnation proceeds will be applied for one of the
following purposes: either to restore or repair such Mortgaged Property, or to
repay the principal of such Loan, or otherwise at the option of the holder of
the related Mortgage;


 


(xvi)        such Loan contains provisions for the
acceleration of the payment of the unpaid principal balance of such Loan if,
without obtaining consent of the holder of the promissory note complying with
the requirements of such Loan, the related Mortgaged Property, or any
controlling interest therein, is directly or indirectly transferred or sold,
unless otherwise approved in writing by the Administrative Agent in its sole
discretion;


 


(xvii)       the Assignment of Leases and Rents, if
any, establishes and creates a valid, subsisting and, subject only to Permitted
Liens, enforceable lien and security interest in the related Obligor’s interest
in the material leases pursuant to which any person is entitled to occupy, use
or possess all or any portion of the Mortgaged Property;


 


(xviii)      if such Mortgage is a deed of trust, a
trustee, duly qualified under Applicable Law to serve as such, has been
properly designated and currently so serves, and no fees or expenses are
payable to such trustee by the Originator, the Borrower, the Servicer, the
Purchasers or any transferee thereof, except in connection with a sale after
default by the related Obligor or in connection with any full or partial
release of the related Mortgaged Property or related security for the related
Loan; and


 


(xix)         if such Mortgaged Property is in an
area identified in the Federal Register by the Federal Emergency Management
Agency as having special flood hazards, a flood insurance policy is in effect
with respect to such Mortgaged Property with a generally acceptable carrier in
an amount representing coverage described in the Agreement.


 


(ii) such Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury,
by the related Obligor (including any account debtor or Person obligated to
make payments on such Loan to such Obligor), nor will the operation of any of
the terms of the Underlying Instruments, or the exercise of any right
thereunder, render the Underlying Instruments unenforceable in whole or in
part, or subject to any right of rescission, set-off, counterclaim or defense,
including the defense of usury, and no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto, and the
Underlying Instruments with respect to the Loan provide for an affirmative
waiver by the related Obligor of all rights of rescission, set-off and
counterclaim against the Originator and its assignees;


 


19

















 


(jj) the Borrower has caused, and will cause, to be
performed any and all acts reasonably required to be performed to preserve the
rights and remedies of the Trustee and the Secured Parties in any Insurance
Policies applicable to the Loan including, without limitation, in each case,
any necessary notifications of insurers, assignments of policies or interests
therein, and establishments of co-insured, joint loss payee and mortgagee
rights in favor of the Trustee and the Secured Parties;


 


(kk)            such Loan is not a DIP Loan; and


 


(ll) such Loan has been approved by the
Administrative Agent in its sole discretion (for the avoidance of doubt, the
Loans that comprise the Loan List set forth on Schedule IV as of the
Thirteenth Amendment Effective Date shall be deemed approved).


 


“Eligible Obligor”:  On Measurement Date, any Obligor that:


 


(i)            is a business organization (and not
a natural person) duly organized and validly existing under the laws of its
jurisdiction of organization;


 


(ii)           is a legal operating entity or
holding company;


 


(iii)          has not entered into the Loan
primarily for personal, family or household purposes;


 


(iv)          is not a Governmental Authority;


 


(v)           is not an Affiliate of the Borrower,
the Originator or the Servicer (so long as the Servicer is an Affiliate of or
the Borrower);


 


(vi)          such Obligor’s principal office is
located in the United States, Canada, any Group I Country, any Group II Country
or any Group III Country;


 


(vii)         is not in the nuclear waste,
biotechnology, natural resource exploration or internet industry (other than
Obligors in the business of wholesale purchasing and reselling of natural gas
or electricity, the Loans to which have been appropriately hedged) unless
approved in writing by the Administrative Agent in its sole discretion; and


 


(viii)        is not (and has not been for at least
four years) the subject of an Insolvency Event, and, as of the date on which
such Loan becomes part of the Collateral, such Obligor is not in financial
distress and has not experienced a material adverse change in its condition,
financial or otherwise, as determined by the Servicer, unless approved in
writing by the Administrative Agent (which approval shall not be unreasonably
withheld).


 


“Eligible Repurchase
Obligations”:  Repurchase obligations
with respect to any security that is a direct obligation of, or fully
guaranteed by, the United States or any agency or instrumentality thereof the
obligations of which are backed by the full faith and credit of the 


 


20

















 


United
States, in either case entered into with a depository institution or trust
company (acting as principal) described in clause (iii)(b) of the
definition of Permitted Investments.


 


“Entitlement Holder”:  The meaning specified in Section 8-102(a)(7) of
the UCC.


 


“Environmental Laws”:  Any and all foreign, federal, state and local
laws, statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities, relating to
the protection of human health or the environment, including, but not limited
to, requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of Hazardous Materials.  Environmental Laws include, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous Material
Transportation Act (49 U.S.C. § 331 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. § 6901 et seq.), the Federal Water Pollution
Control Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. §
7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et
seq.), the Safe Drinking Water Act (42 U.S.C. § 300, et seq.), the
Environmental Protection Agency’s regulations relating to underground storage
tanks (40 C.F.R. Parts 280 and 281), and the Occupational Safety and Health Act
(29 U.S.C. § 651 et seq.), and the rules and regulations
thereunder, each as amended or supplemented from time to time.


 


“Environmental Site
Assessment”:  With respect to any
Mortgaged Property, a “Phase I assessment” or “Phase II assessment” conducted
in accordance with ASTM Standard E 1527-97 or any successor thereto published
by the American Society for Testing and Materials Standard.


 


“Equity Security”:  (i) Any equity security or any other
security that is not eligible for purchase by the Borrower as a Loan, (ii) any
security purchased as part of a “unit” with a Loan and that itself is not
eligible for purchase by the Borrower as a Loan, and (iii) any obligation
that, at the time of commitment to acquire such obligation, was eligible for
purchase by the Borrower as a Loan but that, as of any subsequent date of
determination, no longer is eligible for purchase by the Borrower as a Loan,
for so long as such obligation fails to satisfy such requirements.


 


“ERISA”:  The United States Employee Retirement Income
Security Act of 1974, as amended from time to time, and the regulations
promulgated and rulings issued thereunder.


 


“ERISA Affiliate”:  (a) Any corporation that is a member of
the same controlled group of corporations (within the meaning of Section 414(b) of
the Code) as the Borrower, (b) a trade or business (whether or not
incorporated) under common control (within the meaning of Section 414(c) of
the Code) with the Borrower, or (c) a member of the same affiliated
service group (within the meaning of Section 414(m) of the Code) as
the Borrower, any corporation described in clause (a) above or any trade
or business described in clause (b) above.


 


“Euro”:  The lawful currency of Participating Member
States.


 


“Eurocurrency Liabilities”:  Defined in Regulation D of the Board of
Governors of the Federal Reserve System, as in effect from time to time.


 


21

















 


“Eurodollar Disruption
Event”:  The occurrence of any of the
following:  (a) any Liquidity Bank
or any Institutional Purchaser shall have notified the Administrative Agent of
a determination by such Liquidity Bank or any of its assignees or participants
that it would be contrary to law or to the directive of any central bank or
other Governmental Authority (whether or not having the force of law) to obtain
United States dollars in the London interbank market to fund any Advance, (b) any
Liquidity Bank or any Institutional Purchaser shall have notified the
Administrative Agent of the inability, for any reason, of such Liquidity Bank
or any of its assignees or participants or such Institutional Purchaser, as
applicable, to determine the Adjusted Eurodollar Rate, (c) any Liquidity
Bank or any Institutional Purchaser shall have notified the Administrative
Agent of a determination by such Liquidity Bank or any of its assignees or
participants or such Institutional Purchaser, as applicable, that the rate at
which deposits of United States dollars are being offered to such Liquidity
Bank or any of its assignees or participants or such Institutional Purchaser in
the London interbank market does not accurately reflect the cost to such
Liquidity Bank, such assignee or such participant or such Institutional
Purchaser of making, funding or maintaining any Advance or (d) any
Liquidity Bank or any Institutional Purchaser shall have notified the
Administrative Agent of the inability of such Liquidity Bank or any of its
assignees or participants or such Institutional Purchaser, as applicable, to
obtain United States dollars in the London interbank market to make, fund or
maintain any Advance.


 


“Eurodollar Reserve
Percentage”:  For any period, the
percentage, if any, applicable during such period (or, if more than one such
percentage shall be so applicable, the daily average of such percentages for
those days in such period during which any such percentage shall be so
applicable) under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor thereto) for
determining the maximum reserve requirement (including, without limitation, any
basic, emergency, supplemental, marginal or other reserve requirements) with
respect to liabilities or assets consisting of or including Eurocurrency
Liabilities having a term of one month.


 


“Excepted Persons”:  Defined in Section 13.13(a).


 


“Exchange Act”:  The United States Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.


 


“Excluded Amounts”:  (a) Any amount received in the
Concentration Account with respect to any Loan included as part of the
Collateral, which amount is attributable to the payment of any tax, fee or
other charge imposed by any Governmental Authority on such Loan or on any
Related Property and (b) any amount received in the Collection Account or
other Account representing (i) any amount representing a reimbursement of
insurance premiums, (ii) any escrows relating to taxes, insurance and
other amounts in connection with Loans which are held in an escrow account for
the benefit of the Obligor and the secured party pursuant to escrow
arrangements under the Underlying Instruments, (iii) any amount received
in the Collection Account with respect to any Loan retransferred or substituted
for upon the occurrence of a Warranty Event or that is otherwise replaced by a
Substitute Loan, or that is otherwise sold by the Borrower pursuant to Section 2.18,
Section 2.19 or Section 2.20, to the extent such amount
is attributable to a time after the effective date of such replacement or sale
and (iv) any amounts paid in respect of Attached Equity.


 


22

















 


“Facility Amount”:  The lesser of (a) $225,000,000, as such
amount may vary from time to time upon the written agreement of the parties
hereto, and (b) the Advances Outstanding.


 


“FDIC”: The Federal
Deposit Insurance Corporation, and any successor thereto.


 


“Federal Funds Rate”:  For any period, a fluctuating interest per annum rate equal, for each day during
such period, to the weighted average of the overnight federal funds rates as in
Federal Reserve Board Statistical Release H.15(519) or any successor or
substitute publication selected by the Administrative Agent (or, if such day is
not a Business Day, for the next preceding Business Day), or, if for any reason
such rate is not available on any day, the rate determined, in the sole
discretion of the Administrative Agent, to be the rate at which overnight federal
funds are being offered in the national federal funds market at 9:00 a.m.
on such day.


 


“Finance Charges”:  With respect to any Loan, any interest or
finance charges payable by an Obligor pursuant to or with respect to such Loan.


 


“Financial Asset”:  The meaning specified in Section 8-102(a)(9) of
the UCC.


 


“Financial Sponsor”:  Any Person, including any Subsidiary of such
Person, whose principal business activity is acquiring, holding, and selling
investments (including controlling interests) in otherwise unrelated companies
that each are distinct legal entities with separate management, books and
records and bank accounts, whose operations are not integrated with one another
and whose financial condition and creditworthiness are independent of the other
companies so owned by such Person.


 


“First Lien Loan”:  Except as otherwise designated by the
Administrative Agent on the Thirteenth Amendment Effective Date or the
applicable Cut-Off Date and set forth on Schedule IV, any Term Loan that
(i) is secured by a valid and perfected first priority Lien on all of the
Obligor’s assets constituting Related Property for the Loan, subject to such
exceptions that are generally acceptable to lending institutions in connection
with their regular commercial lending activities, and such other exceptions to
which similar Related Property is commonly subject and which do not
individually, or in the aggregate, materially and adversely affect the benefits
of the security intended to be provided by the related Underlying Instruments
and UCC financing statements, (ii) has a Loan-to-Value Ratio not greater
than 60%, and (iii) provides that the payment obligation of the Obligor on
such Loan is either senior to, or pari passu
with, all other Indebtedness of such Obligor.


 


“Fitch”:  Fitch, Inc. or any successor thereto.


 


“Fixed Rate Loan”:  A Loan other than a Floating Rate Loan.


 


“Floating Rate Loan”:  A Loan under which the interest rate payable
by the Obligor thereof is based on the Ares Prime Rate or Ares LIBOR Rate, plus
some specified interest percentage in addition thereto, and which provides that
such interest rate will reset immediately upon any change in the related Ares
Prime Rate or Ares LIBOR Rate.


 


“Funding Date”: With
respect to any Advance prior to the Thirteenth Amendment Effective Date, the
Business Day following the Business Day of receipt by the Administrative


 


23
















 


Agent,
the Trustee and each Purchaser Agent of a Borrowing Notice and other required
deliveries in accordance with Section 2.3.


 


“Funding Request”:  Prior to the Thirteenth Amendment Effective
Date, a Borrowing Notice requesting an Advance and including the items required
by Section 2.3.


 


“GAAP”:  Generally accepted accounting principles as
in effect from time to time in the United States.


 


“Governmental Authority”:  With respect to any Person, any nation or
government, any state or other political subdivision thereof, any central bank
(or similar monetary or regulatory authority) thereof, any body or entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any court or arbitrator having jurisdiction
over such Person.


 


“Group I Country”:  Any of The Netherlands, the United Kingdom,
Australia and New Zealand.


 


“Group II Country”:  Any of Germany, Ireland, Sweden and
Switzerland.


 


“Group III Country”:  Any of Austria, Belgium, Denmark, Finland,
France, Iceland, Liechtenstein, Luxembourg, Norway and Spain.


 


“Guaranteed Obligations”:  Defined in Section 14.1.


 


“Guarantor”:  Defined in Preamble.


 


“Guaranty”:  The guaranty of the Guarantor set forth in Article XIV.


 


“H.15”:  Federal Reserve Statistical Release H.15.


 


“Hazardous Materials”:
All materials subject to any Environmental Law, including, without limitation,
materials listed in 49 C.F.R. § 172.010, materials defined as hazardous
pursuant to § 101(14) of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, flammable, explosive or
radioactive materials, hazardous or toxic wastes or substances, lead-based
materials, petroleum or petroleum distillates or asbestos or material
containing asbestos, polychlorinated biphenyls, radon gas, urea formaldehyde
and any substances classified as being “in inventory”, “usable work in process”
or similar classification that would, if classified as unusable, be included in
the foregoing definition.


 


“Hedge Amount”:  On any day that (a) the Weighted Average
Coupon is less than LIBOR Rate plus 5.0%, the Hedge Amount shall be an
amount as determined by the Administrative Agent in its sole discretion and (b) the
Weighted Average Coupon is greater than or equal to the LIBOR Rate plus
5.0%, the Hedge Amount shall be $0.  The
Hedge Amount for Floating Rate Loans is $0.


 


“Hedge Breakage Costs”:  For any Hedge Transaction, any amount payable
by the Borrower for the early termination of that Hedge Transaction or any
portion thereof.


 


24

















 


“Hedge Collateral”:  Defined in Section 5.3(b).


 


“Hedge Counterparty”:  Means, to the extent of any Hedging Agreement
entered into in connection with this Agreement, (1) Wachovia and (2) any
other entity, to the extent that such other entity (a) on the date of
entering into a Hedging Agreement (i) is an interest rate swap dealer that
has been approved in writing by the Administrative Agent, and (ii) has a
long-term unsecured debt rating of not less than “A” by S&P, not less than “A2”
by Moody’s and not less than “A-” by Fitch (if such entity is rated by Fitch)
(the “Long-term Rating Requirement”) and a short-term unsecured debt
rating of not less than “A-1” by S&P, not less than “P-1” by Moody’s and not
less than “F-1” by Fitch (if such entity is rated by Fitch) (the “Short-term
Rating Requirement”), and (b) in a Hedging Agreement (i) consents
to the assignment of the Borrower’s rights under the Hedging Agreement to the
Trustee on behalf of the Secured Parties pursuant to Section 5.3(b) and
(ii) agrees that in the event that Moody’s, S&P or Fitch reduces its
long-term unsecured debt rating below the Long-term Rating Requirement, or
reduces its short-term unsecured debt rating below the Short-term Rating
Requirement, it shall either collateralize its obligations in a manner
satisfactory to the Administrative Agent or transfer its rights and obligations
under each Hedge Transaction to another entity that meets the requirements of clause
(a) and (b) hereof which has entered into a Hedging
Agreement with the Borrower on or prior to the date of such transfer.


 


“Hedge Notional Amount”:  For any Advance, the aggregate notional
amount in effect on any day under all Hedge Transactions entered into pursuant
to Section 5.3(a) for that Advance.


 


“Hedge Transaction”:  Each interest rate swap transaction, Interest
Rate Cap Transaction, Interest Rate Floor Transaction or other derivative
transaction approved in writing by the Administrative Agent, between the
Borrower and a Hedge Counterparty that is entered into pursuant to Section 5.3(a) and
is governed by a Hedging Agreement.


 


“Hedging Agreement”:  Each agreement between the Borrower and a
Hedge Counterparty that governs one or more Hedge Transactions entered into by
the Borrower and such Hedge Counterparty pursuant to Section 5.3(a),
which agreement shall consist of a “Master Agreement” in a form published by
the International Swaps and Derivatives Association, Inc., together with a
“Schedule” thereto substantially in the form of Exhibit D hereto or
such other form as the Administrative Agent shall approve in writing, and each “Confirmation”
thereunder confirming the specific terms of each such Hedge Transaction; provided that, the “Schedule” to any
Hedging Agreement with respect to any Hedge Counterparty other than Wachovia
shall be subject to the written approval of the Administrative Agent.


 


“Highest Required
Investment Category”:  (i)  With
respect to ratings assigned by Moody’s, “Aa2” or “P-1” for one month instruments,
“Aa2” and “P-1” for three month instruments, “Aa3” and “P-1” for six month
instruments and “Aa2” and “P-1” for instruments with a term in excess of six
months, (ii) with respect to rating assigned by S&P, “A-1” for
short-term instruments and “A” for long-term instruments, and (iii) with
respect to rating assigned by Fitch (if such investment is rated by Fitch), “F-1+”
for short-term instruments and “AAA” for long-term instruments.


 


25

















 


“Increased Costs”:  Any amounts required to be paid by the
Borrower to an Affected Party pursuant to Section 2.15.


 


“Indebtedness”:


 


(i) with respect to any
Obligor under any Loan, for the purposes of the definition of the Interest
Coverage Ratio and the Net Leverage Ratio, the meaning of “Indebtedness” or any
comparable definition in the Underlying Instruments for each such Loan, and in
any case that “Indebtedness” or such comparable definition is not defined in
such Underlying Instruments, without duplication, (a) all obligations of
such entity for borrowed money or with respect to deposits or advances of any
kind, (b) all obligations of such entity evidenced by bonds, debentures,
notes or similar instruments, (c) all obligations of such entity under
conditional sale or other title retention agreements relating to property
acquired by such entity, (d) all obligations of such entity in respect of
the deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business), (e) all indebtedness
of others secured by (or for which the holder of such indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on property
owned or acquired by such entity, whether or not the indebtedness secured thereby
has been assumed, (f) all guarantees by such entity of indebtedness of
others, (g) all Capital Lease Obligations of such entity, (h) all
obligations, contingent or otherwise, of such entity as an account party in
respect of letters of credit and letters of guaranty and (i) all
obligations, contingent or otherwise, of such entity in respect of bankers’
acceptances; and


 


(ii) for all other
purposes, with respect to any Person at any date, (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of property
or services (other than current liabilities incurred in the ordinary course of
business and payable in accordance with customary trade practices) or that is
evidenced by a note, bond, debenture or similar instrument or other evidence of
indebtedness customary for indebtedness of that type, (b) all obligations
of such Person under leases that have been or should be, in accordance with
GAAP, recorded as capital leases, (c) all obligations of such Person in
respect of acceptances issued or created for the account of such Person, (d) all
liabilities secured by any Lien on any property owned by such Person even
though such Person has not assumed or otherwise become liable for the payment
thereof, (e) all indebtedness, obligations or liabilities of that Person
in respect of derivatives, and (f) all obligations under direct or
indirect guaranties in respect of obligations (contingent or otherwise) to
purchase or otherwise acquire, or to otherwise assure a creditor against loss
in respect of, indebtedness or obligations of others of the kind referred to in
clauses (a) through (e) of this clause (ii).


 


“Indemnified Amounts”:  Defined in Section 11.1.


 


“Indemnified Parties”:  Defined in Section 11.1.


 


“Indorsement”:  The meaning specified in Section 8-102(a)(11)
of the UCC, and “Indorsed” has a corresponding meaning.


 


“Initial Advance”:  The first Advance hereunder.


 


26

















 


“Insolvency Event”:  With respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction over such
Person or any substantial part of its property in an involuntary case under any
applicable Insolvency Law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or ordering the
winding-up or liquidation of such Person’s affairs, and such decree or order
shall remain unstayed and in effect for a period of 60 consecutive days, (b) the
commencement by such Person of a voluntary case under any applicable Insolvency
Law now or hereafter in effect, or the consent by such Person to the entry of
an order for relief in an involuntary case under any such law, (c) the
consent by such Person to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or the
making by such Person of any general assignment for the benefit of creditors,
or (d) the failure by such Person generally to pay its debts as such debts
become due, or the taking of action by such Person in furtherance of any of the
foregoing.


 


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


 


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


 


“Institutional Purchaser”:  Each financial institution other than a
Conduit Purchaser which may from time to time become a Purchaser hereunder in
the sole discretion of the Administrative Agent by executing and delivering a
Joinder Supplement to the Administrative Agent and the Borrower.


 


“Instrument”:  The meaning specified in Section 9-102(a)(47)
of the UCC.


 


“Insurance Policy”:  With respect to any Loan, an insurance policy
covering liability and physical damage to, or loss of, the Related Property.


 


“Insurance Proceeds”:  Any amounts received on or with respect to a
Loan under any Insurance Policy or with respect to any condemnation proceeding
or award in lieu of condemnation which is neither required to be used to
restore, improve or repair the related real estate nor required to be paid to
the Obligor under the Underlying Instruments.


 


“Intercreditor Agreement”:  The Concentration Account and Intercreditor
Agreement, dated as of November 3, 2004 among the Servicer, the Trustee,
the Concentration Account Bank, the Administrative Agent and each
securitization agent that from time to time executes a joinder thereto, as
amended, modified, waived, supplemented or restated from time to time.


 


“Interest”:  For each Accrual Period and each Advance
outstanding, the sum of the products (for each day during such Accrual Period)
of:


 


	
   

  	
  IR
  x P x

  	
  1

  
	
   

  	
   

  	
  D

  



 


27

















 


where:


 


	
  IR

  	
   

  	
  =

  	
   

  	
  the
  Interest Rate applicable on such day;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  P

  	
   

  	
  =

  	
   

  	
  the
  principal amount of such Advance on such day; and

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D

  	
   

  	
  =

  	
   

  	
  360
  or, to the extent the Interest Rate is the Base Rate, 365 or 366 days, as
  applicable.

  



 


provided,
however, that (i) no provision of this Agreement shall
require the payment or permit the collection of Interest in excess of the
maximum permitted by Applicable Law and (ii) Interest shall not be
considered paid by any distribution if at any time such distribution is
rescinded or must otherwise be returned for any reason.


 


“Interest Collections”:  Any and all amounts of collections received
with respect to the Collateral other than Principal Collections that are
deposited into the Collection Account, or received by or on behalf of the
Borrower by the Servicer or the Originator in respect of a Loan, including,
without limitation, Insurance Proceeds, whether in the form of cash, checks,
wire transfers, electronic transfers or any other form of cash payment.


 


“Interest Collections
Account”:  Defined in Section 6.4(h).


 


“Interest Coverage Ratio”:
With respect to any Loan for any Relevant Test Period, the meaning of “Interest
Coverage Ratio” or any comparable definition in the Underlying Instruments for
each such Loan, and in any case that “Interest Coverage Ratio” or such
comparable definition is not defined in such Underlying Instruments, the ratio
of (a) EBITDA to (b) Interest Obligations.


 


“Interest Obligations”:
With respect to any period and any Loan, for the Obligor on such Loan and, to
the extent included in the corresponding calculation of EBITDA, any of its
parents or Subsidiaries that are obligated pursuant to the Underlying
Instruments for such Loan (determined on a consolidated basis without
duplication in accordance with GAAP), the meaning of “Interest Obligations” or
any comparable definition in the Underlying Instruments for each such Loan, and
in any case that “Interest Obligations” or such comparable definition is not
defined in such Underlying Instruments, all cash interest in respect of
Indebtedness (including the interest component of any payments in respect of
Capital Lease Obligations) accrued during such period (whether or not actually
paid during such period).


 


“Interest Rate”:  For any Accrual Period and for each Advance
outstanding for each day during such Accrual Period:


 


(i)            to the extent the applicable Conduit
Purchaser funded such Advance through the issuance of commercial paper, a rate
equal to the applicable CP Rate; or


 


(ii)           to the extent the applicable Conduit
Purchaser or Institutional Purchaser did not fund such Advance through the
issuance of commercial paper, a rate equal to the Alternative Rate;


 


28

















 


provided, however, the Interest Rate shall be
the Base Rate for any Accrual Period for any Advance as to which a Conduit
Purchaser has funded the making or maintenance thereof by a sale of an interest
therein to any Liquidity Bank under the applicable Liquidity Agreement on any
day other than the first day of such Accrual Period and without giving such
Liquidity Bank(s) at least two Business Days’ prior notice of such
assignment.


 


“Interest Rate Cap
Transaction” means any Hedge Transaction with respect to which the related
Hedge Counterparty is required to make periodic payments to the Borrower in an
amount equal to the excess, if any, of the applicable floating rate of interest
over a fixed strike rate multiplied by a specified notional amount, provided that the fixed strike rate of any
such transaction shall be no greater than the then current coupon rate of the
applicable Fixed Rate Loan minus 5.5%.


 


“Interest Rate Floor
Transaction” means any Hedge Transaction acceptable to the Administrative
Agent with respect to which the Borrower is required to make periodic payments
to the related Hedge Counterparty in an amount equal to the excess, if any, of
a fixed strike rate over the applicable floating rate of interest multiplied by
a specified notional amount.


 


“Interests in Real
Property”:  A fee simple interest, a
financeable estate for years or a leasehold interest in each case in real
property.


 


“Investment”:  With respect to any Person, any direct or
indirect loan, advance or investment by such Person in any other Person,
whether by means of share purchase, capital contribution, loan or otherwise,
excluding the acquisition of Loans pursuant to the Sale Agreement.


 


“ISDA Definitions”:  The 2000 ISDA Definitions as published by the
International Swaps and Derivatives Association, Inc.


 


“Joinder Supplement”:  An agreement among the Borrower, a Purchaser,
a Purchaser Agent and the Administrative Agent in the form of Exhibit M
to this Agreement (appropriately completed) delivered in connection with a
Person becoming a Purchaser hereunder after the Closing Date.


 


“Large Obligor Coverage
Amount”:  As of any Measurement Date,
an amount equal to the sum of the Outstanding Loan Balances of all Eligible
Loans (excluding Charged-Off Loans and Delinquent Loans) attributable to the
five Obligors having the largest aggregate Outstanding Loan Balance (excluding
Charged-Off Loans and Delinquent Loans) included in the Borrowing Base on such
date.


 


“Last-Out First Lien Loan”:  Except as otherwise designated by the
Administrative Agent on the Thirteenth Amendment Effective Date or the
applicable Cut-Off Date and set forth on Schedule IV, any Term Loan that
(i) is secured by a valid and perfected first priority Lien on all of the
Obligor’s assets constituting Related Property for the Loan, subject to such
exceptions that are generally acceptable to lending institutions in connection
with their regular commercial lending activities, and such other exceptions to
which similar Related Property is commonly subject and which do not
individually, or in the aggregate, materially and adversely affect the benefits
of the security intended to be provided by the related Underlying Instruments
and UCC 


 


29

















 


financing
statements, and (ii) is not by its terms (and is not expressly permitted
by its terms to become) subordinate in right of payment to any other obligation
for borrowed money of the Obligor of such Loan, other than with respect to the
liquidation of such Obligor or such Related Property.


 


“LIBOR Rate”:  For any day during the Accrual Period, with
respect to any Advance (or portion thereof) (a) the rate per annum
appearing on Page 3750 of the Bridge Telerate Service (formerly Dow Jones
Market Service) (or on any successor or substitute page of such service,
or any successor to or substitute for such service, providing rate quotations
comparable to those currently provided on such page of such service, as
determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time for such
day, provided, if such day is not a Business Day, the immediately preceding
Business Day, as the rate for dollar deposits with a one-month maturity; (b) if
for any reason the rate specified in clause (a) of this definition does
not so appear on Page 3750 of the Bridge Telerate Service (or any
successor or substitute page or any such successor to or substitute for
such service), the rate per annum appearing on Reuters Screen LIBOR01 Page (or
any successor or substitute page) as the London interbank offered rate for
deposits in dollars at approximately 11:00 a.m., London time, for such
day, provided, if such day is not a Business Day, the immediately preceding
Business Day, for a one-month maturity; and (c) if the rate specified in
clause (a) of this definition does not so appear on Page 3750 of the
Bridge Telerate Service (or any successor or substitute page or any such
successor to or substitute for such service) and if no rate specified in clause
(b) of this definition so appears on Reuters Screen LIBOR01 Page (or
any successor or substitute page), the interest rate per annum at which dollar
deposits of $5,000,000 and for a one-month maturity are offered by the
principal London office of WBNA in immediately available funds in the London
interbank market at approximately 11:00 a.m., London time, for such day.


 


“Lien”:  Any mortgage, lien, pledge, charge, right,
claim, security interest or encumbrance of any kind of or on any Person’s
assets or properties in favor of any other Person (including any UCC financing
statement or any similar instrument filed against such Person’s assets or
properties).


 


“Lien Release Dividend”:  Defined in Section 2.21(a).


 


“Lien Release Dividend
Date”:  The date specified by the
Borrower, which date may be any Business Day, provided written notice is given
in accordance with Section 2.21(a).


 


“Liquidation Expenses”:  With respect to any Loan, the aggregate
amount of all out-of-pocket expenses reasonably incurred by the Servicer
(including amounts paid to any subservicer) in accordance with the Servicer’s
customary procedures in connection with the repossession, refurbishing and
disposition of any related assets securing such Loan upon or after the
expiration or earlier termination of such Loan, and other out-of-pocket costs
related to the liquidation of any such assets, including the attempted
collection of any amount owing under such Loan if it is a Charged-Off Loan, as
documented by the Servicer and the Originator upon the request of the
Administrative Agent, in writing providing a breakdown of the Liquidation
Expenses for such Loan, along with any supporting documentation therefor.


 


30

















 


“Liquidity Agreement”:  Means any agreement entered into in
connection with this Agreement pursuant to which a Liquidity Bank agrees to
make purchases from or advances to, or purchase assets from, any Conduit
Purchaser in order to provide liquidity support for such Conduit Purchaser’s
Advances hereunder, which in the case of the agreement entered into by Wachovia
for the benefit of VFCC shall have an initial term of 364 days.


 


“Liquidity Bank”:  The Person or Persons who provide liquidity support
to any Conduit Purchaser pursuant to a Liquidity Agreement in connection with
the issuance by such Conduit Purchaser of Commercial Paper Notes.


 


“Loan”:  Any First Lien Loan, Last-Out First Lien
Loan, Second Lien Loan or Subordinated Loan originated or acquired by the
Originator in the ordinary course of its business, which loan includes, without
limitation, (i) the Required Loan Documents and Loan File, and (ii) all
right, title and interest of the Originator in and to the loan and any Related
Property, but excluding, in each case, the Retained Interest, any Attached
Equity and Excluded Amounts and which loan was purchased by the Borrower under
the Sale Agreement and owned by the Borrower on the initial Funding Date (as
set forth on the Loan List delivered on the initial Funding Date) or acquired
by the Borrower after the initial Funding Date pursuant to the delivery of a
Loan Assignment (as defined in the Sale Agreement) and listed on a schedule to
such Loan Assignment.


 


“Loan Checklist”:  The list delivered by or on behalf of the
Borrower to the Trustee that identifies each of the items contained in the
related Loan File which constitute Required Loan Documents.


 


“Loan File”:  With respect to any Loan and the Related
Security, copies of each of the Required Loan Documents and duly executed
originals (to the extent required by the Credit Policy and the Servicing
Standard) and copies of any other Records relating to such Loan and Related
Security.


 


“Loan List”:  The Loan List provided by the Borrower to the
Administrative Agent and the Trustee, in the form of Schedule IV hereto,
as such list may be amended, supplemented or modified from time to time in
accordance with this Agreement.


 


“Loan Register”:  Defined in Section 5.4(n).


 


“Loan-to-Liquidation Value
Ratio” or “LLV”: With respect to any Loan as of any date of
determination, the percentage equivalent of a fraction, (i) the numerator
of which is equal to the maximum availability (as provided in the applicable
Underlying Instruments) of such Loan and (ii) the denominator of which is
equal to the liquidation value of the Related Property securing such Loan that
is subject to a valid and first priority perfected security interest in favor
of the Originator (as determined by the Servicer in accordance with the Credit
Policy and the Servicing Standard).


 


“Loan-to-Value Ratio”
or “LTV”:  With respect to any
Loan, as of any date of determination, the percentage equivalent of a fraction,
(i) the numerator of which is equal to the commitment amount as provided in
the applicable Underlying Instruments of such Loans plus the commitment amount
of any other senior or pari  passu Indebtedness of the related Obligor 


 


31

















 


(including,
in the case of revolving loans and delayed draw loans, the maximum availability
thereof) and (ii) the denominator of which is equal to the enterprise
value of the Related Property securing such Loan (as determined by the
Originator in accordance with the Credit Policy and the Servicing Standard
unless the Administrative Agent in its sole discretion disagrees with such
determination, in which case the decision of the Administrative Agent as to the
enterprise value of the Related Property shall be conclusive and binding on the
parties hereto absent manifest error).


 


“MAI”:  Member of the Appraisal Institute.


 


“Management Agreement”:  The Investment Advisory and Management
Agreement, dated as of September 30, 2004, between Ares Capital
Corporation and Ares Capital Management LLC.


 


“Margin Stock”:  “Margin Stock” as defined under Regulation U.


 


“Material Adverse Effect”:  With respect to any event or circumstance,
means a material adverse effect on (a) the business, condition (financial
or otherwise), operations, performance or properties of the Originator, the
Servicer or the Borrower, (b) the validity, enforceability or
collectability of this Agreement or any other Transaction Document or the
validity, enforceability or collectability of the Loans generally or any
material portion of the Loans, (c) the rights and remedies of the Trustee,
the Administrative Agent, the Purchasers, the Purchaser Agents and the Secured
Parties with respect to matters arising under this Agreement or any other
Transaction Document, (d) the ability of each of the Borrower, the
Servicer, to perform their respective obligations under this Agreement or any
other Transaction Document, or (e) the status, existence, perfection,
priority or enforceability of the Administrative Agent’s, each Purchaser Agent’s,
or the other Secured Parties’ lien on the Collateral.


 


“Material Modification”:  Any amendment or waiver of, or modification
or supplement to, an Underlying Instrument governing a Loan executed or
effected on or after (i) the date on which the Originator originated or
acquired such Loan, in the case of a Loan purchased by the Borrower from the
Originator, or (ii) the date on which the Borrower acquired such Loan, in
the case of a Loan purchased by the Borrower from any Person other than the
Originator, that:


 


(a)           reduces or forgives any or all of the
principal amount due under such Loan;


 


(b)           delays or extends the required or
scheduled amortization in any way that increases the Average Life of such Loan;
provided, however, that the Average Life of such
Loan may be increased by not more than 20% from its Average Life on the related
Cut-Off Date if the Net Leverage Ratio of such Loan is not more than 85% of the
maximum established in the Net Leverage Ratio covenant of such Loan;


 


(c)           waives one or more interest payments,
permits any interest due in cash to be deferred or capitalized and added to the
principal amount of such Loan (other than any deferral or capitalization
already allowed by the terms of the Underlying Instruments of any PIK Loan), or
reduces the spread or coupon with respect to such Loan; provided, however,
that such spread or coupon may be reduced a maximum of one time and by not more
than 20% from the spread 


 


32

















 


or coupon on the related
Cut-Off Date; provided that the
Interest Coverage Ratio of such Loan is greater than 2.0:1 at the time of such
reduction;


 


(d)           contractually or structurally
subordinates such Loan by operation of a priority of payments, turnover
provisions, the transfer of assets in order to limit recourse to the related
Obligor or the granting of Liens (other than Permitted Liens) on any of the
Related Property securing such Loan;


 


(e)           substitutes, alters or releases the
Related Property securing such Loan, and each such substitution, alteration or
release, as determined in the sole reasonable discretion of the Administrative
Agent, materially and adversely affects the value of such Loan;


 


(f)            provides additional funds to the
Obligor of such Loan with the intent of keeping that Loan current; or


 


(g)           amends, waives, forbears, supplements
or otherwise modifies (i) the meaning of “Net Leverage Ratio” or “Interest
Coverage Ratio” or any respective comparable definitions in the Underlying
Instruments for such Loan or (ii) any term or provision of such Underlying
Instruments referenced in or utilized in the calculation of the “Net Leverage
Ratio” or “Interest Coverage Ratio” or any respective comparable definitions
for such Loan, in either case in a manner that, in the sole reasonable judgment
of the Administrative Agent, is materially adverse to the Secured Parties.


 


“Materially Modified Loan”:  Any Loan subject to a Material Modification,
unless otherwise deemed not to constitute a Materially Modified Loan by the
Administrative Agent in its sole discretion.


 


“Material Mortgage Loan”:  Any Loan for which the underlying Related
Property consisting of real property owned by the Obligor (i) represents
25% or more (measured by the book value of the three most valuable parcels of
real property as of the date of such Loan) of (a) the original commitment
for such Loan or (b) the fair value of the underlying Obligor and the
Related Property as a whole and (ii) is material to the operations of the
related business; provided, however,
that parcels of real property which the Obligor is in the process of disposing
shall not be considered in determining whether a Loan is a Material Mortgage
Loan.


 


“Maximum Availability”:  At any time, an amount equal to the least of:
(i) the Facility Amount; (ii)(A) the product of the Borrowing Base
and the Weighted Average Advance Rate plus (B) the amount on
deposit in the Principal Collections Account received in reduction of the
Outstanding Loan Balance of any Loan; and (iii)(A) the Borrowing Base minus
(B) the Large Obligor Coverage Amount plus (C) the amount on
deposit in the Principal Collections Account received in reduction of the
Outstanding Loan Balance of any Loan.


 


“Measurement Date”:  Each of the following:  (i) the Closing Date; (ii) each
Determination Date; (iii) each Reporting Date, (iv) each Cut-Off
Date, (v) the date of any Borrowing Notice or any Repayment Notice; (vi) the
date on which an Assigned Value for any Eligible Loan is changed; (vii) any
Optional Sale Date; (viii) the date as of which any Loan becomes a
Delinquent Loan or a Charged-Off Loan; (ix) any Discretionary Sale Date; (x) any


 


33
















 


Defaulted
Loan Sale Date; and (xi) any other date that the Administrative Agent
reasonably requests.


 


“Moody’s”:  Moody’s Investors Service, Inc., and any
successor thereto.


 


“Mortgage”:  The mortgage, deed of trust or other
instrument creating a first or second Lien on an Interest in Real Property
securing a Loan subject to this Agreement, including the Assignment of Leases
and Rents related thereto.


 


“Mortgaged Property”:  The underlying Interests in Real Property
which are subject to the Lien of a Mortgage that secures a Loan, consisting of
Interests in Real Property in a parcel or parcels of land, at least one of
which parcels is improved by a commercial building or facility, together with
Interests in Real Property in such commercial building or facility and any
personal property, fixtures, leases and other property or rights pertaining to
such land, commercial building or facility which are subject to the related
Mortgage.


 


“Multiemployer Plan”:  A “multiemployer plan” as defined in Section 4001(a)(3) of
ERISA that is or was at any time during the current year or the preceding five
years contributed to by the Borrower or any ERISA Affiliate on behalf of its
employees.


 


“NAICS Codes”:  The North American Industry Classification
System codes by four digits.


 


“Net Leverage Ratio”:
With respect to any Loan for any Relevant Test Period, the meaning of “Net
Leverage Ratio” or any comparable definition in the Underlying Instruments for
each such Loan, and in any case that “Net Leverage Ratio” or such comparable
definition is not defined in such Underlying Instruments, the ratio of (a) Indebtedness
minus Unrestricted Cash to (b) EBITDA.


 


“Nonrecoverable Advance”:  Any Servicer Advance which, if made by the
Servicer in respect of a Loan, in the reasonable good faith judgment of the
Servicer would not be ultimately recoverable by the Servicer from the net
proceeds and collections received solely with respect to such Loan, and/or the
Related Property, including any escrowed amounts.


 


“Noteless Loan”: A
Loan with respect to which the Underlying Instruments (i) do not require
the Obligor to execute and deliver a promissory note to evidence the
indebtedness created under such Loan or (ii) require any holder of the
indebtedness created under such Loan to affirmatively request a promissory note
from the related Obligor.


 


“Obligor”:  With respect to any Loan, any Person or
Persons obligated to make payments pursuant to or with respect to such Loan,
including any guarantor thereof.


 


“Officer’s Certificate”:  A certificate signed by a Responsible Officer
of the Borrower or the Servicer, as the case may be, and delivered to the
Trustee.


 


“Opinion of Counsel”:  A written opinion of counsel, which opinion
and counsel are acceptable to the Administrative Agent in its sole discretion.


 


34

















 


“Optional Sale”:  Defined in Section 2.19(a).


 


“Optional Sale Date”:  Any Business Day, provided 45 days’ prior
written notice is given in accordance with Section 2.19(a).


 


“Originator”:  Defined in the Preamble of this
Agreement.


 


“Other Costs”:  Defined in Section 13.9(c).


 


“Other Parties”:  Defined in Section 14.7(c).


 


“Outstanding Loan Balance”:  As of any Measurement Date, with respect to
any Loan, the lesser of (a) the Assigned Value of such Loan as of the end
of the most recent date of determination and (b) the outstanding principal
balance of such Loan (exclusive of any interest and Accreted Interest).  The Outstanding Loan Balance of (x) any
Prepaid Loan which has been prepaid in full or (y) any Equity Security
shall equal $0.  For the avoidance of
doubt, any principal amount previously covered by a Servicer Advance will be
excluded from the principal amounts outstanding for purposes of this
definition.


 


“Participating
Member States”:  Means any member
state of the European Community that adopts or has adopted the Euro as its
lawful currency in accordance with legislation of the European Community
relating to Economic and Monetary Union.


 


“Participation”:  A participation interest in all or a portion
of a loan.


 


“Payment Date”:  The 15th day of each April, July, October and
January or, if such day is not a Business Day, the next succeeding
Business Day, commencing in January, 2005.


 


“Payment Duties”:  Defined in Section 8.2(b).


 


“Pension Plans”:  Defined in Section 4.3(p).


 


“Permitted Investments”:  Means negotiable instruments or securities or
other investments that (i) except in the case of demand or time deposits,
investments in money market funds and Eligible Repurchase Obligations, are represented
by instruments in bearer or registered form or ownership of which is
represented by book entries by a Clearing Agency or by a Federal Reserve Bank
in favor of depository institutions eligible to have an account with such
Federal Reserve Bank who hold such investments on behalf of their customers, (ii) as
of any date of determination, mature by their terms on or prior to the Business
Day preceding the next Payment Date, and (iii) evidence:


 


(a)           direct obligations of, and
obligations fully guaranteed as to full and timely payment by, the United
States (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States);


 


(b)           demand deposits, time deposits or
certificates of deposit of depository institutions or trust companies
incorporated under the laws of the United States or any state thereof and
subject to supervision and examination by federal or state banking or
depository 


 


35

















 


institution authorities; provided, however, that at the time of the
Borrower’s investment or contractual commitment to invest therein, the
commercial paper, if any, and short-term unsecured debt obligations (other than
such obligation whose rating is based on the credit of a Person other than such
institution or trust company) of such depository institution or trust company
shall have a credit rating from Fitch and each Rating Agency in the Highest
Required Investment Category granted by Fitch and such Rating Agency;


 


(c)           commercial paper, or other short term
obligations, having, at the time of the Borrower’s investment or contractual
commitment to invest therein, a rating in the Highest Required Investment
Category granted by each Rating Agency and Fitch;


 


(d)           demand deposits, time deposits or
certificates of deposit that are fully insured by the FDIC and either have a
rating on their certificates of deposit or short-term deposits from Moody’s and
S&P of “P-1” and “A-1”, respectively, and if rated by Fitch, from Fitch of “F-1+”;


 


(e)           notes that are payable on demand or
bankers’ acceptances issued by any depository institution or trust company
referred to in clause (b) above;


 


(f)            investments in taxable money market
funds or other regulated investment companies having, at the time of the
Borrower’s investment or contractual commitment to invest therein, a rating of
the Highest Required Investment Category from each Rating Agency and Fitch (if
rated by Fitch);


 


(g)           time deposits (having maturities of
not more than 90 days) by an entity the commercial paper of which has, at the
time of the Borrower’s investment or contractual commitment to invest therein,
a rating of the Highest Required Investment Category granted by each Rating
Agency and Fitch; or


 


(h)           Eligible Repurchase Obligations with
a rating acceptable to the Rating Agencies and Fitch, which in the case of
S&P, shall be “A-1” and in the case of Fitch shall be “F-1+”.


 


The Trustee may pursuant to
the direction of the Servicer or the Administrative Agent, as applicable,
purchase or sell to itself or an Affiliate, as principal or agent, the
Permitted Investments described above.


 


“Permitted Liens”:  Any of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced (a) Liens for state, municipal or other local taxes if such
taxes shall not at the time be due and payable or if a Person shall currently
be contesting the validity thereof in good faith by appropriate proceedings and
with respect to which reserves in accordance with GAAP have been provided on
the books of such Person, (b) Liens imposed by law, such as materialmen’s,
warehousemen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens and
other similar Liens, arising by operation of law in the ordinary course of
business for sums that are not overdue or are being contested in good faith, (c) Liens
granted pursuant to or by the Transaction Documents and (d) with respect
to any Subordinated Loan, Liens in favor of senior lenders with respect to the
related Obligor, its property and assets.


 


36

















 


“Permitted Refinancing”:  Any refinancing transaction undertaken by the
Originator, the Borrower or an Affiliate of the Originator that is secured,
directly or indirectly, by any Loan currently or formerly included in the
Collateral or any portion thereof or any interest therein released from the
Lien of this Agreement.


 


“Permitted Securitization”:  Any private or public term or conduit
securitization transaction (a) undertaken by the Originator, the Borrower
or an Affiliate of the Originator, that is secured, directly or indirectly, by
any Loan currently or formerly included in the Collateral or any portion
thereof or any interest therein released from the Lien of this Agreement,
including, without limitation, any collateralized loan obligation or
collateralized debt obligation offering or other asset securitization and (b) in
the case of a term securitization in which the Originator or an Affiliate
thereof or underwriter or placement agent has agreed to purchase or place 100%
of the equity and non-investment grade tranches of notes issued in such term
securitization transaction.  For the
avoidance of doubt, notwithstanding any agreement by the Originator or an
Affiliate to purchase or place 100% of the equity in such term securitization
transaction, any such party agreeing to so purchase or place may designate
other Persons as purchasers of such equity provided such party or parties
remain primarily liable therefor if such designees fail to purchase or place in
connection with the closing date of such term securitization and/or, after the
closing of such term securitization, may transfer equity it purchases at the
closing thereof.


 


“Person”:  An individual, partnership, corporation,
limited liability company, joint stock company, trust (including a statutory or
business trust), unincorporated association, sole proprietorship, joint
venture, government (or any agency or political subdivision thereof) or other
entity.


 


“PIK Loan”:  A
Loan which provides for a portion of the interest that accrues thereon to be
added to the principal amount of such Loan for some period of the time prior to
such Loan requiring the current cash payment of such previously capitalized
interest, which cash payment shall be treated as an Interest Collection at the
time it is received.


 


“Pledge Date”:  With respect to any additional Eligible Loan
pledged pursuant to Section 2.6(a), the Business Day following the
Business Day of receipt by the Administrative Agent, the Trustee and each
Purchaser Agent of a Repayment Notice and other required deliveries in
accordance with Section 2.6(b).


 


“Prepaid Loan”:  Any Loan (other than a Charged-Off Loan) that
has been terminated or has been prepaid in full or in part prior to its
scheduled expiration date.


 


“Prepayment Amount”:  Defined in Section 6.4(b).


 


“Prepayments”:  Any and all partial or full prepayments on or
with respect to a Loan (including, with respect to any Loan and any Collection
Period, any Scheduled Payment, Finance Charge or portion thereof that is due in
a subsequent Collection Period that the Servicer has received, and pursuant to
the terms of Section 6.4(b) expressly permitted the related
Obligor to make, in advance of its scheduled due date, and that will satisfy
such Scheduled Payment on such due date).


 


37

















 


“Priced Loan”:  Any Loan that has an observable quote from
LoanX Mark-It Partners or Loan Pricing Corporation, or from another pricing
service selected by the Administrative Agent in its sole discretion.


 


“Prime Rate”:  The rate announced by Wachovia from time to
time as its prime rate in the United States, such rate to change as and when
such designated rate changes.  The Prime
Rate is not intended to be the lowest rate of interest charged by Wachovia or
any other specified financial institution in connection with extensions of
credit to debtors.


 


“Principal Collections”:  Any and all amounts of Collections received
in respect of any principal due and payable under the Loans, from or on behalf
of Obligors that are deposited into the Collection Account (including, without
limitation, the principal portion of any Scheduled Payment or of any repurchase
amount paid by the Originator to repurchase a Loan pursuant to Section 6.1
of the Sale Agreement), or received by or on behalf of the Borrower by the
Servicer or the Originator in respect of a Loan and all Recoveries, whether in
the form of cash, checks, wire transfers, electronic transfers or any other
form of cash payment.


 


“Principal Collections
Account”:  Defined in Section 6.4(h).


 


“Proceeds”:  With respect to any Collateral, all property
that is receivable or received when such Collateral is collected, sold,
liquidated, foreclosed, exchanged, or otherwise disposed of, whether such
disposition is voluntary or involuntary, and includes all rights to payment
with respect to any insurance relating to such Collateral.


 


“Program Fee”:  With respect to any Purchaser, the “program
fee” set forth in the applicable Purchaser Fee Letter.


 


“Pro Rata Share”:  With respect to a Purchaser, the percentage
set forth next to such Lender’s name on Annex B hereto, which schedule
may be updated by the Administrative Agent (with notice to the Borrower) from
time to time.


 


“Purchaser”:  Any Conduit Purchaser or Institutional
Purchaser.


 


“Purchaser Agent”:  With respect to (i) VFCC, the VFCC
Agent, (ii) each Conduit Purchaser which may from time to time become
party hereto, the Person designated as the “Purchaser Agent” with respect to
such Purchaser in the applicable Joinder Supplement (iii) each
Institutional Purchaser which may from time to time become a party hereto, each
shall be deemed to be its own Purchaser Agent.


 


“Purchaser Agent’s
Account”:  With respect to (i) VFCC,
a special account (number 2000002391825) at Wachovia and (ii) each
Purchaser which may become a party hereto after the Closing Date, a special
account having the account number and located at the financial institution
specified in the applicable Joinder Supplement.


 


“Purchaser Fee Letter”:  Each fee letter agreement that shall be
entered into by and among the Borrower, the Servicer, the applicable Purchaser
and its related Purchaser Agent in connection with the transactions
contemplated by this Agreement, as amended, modified, waived, supplemented,
restated or replaced from time to time.


 


38

















 


“Qualified Institutional
Buyer”: The meaning given in Rule 144A.


 


“Qualified Institution”:  A depository institution or trust company
acceptable to the Administrative Agent and a depository institution organized
under the laws of the United States of America or any one of the States thereof
or the District of Columbia (or any domestic branch of a foreign bank), (i)(a) that
has either (1) a long-term unsecured debt rating of “A” or better by
S&P, “A2” or better by Moody’s and “A” or better by Fitch, if rated by
Fitch, or (2) a short-term unsecured debt rating or certificate of deposit
rating of “A-1” or better by S&P, “P-1” or better by Moody’s or “A-1” or
better by Fitch, if rated by Fitch, (b) the parent corporation of which
has either (1) a long-term unsecured debt rating of “A” or better by
S&P, “A2” or better by Moody’s and “A” or better by Fitch, if rated by
Fitch, or (2) a short-term unsecured debt rating or certificate of deposit
rating of “A-1” or better by S&P, “P-1” or better by Moody’s and “A-1” or
better by Fitch, if rated by Fitch, or (c) is otherwise acceptable to the
Administrative Agent and (ii) the deposits of which are insured by the
Federal Deposit Insurance Corporation.


 


“Rating Agency”:  Each of S&P, Moody’s, Fitch and any other
rating agency that has been requested to issue a rating with respect to the
commercial paper notes issued by any Conduit Purchaser.


 


“Records”:  All documents relating to the Loans,
including books, records and other information executed in connection with the
origination or acquisition of the Collateral or maintained with respect to the
Collateral and the related Obligors that the Borrower, the Originator or the
Servicer have generated, in which the Borrower, the Originator or the Servicer
have acquired an interest pursuant to the Sale Agreement or in which the
Borrower, the Originator or the Servicer have otherwise obtained an interest.


 


“Recoveries”:  As of the time any Related Property with
respect to any Charged-Off Loan is sold, discarded or abandoned (after a
determination by the Servicer that such Related Property has little or no
remaining value) or otherwise determined to be fully liquidated by the Servicer
in accordance with the Credit Policy and the Servicing Standard, the proceeds
from the sale of the Related Property, the proceeds of any related Insurance
Policy, any other recoveries with respect to such Charged-Off Loan, the Related
Property, and amounts representing late fees and penalties, net of Liquidation
Expenses and amounts, if any, received that are required under such Charged-Off
Loan to be refunded to the related Obligor.


 


“Registered”: With
respect to any debt obligation, a debt obligation that was issued after July 18,
1984 and that is in registered form for purposes of the Code.


 


“Regulation U”:  Regulation U of the Board of Governors of the
Federal Reserve System, 12 C.F.R. §221, or any successor regulation.


 


“Related Property”:  With respect to a Loan, any property or other
assets designated and pledged or mortgaged as collateral to secure repayment of
such Loan, including, without limitation, Mortgaged Property and/or a pledge of
the stock, membership or other ownership interests in the related Obligor and
all Proceeds from any sale or other disposition of such property or other
assets.


 


39

















 


“Related Security”:  As used in (1) the Sale Agreement, all
of the Originator’s right, title and interest in and to the items set forth in
clauses (a) through (d) and (i) hereof, and (2) this
Agreement, all of the Borrower’s right, title and interest in and to:


 


(a)           any Related Property securing a Loan and all Recoveries
related thereto, all payments paid in respect thereof and all monies due, to
become due and paid in respect thereof accruing after the applicable Cut-Off
Date and all liquidation proceeds;


 


(b)           all Required Loan Documents, Loan Files related to any
Loan, any Records, and the documents, agreements, and instruments included in
the Loan File or Records;


 


(c)           all Insurance Policies with respect to any Loan;


 


(d)           all Liens, guaranties, indemnities, warranties, letters of
credit, accounts, bank accounts and property subject thereto from time to time
purporting to secure or support payment of any Loan, together with all UCC
financing statements, mortgages or similar filings signed or authorized by an
Obligor relating thereto;


 


(e)           the Accounts and the Concentration Account, to the extent
amounts on deposit therein or credited thereto relate to the Collateral,
together with all cash and investments in each of the foregoing other than
amounts earned on investments therein (excluding any Excluded Amounts that may
be on deposit therein);


 


(f)            any Hedging Agreement and all payments from time to time
due thereunder;


 


(g)           the Sale Agreement (including, without limitation, rights
of recovery of the Borrower against the Originator) and the assignment to the
Trustee, for the benefit of the Secured Parties, of all UCC financing
statements filed by the Borrower against the Originator under or in connection
with the Sale Agreement;


 


(h)           the Sale Agreement and the assignment to the Trustee of
all UCC financing statements filed by the Borrower against the Originator under
or in connection with the Sale Agreement;


 


(i)            all records (including computer records) with respect to
the foregoing; and


 


(j)            all collections, income, payments, proceeds and other
benefits of each of the foregoing.


 


“Relevant Test Period”:
With respect to any Loan, the relevant test period for the calculation of Net
Leverage Ratio or Interest Coverage Ratio, as applicable, for such Loan in the
Underlying Instruments or, if no such period is provided for therein, for
Obligors delivering monthly financing statements, each period of the last
twelve consecutive reported calendar months, and for Obligors delivering
quarterly financing statements, each period of the last four consecutive
reported fiscal quarters of the principal Obligor on such Loan; provided, however,
that with respect to any Loan for which the relevant test period is not
provided for in the Underlying Instruments, if an Obligor is a newly-formed
entity as to which twelve consecutive calendar months have not yet elapsed, “Relevant
Test Period” shall initially include the period 


 


40

















 


from
the date of formation of such Obligor to the end of the twelfth calendar month
or fourth fiscal quarter (as the case may be) from the date of formation, and
shall subsequently include each period of the last twelve consecutive reported
calendar months or four consecutive reported fiscal quarters (as the case may
be) of such Obligor.


 


“Repayment Notice”:  Each written notice required to be delivered
by the Borrower in respect of (a) any repayment of Advances or any pledge
of additional Eligible Loans, in each case to pay any Required Advance
Reduction Amount pursuant to Section 2.6(b), in the form of Exhibit A-2,
or (b) any reduction of the Advances Outstanding pursuant to Section 2.4(b),
in the form of Exhibit A-2.


 


“Replaced Loan”:  Defined in Section 2.18(a)(i).


 


“Reporting Date”:  The date that is two Business Days prior to
the 15th of each calendar month (unless in such month a
Payment Date occurs, in which case two Business Days prior to such Payment
Date), commencing December 13, 2004.


 


“Required Advance
Reduction Amount”:  As of any
Measurement Date, an amount equal to the positive difference, if any, of (a) Advances
Outstanding on such day over (b) the Maximum Availability on such
day.


 


“Required Loan Documents”:  For each Loan, originals (except as otherwise
indicated) of the following documents or instruments:


 


(a)           (i) other than in the case of a
Noteless Loan, the original or, if accompanied by a “lost note” affidavit and
indemnity, a copy of, the underlying promissory note, endorsed by the Borrower
or the prior holder of record either in blank or to the Trustee (and evidencing
an unbroken chain of endorsements from each prior holder thereof evidenced in
the chain of endorsements to the Trustee), with any endorsement to the Trustee
to be in the following form: “U.S. Bank National Association, as Trustee for
the Secured Parties”, and (ii) in the case of a Noteless Loan, (x) a
copy of each transfer document or instrument relating to such Noteless Loan
evidencing the assignment of such Noteless Loan to the Originator, from the
Originator to the Borrower and from the Borrower either to the Trustee or in
blank, and (y) a copy of the Loan Register with respect to such Noteless
Loan;


 


(b)           originals or copies of each of the
following, to the extent applicable to the related Loan: any related loan
agreement, credit agreement, note purchase agreement, security agreement (if
separate from any Mortgage), sale and servicing agreement, acquisition
agreement, subordination agreement, intercreditor agreement or similar
instruments, guarantee, Insurance Policy, assumption or substitution agreement
or similar material operative document, in each case together with any
amendment or modification thereto, as set forth on the Loan Checklist;


 


(c)           if any Loan is secured by a Mortgage:


 


(i)            either (i) the original
Mortgage, the original Assignment of Leases and Rents, if any, and the
originals of all intervening assignments, if any, of the Mortgage and
Assignments of Leases and Rents with evidence of recording thereon, 


 


41

















 


(ii) copies thereof
certified by the Servicer, by Closing Counsel or by a title company or escrow
company to be true and complete copies thereof where the originals have been
transmitted for recording until such time as the originals are returned by the
public recording office or (iii) copies certified by the public recording
offices where such documents were recorded to be true and complete copies
thereof in those instances where the public recording offices retain the
original or where the original recorded documents are lost; and


 


(ii)           an Assignment of Mortgage and of any
other material recorded security documents (including any Assignment of Leases
and Rents) in recordable form, executed by the Borrower or the prior holder of
record, in blank or to the Trustee (and evidencing an unbroken chain of
assignments from the prior holder of record to the Trustee), with any
assignment to the Trustee to be in the following form: “U.S. Bank National
Association, as Trustee for the Secured Parties”;


 


(d)           with respect to any Loan originated
by the Originator and with respect to which the Originator acts as
administrative agent (or in a comparable capacity), either (i) copies of
the UCC-1 Financing Statements, if any, and any related continuation
statements, each showing the Obligor as debtor and the Trustee as total
assignee or showing the Obligor, as debtor and the Originator as secured party
and each with evidence of filing thereon, or (ii) copies of any such
financing statements certified by the Servicer to be true and complete copies
thereof in instances where the original financing statements have been sent to
the appropriate public filing office for filing.


 


“Required Purchasers”:  The Conduit Purchasers and/or Institutional
Purchasers representing an aggregate of more than 66.67% of the aggregate
Commitments of the Conduit Purchasers and the Institutional Purchasers then in
effect; provided, however, that
for the purposes of determining the Required Purchasers, in the event that an
Institutional Purchaser or a Conduit Purchaser (or its related Liquidity Bank
on its behalf) fails to provide funding for an Advance hereunder for which all
conditions precedent have been satisfied, such Institutional Purchaser or
Conduit Purchaser, as applicable, shall not constitute a Required Purchaser
hereunder (and the Commitment of such Institutional Purchaser or Conduit
Purchaser, as applicable, shall be disregarded for purposes of determining
whether the consent of the Required Purchasers has been obtained).


 


“Required Reports”:  Collectively, the Servicing Report required
pursuant to Section 6.10(b), the Servicer’s Certificate required
pursuant to Section 6.10(c), the financial statements of the
Servicer required pursuant to Section 6.10(d), the tax returns of
the Borrower and the Servicer required pursuant to Section 6.10(e),
the financial statements and valuation reports of each Obligor required
pursuant to Section 6.10(f), the annual statements as to compliance
required pursuant to Section 6.11, and the annual independent
public accountant’s report required pursuant to Section 6.12.


 


“Responsible Officer”:  With respect to any Person, any duly
authorized officer of such Person with direct responsibility for the
administration of this Agreement and also, with respect to a particular matter,
any other duly authorized officer of such Person to whom such matter is referred
because of such officer’s knowledge of and familiarity with the particular
subject.


 


42

















 


“Restricted Junior
Payment”:  (i) Any dividend or
other distribution, direct or indirect, on account of any class of membership
interests of the Borrower now or hereafter outstanding, except a dividend paid
solely in interests of that class of membership interests or in any junior
class of membership interests of the Borrower; (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any class of membership interests of the Borrower
now or hereafter outstanding, (iii) any payment made to redeem, purchase,
repurchase or retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire membership interests of the Borrower now or
hereafter outstanding, and (iv) any payment of management fees by the
Borrower (except for reasonable management fees to the Originator or its
Affiliates in reimbursement of actual management services performed).  For the avoidance of doubt, (x) payments
and reimbursements due to the Servicer in accordance with this Agreement or any
other Transaction Document do not constitute Restricted Junior Payments, and (y) distributions
by the Borrower to holders of its membership interests of Loans or of cash or
other proceeds relating thereto which have been repurchased or substituted by
the Borrower in accordance with this Agreement shall not constitute Restricted
Junior Payments.


 


“Retained Interest”:  With respect to any Agented Note that is
transferred by the Originator to the Borrower and by the Borrower to the
Purchasers, (i) all of the obligations, if any, of the agent(s) under
the documentation evidencing such Agented Note and (ii) the applicable
portion of the interests, rights and obligations under the documentation
evidencing such Agented Note that relate to such portion(s) of the
indebtedness that is owned by another lender.


 


“Retransfer Date”:  Defined in Section 2.18(b).


 


“Retransfer Price”:  Defined in Section 2.18(b).


 


“Review Criteria”:  Defined in Section 8.2(b).


 


“Rule 144A”:  Rule 144A under the Securities Act.


 


“S&P”:  Standard & Poor’s Ratings Services,
a division of The McGraw-Hill Companies, Inc., and any successor thereto.


 


“S&P Rating”:  With respect to any Loan, as of any date of
determination, if such Loan is rated by S&P, such S&P rating.


 


“Sale Agreement”:  The Purchase and Sale Agreement, dated as of
the date hereof, between the Originator and the Borrower, as amended, modified,
waived, supplemented, restated or replaced from time to time.


 


“Scheduled Payment”:  Each scheduled payment of principal and/or
interest required to be made by an Obligor on the related Loan, as adjusted
pursuant to the terms of the related Required Loan Documents.


 


“Second Lien Loan”:  Except as otherwise designated by the
Administrative Agent on the Thirteenth Amendment Effective Date or the
applicable Cut-Off Date and set forth on Schedule


 


43
















 


IV, any Term Loan
that (i) is secured by a valid and perfected second priority security
interest on all of the Obligor’s assets constituting Related Property for the
Loan (whether or not there is also a security interest of a higher or lower
priority in additional collateral), (ii) with respect to priority of
payment obligations is pari passu
with the indebtedness of the holder with the first priority security interest
except after an event of default thereunder, (iii) pursuant to an
intercreditor agreement between the Borrower and the holder of such first
priority security interest, the amount of the indebtedness covered by such
first priority security interest is limited (in terms of aggregate dollar
amount or percent of outstanding principal or both), and (iv) has a
Loan-to-Value Ratio of not greater than 70%.


 


“Secured Party”:  (i) Each Purchaser, (ii) the
Administrative Agent and each Purchaser Agent, (iii) Wachovia Bank,
National Association, to the extent any payments are owed thereto in connection
with the Borrower Guaranty, and (iv) each Hedge Counterparty that at the
time of entering into a Hedging Agreement is either a Purchaser or an Affiliate
of the VFCC Agent if that Affiliate is a Hedge Counterparty that executes a
counterpart of this Agreement agreeing to be bound by the terms of this
Agreement applicable to a Secured Party.


 


“Securities Account”:  The meaning specified in Section 8-501
of the UCC.


 


“Securities Account
Control Agreement”:  The Securities
Account Control Agreement, dated as of the date hereof, among Ares Capital
Corporation, as the debtor, the Servicer, U.S. Bank, as the Trustee and as the
Securities Intermediary, as the same may be amended, modified, waived,
supplemented or restated from time to time.


 


“Securities Act”:  The U.S. Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.


 


“Securities and Exchange
Commission”:  The U.S. Securities and
Exchange Commission.


 


“Securities Intermediary”:  (i) A Clearing Corporation; or (ii) a
Person, including a bank or broker, that in the ordinary course of its business
maintains Securities Accounts for others and is acting in that capacity.


 


“Security”:  The meaning specified in Section 9-102(a)(15)
of the UCC.


 


“Security Certificate”:  The meaning specified in Section 8-102(a)(16)
of the UCC.


 


“Security Entitlement”:  The meaning specified in Section 8-102(a)(17)
of the UCC.


 


“Servicer”: Ares
Capital Corporation and each successor appointed as Successor Servicer pursuant
to Section 6.16(a).


 


“Servicer Advance”:  An advance of Scheduled Payments made by the
Servicer with respect to a Loan pursuant to Section 6.5.


 


“Servicer Default”:  Defined in Section 6.15.


 


44

















 


“Servicer Termination
Notice”:  Defined in Section 6.15.


 


“Servicer’s Certificate”:  Defined in Section 6.10(c).


 


“Servicing Fee”:  The fee payable to the Servicer on each
Payment Date in arrears in respect of each Collection Period, which fee shall
be equal to the product of (i) 0.50% (or, if the Backup Servicer is the
successor Servicer, 1.00%), (ii) the numerical mean of the Aggregate
Outstanding Loan Balance on the first day and on the last day of the related
Collection Period and (iii) the actual number of days in such Collection
Period divided by 360.


 


“Servicing File”:  For each Loan, the following documents or
instruments:


 


(a)           copies of each of the Required Loan Documents;


 


(b)           with respect to any Material Mortgage Loan:


 


(i)       the original or a copy of the lender’s
title insurance policy or a written commitment to issue such title insurance
policy issued on or about the date of the origination of such Loan, together
with all endorsements or riders (or copies thereof) that were issued with or
subsequent to the issuance of such policy or commitment, or, with respect to
each Loan not covered by a lender’s title insurance policy to the extent
customary in the applicable jurisdiction, an attorney’s opinion of title given
by an attorney licensed to practice law in the jurisdiction where the related
Mortgaged Property is located, or, if such policy or commitment has not been
issued and if the related Loan was funded through a title insurance company or
other comparable closing agent pursuant to escrow instructions or lender’s
closing instructions precluding the title insurance company or such agent from
funding until the title insurance company is prepared to issue the required
title insurance coverage, a copy of such escrow instructions or lender’s
closing instructions;


 


(ii)           the originals or copies of any
environmental indemnity agreement;


 


(iii)          each Appraisal of the related
Mortgaged Property;


 


(iv)          any Environmental Site Assessment in
the possession of the Servicer relating to the related Mortgaged Property;


 


(c)           any other portion of the Loan File which is not part of
the Required Loan Documents.


 


“Servicing Report”:  Defined in Section 6.10(b).


 


“Servicing Standard”:  Shall mean, with respect to any Loans
included in the Collateral, to service and administer such Loans on behalf of
the Secured Parties in accordance with Applicable Law, the terms of this
Agreement, the Underlying Instruments, all customary and usual servicing
practices for loans like the Loans and, to the extent consistent with the
foregoing, (a)(i) if the Servicer is the Originator or an Affiliate
thereof, the higher of: (A) the customary and 


 


45

















 


usual
servicing practices that a prudent loan investor or lender would use in
servicing loans like the Loans for its own account, and (B) the same care,
skill, prudence and diligence with which the Servicer services and administers
loans for its own account or for the account of others, and (ii) if the
Servicer is not the Originator or an Affiliate thereof, the same care, skill,
prudence and diligence with which the Servicer services and administers loans
for its own account or for the account of others; (b) with a view to
maximize the value of the Loans; and (c) without regard to: (i) any
relationship that the Servicer or any Affiliate of the Servicer may have with
any Obligor or any Affiliate of any Obligor, (ii) the Servicer’s
obligations to incur servicing and administrative expenses with respect to a
Loan, (iii) the Servicer’s right to receive compensation for its services
hereunder or with respect to any particular transaction, (iv) the
ownership by the Servicer or any Affiliate thereof of any Loans, (v) the
ownership, servicing or management for others by the Servicer of any other
loans or property by the Servicer or (vi) any relationship that the
Servicer or any Affiliate of the Servicer may have with any holder of other
loans of the Obligor with respect to such Loans.


 


“Shareholders’ Equity”:
At any date, the amount determined on a consolidated basis, without
duplication, in accordance with GAAP, of shareholders equity for the Servicer
and its Subsidiaries at such date.


 


“Solvent”:  As to any Person at any time, having a state
of affairs such that all of the following conditions are met:  (a) the fair value of the property of
such Person is greater than the amount of such Person’s liabilities (including
disputed, contingent and unliquidated liabilities) as such value is established
and liabilities evaluated for purposes of Section 101(32) of the
Bankruptcy Code; (b) the present fair saleable value of the property of
such Person in an orderly liquidation of such Person is not less than the
amount that will be required to pay the probable liability of such Person on
its debts and other liabilities as they become absolute and matured; (c) such
Person is able to realize upon its property and pay its debts and other
liabilities (including disputed, contingent and unliquidated liabilities) as
they mature in the normal course of business; (d) such Person does not
intend to, and does not believe that it will, incur debts or liabilities beyond
such Person’s ability to pay as such debts and liabilities mature; and (e) such
Person is not engaged in a business or a transaction, and does not propose to
engage in a business or a transaction, for which such Person’s property assets
would constitute unreasonably small capital.


 


“Sterling”:  The lawful currency of the United Kingdom.


 


“Subordinated Loan”:  Except as otherwise designated by the
Administrative Agent on the Thirteenth Amendment Effective Date or the
applicable Cut-Off Date and set forth on Schedule IV, any Term Loan that
(i) may or may not be secured by a Lien on the Obligor’s assets
constituting Related Property for the Loan, (ii) has a Loan-to-Value Ratio
not greater than 75%, and (iii) contains terms which, upon the occurrence
of an event of default under the Underlying Instruments or in the case of any
liquidation or foreclosure on the Related Property, provide that the Borrower’s
portion of such Loan would be paid only after the other creditors to such
Obligor (including any lender party making any First Lien Loan, Last-Out First
Lien Loan, Second Lien Loan or Subordinated Loan whose right to payment is
contractually senior to the Borrower) is paid in full.


 


46

















 


“Subsidiary”:  As to any Person, a corporation, partnership
or other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the management of which
is otherwise controlled, directly or indirectly, through one or more
intermediaries, or both, by such Person.


 


“Substitute Loan”:  Defined in Section 2.18(a).


 


“Substitution Date”:  Defined in Section 2.18(a).


 


“Successor Servicer”:  Defined in Section 6.16(a).


 


“Tape”:  Defined in Section 7.2(b)(ii).


 


“Taxes”:  Any present or future taxes, levies, imposts,
duties, charges, assessments or fees of any nature (including interest,
penalties, and additions thereto) that are imposed by any Governmental
Authority.


 


“Term Period”:  The period commencing on the Thirteenth
Amendment Effective Date and ending on the day preceding the Termination Date.


 


“Term Loan”:  A Loan that is a term loan that has been
fully funded and does not contain any unfunded commitment on the part of the
Originator arising from an extension of credit by the Originator to an Obligor.


 


“Term Securitization”:  A Permitted Securitization which is a term
securitization transaction.


 


“Termination Date”:  The earliest of (a) the date of the
termination in whole of the Facility Amount pursuant to Section 2.4(b),
(b) the Business Day designated by the Borrower to the Administrative
Agent and each Purchaser Agent as the Termination Date at any time following
two Business Days prior written notice thereof to the Administrative Agent and
each Purchaser Agent, (c) May 7, 2012 or such later date as is agreed
to in writing by the Borrower, the Servicer, the Administrative Agent and the
Purchaser Agents, and (d) the date of the declaration of the Termination
Date or the date of the automatic occurrence of the Termination Date pursuant
to Section 10.2(a).


 


“Termination Event”:  Defined in Section 10.1.


 


“Thirteenth Amendment
Effective Date”:  May 7, 2009.


 


“Title Policy”:  An ALTA lender’s title insurance policy.


 


“Transaction”:  Described in Section 3.2.


 


“Transaction Documents”:  This Agreement, the Sale Agreement, each
Hedging Agreement, the Intercreditor Agreement, the Securities Account Control
Agreement, each 


 


47

















 


Variable
Funding Certificate, each Purchaser Fee Letter, any Joinder Supplement, any
Transferee Letter, the Backup Servicer Fee Letter, the Trustee Fee Letter, and
any additional document the execution of which is necessary or incidental to
carrying out the terms of the foregoing documents.


 


“Transferee Letter”:  Defined in Section 13.16.


 


“Transition Expenses”:  The reasonable costs (including reasonable
attorneys’ fees) of the Backup Servicer incurred in connection with
transferring the servicing obligations under this Agreement and amending this
Agreement to reflect such transfer, in an amount not to exceed $100,000.


 


“Trustee”:  U.S. Bank, not in its individual capacity,
but solely as Trustee, its successor in interest pursuant to Section 8.3
or such Person as shall have been appointed Trustee pursuant to Section 8.5.


 


“Trustee Fee”:  The fee set forth as such in the Trustee Fee
Letter.


 


“Trustee Fee Letter”:  The Trustee Fee Letter, dated as of the date
hereof, by and among the Servicer, the Administrative Agent and the Trustee, as
such letter may be amended, modified, supplemented, restated or replaced from
time to time.


 


“Trustee Termination
Notice”:  Defined in Section 8.5.


 


“UCC”:  The Uniform Commercial Code as from time to
time in effect in the applicable jurisdiction or jurisdictions.


 


“Uncertificated Security”:  The meaning specified in Section 8-102(a)(l8)
of the UCC.


 


“Underlying Instruments”:  The loan agreement, credit agreement or other
agreement pursuant to which a Loan has been issued or created and each other
agreement that governs the terms of or secures the obligations represented by
such Loan or of which the holders of such Loan are the beneficiaries.


 


“United States”:  The United States of America.


 


“Unmatured Termination
Event”:  Any event (other than events
described in Section 10.1(c) and 10.1(d) (in the
case of Section 10.1(d), due to the occurrence of an event
described in Section 6.15(d)) that, with the giving of notice or
the lapse of time, or both, would become a Termination Event.


 


“Unrestricted Cash”:
The meaning of “Unrestricted Cash” or any comparable definition in the
Underlying Instruments for each Loan, and in any case that “Unrestricted Cash”
or such comparable definition is not defined in such Underlying Instruments,
all cash available for use for general corporate purposes and not held in any
reserve account or legally or contractually restricted for any particular
purposes or subject to any lien (other than blanket liens permitted under or
granted in accordance with such Underlying Instruments).


 


48

















 


“Variable Funding
Certificate” or “VFC”: 
Defined in Section 2.1(a).


 


“VFCC”:  Variable Funding Capital Company LLC, a
Delaware limited liability company, as a Purchaser, together with its
successors and assigns in such capacity.


 


“VFCC Agent”:  WCM or any other entity that has been
appointed as the administrator for VFCC.


 


“Wachovia”:  Wachovia Bank, National Association, a
national banking association, in its individual capacity, and its successors
and assigns.


 


“Warranty Event”:  As to any Loan, the discovery that as of the
related Cut-Off Date for such Loan there existed a breach of any representation
or warranty relating to such Loan (other than any representation or warranty
that the Loan satisfies the criteria of the definition of Eligible Loan) and
the failure of Borrower to cure such breach, or cause the same to be cured,
within 30 days after the earlier occur of the Borrower’s receipt of notice
thereof from the Administrative Agent or the Borrower becoming aware thereof.


 


“Warranty Loan”:  Any Loan that fails to satisfy any criteria
of the definition of Eligible Loan as of the applicable Cut-Off Date for such
Loan or any Loan with respect to which a Warranty Event has occurred; provided that, any Loan approved by the Administrative
Agent in accordance with clause (ll) of the definition of Eligible Loan
on the Thirteenth Amendment Effective Date or any subsequent Cut-Off Date (as
applicable) shall not be a Warranty Loan due to the failure of such Loan to
satisfy the requirements of clause (ll) of the definition of Eligible
Loan on any date thereafter.


 


“Weighted Average Advance
Rate”:  For the Advances Outstanding
on any day, the weighted average of the Advance Rates applicable to all
Eligible Loans on such day, weighted according to the proportion of the
Aggregate Outstanding Loan Balance that each type of Loan forming a part of the
Collateral represents; provided, however, that notwithstanding anything to
the contrary contained herein, the Weighted Average Advance Rate may not exceed
40%.


 


“Weighted Average Coupon”:  As of any Determination Date, a fraction
(expressed as a percentage and rounded up to the next 0.001%), (a) the
numerator of which is the sum of the products determined by multiplying the
Outstanding Loan Balance of each Fixed Rate Loan (excluding Charged-Off Loans
and Delinquent Loans) in the Collateral as of such Determination Date by the
interest rate payable by the Obligor thereof, and (b) the denominator of
which is the sum of the Outstanding Loan Balances of all Fixed Rate Loans
(excluding Charged-Off Loans and Delinquent Loans) in the Collateral as of such
Determination Date; provided that
for purposes of this definition: (i) no contingent payment of interest
will be included in such calculation; and (ii) any stated coupon shall
exclude any portion of the interest that is currently being deferred.


 


“Weighted Average Life”:  As of any Measurement Date, the number
determined as follows:  (i) for each
Loan included in the Borrowing Base as of such date, by multiplying the amount
of each Scheduled Payment of principal to be paid after such Measurement Date
by the number of years (rounded to the nearest hundredth) from such Measurement
Date until such Scheduled Payment of principal is due; (ii) summing all of
the products calculated pursuant to 


 


49

















 


clause
(i); and (iii) dividing the sum calculated pursuant to clause  (ii) by
the sum of all Scheduled Payments of principal due on all the Loans included in
the Borrowing Base as of such date.


 


Section 1.2.                                Other Terms.


 


All accounting terms used
but not specifically defined herein shall be construed in accordance with
GAAP.  All terms used in Article 9
of the UCC in the State of New York, and used but not specifically defined
herein, are used herein as defined in such Article 9.


 


Section 1.3.                                Computation of Time Periods.


 


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


 


Section 1.4.                                Interpretation.


 


In each Transaction
Document, unless a contrary intention appears:


 


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


 


(b)           reference to any Person includes such
Person’s successors and assigns but, if applicable, only if such successors and
assigns are permitted by the Transaction Documents;


 


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


 


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


 


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


 


(f)            reference to the words “include”, “includes”
and “including” shall be deemed to be followed by the phrase “without
limitation”;


 


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


 


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


 


50

















 


ARTICLE II



THE VARIABLE FUNDING CERTIFICATES


 


Section 2.1.                                The Variable Funding Certificates.


 


(a)           On the terms and conditions
hereinafter set forth, the Borrower shall deliver (i) on the Closing Date,
to each Purchaser Agent at the applicable address set forth on Annex A
to this Agreement, and (ii) on the effective date of any Joinder
Supplement, to each additional Purchaser Agent, at the address set forth in the
applicable Joinder Supplement, a duly executed variable funding certificate in
substantially the form of Exhibit B (each, a “Variable Funding
Certificate” or “VFC”), dated as of the date of this Agreement, each
in a face amount equal to the applicable Purchaser’s Commitment as of the
Closing Date or the effective date of any Joinder Supplement, as applicable,
and otherwise duly completed.  Each
Variable Funding Certificate shall evidence an undivided ownership interest in
the Collateral purchased by a Purchaser in an amount equal, at any time, to the
percentage equivalent of a fraction, (i) the numerator of which is the
outstanding Advances by such Purchaser under the applicable VFC on such day and
(ii) the denominator of which is the Advances Outstanding on such
day.  Interest shall accrue, and each VFC
shall be payable, as described herein. 
Each Purchaser hereby represents and warrants that such Purchaser is a
Qualified Institutional Buyer.


 


(b)           Prior to the Thirteenth Amendment
Effective Date, the Borrower could, at its option, request the Conduit
Purchasers and the Institutional Purchasers to make advances and pre-funded
advances of funds (each, an “Advance”) under the VFCs pursuant to a
Funding Request, in an aggregate amount not to exceed the availability of funds
then in effect under this Agreement as of the proposed Funding Date of the
Advance.  Following the receipt of a
Funding Request, subject to the terms and conditions hereinafter set forth,
prior to the Thirteenth Amendment Effective Date, the Conduit Purchasers and
the Institutional Purchasers funded such Advance. Notwithstanding anything to
the contrary herein, no Purchaser was obligated to provide the Borrower with
aggregate funds in connection with an Advance that would have exceeded the
least of (i) such Purchaser’s unused Commitment then in effect, (ii) the
aggregate unused Commitments then in effect and (iii) the availability of
funds then in effect under this Agreement on the proposed Funding Date of such
Advance.


 


(c)           [Reserved].


 


(d)           The Borrower may, within 60 days but
not less than 45 days prior to the date set forth in clause (c) of
the definition of Termination Date, by written notice to each Purchaser Agent,
make a request for each Purchaser Agent to extend the date set forth in clause
(c) of the definition of Termination Date for an additional period of
up to 364 days.  Each Purchaser Agent
will give prompt notice to the applicable Purchaser of its receipt of such
request, and each Purchaser shall make a determination, in their sole
discretion, not less than 15 days prior to the expiration of the date set forth
in clause (c) of the definition of Termination Date as to whether
or not it will agree to the applicable extension requested.  The failure of a Purchaser Agent to provide
timely notice of its decision to the Borrower shall be deemed to constitute a
refusal by such Purchaser to extend the date set forth in clause (c) of
the definition of Termination Date.  The
Borrower confirms that each Purchaser, in its sole and absolute 


 


51

















 


discretion, without regard
to the value or performance of the Loans or any other factor, may elect not to
extend the date set forth in clause (c) of the definition of
Termination Date.


 


(e)           [Reserved].


 


(f)            Notwithstanding anything contained
in this Section 2.1 or elsewhere in this Agreement to the contrary,
upon and after the Thirteenth Amendment Effective Date, no Advances shall be
made hereunder.


 


Section 2.2.                                [Reserved].


 


Section 2.3.                                Procedures for Advances by Conduit Purchasers and Institutional
Purchasers.


 


(a)           Prior to the Thirteenth Amendment Effective Date, subject
to the limitations set forth in Section 2.1(b), the Borrower could
request an Advance from the Conduit Purchasers and the Institutional Purchasers
by delivering to the Purchaser Agents at certain times the information and
documents set forth in this Section 2.3.


 


(b)           No later than 2:00 p.m. on the
Business Day prior to the proposed Funding Date, the Borrower (or the Servicer
on its behalf) shall deliver:


 


(i)            to the Administrative Agent and the
Trustee, written notice of such proposed Funding Date (including a duly
completed Borrowing Base Certificate updated to the date such Advance is
requested and giving pro forma
effect to the Advance requested and the use of the proceeds thereof);


 


(ii)           to the Administrative Agent, a
description of the Obligor and the Loan or Loans to be funded by the proposed
Advance;


 


(iii)          to the Administrative Agent, a wire
disbursement and authorization form, to the extent not previously delivered;


 


(iv)          to the Administrative Agent and the
Trustee, a duly completed Funding Request which shall (a) specify the
desired amount of such Advance, which amount must be at least equal to
$500,000, to be allocated to each Conduit Purchaser and each Institutional
Purchaser in accordance with its Pro Rata Share, (b) specify the proposed
Funding Date of such Advance, (c) specify the Loans to be financed on such
Funding Date (including the appropriate file number, Outstanding Loan Balance
for each Loan and identifying each Loan by type and proposed Advance Rate
applicable to each such Loan and any other information reasonably requested by
the Trustee to permit it to properly account for such Loan) and (d) include
a representation that all conditions precedent for an Advance described in Article III
hereof have been satisfied.


 


Each
Funding Request shall be irrevocable.  If
any Funding Request is received by the Administrative Agent and each Purchaser
Agent after 2:00 p.m. on the Business Day prior to the Business Day for
which such Advance is requested or on a day that is not a Business Day, such 


 


52

















 


Funding
Request shall be deemed to be received by the Administrative Agent and each
Purchaser Agent at 9:00 a.m. on the next Business Day.


 


(c)           On the proposed Funding Date, subject
to the limitations set forth in Section 2.1(b) and upon
satisfaction of the applicable conditions set forth in Article III,
each Conduit Purchaser and each Institutional Purchaser shall make available to
the Borrower in same day funds, at such bank or other location reasonably
designated by Borrower in the Funding Request given pursuant to this Section 2.3,
an amount equal to such Purchaser’s Pro Rata Share of the least of (i) the
amount requested by the Borrower for such Advance, (ii) the aggregate
unused Commitments then in effect and (iii) an amount equal to the
availability of funds under this Agreement on such Funding Date.


 


(d)           On each Funding Date related to an
Advance, the obligation of each Conduit Purchaser and each Institutional Purchaser
to remit its Pro Rata Share of any such Advance shall be several from that of
each other Purchaser and the failure of any Conduit Purchaser or Institutional
Purchaser to so make such amount available to the Borrower shall not relieve
any other Purchaser of its obligation hereunder.


 


(e)           Notwithstanding anything contained in
this Section 2.3 or elsewhere in this Agreement to the contrary, on
and after the Thirteenth Amendment Effective Date, no additional Advances shall
be made by the Purchasers.


 


Section 2.4.                                Reduction of the Facility Amount; Optional and Mandatory Repayments of
Advances.


 


(a)           [Reserved].


 


(b)           The Borrower shall be entitled at its
option, at any time prior to the occurrence of a Termination Event, to reduce
the Advances Outstanding; provided that
(i) in the case of any such reduction relating to Advances, the Borrower
shall deliver to the Administrative Agent and each Purchaser Agent (with a copy
to the Trustee and the Backup Servicer) a Repayment Notice one Business Day
prior to any such reduction, (ii) any reduction of the Advances
Outstanding (other than with respect to repayments of Advances Outstanding made
by the Borrower to reduce Advances Outstanding such that the Advances
Outstanding does not exceed the Maximum Availability) shall be in a minimum
amount of $500,000 and in integral multiples of $100,000 in excess thereof, and
(iii) in the case of a prepayment of all or substantially all of the
Advances Outstanding (calculated immediately prior to giving effect to such
prepayment) to zero on or prior to May 7, 2010, the Borrower shall pay to
the Administrative Agent the Call Premium; provided,
however, that no Call Premium
shall be payable by the Borrower to the extent the Advances Outstanding are
equal to or greater than $1,000,000 after giving effect to such
prepayment.  In connection with any such
reduction of Advances Outstanding, the Borrower shall deliver to each Purchaser
Agent (i) instructions to reduce such Advances Outstanding and (ii) funds
sufficient to repay such Advances Outstanding, together with all accrued
Interest, Breakage Costs, Hedge Breakage Costs and any Call Premium; provided that, no such reduction shall be
given effect unless (x) the Borrower has complied with the terms of any
Hedging Agreement requiring that one or more Hedge Transactions be terminated
in whole or in part as the result of any such reduction of the


 


53
















 


Advances Outstanding, and has paid in full all Hedge Breakage Costs
owing to the relevant Hedge Counterparty for any such termination and (y) sufficient
funds have been remitted to pay all such amounts in the succeeding sentence in
full.  The Administrative Agent shall
apply amounts received from the Borrower pursuant to this Section 2.4(b) to
the payment of any Hedge Breakage Costs, to the pro rata reduction of the Advances Outstanding, to the
payment of accrued Interest on the amount of the Advances Outstanding to be
repaid and to the payment of any Breakage Costs.  Any Repayment Notice relating to any
repayment pursuant to this Section 2.4(b) shall be
irrevocable.


 


Section 2.5.                                Determination
of Interest.


 


Each
applicable Purchaser Agent shall determine the CP Rate and the Interest, as
applicable, for its related Purchaser (including unpaid Interest related
thereto, if any, due and payable on a prior Payment Date) to be paid by the
Borrower with respect to each Advance on each Payment Date for the related Accrual
Period and shall advise the Servicer thereof on the third Business Day prior to
such Payment Date.


 


Section 2.6.                                Required
Advance Reduction Amount Payments.


 


(a)                                          In addition
to any other obligation of the Borrower to pay any Required Advance Reduction
Amount pursuant to the terms of this Agreement, if, on any day prior to the
Collection Date, any Required Advance Reduction Amount is outstanding, the
Borrower shall, within five (5) Business Days, pay such Required Advance
Reduction Amount in its entirety by effecting one or more of the following
actions in order to eliminate such condition as of such date of determination: (i) repay
Advances in the amount necessary, after giving effect to any pledge pursuant to
clause (ii), to pay in full such Required Advance Reduction Amount,
and/or (ii) subject to the approval of the Administrative Agent in its
sole discretion (and the Administrative Agent will use reasonable efforts to
give such approval in a timely fashion), pledge additional Eligible Loans,
which shall be included in the Collateral and added to the Loan List, in the
amount necessary to pay in full such Required Advance Reduction Amount.


 


(b)                                         No later than
2:00 p.m. on the Business Day prior to the proposed repayment of Advances
or pledge of additional Eligible Loans pursuant to Section 2.6(a),
the Borrower (or the Servicer on its behalf) shall deliver (i) to the
Administrative Agent and each Purchaser Agent (with a copy to the Trustee and
the Backup Servicer), a Repayment Notice (including a duly completed Borrowing
Base Certificate, updated to the date such repayment or pledge is being made
and giving pro forma effect to
such repayment or pledge), and (ii) to the Administrative Agent, a
description of any Loan and each Obligor of such Loan to be pledged and added
to the Loan List.  Any Repayment Notice
relating to any repayment or any pledge pursuant to this Section 2.6(b) shall
be irrevocable.  For the avoidance of
doubt, no Advances shall be made pursuant to the repayment of Advances or
pursuant to the pledge of additional Eligible Loans.


 


Section 2.7.                                Notations
on Variable Funding Certificates.


 


Each
Purchaser Agent is hereby authorized to enter on a schedule attached to the VFC
with respect to each Conduit Purchaser and each Institutional Purchaser a
notation (which may


 


54

















 


be computer generated) or to otherwise record in its
internal books and records or computer system with respect to each Advance
under the VFC made by the applicable Purchaser of (a) the date and
principal amount thereof and (b) each payment and repayment of principal
thereof.  Any such recordation shall,
absent manifest error, constitute prima facie evidence of the outstanding
Advances under each VFC.  The failure of
any Purchaser Agent to make any such notation on the schedule attached to the
applicable VFC shall not limit or otherwise affect the obligation of the
Borrower to repay the Advances in accordance with the terms set forth herein.


 


Section 2.8.                                Principal
Repayments.


 


(a)                                          Advances
Outstanding shall be repaid as and when necessary to cause the Advances
Outstanding not to exceed the Maximum Availability.


 


(b)                                         [Reserved].


 


(c)                                          All
repayments of any Advance or any portion thereof shall be made together with
payment of (i) all Interest accrued and unpaid on the amount repaid to
(but excluding) the date of such repayment, (ii) all Breakage Costs, (iii) all
Hedge Breakage Costs, and (iv) any Call Premium.


 


Section 2.9.                                Settlement
Procedures During the Term Period.


 


(a)                                 On each Payment Date
during the Term Period, the Servicer shall direct the Trustee to pay pursuant
to the Servicing Report (and the Trustee shall make payment from the Interest
Collections in the Collection Account to the extent of Available Funds, in
reliance on the information set forth in such Servicing Report and without any
independent verification of such information) to the following Persons, the
following amounts in the following order of priority:


 


(1)                                  pro rata in accordance with the amounts
due under this clause, to each Hedge Counterparty, any amounts (other than any
Hedge Breakage Costs) owing to that Hedge Counterparty under its respective
Hedging Agreement in respect of any Hedge Transaction(s);


 


(2)                                  pro  rata
in accordance with the amounts due under this clause, to the extent not paid by
the Originator, to the Backup Servicer and the Trustee, (a) in an amount
equal to any accrued and unpaid Backup Servicing Fees, Trustee Fees and
Transition Expenses, (b) to the Administrative Agent, for the benefit of each
Purchaser or the Administrative Agent, as applicable, all accrued and unpaid
fees and expenses (including attorneys’ fees, costs and expenses) payable by
Borrower to the Administrative Agent or such Purchaser under the Transaction
Documents, and (c) incurred but unreimbursed reasonable third-party,
out-of-pocket expenses relating to their respective duties as Backup Servicer
or Trustee hereunder, in respect of which the Backup Servicer or the Trustee,
as applicable, has provided prior written notice to the Servicer and the
Administrative Agent, for the payment thereof; provided
that amounts payable pursuant to this clause (c) shall not exceed
$15,000 for any Payment Date;


 


55

















 


(3)                                  to
the Servicer, in an amount equal to any unreimbursed Servicer Advances (but
solely to the extent of Collections in respect of the Loan for which such
Servicer Advance was made);


 


(4)                                  to
the Servicer, in an amount equal to any accrued and unpaid Servicing Fees to
the end of the related Collection Period;


 


(5)                                  pro rata in accordance with the amounts
due under this clause, to each Purchaser Agent, in an amount equal to any
accrued and unpaid Interest, Program Fee and Breakage Costs;


 


(6)                                  [Reserved];


 


(7)                                  pro rata in accordance with the amounts
due under subclauses (a) and (b) of this clause (7), (a)(i) on
and after the Payment Date in October 2009 (or such later Payment Date
agreed to in writing between the Borrower, the Servicer, the Administrative
Agent and each Purchaser) if the CP Funding II Financing has not closed, to
each Purchaser Agent for the account of the applicable Purchaser, in an amount
necessary to reduce the Advances Outstanding and Aggregate Unpaids to zero,
otherwise (ii) to each Purchaser Agent for the account of the applicable
Purchaser, if the Required Advance Reduction Amount is greater than zero, an
amount necessary to reduce the Required Advance Reduction Amount to zero, pro rata in accordance with the amount of
Advances Outstanding hereunder, and (b) pro
rata in accordance with the amounts due under this subclause (b), to
each Hedge Counterparty, any Hedge Breakage Costs owing to that Hedge
Counterparty under its respective Hedging Agreement (not caused by any default
of the Hedge Counterparty or any of its Affiliates under such Hedging
Agreement);


 


(8)                                  pro rata in accordance with the amounts
due under this clause, to the Administrative Agent, each Purchaser Agent, any
applicable Purchaser, the Backup Servicer, the Trustee, the Affected Parties,
the Indemnified Parties or the Secured Parties, all other amounts, including,
without duplication, any Hedge Breakage Costs owing to each Hedge Counterparty
under its respective Hedging Agreement (caused by any default of the Hedge
Counterparty or any of its Affiliates under such Hedging Agreement), Increased
Costs, Taxes or Indemnified Amounts, but other than the principal of Advances
Outstanding, then due under this Agreement;


 


(9)                                  to
the Servicer, in an amount equal to the sum of (i) any unreimbursed
Servicer Advances, to the extent not paid pursuant to clause 2 above, and (ii) any
Nonrecoverable Advance;


 


(10)                            to
Wachovia Bank, National Association, on account of any due and payable “Obligations”
under and as defined in the CP Funding II Financing, to the extent a claim has
been made therefor under the Borrower Guaranty; and


 


(11)                            any
remaining amount shall be distributed to the Borrower.


 


56

















 


(b)                                On each Payment Date
during the Term Period, the Servicer shall direct the Trustee to pay pursuant
to the Servicing Report (and the Trustee shall make payment from the Principal
Collections in the Collection Account to the extent of Available Funds, in
reliance on the information set forth in such Servicing Report and without any independent
verification of such information) to the following Persons, the following
amounts in the following order of priority:


 


(1)                                  to
those parties in respect of the payments to be made pursuant to Section 2.9(a)(1)-(5) in
the priority set forth therein, to the extent not paid in full pursuant to the
Interest Collections;


 


(2)                                  pro  rata
in accordance with the amounts due under subclauses (a) and (b) of
this clause (2), (a) to each Purchaser Agent for the account of the
applicable Purchaser, an amount necessary to reduce the Advances Outstanding
and Aggregate Unpaids to zero, and (b) pro rata in accordance with the
amounts due under this subclause (b), to each Hedge Counterparty, any Hedge
Breakage Costs owing to that Hedge Counterparty under its respective Hedging
Agreement (not caused by any default of the Hedge Counterparty or any of its
Affiliates under such Hedging Agreement);


 


(3)                                  pro rata in accordance with the amounts
due under this clause, to the Administrative Agent, each Purchaser Agent, any
applicable Purchaser, the Backup Servicer (including in its capacity as the
successor Servicer), the Trustee, the Affected Parties, the Indemnified Parties
or the Secured Parties, all other amounts, including, without duplication, any
Hedge Breakage Costs (caused by any default of the Hedge Counterparty or any of
its Affiliates under such Hedging Agreement), Increased Costs, Taxes or
Indemnified Amounts then due under this Agreement; and


 


(4)                                  any
remaining amount shall be distributed to the Borrower.


 


Section 2.10.                         Settlement
Procedures During the Amortization Period.


 


(a)                                 On
each Payment Date during the Amortization Period, the Servicer shall direct the
Trustee to pay pursuant to the Servicing Report (and the Trustee shall make
payment from the Collection Account to the extent of Available Funds, in
reliance on the information set forth in such Servicing Report and without any
independent verification of such information) to the following Persons, the
following amounts in the following order of priority:


 


(1)                                  pro rata in accordance with the amounts
due under this clause, to each Hedge Counterparty, any amounts (other than any
Hedge Breakage Costs) owing to that Hedge Counterparty under its respective
Hedging Agreement in respect of any Hedge Transaction(s);


 


(2)                                  pro rata in accordance with the amounts
due under this clause, to the extent not paid by the Originator, to the Backup
Servicer and the Trustee, (a) in an amount equal to any accrued and unpaid
Backup Servicing Fees, Trustee Fees and Transition Expenses, (b) to the
Administrative Agent, for the benefit of each Purchaser or the Administrative
Agent, as applicable, all accrued and unpaid fees and expenses (including
attorneys’ fees, costs and expenses) payable by Borrower to the


 


57

















 


Administrative
Agent or such Purchaser under the Transaction Documents, and (c) incurred
but unreimbursed reasonable third-party, out-of-pocket expenses relating to
their respective duties as Backup Servicer or Trustee hereunder, in respect of
which the Backup Servicer or the Trustee, as applicable, has provided prior
written notice to the Servicer and the Administrative Agent, for the payment
thereof; provided that amounts
payable pursuant to this clause (c) shall not exceed $15,000 for
any Payment Date;


 


(3)                                  to
the Servicer, in an amount equal to any unreimbursed Servicer Advances (but
solely to the extent of Collections in respect of the Loan for which such
Servicer Advance was made);


 


(4)                                  to
the Servicer, in an amount equal to any accrued and unpaid Servicing Fees to
the end of the related Collection Period;


 


(5)                                  pro rata in accordance with the amounts
due under this clause, to each Purchaser Agent, in an amount equal to any
accrued and unpaid Interest, Program Fee and Breakage Costs;


 


(6)                                  [Reserved];


 


(7)                                  pro rata in accordance with the amounts
due under subclauses (a) and (b) of this clause (7), (a) to each
Purchaser Agent for the account of the applicable Purchaser, in an amount
necessary to reduce the Advances Outstanding and Aggregate Unpaids to zero, and
(b) pro rata in accordance
with the amounts due under this subclause (b), to each Hedge Counterparty, any
Hedge Breakage Costs owing to that Hedge Counterparty under its respective
Hedging Agreement (not caused by any default of the Hedge Counterparty or any
of its Affiliates under such Hedging Agreement);


 


(8)                                  pro rata in accordance with the amounts
due under this clause, to the Administrative Agent, each Purchaser Agent, the
applicable Purchaser, the Backup Servicer, the Trustee, the Affected Parties,
the Indemnified Parties, or the Secured Parties, all other amounts, including,
without duplication, any Hedge Breakage Costs owing to each Hedge Counterparty
under its respective Hedging Agreement (caused by any default of the Hedge
Counterparty or any of its Affiliates under such Hedging Agreement), Increased
Costs, Taxes or Indemnified Amounts then due under this Agreement;


 


(9)                                  to
the Servicer, in an amount equal to the sum of (i) any unreimbursed
Servicer Advances, to the extent not paid pursuant to clause (2) above,
and (ii) any Nonrecoverable Advance;


 


(10)                            to
Wachovia Bank, National Association, on account of any due and payable “Obligations”
under and as defined in the CP Funding II Financing, to the extent a claim has
been made therefor under the Borrower Guaranty; and


 


(11)                            any
remaining amounts shall be distributed to the Borrower.


 


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Section 2.11.                         Collections
and Allocations.


 


(a)                                          Collections.  The Servicer shall promptly identify any
collections received as being on account of Interest Collections, Principal
Collections or other Collections and shall transfer, or cause to be
transferred, all Collections received in the Concentration Account or received
directly by it to the Collection Account by the close of business on the second
Business Day after such Collections are received.  Upon the transfer of Collections to the
Collection Account, the Servicer shall segregate Principal Collections and
Interest Collections and transfer the same to the Principal Collections Account
and the Interest Collections Account, respectively.  The Servicer shall further include a
statement as to the amount of Principal Collections and Interest Collections on
deposit in the Principal Collections Account and the Interest Collections
Account on each Reporting Date in the Servicing Report delivered pursuant to Section 6.10(b).


 


(b)                                         Initial
Deposits.  On the Cut-Off Date with
respect to any Loan, the Servicer will deposit into the Collection Account all
Collections received in respect of Eligible Loans being transferred to and
included as part of the Collateral on such date.


 


(c)                                          Excluded
Amounts.  With the prior written
consent of the Administrative Agent (a copy of which will be provided by the
Servicer to the Backup Servicer), the Servicer may withdraw from the Collection
Account any deposits thereto constituting Excluded Amounts if the Servicer has,
prior to such withdrawal and consent, delivered to the Administrative Agent and
each Purchaser Agent a report setting forth the calculation of such Excluded
Amounts in form and substance satisfactory to the Administrative Agent and each
Purchaser Agent in their sole discretion.


 


(d)                                         Investment
of Funds.  Until the occurrence of a
Termination Event, to the extent there are uninvested available amounts
deposited in the Collection Account on or before 3:00 p.m., all such
amounts shall be invested in Permitted Investments selected by the Servicer in
written instructions delivered to the Trustee and the Administrative Agent
(which may be in the form of standing instructions) that mature no later than
the Business Day immediately preceding the next Payment Date; to the extent
that there are uninvested available funds deposited after 3:00 p.m. but
prior to 4:00 p.m., such funds shall be swept into an overnight funds
investment which shall be a Permitted Investment selected by the Servicer in
written instructions delivered to the Trustee and the Administrative Agent
(which may be in the form of standing instructions).  From and after the occurrence of a
Termination Event, to the extent there are uninvested amounts in the Collection
Account (net of losses and investment expenses), all amounts may be invested in
Permitted Investments selected by the Trustee, or the Administrative Agent on
its behalf, that mature no later than the Business Day immediately preceding
the next Payment Date.  All earnings (net
of losses and investment expenses) thereon shall be retained or deposited into
the Collection Account and shall be applied on each Payment Date pursuant to
the provisions of Section 2.9 and Section 2.10.  All investments shall be subject to
availability.  Absent receipt of
instructions as contemplated herein, the Trustee shall have no obligation to
invest any funds.


 


Section 2.12.                         Payments,
Computations, Etc.


 


(a)                                          Unless
otherwise expressly provided herein, all amounts to be paid or deposited by the
Borrower or the Servicer hereunder shall be paid or deposited in accordance
with the


 


59

















 


terms hereof no later than 11:00 a.m. on the day when due in
lawful money of the United States in immediately available funds and any amount
not received before such time shall be deemed received on the next Business
Day.  The Borrower or the Servicer, as
applicable, shall, to the extent permitted by law, pay to the Secured Parties
interest on all amounts not paid or deposited when due hereunder at 2.0% per annum above the Base Rate, payable on
demand; provided, however, that such interest rate shall not
at any time exceed the maximum rate permitted by Applicable Law.  Such interest shall be for the account of,
the applicable Secured Party.  All
computations of interest and other fees hereunder shall be made on the basis of
a year consisting of 360 days (other than calculations with respect to the Base
Rate which shall be based on a year consisting of 365 or 366 days, as
applicable) for the actual number of days elapsed.


 


(b)                                         Whenever any
payment hereunder shall be stated to be due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of the
payment of Interest or any fee payable hereunder, as the case may be.  For avoidance of doubt, to the extent that
Available Funds are insufficient on any Payment Date to satisfy the full amount
of any Increased Costs pursuant to Section 2.9(a)(8) or Section 2.10(a)(8),
such unpaid amounts shall remain due and owing and shall accrue interest as
provided in this Section 2.12 until repaid in full.


 


(c)                                          Prior to the
Thirteenth Amendment Effective Date, if any Advance requested by the Borrower
and approved by the applicable Purchaser pursuant to Section 2.3 is
not, for any reason made or effectuated, as the case may be, on the date
specified therefor, the Borrower shall indemnify the applicable Purchaser
against any reasonable loss, cost or expense incurred by the applicable
Purchaser including, without limitation, any loss (including loss of anticipated
profits, net of anticipated profits in the redeployment of such funds in the
manner determined by each Purchaser), cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by the
applicable Purchaser to fund or maintain such Advance.


 


(d)                                         If the
Administrative Agent disagrees with the computation of any amounts to be paid
or deposited by the Borrower or the Servicer hereunder, or upon their
respective instructions, it shall so notify the Borrower, the Servicer and the
Trustee in writing and in reasonable detail to identify the specific
disagreement. If such disagreement cannot be resolved, the determination of the
Administrative Agent as to such amounts shall be conclusive and binding on the
parties hereto absent manifest error. 
Upon receipt of written notice from the Administrative Agent of such
disagreement, the Trustee shall comply with the Administrative Agent’s written
instructions with respect to the holding back (pending resolution), payment or
deposit of any such amounts as so determined by the Administrative Agent.  The Trustee shall be protected in acting upon
the written instructions of the Administrative Agent and shall have no
responsibility to verify, reconcile or recompute any determination of the
Administrative Agent.


 


Section 2.13.                         [Reserved].


 


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Section 2.14.                         Fees.


 


(a)                                          The Servicer
on behalf of the Borrower shall pay in accordance with Section 2.9(a)(5),
Section 2.9(b)(1) and Section 2.10(a)(5), as
applicable, to each applicable Purchaser Agent, monthly in arrears, the
applicable Program Fee.


 


(b)                                         The Servicer
shall be entitled to the Servicing Fee in accordance with Section 2.9(a)(4),
Section 2.9(b)(1) and Section 2.10(a)(4), as applicable.


 


(c)                                          The Backup
Servicer shall be entitled to receive the Backup Servicing Fee and Transition
Expenses, if applicable, in accordance with Section 2.9(a)(2), Section 2.9(b)(1) and
Section 2.10(a)(2), as applicable.


 


(d)                                         The Trustee
shall be entitled to receive the Trustee Fee in accordance with Section 2.9(a)(2),
Section 2.9(b)(1) and Section 2.10(a)(2), as
applicable.


 


(e)                                          The Borrower
shall pay to Dechert LLP, as counsel to the Administrative Agent, on the
Thirteenth Amendment Effective Date, its reasonable estimated fees and
out-of-pocket expenses and shall pay all additional reasonable fees and
out-of-pocket expenses of Dechert LLP within 30 Business Days after receiving
an invoice for such amounts.


 


Section 2.15.                         Increased
Costs; Capital Adequacy; Illegality.


 


(a)                                          If either (i) the
introduction of or any change (including, without limitation, any change by way
of imposition or increase of reserve requirements) in or in the interpretation
of any Applicable Law or (ii) the compliance by an Affected Party with any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), shall (a) subject an Affected
Party to any Tax (except for Taxes on the overall net income of such Affected
Party), duty or other charge with respect to any ownership interest in the
Collateral, or any right or obligation to make Advances hereunder, or on any
payment made hereunder, (b) impose, modify or deem applicable any reserve
requirement (including, without limitation, any reserve requirement imposed by
the Board of Governors of the Federal Reserve System, but excluding any reserve
requirement, if any, included in the determination of Interest), special
deposit or similar requirement against assets of, deposits with or for the
amount of, or credit extended by, any Affected Party or (c) impose any
other condition affecting the ownership interest in the Collateral conveyed to
the Purchasers hereunder or any Affected Party’s rights hereunder or under any
other Transaction Document or any Liquidity Agreement, the result of which is
to increase the cost to any Affected Party or to reduce the amount of any sum
received or receivable by an Affected Party under this Agreement, under any
other Transaction Document or any Liquidity Agreement, then within ten days
after demand by such Affected Party (which demand shall be accompanied by a
statement setting forth the basis for such demand), the Borrower shall pay
directly to such Affected Party such additional amount or amounts as will compensate
such Affected Party for such additional or increased cost incurred or such
reduction suffered.


 


(b)                                         If either (i) the
introduction of or any change in or in the interpretation of any law,
guideline, rule, regulation, directive or request or (ii) compliance by
any Affected Party with any law, guideline, rule, regulation, directive or
request from any central bank or other governmental authority or agency
(whether or not having the force of law), including, without


 


61

















 


limitation, compliance by an Affected Party with any request or
directive regarding capital adequacy, has or would have the effect of reducing
the rate of return on the capital of any Affected Party as a consequence of its
obligations hereunder or arising in connection herewith to a level below that
which any such Affected Party could have achieved but for such introduction,
change or compliance (taking into consideration the policies of such Affected
Party with respect to capital adequacy) by an amount deemed by such Affected
Party to be material, then from time to time, within ten days after demand by
such Affected Party (which demand shall be accompanied by a statement setting
forth the basis for such demand), the 
Borrower shall pay directly to such Affected Party such additional
amount or amounts as will compensate such Affected Party for such
reduction.  For the avoidance of doubt,
if the issuance of Interpretation No. 46 (and/or any amendment or
supplement thereto or to Statement of Financial Accounting Standards No. 140)
by the Financial Accounting Standards Board or any other change in accounting
standards or the issuance of any other pronouncement, release or
interpretation, causes or requires the consolidation of all or a portion of the
assets and liabilities of the Originator or Borrower or any Purchaser with the
assets and liabilities of the Administrative Agent, any Purchaser Agent, any
Purchaser or any Liquidity Bank or shall otherwise impose any loss, cost,
expense, reduction of return on capital or other loss, such event shall
constitute a circumstance on which such Affected Party may base a claim for
reimbursement under this Section 2.15.


 


(c)                                          If as a
result of any event or circumstance similar to those described in clause (a) or
(b) of this Section 2.15, any Affected Party is required to
compensate a bank or other financial institution providing liquidity support,
credit enhancement or other similar support to such Affected Party in
connection with this Agreement or the funding or maintenance of Advances
hereunder, then within ten days after demand by such Affected Party, the
Borrower shall pay to such Affected Party such additional amount or amounts as
may be necessary to reimburse such Affected Party for any amounts payable or
paid by it.


 


(d)                                         In determining
any amount provided for in this Section 2.15, the Affected Party
may use any reasonable averaging and attribution methods.  Any Affected Party making a claim under this Section 2.15
shall submit to the Servicer a written description as to such additional or
increased cost or reduction and the calculation thereof, which written
description shall be conclusive absent manifest error.


 


(e)                                          If the (a) Purchaser
shall notify its Purchaser Agent that a Eurodollar Disruption Event as
described in clause (a) of the definition of “Eurodollar Disruption
Event” has occurred, the applicable Purchaser Agent or the Administrative Agent
shall in turn so notify the Borrower, whereupon all Advances Outstanding of the
affected Purchaser in respect of which Interest accrues at the LIBOR Rate or
Adjusted Eurodollar Rate, as applicable, shall immediately be converted into
Advances Outstanding in respect of which Interest accrues at the Base Rate.


 


(f)                                            Failure or
delay on the part of any Affected Party to demand compensation pursuant to this
Section 2.15 shall not constitute a waiver of such Affected Party’s
right to demand or receive such compensation.


 


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Section 2.16.                         Taxes.


 


(a)                                          All payments
made by an Obligor in respect of a Loan and all payments made by the Borrower
or made by the Servicer on behalf of the Borrower under this Agreement will be
made free and clear of and without deduction or withholding for or on account
of any Taxes.  If any Taxes are required
to be withheld from any amounts payable to any Indemnified Party, then the
amount payable to such Person will be increased (the amount of such increase,
the “Additional Amount”) such that every net payment made under this
Agreement after withholding for or on account of any Taxes (including, without
limitation, any Taxes on such increase) is not less than the amount that would
have been paid had no such deduction or withholding been made.  The foregoing obligation to pay Additional
Amounts with respect to payments required to be made by the Borrower or
Servicer under this Agreement will not, however, apply with respect to net
income or franchise taxes imposed on any Indemnified Party by a taxing
jurisdiction in which any such Person is organized, conducts business or is
paying taxes (as the case may be).


 


(b)                                         The Servicer
will indemnify (and to the extent the indemnification provided by the Servicer
is insufficient the Borrower will indemnify) each Indemnified Party for the
full amount of Taxes payable by such Person in respect of Additional Amounts
and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto.  All
payments in respect of this indemnification shall be made within 10 days from
the date a written invoice therefor is delivered to the Borrower.


 


(c)                                          Within 30
days after the date of any payment by the Borrower or by the Servicer on behalf
of the Borrower of any Taxes, the Borrower or the Servicer, as applicable, will
furnish to the Administrative Agent and each of the Purchaser Agents at the
applicable address set forth on Annex A to this Agreement, appropriate
evidence of payment thereof.


 


(d)                                         If a Purchaser
is not created or organized under the laws of the United States or a political
subdivision thereof, such Purchaser shall deliver to the Borrower, with a copy
to the Administrative Agent, (i) within 15 days after the date hereof, two
(or such other number as may from time to time be prescribed by Applicable Law)
duly completed copies of IRS Form W-8BEN or Form W-8ECI (or any
successor forms or other certificates or statements that may be required from
time to time by the relevant United States taxing authorities or Applicable
Law), as appropriate, to permit the Borrower to make payments hereunder for the
account of such Purchaser without deduction or withholding of United States
federal income or similar Taxes and (ii) upon the obsolescence of or after
the occurrence of any event requiring a change in, any form or certificate
previously delivered pursuant to this Section 2.16(d), copies (in
such numbers as may from time to time be prescribed by Applicable Law or
regulations) of such additional, amended or successor forms, certificates or
statements as may be required under Applicable Law to permit the Borrower or
the Servicer to make payments hereunder for the account of such Purchaser
without deduction or withholding of United States federal income or similar
Taxes.


 


(e)                                          If, in
connection with an agreement or other document providing liquidity support,
credit enhancement or other similar support to the Purchasers in connection
with this Agreement or the funding or maintenance of Advances hereunder, the
Purchasers are required to compensate a bank or other financial institution in
respect of Taxes under circumstances similar to those described in this Section 2.16,
then, within ten days after demand by each


 


63
















 


applicable Purchaser, the Servicer shall pay (or to the extent the
Servicer does not make such payment the Borrower shall pay) to each applicable
Purchaser such additional amount or amounts as may be necessary to reimburse
each such Purchaser for any amounts paid by them.


 


(f)                                            Without
prejudice to the survival of any other agreement of the Borrower and the
Servicer hereunder, the agreements and obligations of the Borrower and the
Servicer contained in this Section 2.16 shall survive the
termination of this Agreement.


 


Section 2.17.                         Assignment
of the Sale Agreement.


 


The Borrower
hereby assigns to the Trustee, for the benefit of the Secured Parties
hereunder, all of the Borrower’s right, title and interest in and to (but none
of its obligations) under the Sale Agreement and any UCC financing statements
filed under or in connection therewith. 
In furtherance and not in limitation of the foregoing, the Borrower
hereby assigns to the Trustee, for the benefit of the Secured Parties, its
right to indemnification under Article IX of the Sale
Agreement.  The Borrower confirms that
the Trustee on behalf of the Secured Parties shall have the sole right to
enforce the Borrower’s rights and remedies under the Sale Agreement and any UCC
financing statements filed under or in connection therewith for the benefit of
the Secured Parties.


 


Section 2.18.                         Substitution
and Repurchase of Loans.


 


(a)                                          Substitution
of Loans.  On any day the Borrower
may, subject to the conditions set forth in this Section 2.18 and
subject to the other restrictions contained herein, and subject to the prior
written approval of the Administrative Agent (in its sole discretion), replace
any Loan with one or more Eligible Loans (each, a “Substitute Loan”); provided that no such replacement shall
occur unless each of the following conditions is satisfied as of the date of
such replacement and substitution (as certified to the Trustee by the
Borrower):


 


(i)                                     the
Borrower has recommended to the Administrative Agent (with a copy to the
Trustee) in writing that the Loan to be replaced should be replaced (each a “Replaced
Loan”);


 


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


 


(iii)                               after
giving effect to any such substitution, the Advances Outstanding shall not
exceed the Maximum Availability;


 


(iv)                              the
sum of the Outstanding Loan Balances of such Substitute Loans shall be equal to
or greater than the sum of the Outstanding Loan Balances of the Replaced Loans;


 


(v)                                 [Reserved];


 


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


 


64

















 


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


 


(viii)                        the
sum of (1) the Outstanding Loan Balances of all Loans that are Substitute
Loans plus (2) the
Outstanding Loan Balances of all Loans that have been sold pursuant to
Discretionary Sales, in each case excluding Warranty Loans, shall not exceed
20% of the Facility Amount as of the Thirteenth Amendment Effective Date for
any month during the 12-month period immediately preceding such date of
determination (or such lesser number of months as shall have elapsed as of such
date);


 


(ix)                                the
sum of the Outstanding Loan Balances of all Substitute Loans substituted for
Delinquent Loans and Charged-Off Loans shall not exceed 10% of the Facility
Amount as of the Thirteenth Amendment Effective Date for any month during the
12-month period immediately preceding such date of determination (or such
lesser number of months as shall have elapsed as of such date);


 


(x)                                   the
Borrower shall deliver to the Administrative Agent on the date of such
substitution a certificate of a Responsible Officer certifying that each of the
foregoing is true and correct as of such date;


 


(xi)                                each
Loan that is replaced pursuant to the terms of this Section 2.18
shall be substituted only with another Loan that meets the foregoing
conditions; and


 


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


 


In addition,
the Borrower shall in connection with such substitution deliver to the Trustee
the related Required Loan Documents.  On
the date any such substitution is completed (the “Substitution Date”),
the Trustee, for the benefit of the Secured Parties, shall, automatically and without
further action, release and transfer to the Borrower, free and clear of any
Lien created pursuant to this Agreement, all of the right, title and interest
of the Trustee, for the benefit of the Secured Parties, in, to and under such
Replaced Loan, but without any representation and warranty of any kind, express
or implied. Notwithstanding any provision contained in this Section 2.18(a) to
the contrary, upon receipt by the Borrower of the right, title and interest in,
to and under such Replaced Loan from the Trustee, the Borrower shall not, and
the Originator agrees not to cause the Borrower to, transfer any such Replaced
Loan that is not a Warranty Loan to the Originator except: (i)(1) at the
then-current fair market value determined by the Borrower employing a valuation
procedure substantially similar to one that it would employ in a similar sale
to an independent third party and substantially consistent with the value of
such Replaced Loan as determined in the most recent periodic portfolio review conducted
by the Borrower, but taking into account relevant market or other changes
affecting the value of such Replaced Loan since such periodic portfolio review,
and (2) with the consent of the independent director of the Borrower; or (ii) as
a distribution to the Originator to the extent such Replaced Loan was initially
contributed by the Originator to the Borrower.


 


65

















 


(b)                                         Repurchase
or Substitution of Warranty Loans. 
If on any day a Loan is (or becomes) a Warranty Loan, no later than 10
Business Days following the earlier of knowledge by the Borrower of such Loan
becoming a Warranty Loan or receipt by the Borrower from the Administrative
Agent or the Servicer of written notice thereof, the Borrower shall either:


 


(i)                                     make
a deposit to the Collection Account (for allocation pursuant to Section 2.9
or Section 2.10, as applicable) in immediately available funds in
an amount equal to the sum of (a) the Outstanding Loan Balance of such
Loan, (b) any outstanding Servicer Advances thereon, (c) any accrued
and unpaid interest thereon, (d) all Hedge Breakage Costs arising as a
result thereof and owed to the relevant Hedge Counterparty for any termination
of one or more Hedge Transactions, in whole or in part, as required by the
terms of any Hedging Agreement and (e) any costs and damages incurred by
the Administrative Agent or by any Purchaser in connection with any violation
by such Loan of any predatory or abusive lending law which is an Applicable Law
(collectively, the “Retransfer Price”); or


 


(ii)                                  subject
to the satisfaction of the conditions in Section 2.18(a),
substitute for such Warranty Loan a Substitute Loan.  The Borrowing Base shall be reduced by the
Outstanding Loan Balance of each such Warranty Loan and, if applicable,
increased by the Outstanding Loan Balance of each Substitute Loan.  Upon confirmation of the deposit of such
Retransfer Price into the Collection Account or the delivery by the Borrower of
a Substitute Loan for each Warranty Loan (the date of such confirmation or
delivery, the “Retransfer Date”), such Warranty Loan shall be removed
from the Collateral and, as applicable, the Substitute Loan shall be included
in the Collateral and added to the Loan List. 
On the Retransfer Date of each Warranty Loan, the Trustee, for the
benefit of the Secured Parties, shall automatically and without further action
be deemed to transfer, assign and set-over to the Borrower, without recourse,
representation or warranty, all the right, title and interest of the Trustee,
for the benefit of the Secured Parties in, to and under such Warranty Loan and
all future monies due or to become due with respect thereto, the Related
Property, all Proceeds of such Warranty Loan, and Recoveries relating thereto,
all rights to security for any such Warranty Loan, and all Proceeds and
products of the foregoing.  The Trustee,
for the benefit of the Secured Parties, shall at the sole expense of the
Servicer, execute such documents and instruments of transfer as may be prepared
by the Servicer on behalf of the Borrower and take other such actions as shall
reasonably be requested by the Borrower to effect the transfer of such Warranty
Loan pursuant to this Section 2.18


 


(c)                                          Sale of
Delinquent Loans or Charged-Off Loans.


 


(i)                                     In
the event a Loan becomes either a Delinquent Loan or a Charged-Off Loan, the
Servicer, on behalf of the Borrower, may, prior to the occurrence of an
Unmatured Termination Event or a Termination Event, seek to liquidate such
defaulted assets by selling any such Loan (any such sale a “Defaulted Loan
Sale”); provided that such
sale is in accordance with the Servicing Standard and on arms-length terms,
fair market terms.  For the avoidance of
doubt, any substitution of a Delinquent Loan or a Charged-Off Loan under Section 2.18(a) shall
not constitute a 


 


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Defaulted Loan Sale.  All
proceeds of any such sale, net of reasonable selling expenses of the Servicer,
shall be deposited into the Collection Account in immediately available funds
and shall be available to repay Advances Outstanding on the next Payment Date
in accordance with Section 2.9 or Section 2.10, as
applicable.  Each Defaulted Loan Sale
shall be subject to the following terms and conditions:


 


(1)                                  At
least one Business Day prior to such Defaulted Loan Sale Date, the Borrower
shall have recommended to the Administrative Agent in writing that the related
Loan should be sold and shall have given the Administrative Agent (with a copy
to the Trustee) written notice of its intent to effect a Defaulted Loan Sale
(each such notice, a “Defaulted Loan Sale Notice”), specifying the
Defaulted Loan Sale Date, including a list of all Delinquent Loans and/or
Charged-Off Loans to be sold and assigned pursuant to such Defaulted Loan Sale,
and the purchase price therefor, and attaching a completed Borrowing Base
Certificate; provided, however, that if the sale price of any
such Delinquent Loan or Charged-Off Loan is less than the Assigned Value
thereof, then such Defaulted Loan Sale shall require the written consent of the
Administrative Agent (in its sole discretion), a copy of which shall also be
delivered to the Trustee;


 


(2)                                  Any
Defaulted Loan Sale shall be made by the Borrower to an unaffiliated third
party purchaser in a transaction in which the Borrower makes no
representations, warranties or covenants and provides no indemnification for
the benefit of any other party to the Defaulted Loan Sale (other than any
representations, warranties or covenants relating to the Borrower’s ownership
of or title to the Loan that is the subject of the Defaulted Loan Sale that are
standard and customary in connection with such a sale or for which the
Originator has agreed to fully indemnify the Borrower); and


 


(3)                                  After
giving effect to the Defaulted Loan Sale and the assignment to the Borrower of
the Collateral on any Defaulted Loan Sale Date, (a) the Advances
Outstanding shall not exceed the Maximum Availability, (b) the
representations and warranties contained in Section 4.1 hereof
shall continue to be correct in all material respects, except to the extent
relating to an earlier date, and (c) neither an Unmatured Termination
Event nor a Termination Event shall have resulted.


 


(ii)                                  In
connection with any Defaulted Loan Sale, following receipt into the Collection
Account of the amounts referred to in paragraph (i) above and
receipt by the Trustee of a certificate of the Servicer that such amounts have
been paid and all conditions precedent herein to such Defaulted Loan Sale have
been satisfied, there shall be sold and assigned to the Borrower (for further
sale to a third-party unaffiliated with the Borrower, the Originator or the
Servicer) without recourse, representation or warranty all of the right, title
and interest of the Administrative Agent, the Trustee, the Purchaser Agents,
the Purchasers and the Secured Parties in, to and under the portion of the
Collateral so retransferred and such portion of the Collateral so retransferred
shall be released from the Lien of this Agreement (subject to the requirements
of clause  (3) above).


 


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(iii)                              The
Originator hereby agrees to pay the reasonable legal fees and expenses of the
Administrative Agent, the Trustee, each Purchaser Agent and the Secured Parties
in connection with any Defaulted Loan Sale (including, but not limited to,
expenses incurred in connection with the release of the Lien of the
Administrative Agent, the Trustee, the Secured Parties and any other party
having an interest in the Collateral in connection with such Defaulted Loan
Sale).


 


(iv)                              In
connection with any Defaulted Loan Sale, on the related Defaulted Loan Sale
Date, the Trustee shall, at the expense of the Borrower (i) execute such
instruments of release with respect to the portion of the Collateral to be
retransferred to the Borrower, in recordable form if necessary, in favor of the
Borrower as the Borrower may reasonably request, (ii) deliver any portion
of the Collateral to be retransferred to the Borrower in its possession to the
Borrower and (iii) otherwise take such actions as the Borrower or the
Administrative Agent may determine are necessary and appropriate to release the
Lien of the Trustee and the Secured Parties on the portion of the Collateral to
be retransferred to the Borrower and release and deliver to the Borrower such
portion of the Collateral to be retransferred to the Borrower.


 


(v)                                 Unless
and until a Charged-Off Loan is sold pursuant to this Section 2.18(c),
the Servicer shall pursue such other resolution strategies available hereunder
with respect to such Charged-Off Loan, including, without limitation, workout
and foreclosure, as the Servicer may deem appropriate and consistent with the
Credit Policy and the Servicing Standard, in each case with a view towards the
maximization of the recovery on such Loan to the Secured Parties (as a
collective whole) on a present value basis.


 


(vi)                              The
Servicer shall act on behalf of the Secured Parties in negotiating and taking
any other action necessary or appropriate in connection with any Defaulted Loan
Sale, including the collection of all amounts payable in connection therewith.


 


(vii)                           A
Delinquent Loan or Charged-Off Loan may be sold by or on behalf of the Borrower
only on the terms and subject to the conditions set forth in this Section 2.18.


 


(d)                                         Notwithstanding
anything in this Section 2.18, Section 2.19 or Section 2.20,
the Borrower shall not, and the Servicer shall not on the Borrower’s behalf,
purchase, sell or substitute any Loan with the primary purpose of recognizing
gain or decreasing losses on such Loan or in any manner that would cause the
Borrower not to be in compliance with the requirements of Rule 3a-7 under
the Investment Company Act of 1940, as amended.


 


Section 2.19.                         Optional
Sales.


 


(a)                                          Prior to the
occurrence of an Unmatured Termination Event or a Termination Event, on any
Optional Sale Date the Borrower shall have the right, subject to the payment of
any Call Premium owed pursuant to Section 2.4(b), to prepay all or
a portion of the Advances 


 


68

















 


Outstanding in connection with the sale and assignment to the Borrower
by the Trustee, on behalf of the Secured Parties, of all or a portion of the
Loans, as the case may be in connection with a Permitted Securitization or a
Permitted Refinancing (each, an “Optional Sale”), subject to the
following terms and conditions:


 


(i)                                    The
Borrower shall have given the Administrative Agent (with a copy to the Trustee)
at least 45 Business Days’ prior written notice of its intent to effect an
Optional Sale in connection with a Permitted Securitization or a Permitted
Refinancing, and the Administrative Agent shall have delivered to the Borrower
its prior written consent (in its sole discretion) to such Optional Sale,
unless such notice and/or consent requirement, as applicable, is waived or
reduced by the Administrative Agent; provided
that no such consent will be required for any Optional Sale of any Loan at a
price equal to or greater than the Assigned Value of such Loan as of the date
of the Optional Sale;


 


(ii)                                 Any
Optional Sale shall be in connection with a Permitted Securitization or a
Permitted Refinancing;


 


(iii)                              Unless
an Optional Sale is to be effected on a Payment Date (in which case the
relevant calculations with respect to such Optional Sale shall be reflected on
the applicable Servicing Report), the Servicer shall deliver to the
Administrative Agent (with a copy to the Trustee) a certificate and evidence to
the reasonable satisfaction of the Administrative Agent (which evidence may
consist solely of a certificate from the Servicer) that the Borrower shall have
sufficient funds on the related Optional Sale Date to effect the contemplated
Optional Sale in accordance with this Agreement.  In effecting an Optional Sale, the Borrower
may use the Proceeds of sales of the Loans to repay all or a portion of the
Aggregate Unpaids;


 


(iv)                              After
giving effect to the Optional Sale and the assignment to the Borrower of all or
a portion of the Loans, as the case may be, on any Optional Sale Date, (a) the
Advances Outstanding shall not exceed the Maximum Availability, (b) the
representations and warranties contained in Section 4.1 hereof
shall continue to be correct, except to the extent relating to an earlier date
and (c) neither an Unmatured Termination Event nor a Termination Event
shall have resulted from the Optional Sale;


 


(v)                                 On
the related Optional Sale Date, the Administrative Agent, each Purchaser Agent
on behalf of the applicable Purchaser, the Hedge Counterparties, the Trustee and
the Backup Servicer, as applicable, shall have received, as applicable, in
immediately available funds, an amount equal to the sum of (a) the portion
of the Advances Outstanding to be repaid (that are attributable to the
Collateral to be sold by the Borrower in connection with such Optional Sale) plus
(b) an amount equal to all unpaid Interest to the extent reasonably
determined by the Administrative Agent and the Purchaser Agents to be
attributable to that portion of the Advances Outstanding to be repaid in
connection with the Optional Sale plus (c) an aggregate amount
equal to the sum of all other amounts due and owing to the 


 


69

















 


Administrative
Agent, the Trustee, the Backup Servicer, the Purchaser Agents, each applicable
Purchaser, the Affected Parties, the Indemnified Parties and the Hedge
Counterparties, as applicable, under this Agreement and the other Transaction
Documents, to the extent accrued to such date and to accrue thereafter to the
next Payment Date and attributed to that portion of the Advances Outstanding to
be repaid in connection with the Optional Sale; provided that the Trustee, the Administrative Agent and each
Purchaser Agent shall have the right solely in connection with a Permitted Securitization
or Permitted Refinancing to determine whether the amount paid (or proposed to
be paid) by the Borrower on the Optional Sale Date is sufficient to satisfy the
requirements of clauses  (a) through (c) and is
sufficient to reduce the Advances Outstanding to the extent requested by the
Borrower in connection with the Optional Sale;


 


(vi)                              On
or prior to each Optional Sale Date, the Borrower shall have delivered to the
Administrative Agent a list specifying all Loans to be sold and assigned
pursuant to such Optional Sale; and


 


(vii)                           No
selection procedure adverse to the interests of the Administrative Agent, the
Purchaser Agents or the Secured Parties shall have been utilized by the
Borrower in the selection of the Loan to be sold and assigned pursuant to such
Optional Sale.


 


(b)                                         In connection
with any Optional Sale, upon receipt by the Administrative Agent, the Purchaser
Agents, the Hedge Counterparties, the Trustee and the Backup Servicer, as
applicable, of the amounts referred to in clause (a)(v) above,
there shall be sold and assigned to the Borrower without recourse,
representation or warranty all of the right, title and interest of the Trustee,
for the benefit of the Secured Parties, in, to and under the portion of the
Collateral so retransferred and such portion of the Collateral so retransferred
shall be released from the Lien of this Agreement.


 


(c)                                          The
Originator hereby agrees to pay the reasonable legal fees and expenses of the
Administrative Agent, each Purchaser Agent and the other Secured Parties in
connection with any Optional Sale (including, but not limited to, expenses
incurred in connection with the release of the Lien of the Trustee on behalf of
the Secured Parties and any other party having an interest in the Collateral in
connection with such Optional Sale).


 


(d)                                         In connection
with any Optional Sale, on the related Optional Sale Date, the Trustee, on
behalf of the Secured Parties, shall, at the expense of the Borrower (i) execute
such instruments of release in favor of the Borrower with respect to the
portion of the Collateral to be retransferred to the Borrower, as the Borrower
may reasonably request (in recordable form if necessary and, in each case,
without recourse), (ii) deliver any portion of the Collateral to be
retransferred to the Borrower in its possession to the Borrower and (iii) otherwise
take such actions, and cause or permit the Trustee to take such actions, as are
necessary and appropriate to release the Lien of the Trustee and the Secured
Parties on the portion of the Collateral to be retransferred to the Borrower
and release and deliver to the Borrower such portion of the Collateral to be
retransferred to the Borrower.


 


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Section 2.20.                         Discretionary
Sales.


 


(a)                                          Prior to the
occurrence of an Unmatured Termination Event or a Termination Event, on any
Discretionary Sale Date the Borrower shall have the right, subject to the
payment of any Call Premium owed pursuant to Section 2.4(b), to
prepay all or a portion of the Advances Outstanding in connection with the sale
and assignment to the Borrower by the Trustee, for the benefit of the Secured
Parties, of one or more Loans (each, a “Discretionary Sale”), subject to
the following terms and conditions:


 


(i)                                     At
least one Business Day prior to such Discretionary Sale Date, the Borrower
shall have recommended to the Administrative Agent in writing that the related
Loan should be sold and shall have given the Administrative Agent (with a copy
to the Trustee) written notice of its intent to effect a Discretionary Sale
(each such notice, a “Discretionary Sale Notice”), specifying the
Discretionary Sale Date, including a list of all Loans to be sold and assigned
pursuant to such Discretionary Sale and the Administrative Agent shall have delivered
to the Borrower its prior written consent (in its sole discretion) to such
Discretionary Sale; provided that
no such consent will be required for any Discretionary Sale of any Loan at a
price equal to or greater than the Assigned Value of such Loan as of the date
of the Discretionary Sale;


 


(ii)                                  Any
Discretionary Sale shall be made by the Borrower to an unaffiliated third party
purchaser in a transaction (w) in accordance with the Servicing Standard, (x) reflecting
arms-length market terms, (y) in which the Borrower makes no
representations, warranties or covenants and provides no indemnification for
the benefit of any other party to the Discretionary Sale (other than any
representations, warranties or covenants relating to the Borrower’s ownership of
or title to the Loan that is the subject of the Defaulted Loan Sale that are
standard and customary in connection with such a sale or for which the
Originator has agreed to fully indemnify the Borrower) and (z) the primary
purpose of which is other than to maximize gain or minimize loss on the
Borrower’s assets and such purpose of the transaction shall be set forth in
writing by Borrower in the notice delivered pursuant to sub-clause (i) above;


 


(iii)                               The
Servicer shall deliver to the Administrative Agent (with a copy to the Trustee)
a completed Borrowing Base Certificate and other evidence to the reasonable
satisfaction of the Administrative Agent that the Borrower shall have
sufficient funds on the related Discretionary Sale Date to effect the contemplated
Discretionary Sale in accordance with this Agreement (unless a Discretionary
Sale is to be effected on a Payment Date, in which case there must be
sufficient Available Funds to effect the contemplated Discretionary Sale in
accordance with the terms of this Agreement);


 


(iv)                              After
giving effect to the Discretionary Sale and the assignment to the Borrower of
the related Collateral on any Discretionary Sale Date, (a) the Advances
Outstanding shall not exceed the Maximum Availability, (b) the
representations and warranties contained in Section 4.1 hereof
shall continue to be 


 


71

















 


correct in all
material respects, except to the extent relating to an earlier date, and (c) neither
an Unmatured Termination Event nor a Termination Event shall have resulted; and


 


(v)                                         On
the related Discretionary Sale Date, the Trustee on behalf of the Secured
Parties shall have received, into the Collection Account, in immediately
available funds, an amount equal to the sum of (a) the portion of the
Advances Outstanding to be prepaid that are attributable to the Collateral to
be sold by the Borrower pursuant to this Section 2.20  plus (b) an
amount equal to all unpaid Interest to the extent reasonably determined by the
Administrative Agent and the Purchaser Agents to be attributable to that
portion of the Advances Outstanding to be paid in connection with the
Discretionary Sale plus (c) an aggregate amount equal to the sum of
all other amounts due and owing to the Administrative Agent, the Trustee and
the Backup Servicer, the Purchaser Agents, the applicable Purchaser, any other
Affected Parties and the Hedge Counterparties, as applicable, under this
Agreement and the other Transaction Documents, to the extent accrued to such
date and to accrue to the next Payment Date (including, without limitation,
Breakage Costs, Hedge Breakage Costs and any other payments owing to the Hedge
Counterparties in respect of the termination of any Hedge Transaction) in each
case, to the extent attributable to the Collateral to be sold by the Borrower
pursuant to this Section 2.20; provided
that the Trustee, the Administrative Agent and each Purchaser Agent shall have
the right to determine whether the amount paid (or proposed to be paid) by the
Borrower on the Discretionary Sale Date is sufficient to satisfy such
requirements and is sufficient to reduce the Advances Outstanding to the extent
requested by the Borrower in connection with the Discretionary Sale; provided, further,
that any proceeds of such Discretionary Sale in excess of the amount so
deposited into the Collection Account also shall be deposited into the
Collection Account and used to prepay Advances Outstanding on such
Discretionary Sale Date.


 


(b)                                         In connection
with any Discretionary Sale, following receipt by the Purchaser Agents of the
amounts referred to in clause (v) above, there shall be sold and
assigned to the Borrower (for further sale to a third-party unaffiliated with
the Borrower, the Originator or the Servicer) without recourse, representation
or warranty all of the right, title and interest of the Administrative Agent,
the Trustee, the Purchaser Agents, the Purchasers and the Secured Parties in,
to and under the portion of the Collateral subject to such Discretionary Sale
and such portion of the Collateral so transferred shall be released from the
Lien of this Agreement (subject to the requirements of clauses (iii) and
(iv) above).


 


(c)                                          The
Originator hereby agrees to pay the reasonable legal fees and expenses of the
Administrative Agent, the Trustee, each Purchaser Agent and the Secured Parties
in connection with any Discretionary Sale (including, but not limited to,
expenses incurred in connection with the release of the Lien of the
Administrative Agent, the Trustee, the Secured Parties and any other party
having an interest in the Collateral in connection with such Discretionary
Sale).


 


72

















 


(d)                                         In connection
with any Discretionary Sale, on the related Discretionary Sale Date, the Trustee
shall, at the expense of the Borrower (i) execute such instruments of
release with respect to the portion of the Collateral to be retransferred to
the Borrower, in recordable form if necessary, in favor of the Borrower as the
Borrower may reasonably request, (ii) deliver any portion of the
Collateral to be retransferred to the Borrower in its possession to the
Borrower and (iii) otherwise take such actions, and cause or permit the
Trustee to take such actions, as are necessary and appropriate to release the
Lien of the Trustee and the Secured Parties on the portion of the Collateral to
be retransferred to the Borrower and release and deliver to the Borrower such
portion of the Collateral to be retransferred to the Borrower.


 


Section 2.21.                         Lien
Release Dividend.


 


(a)                                          Notwithstanding
any provision contained in this Agreement to the contrary, provided there is
not then existing an Unmatured Termination Event, a Termination Event or a
Servicer Default, on a Lien Release Dividend Date, the Borrower may dividend to
the Originator a portion of those Loans that were contributed to the Borrower
from the Originator, or portions thereof (each, a “Lien Release Dividend”),
subject to the following terms and conditions, as certified by the Borrower and
the Originator to the Administrative Agent (with a copy to the Trustee):


 


(i)                                     The
Borrower and the Originator shall have given the Administrative Agent and each
Purchaser, with a copy to the Trustee and the Backup Servicer, at least five
Business Days prior written notice requesting that the Purchasers consent to
the effectuation of a Lien Release Dividend, in the form of Exhibit O
hereto (a “Notice and Request for Consent”), which consent shall be
given in the sole and absolute discretion of each Purchaser; provided that, if a Purchaser shall not
have responded to the Notice and Request for Consent by 11:00 A.M. on the
day that is one Business Day prior to the proposed Lien Release Dividend Date,
such Purchaser shall be deemed not to have given its consent;


 


(ii)                                  on
any Lien Release Dividend Date, no more than four Lien Release Dividends shall
have been made during the 12-month period immediately preceding the proposed
Lien Release Dividend Date;


 


(iii)                               with
respect to any Lien Release Dividend, the sum of the Outstanding Loan Balances
of all Loans which were Delinquent Loans, Charged-Off Loans or Loans subject to
a Warranty Event which were (x) included in all Lien Release Dividends or (y) replaced
by the Borrower pursuant to Section 2.18, in each case during the
12-month period immediately preceding the proposed Lien Release Dividend Date,
does not exceed 10% of the highest Aggregate Outstanding Loan Balance of any
month during such 12-month period;


 


(iv)                              After
giving effect to the Lien Release Dividend on the Lien Release Dividend Date, (A) the
Advances Outstanding shall not exceed the Maximum Availability, (B) the
representations and warranties contained in Sections 4.1 and 4.2
hereof shall continue to be correct in all material respects, except to the
extent relating to an earlier date, (C) the eligibility of any Loan
remaining as part of the


 


73
















 


Collateral
after the Lien Release Dividend will be redetermined as of the Lien Release
Dividend Date, (D) neither an Unmatured Termination Event, a Termination
Event nor a Servicer Default shall have resulted, (E) no claim has been
asserted or proceeding commenced challenging the enforceability or validity of
any of the Required Loan Documents, (F) there shall have been no material
adverse change as to the Servicer or the Borrower, and (G) the Weighted
Average Life of the Loans included in the Collateral (weighted based on
Outstanding Loan Balances) will not exceed six years;


 


(v)                                 Such
Lien Release Dividend must be in compliance with Applicable Law and may not (A) be
made with the intent to hinder, delay or defraud any creditor of the Borrower
or (B) leave the Borrower, immediately after giving effect to the Lien
Release Dividend, (i) insolvent, (ii) with insufficient funds to pay
its obligations as and when they become due or (iii) with inadequate
capital for its present and anticipated business and transactions;


 


(vi)                              On
or prior to the Lien Release Dividend Date, the Borrower shall have (A) delivered
to the Administrative Agent, with a copy to the Trustee and the Backup
Servicer, a list specifying all Loans or portions thereof to be transferred
pursuant to such Lien Release Dividend and the Administrative Agent shall have
approved same in its sole discretion and (B) obtained all authorizations,
consents and approvals required to effectuate the Lien Release Dividend;


 


(vii)                           A
portion of a Loan may be transferred pursuant to a Lien Release Dividend
provided that (A) such transfer does not have an adverse effect on the
portion of such Loan remaining as a part of the Collateral, any other
Collateral, the Purchasers, the Administrative Agent or any other Secured Party
and (B) a new promissory note (other than with respect to a Noteless Loan)
for the portion of the Loan remaining as a part of the Collateral has been
executed, and the original thereof has been endorsed to the Administrative
Agent and delivered to the Trustee;


 


(viii)                        Each
Loan, or portion thereof, as applicable, shall be transferred at a value equal
to the Outstanding Loan Balance thereof, exclusive of any accrued and unpaid
interest or Accreted Interest thereon;


 


(ix)                                The
Borrower shall deliver a Borrowing Base Certificate (including a calculation of
the Borrowing Base after giving effect to such Lien Release Dividend) to the
Administrative Agent; and


 


(x)                                   The
Borrower shall have paid in full an aggregate amount equal to the sum of all
amounts due and owing to the Administrative Agent, the Purchasers, the Trustee,
the Backup Servicer and any Hedge Counterparty, as applicable, under this
Agreement and the other Transaction Documents, to the extent accrued to such
date (including, without limitation, Breakage Costs and Hedge Breakage Costs)
with respect to the Loans to be transferred pursuant to such Lien Release
Dividend and incurred in connection with the transfer of such Loans pursuant to
such Lien Release 


 


74

















 


Dividend and
the termination of any Hedge Transactions that may be required to be
terminated, in whole or in part, in connection therewith.


 


(b)                                         In connection
with the Lien Release Dividend, there shall be sold and assigned to the
Borrower, without recourse, representation or warranty, all of the right, title
and interest of the Trustee, on behalf of the Secured Parties, in, to and under
the Loans or portions thereof so transferred (together with any related
Collateral (provided that in the case of a transfer of a portion of a Loan, a
pro rata interest in the Related Property and other related Collateral shall be
released)) and such Loans or portions thereof so transferred (together with any
related Collateral (provided that in the case of a transfer of a portion of a
Loan, a pro rata interest in the Related Property and other related Collateral
shall be released)) shall be released from the Lien of this Agreement (subject
to the requirements of Section 2.21(a) above).


 


(c)                                          The Borrower
hereby agrees to pay the reasonable legal fees and expenses of the
Administrative Agent, the Trustee and the other Secured Parties in connection
with any Lien Release Dividend (including, but not limited to, expenses
incurred in connection with the release of the Lien of the Administrative
Agent, on behalf of the Secured Parties, and any other party having an interest
in the Loans in connection with such Lien Release Dividend).


 


(d)                                         In connection
with any Lien Release Dividend, on the related Lien Release Dividend Date, the
Trustee, on behalf of the Secured Parties, shall, at the request of the
Administrative Agent and the expense of the Borrower (1) execute such
instruments of release with respect to the Loans or portions thereof to be
transferred to the Borrower (together with, in the case of the transfer of the
Loans but not portions thereof, any related Collateral), in recordable form if
necessary, in favor of the Borrower as the Borrower may reasonably request, (2) deliver
any portion of the Loans or portions thereof to be transferred to the Borrower
(together with, in the case of the transfer of the Loans but not portions
thereof, any related Collateral) in its possession to the Borrower and (3) otherwise
take such actions, and cause or permit the Trustee to take such actions, as are
necessary and appropriate to release the Lien of the Trustee on behalf of the
Secured Parties on the Loans or portions thereof to be transferred to the
Borrower (together with, in the case of the transfer of the Loans but not
portions thereof, any related Collateral) and release and deliver to the
Borrower such Loans or portions thereof to be transferred to the Borrower
(together with, in the case of the transfer of the Loans but not portions
thereof, any related Collateral).


 


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ARTICLE III



CONDITIONS TO CLOSING; ADVANCES


 


Section 3.1.                                Conditions
to Closing and Initial Advance.


 


No Purchaser
shall be obligated to make any Advance hereunder on the occasion of the Initial
Advance, nor shall any Purchaser, the Administrative Agent, the Purchaser
Agents, the Backup Servicer or the Trustee be obligated to take, fulfill or
perform any other action hereunder, until the following conditions have been
satisfied, in the sole discretion of, or waived in writing by, the
Administrative Agent and each Purchaser Agent:


 


(a)                                          Each
Transaction Document shall have been duly executed by, and delivered to, the
parties thereto, and the Administrative Agent and each Purchaser Agent shall
have received such other documents, instruments, agreements and legal opinions
as the Administrative Agent and each Purchaser Agent shall reasonably request
in connection with the transactions contemplated by this Agreement, including,
without limitation, all those specified in the schedule of condition precedent
documents attached hereto as Schedule I, each in form and substance
satisfactory to the Administrative Agent and each Purchaser Agent;


 


(b)                                         The
Administrative Agent and each Purchaser Agent shall have received (i) satisfactory
evidence that the Borrower, the Originator and the Servicer have obtained all
required consents and approvals of all Persons, including all requisite
Governmental Authorities, to the execution, delivery and performance of this
Agreement and the other Transaction Documents to which each is a party and the
consummation of the transactions contemplated hereby or thereby or (ii) an
Officer’s Certificate from each of the Borrower, the Originator and the
Servicer in form and substance satisfactory to the Administrative Agent and
each Purchaser Agent affirming that no such consents or approvals are required;
it being understood that the acceptance of
such evidence or Officer’s Certificate shall in no way limit the recourse of
the Administrative Agent, each Purchaser Agent or any Secured Party against the
Originator, the Servicer, or the Borrower for a breach of the Originator’s, the
Borrower’s, and the Servicer’s representation or warranty that all such
consents and approvals have, in fact, been obtained;


 


(c)                                          The Borrower,
the Servicer and the Originator shall each be in compliance in all material
respects with all Applicable Law and shall have delivered to the Administrative
Agent and each Purchaser Agent as to this and other closing matters a
certification in the form of Exhibits F-1 and F-2, as
applicable;


 


(d)                                         The Borrower
and the Servicer shall have delivered to the Administrative Agent, the Trustee
and each Purchaser Agent duly executed Powers of Attorney in the form of Exhibits
G-1 and G-2, as applicable;


 


(e)                                          The Borrower
and the Servicer shall each have delivered to the Administrative Agent and each
Purchaser Agent a certificate as to Solvency in the form of Exhibits E-1
and E-2, as applicable;


 


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(f)                                            On or prior
to the date of the Initial Advance, each applicable Purchaser Agent shall have
received a duly executed copy of its Variable Funding Certificate, in a
principal amount equal to the Commitment of the related Purchaser; and


 


(g)                                         On or prior to
the date of the Initial Advance, the Administrative Agent shall have approved
the Credit Policy.


 


Section 3.2.                                Conditions
Precedent to Repayments.


 


(a)                                          Each
reduction in Advances Outstanding pursuant to Section 2.4(b), and
each repayment of Advances or each pledge of additional Eligible Loans, in each
case to pay any Required Advance Reduction Amount pursuant to Section 2.6(b) (each,
a “Transaction”) shall be subject to the further conditions precedent
that:


 


(i)                                     with
respect to any reduction in Advances Outstanding pursuant to Section 2.4(b),
the Servicer shall have delivered to the Administrative Agent and each
Purchaser Agent (with a copy to the Trustee and the Backup Servicer) at least
one Business Day prior to any reduction of Advances Outstanding a Repayment
Notice in the form of Exhibit A-2 and a Borrowing Base Certificate;
and


 


(ii)                                  with
respect to any repayment of Advances or any pledge of additional Eligible Loans
pursuant to Section 2.6(b), the Servicer shall have delivered to
the Administrative Agent and each Purchaser Agent (with a copy to the Trustee
and the Backup Servicer) no later than 2:00 p.m. on the Business Day prior
to the related repayment or pledge a Repayment Notice in the form of Exhibit A-2
and a Borrowing Base Certificate.


 


(b)                                         On the date of
such Transaction the following shall be true and correct and the Borrower and
the Servicer shall have certified in the related Repayment Notice that all
conditions precedent to such Transaction have been satisfied and shall be
deemed to have certified that:


 


(i)                                     The
representations and warranties contained in Section 4.1, Section 4.2
and Section 4.3 are true and correct in all material respects on
and as of such day as though made on and as of such day and shall be deemed to
have been made on such day (other than any representation and warranty that is
made as of a specific date);


 


(ii)                                  No
event has occurred, or would result from such Transaction, that constitutes a
Termination Event or Unmatured Termination Event;


 


(iii)                               On
and as of such day, after giving effect to such Transaction, the Advances
Outstanding shall not exceed the Maximum Availability;


 


(iv)                              On
and as of such day, the Borrower and the Servicer each has performed all of the
covenants and agreements contained in this Agreement to be performed by such
Person on or prior to such day;


 


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(v)                                 No
Applicable Law shall prohibit or enjoin the proposed reduction of Advances
Outstanding, the proposed pledge of additional Eligible Loans or any other transaction
contemplated herein;


 


(c)                                          The Borrower
shall have delivered to the Trustee (with a copy to the Backup Servicer and the
Administrative Agent) in the case of any pledge of additional Eligible Loans,
no later than 2:00 p.m. one Business Day prior to the related Pledge Date,
a faxed or e-mailed copy of the duly executed original promissory notes of the
Loans (other than in the case of Noteless Loans) and if any Loans are closed in
escrow, a certificate (in the form of Exhibit L) from the closing
attorneys of such Loans certifying the possession of the Required Loan
Documents, provided, however,
that, notwithstanding the foregoing, the Borrower shall cause the Required Loan
Documents to be in the possession of the Trustee within two Business Days of the
related Pledge Date;


 


(d)                                         The
Amortization Period shall not have commenced;


 


(e)                                          On the date
of such Transaction, the Administrative Agent and each Purchaser Agent shall
have received such other approvals, opinions or documents as the Administrative
Agent and each Purchaser Agent may reasonably require;


 


(f)                                            The
Administrative Agent shall have received from the Borrower all hedging
confirmations required in connection with such Transaction;


 


(g)                                         The Borrower
and Servicer shall have delivered to the Administrative Agent and each
Purchaser Agent all reports required to be delivered as of the date of such
Transaction;


 


(h)                                         The Borrower
shall have paid all fees required to be paid, including all fees required
hereunder and under the applicable Purchaser Fee Letters and shall have
reimbursed the Purchasers, the Administrative Agent and each Purchaser Agent
for all fees, costs and expenses of closing the transactions contemplated
hereunder and under the other Transaction Documents, including the reasonable
attorney fees and any other legal and document preparation costs incurred by
the Purchasers, the Administrative Agent and each Purchaser Agent; and


 


(i)                                             The
Borrower shall have delivered to the Administrative Agent and each Purchaser
Agent (with a copy to the Trustee) an Officer’s Certificate (which may be part
of the Repayment Notice) in form and substance reasonably satisfactory to the
Administrative Agent and each Purchaser Agent certifying that each of the
foregoing conditions precedent has been satisfied.


 


Section 3.3.                                Custodianship;
Transfer of Loans and Permitted Investments.


 


(a)                                          The Trustee
shall hold all Certificated Securities (whether Loans or Permitted Investments)
and Instruments in physical form at the office of the Trustee in Boston,
Massachusetts or the office of the Trustee in Florence, South Carolina at the
addresses specified in Schedule III hereto.  Any successor Trustee shall be a state or
national bank or trust company which is not an Affiliate of the Borrower and
which is a Qualified Institution.


 


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(b)                                         Each time that
the Borrower (or the Servicer on behalf of the Borrower) shall direct or cause
the acquisition of any Permitted Investment, the Borrower shall (or the
Servicer on behalf of the Borrower), if such Permitted Investment has not
already been transferred in accordance with its Underlying Instruments
(including obtaining any necessary consents) to the Collection Account, cause
the transfer of such Permitted Investment in accordance with its Underlying
Instruments (including obtaining any necessary consents) to the Trustee to be
held in the Collection Account for the benefit of the Secured Parties in
accordance with the terms of this Agreement. 
The security interest of the Trustee in the funds or other property
utilized in connection with such acquisition shall, immediately and without
further action on the part of the Trustee, be released.  The security interest of the Trustee shall
nevertheless come into existence and continue in the Permitted Investment so
acquired, including all rights of the Borrower in and to any contracts related
to and proceeds of such Permitted Investment.


 


(c)                                          The Borrower
(or the Servicer on behalf of the Borrower) shall cause all Permitted
Investments acquired by the Borrower to be transferred to the Trustee for
credit to the appropriate Account, in each case for the benefit of the Secured
Parties, and shall cause all Loans acquired by the Borrower to be delivered to
the Trustee, for the benefit of the Secured Parties, by one of the following
means (and shall take any and all other actions necessary to create in favor of
the Trustee, for the benefit of the Secured Parties, a valid, perfected, first
priority security interest in each Loan and Permitted Investment granted to the
Administrative Agent under laws and regulations (including without limitation
Articles 8 and 9 of the UCC, as applicable) in effect at the time of such
grant):


 


(i)                                    in
the case of an Instrument or a Certificated Security represented by a Security
Certificate in registered form by having it specially Indorsed to the Trustee
or in blank by an effective Indorsement or registered in the name of the
Trustee and by (A) delivering such Instrument or Security Certificate to
the Trustee in the State of Massachusetts or South Carolina and (B) causing
the Trustee to maintain (on behalf of the Secured Parties) continuous
possession of such Instrument or Security Certificate in the State of
Massachusetts or South Carolina;


 


(ii)                                 in
the case of an Uncertificated Security, by (A) causing the Trustee, for
the benefit of the Secured Parties, to become the registered owner of such
Uncertificated Security and (B) causing such registration to remain
effective;


 


(iii)                              in
the case of any Security Entitlement, by causing the Trustee, for the benefit
of the Secured Parties, to become the Entitlement Holder of such Security
Entitlement; and


 


(iv)                              in
the case of general intangibles (including any loan not evidenced by an
Instrument) by (A) notifying the related Obligor thereunder of the
transfer and (B) filing, maintaining and continuing the effectiveness of,
a financing statement naming the Borrower as debtor and the Trustee as secured
party and describing the Loan or Permitted Investment (as the case may be) as
the collateral at the filing office of the Secretary of State for the State of
Delaware.


 


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ARTICLE IV




REPRESENTATIONS AND WARRANTIES


 


Section 4.1.                                Representations
and Warranties of the Borrower.


 


The Borrower
represents and warrants as follows as of the Closing Date, the Thirteenth
Amendment Effective Date, each applicable Cut-Off Date, each date that Advances
Outstanding are reduced pursuant to Section 2.4(b), each date that
Advances are repaid pursuant to Section 2.6(b), each date as of
which any Servicing Report, as provided for in Section 6.10(b), is
calculated, and as of each other date provided under this Agreement or the
other Transaction Documents on which such representations and warranties are
required to be (or deemed to be) made:


 


(a)                                          Organization
and Good Standing.  The Borrower has
been duly organized, and is validly existing as a limited liability company in
good standing, under the laws of the State of Delaware, with all requisite
limited liability company power and authority to own or lease its properties
and conduct its business as such business is presently conducted, and had at
all relevant times, and now has all necessary power, authority and legal right
to acquire, own and sell the Collateral.


 


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


 


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


 


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


 


(e)                                          No
Violation.  The consummation of the
transactions contemplated by this Agreement and the other Transaction Documents
to which it is a party and the fulfillment of the terms hereof and thereof will
not (i) conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time or both)
a default under, the Borrower’s certificate of formation, operating agreement
or any Contractual Obligation of the 


 


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Borrower, (ii) result in the creation or imposition of any Lien
(other than Permitted Liens) upon any of the Borrower’s properties pursuant to
the terms of any such Contractual Obligation, other than this Agreement, or (iii) violate
any Applicable Law.


 


(f)                                            No
Proceedings.  There is no litigation,
proceeding or investigation pending or, to the best knowledge of the Borrower,
threatened against the Borrower, before any Governmental Authority (i) asserting
the invalidity of this Agreement or any other Transaction Document to which the
Borrower is a party, (ii) seeking to prevent the consummation of any of
the transactions contemplated by this Agreement or any other Transaction
Document to which the Borrower is a party or (iii) seeking any
determination or ruling that could reasonably be expected to have Material
Adverse Effect.


 


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


 


(h)                                         Bulk Sales.  The execution, delivery and performance of
this Agreement and the transactions contemplated hereby do not require
compliance with any “bulk sales” act or similar law by Borrower.


 


(i)                                             Solvency.  The Borrower is not the subject of any
Insolvency Proceedings or Insolvency Event. 
The transactions under this Agreement and any other Transaction Document
to which the Borrower is a party do not and will not render the Borrower not
Solvent and the Borrower shall deliver to the Administrative Agent and each
Purchaser Agent on the Closing Date a certification in the form of Exhibit E-1.


 


(j)                                             Selection
Procedures.  No procedures adverse to
the interests of the Purchasers were utilized by the Borrower in identifying
and/or selecting the Loans in the Collateral.


 


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


 


(l)                                             Exchange
Act Compliance; Regulations T, U and X. 
None of the transactions contemplated herein or in the other Transaction
Documents (including, without limitation, the use of the proceeds from the sale
of the Collateral) will violate or result in a violation of Section 7 of
the Exchange Act, or any regulations issued pursuant thereto, including,
without limitation, Regulations T, U and X of the Board of Governors of the
Federal Reserve System, 12 C.F.R., Chapter II. 
The Borrower does not own or intend to carry or purchase, and no
proceeds from the Advances will be used to carry or purchase, any “margin stock”
within the meaning of Regulation U or to extend “purpose credit” within the
meaning of Regulation U.


 


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(m)                                       Security
Interest.


 


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


 


(ii)                                  the
Collateral is comprised of “instruments”, “security entitlements”, “general
intangibles”, “tangible chattel paper”, “accounts”, “certificated securities”, “uncertificated
securities” or “securities accounts” (each as defined in the applicable UCC)
and/or such other category of collateral under the applicable UCC as to which
the Borrower has complied with its obligations under this Section 4.1(m));


 


(iii)                               with
respect to Collateral that constitute “security entitlements”:


 


(1)                                  all
of such security entitlements have been credited to one of the Accounts and the
securities intermediary for each Account has agreed to treat all assets
credited to such Account as “financial assets” within the meaning of the
applicable UCC;


 


(2)                                  the
Borrower has taken all steps necessary to cause the securities intermediary to
identify in its records the Trustee, for the benefit of the Secured Parties, as
the Person having a security entitlement against the securities intermediary in
each of the Accounts; and


 


(3)                                  the
Accounts are not in the name of any Person other than the Borrower, subject to
the lien of the Trustee, for the benefit of the Secured Parties.  The Borrower has not authorized or allowed
the securities intermediary of any Account to comply with the entitlement order
of any Person other than the Trustee, for the benefit of the Secured Parties, provided that, until the Trustee delivers
a notice of exclusive control under the Securities Account Control Agreement,
the Borrower and the Servicer may cause cash in the Accounts to be invested in
Permitted Investments.


 


(iv)                              all
Accounts constitute “securities accounts” as defined in the applicable UCC;


 


(v)                                 the
Borrower owns and has good and marketable title to the Collateral free and
clear of any Lien (other than Permitted Liens) of any Person;


 


(vi)                              the
Borrower has received all consents and approvals required by the terms of any
Loan to the granting of a security interest in the Loans hereunder to the
Trustee, on behalf of the Secured Parties;


 


(vii)                           the
Borrower has caused the filing of all appropriate financing statements in the
proper filing office in the appropriate jurisdictions under Applicable Law in
order to perfect the security interest in the Collateral and that portion of
the Loans in which a security interest may be perfected by filing granted to
the Trustee, on behalf of the Secured Parties, under this Agreement;


 


 


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(viii)                        other
than the security interest granted to the Trustee, on behalf of the Secured
Parties, pursuant to this Agreement, the Borrower has not pledged, assigned,
sold, granted a security interest in or otherwise conveyed any of the
Collateral.  The Borrower has not
authorized the filing of and is not aware of any financing statements against
the Borrower that include a description of collateral covering the Collateral
other than any financing statement (A) relating to the security interest
granted to the Borrower under the Sale Agreement, or (B) relating to the
closing of a Permitted Securitization contemplated by Section 2.19,
or (C) that has been terminated and/or fully and validly assigned to the
Trustee on or prior to the date hereof or (D) relating to the Collateral
related to a Subordinated Loan.  The
Borrower is not aware of the filing of any judgment or tax lien filings against
the Borrower;


 


(ix)                                all
original executed copies of each underlying promissory note or copies of each
Loan Register, as applicable, that constitute or evidence each Loan has been,
or subject to the delivery requirements contained herein, will be delivered to
the Trustee;


 


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


 


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


 


(xii)                            with
respect to Collateral that constitutes a “certificated security,” such
certificated security has been delivered to the Trustee, on behalf of the
Secured Parties and, if in registered form, has been specially Indorsed to the
Trustee, for the benefit of the Secured Parties, or in blank by an effective
Indorsement or has been registered in the name of the Trustee, for the benefit
of the Secured Parties, upon original issue or registration of transfer by the
Borrower of such certificated security; and


 


(xiii)                         with
respect to Collateral that constitutes an “uncertificated security”, that the
Borrower of such uncertificated security has registered the Administrative
Agent as the registered owner of such uncertificated security.


 


(n)                                         Reports
Accurate.  All Servicing Reports (if
prepared by the Borrower, or to the extent that information contained therein
is supplied by the Borrower), information, exhibits, financial statements,
documents, books, records or reports furnished by the Borrower to the
Administrative Agent, the Trustee, each Purchaser Agent or any Purchaser in
connection with this Agreement are, as of their date, true, complete and correct.


 


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(o)                                         Location of
Offices.  The Borrower’s location
(within the meaning of Article 9 of the UCC) is Delaware.  The office where the Borrower keeps all the
Records is at the address of the Borrower referred to in Section 13.2
hereof (or at such other locations as to which the notice and other
requirements specified in Section 5.2(g) shall have been
satisfied).  The Borrower’s Federal
Employee Identification Number is correctly set forth on Exhibit F-1.  The Borrower has not changed its name
(whether by amendment of its certificate of formation, by reorganization or
otherwise) or its jurisdiction of organization and has not changed its location
within the four months preceding the Closing Date.


 


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


 


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


 


(r)                                            Sale
Agreement.  The Sale Agreement is the
only agreement pursuant to which the Borrower purchases Collateral.


 


(s)                                          Value
Given.  The Borrower shall have given
reasonably equivalent value to the Originator in consideration for the transfer
to the Borrower of the Collateral under the Sale Agreement, no such transfer
has been made for or on account of an antecedent debt owed by the Originator to
the Borrower, and no such transfer is or may be voidable or subject to
avoidance under any section of the Bankruptcy Code.


 


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


 


(u)                                         Special
Purpose Entity.  The Borrower has not
and shall not:


 


(i)                                     engage
in any business or activity other than the purchase and receipt of Collateral
and related assets from the Originator under the Sale Agreement, the sale and
pledge of Collateral under the Transaction Documents, the execution of the
Borrower Guaranty and such other activities as are incidental thereto;


 


(ii)                                  acquire
or own any material assets other than (a) the Collateral and related
assets from the Originator under the Sale Agreement and (b) incidental
property as may be necessary for the operation of the Borrower and the
performance of its obligations under the Transaction Documents;


 


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(iii)                              merge
into or consolidate with any Person or dissolve, terminate or liquidate in
whole or in part, transfer or otherwise dispose of all or substantially all of
its assets or change its legal structure, or jurisdiction of formation, without
in each case first obtaining the consent of the Administrative Agent and each
Purchaser Agent;


 


(iv)                              fail
to preserve its existence as an entity duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization or
formation, or without the prior written consent of the Administrative Agent and
each Purchaser Agent, amend, modify, terminate or fail to comply with the
provisions of its operating agreement, or fail to observe limited liability
company formalities;


 


(v)                                 own
any Subsidiary or make any Investment in any Person without the consent of the
Administrative Agent and each Purchaser Agent;


 


(vi)                              except
as permitted by this Agreement and the Intercreditor Agreement, commingle its
assets with the assets of any of its Affiliates, or of any other Person;


 


(vii)                           incur
any debt, secured or unsecured, direct or contingent (including guaranteeing
any obligation (other than with respect to the Borrower Guaranty)), other than
indebtedness to the Secured Parties hereunder or in conjunction with a
repayment of all Advances owed to the Purchasers, except for trade payables in
the ordinary course of its business; provided
that, such debt is not evidenced by a note and is paid when due;


 


(viii)                       become
insolvent or fail to pay its debts and liabilities from its assets as the same
shall become due;


 


(ix)                               fail
to maintain its records, books of account and bank accounts separate and apart
from those of any other Person;


 


(x)                                  enter
into any contract or agreement with any Person (other than with respect to the
Borrower Guaranty), except upon terms and conditions that are commercially
reasonable and intrinsically fair and substantially similar to those that would
be available on an arms-length basis with third parties other than such Person;


 


(xi)                               seek
its dissolution or winding up in whole or in part;


 


(xii)                            fail
to correct any known misunderstandings regarding the separate identity of
Borrower and the Originator or any principal or Affiliate thereof or any other
Person;


 


(xiii)                         guarantee,
become obligated for, or hold itself out to be responsible for the debt of
another Person (other than with respect to the Borrower Guaranty);


 


85

















 


(xiv)                         make
any loan or advances to any third party, including any principal or Affiliate,
or hold evidence of indebtedness issued by any other Person (other than the
Loans, cash and Permitted Investments);


 


(xv)                            fail
to file its own separate tax return, or file a consolidated federal income tax
return with any other Person, except as may be required by the Code and
regulations;


 


(xvi)                         fail
either to hold itself out to the public as a legal entity separate and distinct
from any other Person or to conduct its business solely in its own name in
order not (a) to mislead others as to the identity with which such other
party is transacting business, or (b) to suggest that it is responsible
for the debts of any third party (including any of its principals or
Affiliates);


 


(xvii)                      fail
to maintain adequate capital for the normal obligations reasonably foreseeable
in a business of its size and character and in light of its contemplated
business operations;


 


(xviii)                   file
or consent to the filing of any petition, either voluntary or involuntary, to
take advantage of any applicable insolvency, bankruptcy, liquidation or
reorganization statute, or make an assignment for the benefit of creditors;


 


(xix)                          except
as may be required by the Code and regulations, share any common logo with or
hold itself out as or be considered as a department or division of (a) any
of its principals or Affiliates, (b) any Affiliate of a principal or (c) any
other Person;


 


(xx)                              permit
any transfer (whether in any one or more transactions) of any direct or
indirect ownership interest in the Borrower to the extent it has the ability to
control the same, unless the Borrower delivers to the Administrative Agent and
each Purchaser Agent an acceptable non-consolidation opinion and the
Administrative Agent consents to such transfer;


 


(xxi)   fail
to maintain separate financial statements, showing its assets and liabilities
separate and apart from those of any other Person;


 


(xxii)                       fail
to pay its own liabilities and expenses only out of its own funds;


 


(xxiii)                    fail
to pay the salaries of its own employees, if any, in light of its contemplated
business operations;


 


(xxiv)                    acquire
the obligations or securities of its Affiliates or stockholders;


 


(xxv)                       guarantee
any obligation of any person, including an Affiliate (other than with respect
to the Borrower Guaranty);


 


86

















 


(xxvi)                    fail
to allocate fairly and reasonably any overhead expenses that are shared with an
Affiliate, including paying for office space and services performed by any
employee of an Affiliate;


 


(xxvii)                 fail
to use separate invoices and checks bearing its own name;


 


(xxviii)              pledge
or permit the pledge of its assets or ownership interests in the Borrower for
the benefit of any other Person, other than with respect to payment of the
indebtedness to the Secured Parties hereunder;


 


(xxix)                      fail
at any time to have at least one independent manager (an “Independent
Manager”) who is not currently a director, officer, employee, trade
creditor shareholder, manager or member (or spouse, parent, sibling or child of
the foregoing) of (a) the Servicer, (b) the Borrower, (c) any
principal of the Servicer, (d) any Affiliate of the Servicer, or (e) any
Affiliate of any principal of the Servicer; provided,
however, such Independent Manager may be an independent manager or
an independent director of another special purpose entity affiliated with the
Servicer or fail to ensure that all limited liability company action relating
to the selection, maintenance or replacement of the Independent Manager are
duly authorized by the unanimous vote of the board of managers (including the
Independent Managers);


 


(xxx)                         fail
to provide that the unanimous consent of all members (including the consent of
the Independent Manager) is required for the Borrower to (a) dissolve or
liquidate, in whole or part, or institute proceedings to be adjudicated
bankrupt or insolvent, (b) institute or consent to the institution of
bankruptcy or insolvency proceedings against it, (c) file a petition
seeking or consent to reorganization or relief under any applicable federal or
state law relating to bankruptcy or insolvency, (d) seek or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator,
custodian or any similar official for the Borrower, (e) make any
assignment for the benefit of the Borrower’s creditors, (f) admit in
writing its inability to pay its debts generally as they become due, or (g) take
any action in furtherance of any of the foregoing; and


 


(xxxi)                      take
or refrain from taking, as applicable, each of the activities specified in the
non-consolidation opinion of Latham & Watkins LLP, dated as of the
date hereof, upon which the conclusions expressed therein are based.


 


(xxxii)                   The
Borrower has received in writing from the Originator confirmation that the
Originator will not cause the Borrower to file a voluntary petition under the
Bankruptcy Code or Insolvency Laws.


 


(v)                                         Investment
Company Act.  The Borrower is exempt
from the provisions of the 1940 Act.


 


(w)                                       ERISA.  The present value of all benefits vested
under all “employee pension benefit plans,” as such term is defined in Section 3
of ERISA, maintained by the Borrower, or in which employees of the Borrower are
entitled to participate, as from time to time in effect (the “Pension Plans”),
does not exceed the value of the assets of the Pension Plan allocable to 


 


87

















 


such vested benefits (based on the value of such assets as of the last
annual valuation date).  No prohibited
transactions, accumulated funding deficiencies, withdrawals or reportable
events have occurred with respect to any Pension Plans that, in the aggregate,
could subject the Borrower to any material tax, penalty or other
liability.  No notice of intent to
terminate a Pension Plan has been filed, nor has any Pension Plan been
terminated under Section 4041(f) of ERISA, nor has the Pension
Benefit Guaranty Corporation instituted proceedings to terminate, or appoint a
trustee to administer a Pension Plan and no event has occurred or condition
exists that might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension
Plan.


 


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


 


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


 


(z)                                           [Reserved].


 


(aa)                                    Collections.  The Borrower acknowledges that all
Collections received by it or its Affiliates with respect to the Collateral
sold hereunder are held and shall be held in trust for the benefit of the
Secured Parties until deposited into the Collection Account within two Business
Days after receipt as required herein.


 


(bb)                                  Set-Off, etc.  No Loan has been compromised, adjusted,
extended, satisfied, subordinated (other than Subordinated Loans, and solely to
the extent described and provided for in the definition thereof), rescinded,
set-off or modified by the Borrower, the Originator or the Obligor thereof, and
no Collateral is subject to compromise, adjustment, extension, satisfaction,
subordination, rescission, set-off, counterclaim, defense, abatement,
suspension, deferment, deduction, reduction, termination or modification,
whether arising out of transactions concerning the Collateral or otherwise, by
the Borrower, the Originator or the Obligor with respect thereto, except for
amendments, extensions and modifications, if any, to such Collateral otherwise
permitted under Section 6.4(a) of this Agreement and in
accordance with the Credit Policy and the Servicing Standard.


 


(cc)                                    Full Payment.  As of the applicable Cut-Off Date therefor,
the Borrower has no knowledge of any fact which should lead it to expect that
any Loan will not be paid in full.


 


(dd)                                  Accuracy of
Representations and Warranties.  Each
representation or warranty by the Borrower contained herein or in any
certificate or other document furnished by the Borrower pursuant hereto or in
connection herewith is true and correct in all material respects.


 


(ee)                                    [Reserved].


 


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(ff)                                        Reaffirmation
of Representations and Warranties by the Borrower.  On each day that any Advance is made
hereunder, the Borrower shall be deemed to have certified that all
representations and warranties described in Section 4.1 are correct
on and as of such day as though made on and as of such day, except for any such
representations or warranties which are made as of a specific date.


 


(gg)                                  [Reserved].


 


(hh)                                  Environmental.


 


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


 


(ii)                                  As
of Cut-Off Date for the Loan related to such Related Property, none of the
Borrower, the Originator nor the Servicer has received any written or verbal
notice of, or inquiry from any Governmental Authority regarding, any violation,
alleged violation, non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with regard to any
of the Related Property, nor does any such Person have knowledge or reason to
believe that any such notice will be received or is being threatened.


 


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


 


(jj)                                          “Concentration
Account”:  The Concentration Account
is the only account to which Obligors send Collections on the Collateral.  The Concentration Account is subject only to
the interests of the parties to the Intercreditor Agreement.


 


The representations and warranties in Section 4.1(m) shall
survive the termination of this Agreement.


 


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Section 4.2.                                Representations
and Warranties of the Borrower Relating to the Agreement and the Collateral.


 


The Borrower
hereby represents and warrants, as of the Closing Date and as of each Cut-Off
Date:


 


(a)                                          Valid
Transfer and Security Interest.  This
Agreement constitutes a valid transfer to the Trustee, for the benefit of the
Secured Parties, of all right, title and interest of the Borrower in, to and
under all of the Collateral, free and clear of any Lien of any Person claiming
through or under the Borrower or its Affiliates, except for Permitted
Liens.  If the conveyances contemplated
by this Agreement are determined to be transfers for security, then this
Agreement constitutes a grant of a security interest in all of the Collateral
to the Trustee, for the benefit of the Secured Parties, which upon the delivery
of the Required Loan Documents to the Trustee, the crediting of Loans to the
Accounts and the filing of the financing statements described in Section 4.1(m) and,
in the case of Loans acquired after the initial Funding Date, on the applicable
Cut-Off Date, shall be a valid and first priority perfected security interest
in Agents the Loans forming a part of the Collateral and in that portion of the
Loans in which a security interest may be perfected by filing subject only to
Permitted Liens.  Neither the Borrower
nor any Person claiming through or under Borrower shall have any claim to or
interest in the Collection Account or any other Account and, if this Agreement
constitutes the grant of a security interest in such property, except for the
interest of Borrower in such property as a debtor for purposes of the UCC.


 


(b)                                         Eligibility
of Collateral.  As of the Closing
Date and each Cut-Off Date, (i) the Loan List and the information
contained in each Borrowing Notice or each Repayment Notice, as applicable,
delivered pursuant to Section 2.3 or Section 2.6, as
applicable, is an accurate and complete listing of all Collateral as of the
related Cut-Off Date and the information contained therein with respect to the
identity of such Collateral and the amounts owing thereunder is true and
correct as of the related Cut-Off Date, (ii) each such Loan included in
the Borrowing Base is an Eligible Loan and (iii) with respect to each such
item of Collateral, all consents, licenses, approvals or authorizations of or
registrations or declarations of any Governmental Authority or any Person required
to be obtained, effected or given by the Borrower in connection with the
transfer of an ownership interest or security interest in such Collateral to
the Trustee, for the benefit of the Secured Parties, have been duly obtained,
effected or given and are in full force and effect.


 


(c)                                          No Fraud.  Each Loan was originated without any fraud or
material misrepresentation by the Originator or, to the best of the Borrower’s
knowledge, on the part of the Obligor.


 


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Section 4.3.                                Representations
and Warranties of the Servicer.


 


The Servicer
represents and warrants as follows as of the Closing Date, the Thirteenth
Amendment Effective Date, each applicable Cut-Off Date, each date that Advances
Outstanding are reduced pursuant to Section 2.4(b), each date that
Advances are repaid pursuant to Section 2.6(b), each date as of
which any Servicing Report, as provided for in Section 6.10(b), is
calculated, and as of each other date provided under this Agreement or the
other Transaction Documents on which such representations and warranties are
required to be (or deemed to be) made:


 


(a)                                          Organization
and Good Standing.  The Servicer has
been duly organized and is validly existing as a corporation in good standing
under the laws of the State of Maryland, with all requisite corporate power and
authority to own or lease its properties and to conduct its business as such
business is presently conducted and to enter into and perform its obligations
pursuant to this Agreement.


 


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


 


(c)                                          Power and
Authority; Due Authorization; Execution and Delivery.  The Servicer (i) has all necessary
power, authority and legal right to (a) execute and deliver this Agreement
and the other Transaction Documents to which it is a party, (b) carry out
the terms of the Transaction Documents to which it is a party, and (ii) has
duly authorized by all necessary corporate action the execution, delivery and
performance of this Agreement and the other Transaction Documents to which it
is a party.  This Agreement and each
other Transaction Document to which the Servicer is a party have been duly
executed and delivered by the Servicer.


 


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


 


(e)                                          No
Violation.  The consummation of the
transactions contemplated by this Agreement and the other Transaction Documents
to which it is a party and the fulfillment of the terms hereof and thereof will
not (i) conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time or both)
a default under, the Servicer’s articles of incorporation or by-laws or any
Contractual Obligation of the Servicer, (ii) result in the creation or
imposition of any Lien upon any of the Servicer’s properties pursuant to the
terms of any such Contractual Obligation, other than this Agreement, or (iii) violate
any Applicable Law.


 


(f)                                            No
Proceedings.  There is no litigation,
proceeding or investigation pending or, to the best knowledge of the Servicer,
threatened against the Servicer, before any Governmental 


 


91

















 


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


 


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


 


(h)                                         Reports
Accurate.  All Servicer Certificates,
Servicing Reports, Borrowing Notices, Repayment Notices, Borrowing Base
Certificates and other written or electronic information, exhibits, financial
statements, documents, books, records or reports furnished by the Servicer to
the Administrative Agent, the Trustee, each Purchaser Agent or any Purchaser in
connection with this Agreement are, as of their date, accurate, true and
correct.


 


(i)                                             Credit
Policy and Servicing Standard.  The
Servicer has complied in all material respects with (i) the Credit Policy
with regard to the origination and underwriting of the Loans and (ii) the
Servicing Standard with regard to the servicing of the Loans.


 


(j)                                             Collections.  The Servicer acknowledges that all
Collections received by it or its Affiliates with respect to the Collateral
transferred or pledged hereunder are held and shall be held in trust for the
benefit of the Secured Parties until deposited into the Collection Account
within two Business Days from receipt as required herein.


 


(k)                                          Bulk Sales.  The execution, delivery and performance of
this Agreement do not require compliance with any “bulk sales” act or similar
law by the Servicer.


 


(l)                                             Solvency.  The Servicer is not the subject of any
Insolvency Proceedings or Insolvency Event. 
The transactions under this Agreement and any other Transaction Document
to which the Servicer is a party do not and will not render the Servicer not
Solvent and the Servicer shall deliver to the Administrative Agent and each
Purchaser Agent on the Closing Date a certification in the form of Exhibit E-2.


 


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


 


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


 


92

















 


Regulations T, U and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R., Chapter II.


 


(o)                                         Security
Interest.  The Servicer will take all
steps necessary to ensure that the Borrower has granted a security interest (as
defined in the UCC) to the Trustee, for the benefit of the Secured Parties, in
the Collateral, which is enforceable in accordance with Applicable Law upon
execution and delivery of this Agreement. 
Upon the filing of UCC-1 financing statements naming the Trustee as
secured party and the Borrower as debtor, the Trustee, for the benefit of the
Secured Parties, shall have a valid and first priority perfected security
interest in the Loans and that portion of the Collateral in which a security
interest may be perfected by filing (except for any Permitted Liens).  All filings (including, without limitation,
such UCC filings) as are necessary for the perfection of the Secured Parties’
security interest in the Loans and that portion of the Collateral in which a
security interest may be perfected by filing (or prior to the applicable
Advance will be) made.


 


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


 


(q)                                         [Reserved].


 


(r)                                            Concentration
Account.  The name and address of the
Concentration Account Bank, together with the account number of the
Concentration Account of the Originator at the Concentration Account Bank, have
been sent to the Trustee and the Administrative Agent.  Subject to the terms of the Intercreditor
Agreement, the Servicer has not granted and shall not grant any Person other
than the Trustee an interest in the Concentration Account, other than any such
interest that has been terminated or fully and validly assigned to the Trustee
on or prior to the date hereof.


 


(s)                                          USA
PATRIOT Act.  Neither the Servicer
nor any Affiliate of the Servicer is (i) a country, territory,
organization, person or entity named on an OFAC list; (ii) a Person that
resides or has a place of business in a country or territory named on such
lists or which is designated as a “Non-Cooperative Jurisdiction” by the
Financial Action Task Force on Money Laundering, or whose subscription funds
are transferred from or through such a jurisdiction; (iii) a “Foreign
Shell Bank” within the meaning of the USA PATRIOT Act, i.e., a foreign bank
that does not have a physical presence in any country and that is not
affiliated with a bank that has a physical presence and an acceptable level of
regulation and supervision; or (iv) a person


 


93
















 


or entity that resides in or is organized under the laws of a
jurisdiction designated by the United States Secretary of the Treasury under
Sections 311 or 312 of the USA PATRIOT Act as warranting special measures due
to money laundering concerns.


 


(t)                                            Environmental.


 


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


 


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


 


(u)                                         Compliance
with Law.  The Servicer has complied
in all material respects with all Applicable Law to which it may be subject,
and no Loan in the Collateral contravenes in any material respect any Applicable
Law (including, without limitation, laws, rules and regulations relating
to licensing, truth in lending, fair credit billing, fair credit reporting,
equal credit opportunity, fair debt collection practices and privacy).


 


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


 


Section 4.4.                                Representations
and Warranties of the Backup Servicer.


 


The Backup
Servicer in its individual capacity and as Backup Servicer represents and
warrants as follows:


 


(a)                                          Organization;
Power and Authority.  It is a duly
organized and validly existing national banking association in good standing
under the laws of the United States.  It
has full corporate power, authority and legal right to execute, deliver and
perform its obligations as Backup Servicer under this Agreement.


 


(b)                                         Due
Authorization.  The execution and
delivery of this Agreement and the consummation of the transactions provided
for herein have been duly authorized by all necessary association action on its
part, either in its individual capacity or as Backup Servicer, as the case may
be.


 


94

















 


(c)                                          No
Conflict.  The execution and delivery
of this Agreement, the performance of the transactions contemplated hereby and
the fulfillment of the terms hereof will not conflict with, result in any
breach of its articles of incorporation or bylaws or any of the material terms
and provisions of, or constitute (with or without notice or lapse of time or
both) a default under any indenture, contract, agreement, mortgage, deed of
trust, or other instrument to which the Backup Servicer is a party or by which
it or any of its property is bound.


 


(d)                                         No
Violation.  The execution and
delivery of this Agreement, the performance of the transactions contemplated
hereby and the fulfillment of the terms hereof will not conflict with or
violate, in any material respect, any Applicable Law.


 


(e)                                          All
Consents Required.  All approvals,
authorizations, consents, orders or other actions of any Person or Governmental
Authority applicable to the Backup Servicer, required in connection with the
execution and delivery of this Agreement, the performance by the Backup
Servicer of the transactions contemplated hereby and the fulfillment by the
Backup Servicer of the terms hereof have been obtained.


 


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


 


Section 4.5.                                Representations
and Warranties of the Trustee.


 


The Trustee in its individual capacity and as Trustee represents and
warrants as follows:


 


(a)                                          Organization;
Power and Authority.  It is a duly
organized and validly existing national banking association in good standing
under the laws of the United States.  It
has full corporate power, authority and legal right to execute, deliver and
perform its obligations as Trustee under this Agreement.


 


(b)                                         Due
Authorization.  The execution and
delivery of this Agreement and the consummation of the transactions provided
for herein have been duly authorized by all necessary association action on its
part, either in its individual capacity or as Trustee, as the case may be.


 


(c)                                          No
Conflict.  The execution and delivery
of this Agreement, the performance of the transactions contemplated hereby and
the fulfillment of the terms hereof will not conflict with, result in any
breach of its articles of incorporation or bylaws or any of the material terms
and provisions of, or constitute (with or without notice or lapse of time or
both) a default under any indenture, contract, agreement, mortgage, deed of
trust, or other instrument to which the Trustee is a party or by which it or
any of its property is bound.


 


(d)                                         No Violation.  The execution and delivery of this Agreement,
the performance of the Transactions contemplated hereby and the fulfillment of
the terms hereof will not conflict with or violate, in any material respect,
any Applicable Law.


 


95

















 


(e)                                          All
Consents Required.  All approvals,
authorizations, consents, orders or other actions of any Person or Governmental
Authority applicable to the Trustee, required in connection with the execution
and delivery of this Agreement, the performance by the Trustee of the
transactions contemplated hereby and the fulfillment by the Trustee of the
terms hereof have been obtained.


 


(f)                                            Validity,
Etc.  The Agreement constitutes the
legal, valid and binding obligation of the Trustee, enforceable against the
Trustee in accordance with its terms, except as such enforceability may be
limited by applicable Insolvency Laws and general principles of equity (whether
considered in a suit at law or in equity).


 


Section 4.6.                                Representations and Warranties of the Purchasers.


 


Each Purchaser hereby represents and warrants
that it is a “Qualified Purchaser” within the meaning of Section 2(a)(51)
of the 1940 Act, as amended.


 


Section 4.7.                                Representations
and Warranties of the Guarantor.


 


The Guarantor
represents and warrants as follows as of the Thirteenth Amendment Effective
Date, each applicable Cut-Off Date, each date that Advances Outstanding are
reduced pursuant to Section 2.4(b), each date that Advances are
repaid pursuant to Section 2.6(b), each date as of which any
Servicing Report, as provided for in Section 6.10(b), is
calculated, and as of each other date provided under this Agreement or the
other Transaction Documents on which such representations and warranties are
required to be (or deemed to be) made:


 


(a)                                          Organization
and Good Standing.  The Guarantor has
been duly organized, and is validly existing as a limited liability company in
good standing, under the laws of the State of Delaware, with all requisite
limited liability company power and authority to own or lease its properties
and conduct its business as such business is presently conducted, and had at
all relevant times, and now has all necessary power, authority and legal right
to provide the Guaranty.


 


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


 


(c)                                          Power and
Authority; Due Authorization; Execution and Delivery.  The Guarantor (i) has all necessary
limited liability company power, authority and legal right to (a) execute
and deliver this Agreement and the other Transaction Documents to which it is a
party, and (b) carry out the terms of the Transaction Documents to which
it is a party, and (ii) has duly authorized by all necessary limited
liability company action, the execution, delivery and performance of this
Agreement and the Guaranty on the terms and conditions herein provided.  This Agreement and each other Transaction
Document to which the Guarantor is a party have been duly executed and
delivered by the Guarantor.


 


96

















 


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


 


(e)                                          No
Violation.  The consummation of the transactions
contemplated by this Agreement and the other Transaction Documents to which it
is a party and the fulfillment of the terms hereof and thereof will not (i) conflict
with, result in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time or both) a default under, the
Guarantor’s certificate of formation, limited liability company agreement or
any Contractual Obligation of the Guarantor, (ii) result in the creation
or imposition of any Lien (other than Permitted Liens) upon any of the
Guarantor’s properties pursuant to the terms of any such Contractual
Obligation, other than this Agreement, or (iii) violate any Applicable
Law.


 


(f)                                            No
Proceedings.  There is no litigation,
proceeding or investigation pending or, to the best knowledge of the Guarantor,
threatened against the Guarantor, before any Governmental Authority (i) asserting
the invalidity of this Agreement or any other Transaction Document to which the
Guarantor is a party, (ii) seeking to prevent the consummation of any of
the transactions contemplated by this Agreement or any other Transaction
Document to which the Guarantor is a party or (iii) seeking any
determination or ruling that could reasonably be expected to have Material
Adverse Effect.


 


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


 


(h)                                         Bulk Sales.  The execution, delivery and performance of
this Agreement and the transactions contemplated hereby do not require
compliance with any “bulk sales” act or similar law by Guarantor.


 


(i)                                             Investment
Company Act.  The Guarantor is not
required to register as an investment company under the provisions of the 1940
Act.


 


(j)                                             Solvency.  The Guarantor is not the subject of any
Insolvency Proceedings or Insolvency Event.


 


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ARTICLE V



GENERAL COVENANTS


 


Section 5.1.                                Affirmative
Covenants of the Borrower.


 


From the date
hereof until the Collection Date:


 


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


 


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


 


(c)                                          Performance
and Compliance with Collateral.  The
Borrower will, at its expense, timely and fully perform and comply (or cause
the Originator to perform and comply pursuant to the Sale Agreement) in all
material respects with all provisions, covenants and other promises required to
be observed by it under the Collateral and all other agreements related to such
Collateral.


 


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


 


(e)                                          Protection
of Interest in Collateral.  With
respect to the Collateral acquired by the Borrower, the Borrower will (i) acquire
such Collateral pursuant to and in accordance with the terms of the Sale
Agreement, (ii) (at the Servicer’s expense) take all action necessary to
perfect, protect and more fully evidence the Borrower’s ownership of such
Collateral free and clear of any Lien other than the Lien created hereunder and
Permitted Liens, including, without limitation, (a) with respect to the
Loans and that portion of the Collateral in which a security interest may be
perfected by filing, filing and maintaining (at the Servicer’s expense),
effective financing statements against the Originator in all necessary or
appropriate filing offices, (including any amendments thereto or assignments
thereof) and filing continuation statements, amendments or assignments with respect
thereto in such filing offices, (including any amendments thereto or
assignments thereof) and (b) executing or causing to be executed such
other instruments or notices as may be necessary or appropriate, (iii) permit
the Administrative Agent or its agents or representatives to visit the offices
of the Borrower during normal office hours and upon reasonable notice examine
and make copies of all documents, books, records and other information
concerning the Collateral and discuss matters related thereto with any of the
officers or employees of the Borrower having knowledge of such matters, and (iv) take
all 


 


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additional action that the Administrative Agent may reasonably request
to perfect, protect and more fully evidence the respective interests of the
parties to this Agreement in the Collateral.


 


(f)                                            Deposit
of Collections.  The Borrower
promptly (but in no event later than two Business Days after receipt) deposit
all Collections received by the Borrower in respect of the Collateral into the
Collection Account.


 


(g)                                         Special
Purpose Entity.  The Borrower shall
be in compliance with the Special Purpose Entity requirements set forth in Section 4.1(u).


 


(h)                                         [Reserved].


 


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


 


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


 


(k)                                          Use of
Proceeds.  The Borrower will use the
proceeds of the Advances only to acquire Collateral or to make distributions to
its members in accordance with the terms hereof.


 


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


 


(m)                                       Adverse
Claims.  Subject to the terms of the
Intercreditor Agreement, the Borrower will not create, or participate in the
creation of, or permit to exist, any Liens in relation to the Concentration
Account other than as disclosed to the Administrative Agent, the Trustee and
each Purchaser Agent and existing as of the date of this Agreement.


 


(n)                                         Protection
of Interest in Collateral.  With
respect to each item of Collateral granted to the Trustee, for the benefit of
the Secured Parties, the Borrower will (i) take all action necessary to
perfect, protect and more fully evidence the Trustee’s, for the benefit of
the  Secured Parties, ownership of such
Collateral, including, without limitation, (a) with respect to the Loans
and that portion of the Collateral in which a Security Interest may be
perfected by filing, by filing and maintaining (at the Servicer’s expense),
effective financing statements against the Borrower in all necessary or
appropriate filing offices, (including any amendments thereto or assignments
thereof) and filing continuation statements, amendments or assignments 


 


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with respect thereto in such filing offices, and (b) executing or
causing to be executed such other instruments or notices as may be necessary or
appropriate and (ii) take all additional action that the Administrative
Agent or the Trustee may reasonably request to perfect, protect and more fully
evidence the respective interests of the parties to this Agreement in such Collateral.


 


(o)                                 Notices.  The Borrower will furnish to the
Administrative Agent, the Trustee and each Purchaser Agent (with a copy to the
Backup Servicer):


 


(i)                                     Income
Tax Liability.  Within ten Business
Days after the receipt of revenue agent reports or other written proposals,
determinations or assessments of the Internal Revenue Service or any other
taxing authority which propose, determine or otherwise set forth positive
adjustments to the Tax liability of any “affiliated group” (within the meaning
of Section 1504(a)(l) of the Code) which equal or exceed $1,000,000
in the aggregate, telephonic or facsimile notice (confirmed in writing within
five Business Days) specifying the nature of the items giving rise to such
adjustments and the amounts thereof;


 


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


 


(iii)                               Representations
and Warranties.  Forthwith upon
receiving knowledge of the same, the Borrower shall notify the Administrative
Agent and each Purchaser Agent if any representation or warranty set forth in Section 4.1
or Section 4.2 was incorrect at the time it was given or deemed to
have been given and at the same time deliver to the Trustee, the Administrative
Agent and each Purchaser Agent a written notice setting forth in reasonable
detail the nature of such facts and circumstances. In particular, but without
limiting the foregoing, the Borrower shall notify the Administrative Agent and
each Purchaser Agent in the manner set forth in the preceding sentence before
any Pledge Date of any facts or circumstances within the knowledge of the
Borrower which would render any of the said representations and warranties
untrue at the date when such representations and warranties were made or deemed
to have been made;


 


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


 


(v)                                 Proceedings.  As soon as possible and in any event within
three Business Days after the Borrower receives notice or obtains knowledge
thereof, notice of any settlement of, material judgment (including a material
judgment with respect to the liability phase of a bifurcated trial) in or
commencement of any material labor controversy, material litigation, material
action, material suit or material proceeding before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting the Collateral, the Transaction Documents, the Trustee’s,
for the benefit of the Secured Parties, interest in the Collateral, or the
Borrower, the Servicer or the Originator or 


 


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any of their
Affiliates; provided, however,
that, notwithstanding the foregoing, any settlement, judgment, labor
controversy, litigation, action, suit or proceeding affecting the Collateral,
the Transaction Documents, the Trustee’s, for the benefit of the Secured
Parties, interest in the Collateral, or the Borrower, the Servicer or the
Originator or any of their Affiliates in excess of $1,000,000 or more shall be
deemed to be material for purposes of this Section 5.1(o);


 


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


 


(vii)                           Accounting
Changes.  As soon as possible and in
any event within three Business Days after the effective date thereof, notice
of any change in the accounting policies of the Borrower or the Servicer.


 


(p)                                         Other.  The Borrower will furnish to the
Administrative Agent and each Purchaser Agent promptly, from time to time, such
other information, documents, records or reports respecting the Collateral or
the condition or operations, financial or otherwise, of the Borrower or the
Originator as the Administrative Agent and each Purchaser Agent may from time
to time reasonably request in order to protect the interests of the
Administrative Agent, the Trustee, each Purchaser Agent or the Secured Parties
under or as contemplated by this Agreement.


 


Section 5.2.                                Negative
Covenants of the Borrower.


 


From the date
hereof until the Collection Date:


 


(a)                                          Other
Business.  Borrower will not (i) engage
in any business other than the transactions contemplated by the Transaction
Documents, (ii) incur any Indebtedness, obligation, liability or
contingent obligation of any kind other than pursuant to this Agreement or
under any Hedging Agreement required by Section 5.3(a), or (iii) form
any Subsidiary or make any Investment in any other Person.


 


(b)                                         Collateral
Not to be Evidenced by Instruments. 
The Borrower will take no action to cause any Loan that is not, as of
the Closing Date or the related Cut-Off Date, as the case may be, evidenced by
an Instrument, to be so evidenced except in connection with the enforcement or
collection of such Loan.


 


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


 


101

















 


however, that
nothing in this Section 5.2(c) shall prevent or be deemed to
prohibit the Borrower from suffering to exist Permitted Liens upon any of the
Collateral.


 


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


 


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


 


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


 


(g)                                         Change of
Name or Location of Loan Files.  The
Borrower shall not (x) change its name, move the location of its principal
place of business and chief executive office, change the offices where it keeps
the records from the location referred to in Section 13.2, or
change the jurisdiction of its organization, or (y) move, or consent to
the Trustee or Servicer moving, the Required Loan Documents and the Loan Files
from the location thereof on the initial Funding Date, unless the Borrower has
given at least 30 days’ written notice to the Administrative Agent and the
Trustee and has taken all actions required under the UCC of each relevant jurisdiction
in order to continue the first priority perfected security interest of the
Trustee, for the benefit of the Secured Parties, in the Collateral.


 


(h)                                         Accounting
of Purchases.  Other than for tax and
consolidated accounting purposes, the Borrower will not account for or treat
(whether in financial statements or otherwise) the transactions contemplated
hereby in any manner other than as a sale of the Collateral by the Borrower to
the Secured Parties. Other than for tax and consolidated accounting purposes,
the Borrower will not account for or treat (whether in financial statements or
otherwise) the transactions contemplated by the Sale Agreement in any manner
other than as a sale of the Collateral by the Originator to the Borrower.


 


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


 


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(j)                                             Operating
Agreement; Sale Agreement.  The
Borrower will not amend, modify, waive or terminate any provision of its
operating agreement or the Sale Agreement without the prior written consent of
the Administrative Agent and each Purchaser Agent.


 


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


 


(l)                                             Extension
or Amendment of Collateral.  The
Borrower will not, except as otherwise permitted in Section 6.4(a),
extend, amend or otherwise modify the terms of any Loan (including the Related
Security).


 


(m)                                       Revolving
Loans and Delayed Draw Loans. The Borrower will not own any Loan that
requires the Borrower to make future advances to such Obligor under the related
Underlying Instruments.


 


(n)                                         Taxable
Mortgage Pool Matters.  The sum of
the Outstanding Loan Balances of all Loans owned by the Borrower and that are
principally secured by an interest in real property (within the meaning of
Treasury Regulation Section 301.7701(i)-1(d)(3)) shall not at any time
exceed 35% of the Aggregate Outstanding Loan Balance.


 


Section 5.3.                                Covenants
of the Borrower Relating to the Hedging of Fixed Rate Loans.


 


(a)                                          (i)                             At
any time during the Term Period, the Borrower may enter into one or more Hedge
Transactions with the prior written consent of the Administrative Agent in its
sole discretion.


 


(ii)                          At any time during the Amortization
Period, the Administrative Agent, in its sole reasonable discretion, may direct
the Borrower to (A) enter into one or more Hedge Transactions with respect
to any Fixed Rate Loan in a notional amount reasonably determined by the
Administrative Agent and (B) amend or modify the terms of, or terminate,
any Hedge Transaction then in effect; provided
that the primary objective of any such amendment, modification or
termination shall be the maximization of the value of the Collateral and such
amendment, modification or termination shall not have a Material Adverse Effect
on the Borrower.


 


(b)                                 As
additional security hereunder, the Borrower hereby assigns to the Trustee, for
the benefit of the Secured Parties, all right, title and interest of the
Borrower (but none of the obligations) in each Hedging Agreement, each Hedge
Transaction, and all present and future amounts payable by a Hedge Counterparty
to the Borrower under or in connection with the respective Hedging Agreement
and Hedge Transaction(s) with that Hedge Counterparty (“Hedge
Collateral”), and grants a security interest to the Trustee, for the
benefit of the Secured


 


103
















 


Parties, in the Hedge Collateral; provided, however,
that so long as the Hedge Counterparty is the Administrative Agent or any
Affiliate thereof, the Trustee hereby grants to the Servicer a non-exclusive
license (which shall be deemed revoked upon the occurrence of a Termination
Event) to exercise any rights under any related Hedging Agreement or Hedge
Transaction.  The Borrower acknowledges
that as a result of such assignment the Borrower may not, except as set forth
in the proviso to the immediately preceding sentence (and in accordance with Part 6(c)(iii) of
each Hedging Agreement), without the prior written consent of the
Administrative Agent, exercise any rights under any Hedging Agreement or Hedge
Transaction, except for the Borrower’s right under any Hedging Agreement to
enter into Hedge Transactions in order to meet the Borrower’s obligations under
Section 5.3(a) hereof. 
Nothing herein shall have the effect of releasing the Borrower from any
of its obligations under any Hedging Agreement or any Hedge Transaction, nor be
construed as requiring the consent of the Administrative Agent, the Trustee or
any Secured Party for the performance by the Borrower of any such obligations.


 


(c)                                          The Borrower
shall, promptly upon execution thereof, provide to the Administrative Agent and
the Trustee a copy of any Hedging Agreement entered into in connection with
this Agreement.


 


Section 5.4.                                Affirmative
Covenants of the Servicer.


 


From the date
hereof until the Collection Date:


 


(a)                                          Compliance
with Law.  The Servicer will comply
in all material respects with all Applicable Law, including those with respect
to managing and servicing the Collateral or any part thereof.


 


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


 


(c)                                          Obligations
and Compliance with Collateral.  The
Servicer will duly fulfill and comply with all obligations on the part of the
Borrower to be fulfilled or complied with under or in connection with the
administration of each item of Collateral and will do nothing to impair the
rights of the Trustee, for the benefit of the Secured Parties, or of the
Secured Parties in, to and under the Collateral.  It is understood and agreed that the Servicer
does not hereby assume any obligations of the Borrower in respect of any
Advances or assume any responsibility for the performance by the Borrower of
any of its obligations hereunder or under any other agreement executed in
connection herewith that would be inconsistent with the limited recourse
undertaking of the Servicer, in its capacity as Seller, under Section 2.1(d) of
the Sale Agreement.


 


(d)                                         Keeping of
Records and Books of Account.


 


(i)                                     The
Servicer will maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records evidencing
Collateral in the event of the destruction of the originals thereof), and 


 


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keep and maintain
all documents, books, records and other information reasonably necessary or
advisable for the collection of all Collateral and the identification of the
Collateral.


 


(ii)                                  The
Servicer shall permit the Administrative Agent, each Purchaser Agent or their
respective agents or representatives, to visit the offices of the Servicer
during normal office hours and upon reasonable notice and examine and make
copies of all documents, books, records and other information concerning the
Collateral and the Servicer’s servicing thereof and discuss matters related
thereto with any of the officers or employees of the Servicer having knowledge
of such matters.


 


(iii)                               The
Servicer will on or prior to the date hereof, mark its master data processing
records and other books and records relating to the Collateral with a legend,
acceptable to the Administrative Agent describing the sale of the Collateral (A) from
the Originator to the Borrower, and (B) from the Borrower to the Trustee,
for the benefit of the Secured Parties.


 


(e)                                          Preservation
of Security Interest.  The Servicer
(at its own expense) will file such financing and continuation statements and
any other documents that may be required by any law or regulation of any
Governmental Authority to preserve and protect fully the first priority
perfected ownership and security interest of the Trustee, for the benefit of
the Secured Parties, in, to and under the Loans and that portion of the
Collateral in which a security interest may be perfected by filing.


 


(f)                                            Credit
Policy.  The Servicer will (i) comply
in all material respects with the Credit Policy and the Servicing Standard in
regard to the Collateral, and (ii) furnish to the Administrative Agent and
each Purchaser Agent, prior to its effective date, prompt written notice of any
changes in the Credit Policy.  The
Servicer will not agree to or otherwise permit to occur any change in the
Credit Policy that could have a Material Adverse Effect without the prior
written consent of the Administrative Agent and each Purchaser Agent; provided that, no consent shall be
required from the Administrative Agent or any Purchaser Agent in connection
with any change mandated by Applicable Law or a Governmental Authority as
evidenced by an Opinion of Counsel to that effect delivered to the
Administrative Agent and each Purchaser Agent.


 


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


 


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


 


(i)                                            Other.  The Servicer will promptly furnish to the
Trustee, the Administrative Agent and each Purchaser Agent such other
information, documents, records or reports respecting the Collateral or the
condition or operations, financial or otherwise, of the Borrower or the
Servicer as the Trustee, the Administrative Agent and each Purchaser Agent may
from time to time reasonably request in order to protect the interests of the
Administrative Agent, the Trustee, each Purchaser Agent or Secured Parties
under or as contemplated by this Agreement.


 


(j)                                            Proceedings
Related to the Borrower, the Originator and the Servicer and the Transaction
Documents.  As soon as possible and
in any event within three Business Days after any executive officer of the
Servicer receives notice or obtains knowledge thereof of any settlement of,
judgment (including a judgment with respect to the liability phase of a
bifurcated trial) in or commencement of any labor controversy, litigation,
action, suit or proceeding before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, that
could reasonably be expected to have a Material Adverse Effect on the Borrower,
the Originator or the Servicer (or any of their Affiliates) or the Transaction
Documents; provided, however,
that, notwithstanding the foregoing, any settlement, judgment, labor
controversy, litigation, action, suit or proceeding affecting the Transaction
Documents, the Borrower, the Servicer or the Originator (or any of their
Affiliates) in excess of $2,500,000 or more shall be deemed to be expected to
have such a Material Adverse Effect for purposes of this Section 5.4(j).


 


(k)                                         Deposit of
Collections.  The Servicer shall
promptly (but in no event later than two Business Days after receipt) deposit
into the Collection Account any and all Collections received by the Borrower,
the Servicer or any of their Affiliates.


 


(l)                                            Concentration
Account.  The Servicer will maintain
exclusive ownership, dominion and control (subject to the terms of the
Intercreditor Agreement) of the Concentration Account and shall not grant the
right to take dominion and control of the Concentration Account to any Person,
except to the Administrative Agent and each Purchaser Agent as contemplated by
this Agreement and except as otherwise contemplated by the Intercreditor
Agreement.


 


(m)                                      Change of
Control.  Upon the occurrence of a
Change of Control, the Servicer shall provide the Administrative Agent, each
Purchaser Agent and the Hedge Counterparties with notice of such Change of
Control within 30 days after completion of the same.


 


(n)                                        Loan
Register.


 


(i)                                     The
Servicer shall maintain with respect to each Noteless Loan a register (each, a “Loan
Register”) in which it will record (v) the amount of such Loan, (w) the
amount of any principal or interest due and payable or to become due and
payable from the Obligor thereunder, (x) the amount of any sum in respect
of such Loan received from the Obligor, (y) the date of origination of
such Loan and (z) the maturity date of such Loan.


 


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(ii)                                  At
any time a Noteless Loan is included as part of the Collateral pursuant to this
Agreement, the Servicer shall deliver to the Administrative Agent and the
Trustee (with a copy to the Backup Servicer) a copy of the related Loan
Register, together with a certificate of a Responsible Officer of the Servicer
certifying to the accuracy of such Loan Register as of the applicable Cut-Off
Date.


 


(o)                                         Special
Purpose Entity Requirements.  The
Servicer shall take such actions as are necessary to cause the Borrower to be
in compliance with the Special Purpose Entity requirements set forth in Section 4.1(u).


 


(p)                                         Accounting
Changes.  As soon as possible and in
any event within three Business Days after the effective date thereof, the
Servicer will provide to the Administrative Agent notice of any change in the
accounting policies of the Borrower or the Servicer.


 


(q)                                         Proceedings
Related to the Collateral.  As soon
as possible and in any event within three Business Days after any Responsible
Officer of the Servicer receives notice or has actual knowledge of any
settlement of, judgment (including a judgment with respect to the liability
phase of a bifurcated trial) in or commencement of any labor controversy,
litigation, action, suit or proceeding before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, that could reasonably be expected to have a Material Adverse Effect on
the interests of the Trustee or the Secured Parties in, to and under the
Collateral; provided, however,
that, notwithstanding the foregoing, any settlement, judgment, labor
controversy, litigation, action, suit or proceeding affecting the Collateral or
the Trustee’s or the Secured Parties’ interest in the Collateral in excess of
$2,500,000 or more shall be deemed to be expected to have such a Material
Adverse Effect for purposes of this Section 5.4(q).


 


Section 5.5.                                Negative
Covenants of the Servicer.


 


From the date
hereof until the Collection Date.


 


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


 


(b)                                         Mergers,
Acquisition, Sales, etc.  The
Servicer will not consolidate with or merge into any other Person or convey or
transfer its properties and assets substantially as an entirety to any Person,
unless the Servicer is the surviving entity and unless:


 


(i)                                     the
Servicer has delivered to the Administrative Agent and each Purchaser Agent an
Officer’s Certificate and an Opinion of Counsel each stating that any such
consolidation, merger, conveyance or transfer and any supplemental agreement
executed in connection therewith comply with this Section 5.5 and
that all conditions precedent herein provided for relating to such transaction
have been complied with and, in the case of the Opinion of Counsel, that such
supplemental agreement is legal, valid and binding with respect to the Servicer
and such other matters as the Administrative Agent may reasonably request;


 


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(ii)                                  the
Servicer shall have delivered notice of such consolidation, merger, conveyance
or transfer to the Administrative Agent and each Purchaser Agent;


 


(iii)                               after
giving effect thereto, no Termination Event or Servicer Default or event that
with notice or lapse of time would constitute either a Termination Event or a
Servicer Default shall have occurred; and


 


(iv)                              the
Administrative Agent and each Purchaser Agent have consented in writing to such
consolidation, merger, conveyance or transfer.


 


(c)                                          Change of
Name or Location of Loan Files.  The
Servicer shall not (x) change its name, move the location of its principal
place of business and chief executive office, change the offices where it keeps
records concerning the Collateral from the location referred to in Section 13.2,
or change the jurisdiction of its formation, or (y) move, or consent to
the Trustee moving, the Required Loan Documents and Loan Files from the
location thereof on the initial Funding Date, unless the Servicer has given at
least 30 days’ written notice to the Administrative Agent and has taken all
actions required under the UCC of each relevant jurisdiction in order to
continue the first priority perfected security interest of the Trustee, for the
benefit of the Secured Parties, in the Collateral.


 


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


 


(e)                                          Extension
or Amendment of Loans.  The Servicer
will not, except as otherwise permitted in Section 6.4(a), extend,
amend or otherwise modify the terms of any Loan (including the Related
Security).


 


(f)                                            Taxable
Mortgage Pool Matters.  The Servicer
will manage the portfolio and advise the Borrower with respect to purchases
from the Originator so as to not at any time allow the sum of the Outstanding
Loan Balances of all Loans owned by the Borrower and that are principally
secured by an interest in real property (within the meaning of Treasury
Regulation Section 301.7701(i)-1(d)(3)) to exceed 35% of the Aggregate
Outstanding Loan Balance.


 


(g)                                         Revolving
Loans and Delayed Draw Loans. The Servicer will not cause the Borrower to
own any Loan that requires the Borrower to make future advances to the Obligor
under the related Underlying Instruments.


 


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Section 5.6.                                Affirmative
Covenants of the Backup Servicer.


 


From the date
hereof until the Collection Date:


 


(a)                                          Compliance
with Law.  The Backup Servicer will
comply in all material respects with all Applicable Law.


 


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


 


Section 5.7.                                Negative
Covenants of the Backup Servicer.


 


From the date
hereof until the Collection Date:


 


(a)                                          No Changes
in Backup Servicer Fee.  The Backup
Servicer will not make any changes to the Backup Servicer Fee set forth in the
Backup Servicer Fee Letter without the prior written approval of the
Administrative Agent and each Purchaser Agent.


 


Section 5.8.                                Affirmative
Covenants of the Trustee.


 


From the date
hereof until the Collection Date:


 


(a)                                          Compliance
with Law.  The Trustee will comply in
all material respects with all Applicable Law.


 


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


 


(c)                                          Location
of Required Loan Documents.  Subject
to Section 8.8, the Required Loan Documents shall remain at all
times in the possession of the Trustee at the address set forth on Annex A
to this Agreement unless notice of a different address is given in accordance
with the terms hereof or unless the Administrative Agent agrees to allow
certain Required Loan Documents to be released to the Servicer on a temporary
basis in accordance with the terms hereof, except as such Required Loan
Documents may be released pursuant to this Agreement.


 


Section 5.9.                                Negative
Covenants of the Trustee.


 


From the date
hereof until the Collection Date:


 


(a)                                          Required
Loan Documents.  The Trustee will not
dispose of any documents constituting the Required Loan Documents in any manner
that is inconsistent with the 


 


109

















 


performance of its obligations as the Trustee pursuant to this
Agreement and will not dispose of any Collateral except as contemplated by this
Agreement.


 


(b)                                         No Changes
in Trustee Fee.  The Trustee will not
make any changes to the Trustee Fee set forth in the Trustee Fee Letter without
the prior written approval of the Administrative Agent and each Purchaser
Agent.


 


ARTICLE VI



ADMINISTRATION AND SERVICING OF CONTRACTS


 


Section 6.1.                                Designation
of the Servicer.


 


(a)                                          Initial
Servicer.  The servicing,
administering and collection of the Collateral shall be conducted by the Person
designated as the Servicer hereunder from time to time in accordance with this Section 6.1.  Until the Administrative Agent gives to the
Originator a Servicer Termination Notice, the Originator is hereby appointed
as, and hereby accepts such appointment and agrees to perform the duties and
responsibilities of, the Servicer pursuant to the terms hereof.


 


(b)                                         Successor
Servicer.  Upon the Servicer’s
receipt of a Servicer Termination Notice from the Administrative Agent pursuant
to Section 6.15, the Servicer agrees that it will terminate its
activities as Servicer hereunder in a manner that the Administrative Agent
believes will facilitate the transition of the performance of such activities
to a successor Servicer, and the successor Servicer shall assume each and all
of the Servicer’s obligations to service and administer the Collateral, on the
terms and subject to the conditions herein set forth, and the Servicer shall
use its best efforts to assist the successor Servicer in assuming such obligations.


 


(c)                                          Subcontracts.  The Servicer may, with the prior written
consent of the Administrative Agent, subcontract with any other Person for
servicing, administering or collecting the Collateral; provided, however,
that (i) the Servicer shall select any such Person with reasonable care
and shall be solely responsible for the fees and expenses payable to any such
Person, (ii) the Servicer shall not be relieved of, and shall remain
liable for, the performance of the duties and obligations of the Servicer
pursuant to the terms hereof without regard to any subcontracting arrangement
and (iii) any such subcontract shall be terminable upon the occurrence of
a Servicer Default.


 


(d)                                         Servicing
Programs.  In the event that the
Servicer uses any software program in servicing the Collateral that it licenses
from a third party, the Servicer shall use its best efforts to obtain, either
before the Closing Date or as soon as possible thereafter, whatever licenses or
approvals are necessary to allow the Administrative Agent or the Servicer to
use such program and to allow the Servicer to assign such licenses to the
Backup Servicer or to any other Successor Servicer appointed as provided in
this Agreement.


 


Section 6.2.                                Duties
of the Servicer.


 


(a)                                          Appointment.  The Borrower hereby appoints the Servicer as
its agent, as from time to time designated pursuant to Section 6.1,
to service the Collateral and enforce its rights 


 


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in, to and under such Collateral. 
The Servicer hereby accepts such appointment and agrees to perform the
duties and obligations with respect thereto as set forth herein.  The Servicer and the Borrower hereby
acknowledge that the Administrative Agent, each Purchaser Agent and the Secured
Parties are third party beneficiaries of the obligations undertaken by the
Servicer hereunder.


 


(b)                                         Duties.  The Servicer shall take or cause to be taken
all such actions as may be necessary or advisable to collect on the Collateral
from time to time, all in accordance with Applicable Law and the Servicing
Standard.  Without limiting the
foregoing, the duties of the Servicer shall include the following:


 


(i)                                     supervising
the Collateral, including communicating with Obligors, providing consents and
waivers, enforcing and collecting on the Collateral and otherwise managing the
Collateral on behalf of the Borrower;


 


(ii)                                  maintaining
all necessary servicing records with respect to the Collateral and providing
such reports to the Administrative Agent and each Purchaser Agent (with a copy
to the Trustee and the Backup Servicer) in respect of the servicing of the
Collateral (including information relating to its performance under this
Agreement) as may be required hereunder or as the Administrative Agent and each
Purchaser Agent may reasonably request;


 


(iii)                               maintaining
and implementing administrative and operating procedures (including, without
limitation, an ability to recreate servicing records evidencing the Collateral
in the event of the destruction of the originals thereof) and keeping and
maintaining all documents, books, records and other information reasonably
necessary or advisable for the collection of the Collateral;


 


(iv)                              promptly
delivering to the Administrative Agent, each Purchaser Agent, the Trustee or
the Backup Servicer, from time to time, such information and servicing records
(including information relating to its performance under this Agreement) as the
Administrative Agent, each Purchaser Agent, the Trustee or the Backup Servicer
may from time to time reasonably request;


 


(v)                                 identifying
each Loan clearly and unambiguously in its servicing records to reflect that
such Loan is owned by the Borrower and that the Borrower is selling an
undivided ownership interest therein to the Secured Parties pursuant to this Agreement;


 


(vi)                              notifying
the Administrative Agent and each Purchaser Agent of any material action, suit,
proceeding, dispute, offset, deduction, defense or counterclaim (1) that
is or is threatened to be asserted by an Obligor with respect to any Loan (or portion
thereof) of which it has knowledge or has received notice; or (2) that
could reasonably be expected to have a Material Adverse Effect;


 


(vii)                           providing
the prompt written notice to the Administrative Agent and each Purchaser Agent,
prior to the effective date thereof, of any proposed changes in the Credit
Policy;


 


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(viii)                        using
its best efforts to maintain the perfected security interest of the Trustee,
for the benefit of the Secured Parties, in the Collateral;


 


(ix)                                maintaining
the Loan File with respect to Loans included as part of the Collateral; provided that, so long as the Servicer is
in possession of any Required Loan Documents, the Servicer will hold such
Required Loan Documents in a fireproof safe or fireproof file cabinet;


 


(x)                                   directing
the Trustee to make payments pursuant to the terms of the Servicing Report in
accordance with Section 2.9 and Section 2.10; and


 


(xi)                                directing
the sale or substitution of Collateral in accordance with Section 2.18
, Section 2.19 and Section 2.20.


 


It is
acknowledged and agreed that in circumstances in which a Person other than the
Borrower, the Originator (so long as the Originator is also the Servicer) or
the Servicer acts as lead agent with respect to any Loan, the Servicer shall
perform its servicing duties hereunder only to the extent a lender under the
related loan syndication Underlying Instruments has the right to do so.


 


(c)                                          Notwithstanding
anything to the contrary contained herein, the exercise by the Administrative
Agent, the Trustee, each Purchaser Agent and the Secured Parties of their
rights hereunder shall not release the Servicer, the Originator or the Borrower
from any of their duties or responsibilities with respect to the Collateral.  The Secured Parties, the Administrative
Agent, each Purchaser Agent and the Trustee shall not have any obligation or
liability with respect to any Collateral, nor shall any of them be obligated to
perform any of the obligations of the Servicer hereunder.


 


(d)                                         Except as
otherwise set forth in Section 13.18, any payment by an Obligor in
respect of any indebtedness owed by it to the Originator or the Borrower shall,
except as otherwise specified by such Obligor or otherwise required by contract
or law and unless otherwise instructed by the Administrative Agent, be applied
as a collection of a payment by such Obligor (starting with the oldest such
outstanding payment due) to the extent of any amounts then due and payable
thereunder before being applied to any other receivable or other obligation of
such Obligor.


 


Section 6.3.                                Authorization
of the Servicer.


 


(a)                                          Each of the
Borrower, the Administrative Agent, each Purchaser Agent, each Purchaser and
each Hedge Counterparty hereby authorizes the Servicer (including any successor
thereto) to take any and all reasonable steps in its name and on its behalf
necessary or desirable in the determination of the Servicer and not
inconsistent with the sale of the Collateral by the Originator to the Borrower
under the Sale Agreement and, thereafter, by the Borrower to the Trustee on
behalf of the Secured Parties hereunder, to collect all amounts due under any
and all Collateral, including, without limitation, endorsing any of their names
on checks and other instruments representing Collections, executing and
delivering any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge, and all other comparable instruments,
with respect to the Collateral and, after the delinquency of any Collateral and
to 


 


112

















 


the extent permitted under and in compliance with Applicable Law, to
commence proceedings with respect to enforcing payment thereof, to the same
extent as the Originator could have done if it had continued to own such
Collateral.  The Originator, the Borrower
and the Trustee on behalf of the Secured Parties and each Hedge Counterparty
shall furnish the Servicer (and any successors thereto) with any powers of attorney
and other documents necessary or appropriate to enable the Servicer to carry
out its servicing and administrative duties hereunder, and shall cooperate with
the Servicer to the fullest extent in order to ensure the collectability of the
Collateral.  In no event shall the
Servicer be entitled to make the Secured Parties, any Hedge Counterparty, the
Administrative Agent, the Trustee or the Purchaser Agents a party to any
litigation without such party’s express prior written consent, or to make the
Borrower a party to any litigation (other than any routine foreclosure or
similar collection procedure) without the Administrative Agent’s and each
Purchaser Agent’s consent.


 


(b)                                         After the
declaration of the Termination Date, at the direction the Administrative Agent,
the Servicer shall take such action as the Administrative Agent may deem
necessary or advisable to enforce collection of the Collateral; provided, however, that the Administrative
Agent may, at any time that a Termination Event has occurred, notify any
Obligor with respect to any Collateral of the assignment of such Collateral to
the Trustee on behalf of the Secured Parties and direct that payments of all
amounts due or to become due be made directly to the Administrative Agent or
any servicer, collection agent or account designated by the Administrative
Agent and, upon such notification and at the expense of the Borrower, the
Administrative Agent may enforce collection of any such Collateral, and adjust,
settle or compromise the amount or payment thereof.


 


Section 6.4.                                Collection
of Payments; Accounts.


 


(a)                                          Collection
Efforts, Modification of Collateral. 
The Servicer will use its best efforts to collect or cause to be
collected, all payments called for under the terms and provisions of the Loans
included in the Collateral as and when the same become due in accordance with
the Credit Policy and the Servicing Standard. 
The Servicer may not waive, modify or otherwise vary any provision of an
item of Collateral in a manner that would impair the collectability of the
Collateral or in any manner contrary to the Credit Policy or the Servicing
Standard.


 


(b)                                         [Reserved].


 


(c)                                          Acceleration.  If required by the Credit Policy or if
consistent with the Servicing Standard, the Servicer shall accelerate the
maturity of all or any Scheduled Payments and other amounts due under any Loan
promptly after such Loan becomes a Charged-Off Loan.


 


(d)                                         Taxes and
other Amounts.  The Servicer will use
its best efforts to collect all payments with respect to amounts due for Taxes,
assessments and insurance premiums relating to each Loan to the extent required
to be paid to the Borrower for such application under the Underlying Instrument
and remit such amounts to the appropriate Governmental Authority or insurer as
required by the Underlying Instruments.


 


(e)                                          Payments
to Concentration Account.  On or
before the applicable Cut-Off Date, the Servicer shall have instructed all
Obligors to make all payments in respect of the Collateral


 


113
















 


directly to the Concentration Account; provided,
however, that the Servicer is not required to so instruct any
Obligor which is solely a guarantor unless and until the Servicer calls on the
related guaranty.


 


(f)                                            Accounts.  Each of the parties hereto hereby agrees that
(i) each Account shall be deemed to be a Securities Account and (ii) except
as otherwise expressly provided herein, the Administrative Agent shall be
exclusively entitled to exercise the rights that comprise each Financial Asset
held in each Account.  Each of the
parties hereto hereby agrees to cause the Trustee or any other Securities
Intermediary that holds any money or other property for the Borrower in an
Account to agree with the parties hereto that (A) the cash and other
property (subject to Section 6.4(g) below with respect to any
property other than investment property, as defined in Section 9-102(a)(49)
of the UCC) is to be treated as a Financial Asset under Article 8 of the
UCC and (B) the “securities intermediary’s jurisdiction” (within the
meaning of Section 8-110 of the UCC) for that purpose shall be the State
of New York.  In no event may any
Financial Asset held in any Account be registered in the name of, payable to
the order of, or specially Indorsed to, the Borrower, unless such Financial
Asset has also been Indorsed in blank or to the Trustee or other Securities
Intermediary that holds such Financial Asset in such Account.


 


(g)                                         Underlying
Instruments.  Notwithstanding any
term hereof (or any term of the UCC that might otherwise be construed to be
applicable to a “securities intermediary” as defined in the UCC) to the
contrary, none of the Trustee nor any Securities Intermediary shall be under
any duty or obligation in connection with the acquisition by the Borrower, or
the grant by the Borrower to the Trustee, of any Loan in the nature of a loan
or a participation in a loan to examine or evaluate the sufficiency of the
documents or instruments delivered to it by or on behalf of the Borrower under
the related Underlying Instruments, or otherwise to examine the Underlying
Instruments, in order to determine or compel compliance with any applicable
requirements of or restrictions on transfer (including without limitation any
necessary consents).  The Trustee shall
hold any Instrument delivered to it evidencing any Loan granted to the Trustee
hereunder as custodial agent for the Administrative Agent in accordance with
the terms of this Agreement.


 


(h)                                         Establishment
of the Collection Account.  The
Servicer shall cause to be established, on or before the Closing Date, with the
Trustee, and maintained in the name of the Borrower, subject to the lien of the
Trustee, for the benefit of the Secured Parties, a segregated corporate trust
account entitled “Collection Account for Ares Capital CP Funding LLC, subject
to the lien of U.S. Bank National Association, as Trustee for the benefit of
the Secured Parties” (the “Collection Account”), and the Servicer shall
further cause to be maintained three subaccounts linked to and constituting
part of the Collection Account for the purpose of  segregating, within two Business Days of the
receipt of any Collections, Principal Collections (the “Principal
Collections Account”) and Interest Collections (the “Interest
Collections Account”), respectively, and over which the Trustee, for the
benefit of the Secured Parties, shall have control and from which neither the
Originator, the Servicer nor the Borrower shall have any right of withdrawal.


 


(i)                                             Adjustments.  If (i) the Servicer makes a deposit into
the Collection Account in respect of a Collection of a Loan and such Collection
was received by the Servicer in the form 


 


114

















 


of a check that is not honored for any reason or (ii) the Servicer
makes a mistake with respect to the amount of any Collection and deposits an
amount that is less than or more than the actual amount of such Collection, the
Servicer shall appropriately adjust the amount subsequently deposited into the
Collection Account to reflect such dishonored check or mistake.  Any Scheduled Payment in respect of which a
dishonored check is received shall be deemed not to have been paid.


 


Section 6.5.                                Servicer
Advances.


 


(a)                                          For each
Collection Period, if the Servicer determines that any Scheduled Payment (or
portion thereof) that was due and payable pursuant to a Loan during such
Collection Period was not received prior to the last day of such Collection
Period, the Servicer may (in its sole and absolute discretion) make an advance
in an amount up to the amount of such delinquent Scheduled Payment (or portion
thereof) to the extent the Servicer has determined in accordance with the
Credit Policy and the Servicing Standard that such amount will be ultimately
recoverable.  The Servicer will deposit
any Servicer Advances into the Collection Account on or prior to 9:00 a.m.
on the Business Day prior to the related Payment Date, in immediately available
funds.  Notwithstanding anything to the
contrary contained herein, no Successor Servicer shall have any responsibility
to make Servicer Advances.


 


(b)                                         Notwithstanding
anything to the contrary set forth herein, the Servicer shall not be required
to make any Nonrecoverable Advance; provided,
however, that the Servicer may make a Servicer Advance
notwithstanding that, at the time such Servicer Advance is made, the Servicer
may not have adequate information available in order to make a determination
whether or not such advance would, if made, be a Nonrecoverable Advance.  Nonrecoverable Advances (including any Servicer
Advances made pursuant to the proviso of the preceding sentence which are
ultimately determined to be Nonrecoverable Advances) shall be reimbursable in
accordance with Section 2.9(a)(9) and Section 2.10(a)(9).


 


Section 6.6.                                Realization
Upon Charged-Off Loans.


 


The Servicer
will use reasonable efforts consistent with the Servicing Standard to foreclose
upon or repossess, as applicable, or otherwise comparably convert the ownership
of any Related Property relating to a Charged-Off Loan as to which no satisfactory
arrangements can be made for collection of delinquent payments.  The Servicer will comply with the Servicing
Standard and Applicable Law in realizing upon such Related Property, and employ
practices and procedures including reasonable efforts to enforce all
obligations of Obligors foreclosing upon, repossessing and causing the sale of
such Related Property at public or private sale in circumstances other than
those described in the preceding sentence. 
Without limiting the generality of the foregoing, unless the
Administrative Agent has specifically given instruction to the contrary, the
Servicer may cause the sale of any such Related Property to the Servicer or its
Affiliates for a purchase price equal to the then fair market value thereof,
any such sale to be evidenced by a certificate of a Responsible Officer of the
Servicer delivered to the Administrative Agent setting forth the Loan, the
Related Property, the sale price of the Related Property and certifying that
such sale price is the fair market value of such Related Property.  In any case in which any such Related
Property has suffered damage, the Servicer will not expend funds in connection
with any repair or toward the foreclosure or repossession of such Related 


 


115

















 


Property unless it reasonably determines that such repair and/or
foreclosure or repossession will increase the Recoveries by an amount greater
than the amount of such expenses.  The
Servicer will remit to the Collection Account the Recoveries received in
connection with the sale or disposition of Related Property relating to a
Charged-Off Loan.


 


Section 6.7.                                [Reserved].


 


Section 6.8.                                Servicing
Compensation.


 


As
compensation for its servicing activities hereunder and reimbursement for its
expenses, the Servicer shall be entitled to receive the Servicing Fee, to the
extent of funds available therefor pursuant to the provisions of Section 2.9(a)(4),
Section 2.9(b)(1) or Section 2.10(a)(4), as
applicable.


 


Section 6.9.                                Payment
of Certain Expenses by Servicer.


 


The Servicer
will be required to pay all expenses incurred by it in connection with its
activities under this Agreement, including fees and disbursements of its
independent accountants, Taxes imposed on the Servicer, expenses incurred by
the Servicer in connection with payments and reports pursuant to this
Agreement, and all other fees and expenses not expressly stated under this
Agreement for the account of the Borrower, but excluding Servicer Advances and
Liquidation Expenses incurred as a result of activities contemplated by Section 6.6;
provided, however, for avoidance
of doubt, to the extent Servicer Advances and Liquidation Expenses relate to a
Loan and a Retained Interest such Liquidation Expenses shall be allocated pro rata.  The Servicer will be required to pay all
reasonable fees and expenses owing to any bank or trust company in connection
with the maintenance of the Accounts and the Concentration Account.  The Servicer shall be required to pay such
expenses for its own account and shall not be entitled to any payment therefor
other than the Servicing Fee.


 


Section 6.10.                         Reports.


 


(a)                                          Repayment
Notice.  On each reduction of
Advances Outstanding pursuant to Section 2.4(b), or on each
repayment of Advances or each pledge of additional Eligible Loans, in each case
to pay any Required Advance Reduction Amount pursuant to Section 2.6(b),
the Borrower (and the Servicer on its behalf) will provide a Repayment Notice
and a Borrowing Base Certificate, each updated as of such date, to the
Administrative Agent and each Purchaser Agent (with a copy to the Trustee and
the Backup Servicer).


 


(b)                                         Servicing
Report.  On each Reporting Date, the
Servicer will provide to the Borrower, the Administrative Agent, the Trustee,
each Purchaser Agent, the Backup Servicer and any Liquidity Bank, a monthly
statement including (i) a Borrowing Base calculated as of the most recent
Determination Date and (ii) a summary prepared with respect to each
Obligor and with respect to each Loan for such Obligor prepared as of the most
recent Determination Date that will be required to set forth only (y) calculations
of the Net Leverage Ratio and the Interest Coverage Ratio for each such Loan
for the most recently ended Relevant Test Period for each such Loan and (z) whether
or not each such Loan shall have become a Materially Modified Loan (such
monthly statement, a “Servicing Report”), with respect to related
calendar 


 


116

















 


month signed by a Responsible Officer of the Servicer and the Borrower
and substantially in the form of Exhibit C.


 


(c)                                          Servicer’s
Certificate.  Together with each
Servicing Report, the Servicer shall submit to the Administrative Agent, the
Trustee, each Purchaser Agent, the Backup Servicer and any Liquidity Bank a
certificate substantially in the form of Exhibit J (a “Servicer’s
Certificate”), signed by a Responsible Officer of the Servicer, which shall
include a certification by such Responsible Officer that no Termination Event
or Unmatured Termination Event has occurred.


 


(d)                                         Financial
Statements.  The Servicer will submit
to the Administrative Agent, each Purchaser Agent, each Purchaser, the Backup
Servicer and any Liquidity Bank, (i) within 45 days after the end of each
of its fiscal quarters (excluding the fiscal quarter ending on the date
specified in clause (ii)), commencing December 31, 2004, consolidated and
consolidating unaudited financial statements of the Servicer for the most
recent fiscal quarter, and (ii) within 90 days after the end of each
fiscal year, commencing with the fiscal year ended December 31, 2004,
consolidated and consolidating audited financial statements of the Servicer,
audited by a firm of nationally recognized independent public accountants, as
of the end of such fiscal year.


 


(e)                                          Tax
Returns.  Upon demand by the
Administrative Agent, each Purchaser Agent and any Liquidity Bank, the Servicer
shall deliver, copies of all federal, state and local tax returns and reports
filed by the Borrower and the Servicer, or in which the Borrower or Servicer
was included on a consolidated or combined basis (excluding sales, use and like
Taxes).


 


(f)                                            Obligor
Financial Statements; Valuation Reports; Other Reports.  The Servicer will deliver to the
Administrative Agent, each Purchaser Agent, each Purchaser, the Backup Servicer
and any Liquidity Bank, with respect to each Obligor, (i) to the extent
received by the Borrower and/or the Servicer pursuant to the Underlying
Instruments, the complete financial reporting package with respect to such
Obligor and with respect to each Loan for such Obligor (including any covenant
compliance certificates with respect to such Obligor and with respect to each
Loan for such Obligor) provided to the Borrower and/or the Servicer either
monthly or quarterly, as the case may be, by such Obligor, which delivery shall
be made within 45 days (or such longer period as specified in the Underlying
Instruments) after the end of each such month or such Obligor’s fiscal
quarters, as applicable (excluding the last month or fiscal quarter, as
applicable, of each such Obligor’s fiscal year), and within 90 days (or such
longer period as specified in the Underlying Instruments) after the end of each
such Obligor’s fiscal year, and (ii) a quarterly update to the “tear sheet”
prepared by the Servicer with respect to such Obligor and with respect to each
Loan for such Obligor, which delivery shall be made within 45 days (or such
longer period as specified in the Underlying Instruments) after the end of each
such Obligor’s fiscal quarters (excluding the last fiscal quarter of each such
Obligor’s fiscal year) and within 90 days (or such longer period as specified
in the Underlying Instruments) after the end of each such Obligor’s fiscal
year.  The Servicer will promptly deliver
to the Administrative Agent, upon reasonable request and to the extent received
by the Borrower and/or the Servicer, all other documents and information
required to be delivered by the Obligors to the Borrower with respect to any
Loan included in the Collateral.


 


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(g)                                         Amendments to
Loans.  The Servicer will deliver to
the Administrative Agent a copy of any material amendment, restatement,
supplement, waiver or other modification to the Underlying Instruments of any
Loan (along with any internal documents prepared by the Servicer and provided
to its investment committee in connection with such amendment, restatement,
supplement, waiver or other modification) within ten (10) Business Days of
the effectiveness of such amendment, restatement, supplement, waiver or other
modification.


 


(h)                                         Website
Access to Information. Notwithstanding anything to the contrary
contained herein, information required to be delivered or submitted to any
Secured Party, any Liquidity Bank or the Backup Servicer pursuant to this Article VI
shall be deemed to have been delivered on the date on which such information is
posted on an IntraLinks (or other replacement) website to which the
Administrative Agent has access.


 


Section 6.11.                         Annual
Statement as to Compliance.


 


The Servicer
will provide to the Administrative Agent, the Trustee, the Backup Servicer and
each Purchaser Agent, within 90 days following the end of each fiscal year of
the Servicer, commencing with the fiscal year ending on December 31, 2004,
a fiscal report signed by a Responsible Officer of the Servicer certifying that
(a) a review of the activities of the Servicer, and the Servicer’s
performance pursuant to this Agreement, for the fiscal period ending on the
last day of such fiscal year has been made under such Person’s supervision and (b) the
Servicer has performed or has caused to be performed in all material respects
all of its obligations under this Agreement throughout such year and no
Servicer Default has occurred.


 


Section 6.12.                         Annual
Independent Public Accountant’s Servicing Reports.


 


The Servicer
will cause a firm of nationally recognized independent public accountants (who
may also render other services to the Servicer) to furnish to the
Administrative Agent, each Purchaser Agent, the Trustee and the Backup
Servicer, within 90 days following the end of each fiscal year of the Servicer,
commencing with the fiscal year ending on December 31, 2005, a report
covering such fiscal year to the effect that such accountants have applied
certain agreed-upon procedures (a copy of which procedures are attached hereto
as Schedule V, it being understood that the Servicer and the
Administrative Agent will provide an updated Schedule V reflecting any
further amendments to such Schedule V prior to the issuance of the first
such agreed-upon procedures report, a copy of which shall replace the then
existing Schedule V) to certain documents and records relating to the
Collateral under any Transaction Document, compared the information contained
in the Servicing Reports and the Servicer’s Certificates delivered during the
period covered by such report with such documents and records and that no
matters came to the attention of such accountants that caused them to believe
that such servicing was not conducted in compliance with this Article VI,
except for such exceptions as such accountants shall believe to be immaterial
and such other exceptions as shall be set forth in such statement.


 


Section 6.13.                         Limitation
on Liability of the Servicer and Others


 


Except as
provided herein, the Servicer shall not be under any liability to the
Administrative Agent, the Trustee, each Purchaser Agent, the Secured Parties or
any other 


 


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Person for any action taken or for refraining from the taking of any
action pursuant to this Agreement whether arising from express or implied
duties under this Agreement; provided,
however, notwithstanding anything to the contrary contained herein
nothing shall protect the Servicer against any liability that would otherwise
be imposed by reason of its willful misfeasance, bad faith or negligence in the
performance of duties or by reason of its willful misconduct hereunder.


 


Section 6.14.                         The
Servicer Not to Resign.


 


The Servicer
shall not resign from the obligations and duties hereby imposed on it except
upon the Servicer’s determination that (i) the performance of its duties
hereunder is or becomes impermissible under Applicable Law and (ii) there
is no reasonable action that the Servicer could take to make the performance of
its duties hereunder permissible under Applicable Law.  Any such determination permitting the
resignation of the Servicer shall be evidenced as to clause (i) above by
an Opinion of Counsel to such effect delivered to the Administrative Agent,
each Purchaser Agent and the Backup Servicer. 
No such resignation shall become effective until a Successor Servicer
shall have assumed the responsibilities and obligations of the Servicer in
accordance with Section 6.2.


 


Section 6.15.                         Servicer
Defaults.


 


If any one of
the following events (a “Servicer Default”)
shall occur:


 


(a)                                          any failure
by the Servicer to make any payment, transfer or deposit into the Collection
Account (including, without limitation, with respect to bifurcation and
remittance of Collections) as required by this Agreement which continues
unremedied for a period of two Business Days;


 


(b)                                         any failure on
the part of the Servicer duly to (i) observe or perform in any material
respect any other covenants or agreements of the Servicer set forth in this
Agreement or the other Transaction Documents to which the Servicer is a party
(including, without limitation, any material delegation of the Servicer’s
duties that is not permitted by Section 6.1) or (ii) comply in
any material respect with the Credit Policy and the Servicing Standard
regarding the servicing of the Collateral and in each case the same continues
unremedied for a period of 30 days (if such failure can be remedied) after the
earlier to occur of (i) the date on which written notice of such failure
requiring the same to be remedied shall have been given to the Servicer by the
Administrative Agent or any Purchaser Agent and (ii) the date on which a
Responsible Officer of the Servicer acquires knowledge thereof;


 


(c)                                          the failure
of the Servicer to make any payment when due (after giving effect to any
related grace period) under one or more agreements for borrowed money to which
it is a party in an aggregate amount in excess of United States $5,000,000,
individually or in the aggregate, or the occurrence of any event or condition
that has resulted in the acceleration of such amount of recourse debt whether
or not waived;


 


(d)                                         an Insolvency
Event shall occur with respect to the Servicer;


 


(e)                                          [Reserved];


 


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(f)                                            the
Servicer consents to or otherwise permits to occur, without the prior written
consent of the Administrative Agent and each Purchaser Agent, any material
amendment, modification, change, supplement or rescission (any of the foregoing
an “amendment” for purposes of this Section 6.15(f)) of or to the
Credit Policy and the Servicer fails to receive the written consent of the
Administrative Agent within ten Business Days after notice of such amendment
has been delivered to the Administrative Agent (which notice shall be delivered
by the Servicer within seven Business Days after the effectiveness of such
amendment); provided, however, that no such written consent
shall be required in the case of an amendment which was mandated by any
Applicable Law or Governmental Authority;


 


(g)                                         Ares Capital
Corporation or an Affiliate thereof shall cease to be the Servicer;


 


(h)                                         [Reserved];


 


(i)                                             at any
time, Ares Capital Corporation fails to maintain the Asset Coverage Ratio at
greater than or equal to 2:1;


 


(j)                                             Ares
Capital Corporation permits Shareholders’ Equity at the last day of any of its
fiscal quarter to be less than the greater of (i) 40% of the total assets
of the Servicer and its Subsidiaries as at the last day of such fiscal quarter
(determined on a consolidated basis, without duplication, in accordance with
GAAP) and (ii) $300,000,000 plus 25% of the net proceeds of the sale of
equity interests by the Servicer and its Subsidiaries after the Thirteenth Amendment
Effective Date;


 


(k)                                          any change in
the management of the Servicer (whether by resignation, termination,
disability, death or lack of day to day management) relating to any three (3) of
Michael Arougheti, R. Kipp deVeer, Mitchell Goldstein, Eric Beckman and Michael
Smith (or other individuals acceptable to the Administrative Agent), or any
failure by any three (3) of the aforementioned Persons to provide active
and material participation in the Servicer’s daily activities including, but
not limited to, general management, underwriting, and the credit approval
process and credit monitoring activities, and a reputable, experienced
individual reasonably satisfactory to the Administrative Agent has not been
appointed within 30 days of such event; provided,
however, that time relating to an individual’s vacation within the
Servicer’s employee policy and customary industry standards shall not
constitute lack of day-to-day management or failure to provide active and
material participation in the Servicer’s daily activities.  The Administrative Agent deems each of John
Kissick, Anthony Ressler, Bennett Rosenthal, David Sachs, Gregory Margolies,
David Kaplan and Seth Brufsky to be an acceptable, experienced appointee for purposes
of satisfying this provision;


 


(l)                                             any
failure by the Servicer to deliver (i) any required Servicing Report on or
before the date occurring two Business Days after the date such report is
required to be made or given, as the case may be or (ii) any other
Required Reports hereunder on or before the date occurring five Business Days
after the date such report is required to be made or given, as the case may be,
in each case under the terms of this Agreement;


 


(m)                                       any
representation, warranty or certification made by the Servicer in any Transaction
Document or in any certificate delivered pursuant to any Transaction Document 


 


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shall prove to have been incorrect when made, which has a Material
Adverse Effect on the Administrative Agent, any Purchaser Agent or the Secured
Parties and which continues to be unremedied for a period of 30 days after the
earlier to occur of (i) the date on which written notice of such
incorrectness requiring the same to be remedied shall have been given to the
Servicer by the Administrative Agent or any Purchaser Agent and (ii) the
date on which a Responsible Officer of the Servicer acquires knowledge thereof;


 


(n)                                         [Reserved];


 


(o)                                         any financial
or other information reasonably requested by the Administrative Agent, any
Purchaser Agent or any Purchaser is not provided as requested within a
reasonable amount of time following such request;


 


(p)                                         the rendering
against the Servicer of one or more final judgments, decrees or orders for the
payment of money in excess of United States $7,500,000, individually or in the
aggregate, and the continuance of such judgment, decree or order unsatisfied
and in effect for any period of more than 60 consecutive days without a stay of
execution; or


 


(q)                                         any change in
the control of the Servicer that takes the form of either a merger or
consolidation that does not comply with the provisions of Section 5.5(b);


 


then, notwithstanding anything herein to the contrary, the
Administrative Agent, by written notice to the Servicer (with a copy to the
Trustee and Backup Servicer) (a “Servicer Termination
Notice”), may terminate all of the rights and obligations of the
Servicer as Servicer under this Agreement.


 


Section 6.16.                         Appointment
of Successor Servicer.


 


(a)                                          On and after
the receipt by the Servicer of a Servicer Termination Notice pursuant to Section 6.15,
the Servicer shall continue to perform all servicing functions under this
Agreement until the date specified in the Servicer Termination Notice or
otherwise specified by the Administrative Agent in writing or, if no such date
is specified in such Servicer Termination Notice or otherwise specified by the
Administrative Agent, until a date mutually agreed upon by the Servicer and the
Administrative Agent and shall be entitled to receive, to the extent of funds
available therefor pursuant to Section 2.9 or Section 2.10,
as applicable, the Servicing Fee therefor until such date, together with the
sum of (i), an amount equal to all unreimbursed Nonrecoverable Advances made by
such Servicer which remain outstanding as of such date plus (ii) an amount
equal to any unreimbursed Servicer Advances (but solely to the extent of
Collections received from time to time in respect of the Loan for which such
Servicer Advance was made) which remain outstanding as of such date.  The Administrative Agent may at any time
following delivery of a Servicer Termination Notice in its sole discretion,
appoint the Backup Servicer as the Servicer hereunder, and the Backup Servicer
shall on such date assume all obligations of the Servicer hereunder, and all
authority and power of the Servicer under this Agreement shall pass to and be
vested in the Backup Servicer.  As
compensation therefor, the Backup Servicer shall be entitled to the Servicing
Fee, together with other servicing compensation in the form of assumption fees,
late payment charges or otherwise as provided herein; including, without
limitation, Transition Expenses.  In the
event that the 


 


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Administrative Agent does not so appoint the Backup Servicer, there is
no Backup Servicer or the Backup Servicer is unable to assume such obligations
on such date, the Administrative Agent shall as promptly as possible appoint a
successor servicer (the “Successor Servicer”), and such Successor
Servicer shall accept its appointment by a written assumption in a form
acceptable to the Administrative Agent and each Purchaser Agent.  In the event that a Successor Servicer has
not accepted its appointment at the time when the Servicer ceases to act as
Servicer, the Administrative Agent shall petition a court of competent
jurisdiction to appoint any established financial institution, having a net
worth of not less than United States $50,000,000 and whose regular business
includes the servicing of Collateral, as the Successor Servicer hereunder.


 


(b)                                         Upon its
appointment, the Backup Servicer (subject to Section 6.16(a)) or
the Successor Servicer, as applicable, shall be the successor in all respects
to the Servicer with respect to servicing functions under this Agreement and
shall be subject to all the responsibilities, duties and liabilities relating
thereto placed on the Servicer by the terms and provisions hereof, and all
references in this Agreement to the Servicer shall be deemed to refer to the
Backup Servicer or the Successor Servicer, as applicable; provided, however, that the Backup
Servicer or Successor Servicer, as applicable, shall have (i) no liability
with respect to any action performed by the terminated Servicer prior to the date
that the Backup Servicer or Successor Servicer, as applicable, becomes the
successor to the Servicer or any claim of a third party based on any alleged
action or inaction of the terminated Servicer, (ii) no obligation to
perform any advancing obligations, if any, of the Servicer unless it elects to
in its sole discretion, (iii) no obligation to pay any taxes required to
be paid by the Servicer (provided that the Backup Servicer or Successor
Servicer, as applicable, shall pay any income taxes for which it is liable), (iv) no
obligation to pay any of the fees and expenses of any other party to the
transactions contemplated hereby, and (v) no liability or obligation with
respect to any Servicer indemnification obligations of any prior Servicer,
including the original Servicer.  The
indemnification obligations of the Backup Servicer or the Successor Servicer,
as applicable, upon becoming a Successor Servicer, are expressly limited to
those arising on account of its failure to act in good faith and with reasonable
care under the circumstances.  In
addition, the Backup Servicer or Successor Servicer, as applicable, shall have
no liability relating to the representations and warranties of the Servicer
contained in Article IV. 
Further, for so long as the Backup Servicer shall be the Successor
Servicer, the provisions of Section 2.15, Section 2.16(b),
Section 2.16(e), Section 6.10(b)(ii) and Section 6.10(f) of
this Agreement shall not apply to it in its capacity as Servicer.


 


(c)                                          All authority
and power granted to the Servicer under this Agreement shall automatically
cease and terminate upon termination of this Agreement and shall pass to and be
vested in the Borrower and, without limitation, the Borrower is hereby
authorized and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, all documents and other instruments, and to do
and accomplish all other acts or things necessary or appropriate to effect the
purposes of such transfer of servicing rights. 
The Servicer agrees to cooperate with the Borrower in effecting the
termination of the responsibilities and rights of the Servicer to conduct
servicing of the Collateral.


 


(d)                                         Upon the
Backup Servicer receiving notice that it is required to serve as the Servicer
hereunder pursuant to the foregoing provisions of this Section 6.16,
the Backup 


 


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Servicer will promptly begin the transition to its role as
Servicer.  In the event the Backup
Servicer declines to continue to act as Servicer hereunder, the Backup Servicer
shall solicit, by public announcement, bids from banks, specialty finance
companies, asset managers, mortgage servicing institutions meeting the
qualifications set forth in Section 6.16(a).  Such public announcement shall specify that
the Successor Servicer shall be entitled to the full amount of the Servicing
Fee as servicing compensation, together with the other servicing compensation
in the form of assumption fees, late payment charges or otherwise that accrued
prior thereto.  Within 30 days after any
such public announcement, the Backup Servicer shall negotiate and effect the
sale, transfer and assignment of the servicing rights and responsibilities
hereunder to a qualified party acceptable to the Administrative Agent submitting
a qualifying bid.  The Backup Servicer
shall deduct from any sum received by the Backup Servicer from the successor to
the Servicer in respect of such sale, transfer and assignment, all costs and
expenses of any public announcement, and of any sale, transfer and assignment
of the servicing rights and responsibilities hereunder and the amount of any
unreimbursed Servicing Advances.  After
such deductions, the remainder of such sum shall be paid by the Backup Servicer
to the Servicer at the time of such sale, transfer and assignment to the
Servicer’s successor.  If no bid from a
qualified potential Successor Servicer is received or if no sale, transfer and
assignment of the servicing rights and responsibilities hereunder shall have
been concluded within 30 days after such public announcement, the Backup
Servicer may, in its discretion, appoint, or petition a court of competent
jurisdiction to appoint, any established servicing institution as the successor
to the Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer hereunder. As
compensation, any Successor Servicer (including, without limitation, the
Administrative Agent) so appointed shall be entitled to receive the Servicing
Fee, together with any other servicing compensation in the form of assumption
fees, late payment charges or otherwise as provided herein that accrued prior
thereto, including, without limitation, Transition Expenses.  The Backup Servicer and such successor shall
take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.  No
appointment of a successor to the Servicer hereunder shall be effective until
written notice of such proposed appointment shall have been provided by the
Backup Servicer to the Administrative Agent and each Purchaser Agent and the
Backup Servicer shall have consented thereto. 
The Backup Servicer shall not resign as servicer until a Successor
Servicer has been appointed and accepted such appointment.  Notwithstanding anything to the contrary
contained herein, in no event shall Lyon, in any capacity, be liable for any
Servicing Fee or for any differential in the amount of the Servicing Fee paid
hereunder and the amount necessary to induce any Successor Servicer under this
Agreement and the transactions set forth or provided for by this Agreement.


 


ARTICLE VII



THE BACKUP SERVICER


 


Section 7.1.                                Designation
of the Backup Servicer.


 


(a)                                          Initial
Backup Servicer.  The backup
servicing role with respect to the Collateral shall be conducted by the Person
designated as Backup Servicer hereunder from time to time in accordance with
this Section 7.1.  Until the
Administrative Agent shall give to Lyon a Backup


 


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Servicer Termination Notice, Lyon is hereby designated as, and hereby
agrees to perform the duties and obligations of, a Backup Servicer pursuant to
the terms hereof.


 


(b)                                         Successor
Backup Servicer.  Upon the Backup
Servicer’s receipt of Backup Servicer Termination Notice from the
Administrative Agent of the designation of a replacement Backup Servicer
pursuant to the provisions of Section 7.5, the Backup Servicer
agrees that it will terminate its activities as Backup Servicer hereunder.


 


Section 7.2.                                Duties
of the Backup Servicer.


 


(a)                                          Appointment.  The Borrower and the Administrative Agent
each hereby appoints Lyon to act as Backup Servicer, for the benefit of the
Administrative Agent, the Trustee each Purchaser Agent and the benefit of the
Secured Parties, as from time to time designated pursuant to Section 7.1.  The Backup Servicer hereby accepts such
appointment and agrees to perform the duties and obligations with respect
thereto set forth herein.


 


(b)                                         Duties.  On or before the initial Funding Date, and
until its removal pursuant to Section 7.5, the Backup Servicer
shall perform, on behalf of the Administrative Agent, the Trustee and the
Secured Parties, the following duties and obligations:


 


(i)                                     On
or before the initial Funding Date, the Backup Servicer shall accept from the
Servicer delivery of the information required to be set forth in the Servicing
Reports (if any) in hard copy and in EXCEL or a comparable format.


 


(ii)                                  Not
later than 12:00 p.m. on each Reporting Date, the Servicer shall deliver
to the Backup Servicer the loan tape, which shall include but not be limited to
the following information:  (x) for
each Loan, the name and number of the related Obligor, the collection status,
the loan status, the date of each Scheduled Payment and the Outstanding Loan
Balance, (y) the Borrowing Base and (z) the Aggregate Outstanding
Loan Balance (the “Tape”).  The
Backup Servicer shall accept delivery of the Tape.


 


(iii)                               Prior
to the related Payment Date, the Backup Servicer shall review the Servicing
Report to ensure that it is complete on its face and that the following items
in such Servicing Report have been accurately calculated, if applicable, and
reported:  (A) the Borrowing Base, (B) the
Backup Servicing Fee, (C) the Loans that are current and not past due, (D) the
Loans that are 1 - 30 days past due, (E) the Loans that are 31 - 60 days
past due, (F) the Loans that are 61 - 90 days past due, (G) the Loans
that are 90+ days past due, (H) the Aggregate Outstanding Loan Balance and
(I) the Weighted Average Life.  The
Backup Servicer by a separate written report shall notify the Administrative
Agent and the Servicer of any disagreements with the Servicing Report based on
such review not later than the Business Day preceding such Payment Date to such
Persons.


 


(iv)                              If
the Servicer disagrees with the report provided under paragraph (iii) above
by the Backup Servicer or if the Servicer or any subservicer has not reconciled
such discrepancy, the Backup Servicer agrees to confer with the Servicer 


 


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to resolve
such disagreement on or prior to the next succeeding Determination Date and
shall settle such discrepancy with the Servicer if possible, and notify the
Administrative Agent of the resolution thereof. 
The Servicer hereby agrees to cooperate at its own expense with the
Backup Servicer in reconciling any discrepancies herein.  If within 20 days after the delivery of the
report provided under paragraph (iii) above by the Backup Servicer, such
discrepancy is not resolved, the Backup Servicer shall promptly notify the
Administrative Agent of the continued existence of such discrepancy.  Following receipt of such notice by the
Administrative Agent, the Servicer shall deliver to the Administrative Agent,
the Secured Parties and the Backup Servicer no later than the next Payment Date
a certificate describing the nature and amount of such discrepancies and the
actions the Servicer proposes to take with respect thereto.


 


(c)                                          Reliance
on Tape.  With respect to the duties
described in Section 7.2(b), the Backup Servicer, is entitled to
rely conclusively, and shall be fully protected in so relying, on the contents
of each Tape, including, but not limited to, the completeness and accuracy
thereof, provided by the Servicer.


 


Section 7.3.                                Merger
or Consolidation.


 


Any Person (i) into
which the Backup Servicer may be merged or consolidated, (ii) that may
result from any merger or consolidation to which the Backup Servicer shall be a
party, or (iii) that may succeed to the properties and assets of the
Backup Servicer substantially as a whole, which Person in any of the foregoing
cases executes an agreement of assumption to perform every obligation of the
Backup Servicer hereunder, shall be the successor to the Backup Servicer under
this Agreement without further act on the part of any of the parties to this
Agreement provided such Person is organized under the laws of the United States
of America or any one of the States thereof or the District of Columbia (or any
domestic branch of a foreign bank), and (a) has either (1) a
long-term unsecured debt rating of “A” or better by S&P and “A2” or better
by Moody’s or (2) a short-term unsecured debt rating or certificate of
deposit rating of “A-1” or better by S&P or “P-1” or better by Moody’s, (b) the
parent corporation which has either (1) a long-term unsecured debt rating
of “A” or better by S&P and “A2” or better by Moody’s or (2) a
short-term unsecured debt rating or certificate of deposit rating of “A-1” or
better by S&P and “P-1” or better by Moody’s or (c) is otherwise
acceptable to the Administrative Agent.


 


Section 7.4.                                Backup
Servicing Compensation.


 


As
compensation for its back-up servicing activities hereunder, the Backup
Servicer shall be entitled to receive the Backup Servicing Fee from the
Servicer.  To the extent that such Backup
Servicing Fee is not paid by the Servicer, the Backup Servicer shall be
entitled to receive the unpaid balance of its Backup Servicing Fee to the
extent of funds available therefor pursuant to Section 2.9(a)(2), Section 2.9(b)(1) and
Section 2.10(a)(2), as applicable. 
The Backup Servicer’s entitlement to receive the Backup Servicing Fee
shall cease (excluding any unpaid outstanding amounts as of that date) on the
earliest to occur of:  (i) it becoming
the Successor Servicer, (ii) its removal as Backup Servicer pursuant to Section 7.5,
or (iii) the termination of 


 


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this Agreement.  Upon becoming
Successor Servicer pursuant to Section 6.16, the Backup Servicer
shall be entitled to the Servicing Fee.


 


Section 7.5.                                Backup
Servicer Removal.


 


The Backup
Servicer may be removed, with or without cause, by the Administrative Agent by
notice given in writing to the Backup Servicer (the “Backup Servicer Termination
Notice”), dated one day prior to the effective date of such Backup Servicer
Termination Notice, in the case of any removal for cause, and at least 30 days
prior to the effective date of the Backup Servicer Termination Notice, in the
case of any removal without cause.  In
the event of any such removal, a replacement Backup Servicer may be appointed
by the Administrative Agent.


 


Section 7.6.                                Limitation
on Liability.


 


(a)                                          The Backup
Servicer undertakes to perform only such duties and obligations as are
specifically set forth in this Agreement, it being expressly understood by all
parties hereto that there are no implied duties or obligations of the Backup
Servicer hereunder.  Without limiting the
generality of the foregoing, the Backup Servicer, except as expressly set forth
herein, shall have no obligation to supervise, verify, monitor or administer
the performance of the Servicer.  The
Backup Servicer may act through its agents, nominees, attorneys and custodians
in performing any of its duties and obligations under this Agreement, it being
understood by the parties hereto that the Backup Servicer will be responsible
for any misconduct or negligence on the part of such agents, attorneys or
custodians.  Neither the Backup Servicer
nor any of its officers, directors, employees or agents shall be liable,
directly or indirectly, for any damages or expenses arising out of the services
performed under this Agreement other than damages or expenses that result from
the gross negligence or willful misconduct of it or them or the failure to
perform materially in accordance with this Agreement.


 


(b)                                         The Backup
Servicer shall not be liable for any obligation of the Servicer contained in
this Agreement or for any errors of the Servicer contained in any computer tape,
certificate or other data or document delivered to the Backup Servicer
hereunder or on which the Backup Servicer must rely in order to perform its
obligations hereunder, and the Secured Parties, the Administrative Agent and
the Trustee each agree to look only to the Servicer to perform such
obligations.  The Backup Servicer shall
have no responsibility and shall not be in default hereunder or incur any
liability for any failure, error, malfunction or any delay in carrying out any
of its duties under this Agreement if such failure or delay results from the
Backup Servicer acting in accordance with information prepared or provided by a
Person other than the Backup Servicer or the failure of any such other Person
to prepare or provide such information. 
The Backup Servicer shall have no responsibility, shall not be in
default and shall incur no liability for (i) any act or failure to act of
any third party, including the Servicer, (ii) any inaccuracy or omission
in a notice or communication received by the Backup Servicer from any third
party, (iii) the invalidity or unenforceability of any Collateral under
Applicable Law, (iv) the breach or inaccuracy of any representation or
warranty made with respect to any Collateral, or (v) the acts or omissions
of any successor Backup Servicer.


 


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Section 7.7.                                The
Backup Servicer Not to Resign.


 


The Backup
Servicer shall not resign (except with prior consent of the Administrative
Agent which consent shall not be unreasonably withheld) from the obligations
and duties hereby imposed on it except upon a determination by the Backup
Servicer that (i) the performance of its duties hereunder is or becomes
impermissible under Applicable Law and (ii) there is no reasonable action
that the Backup Servicer could take to make the performance of its duties
hereunder permissible under Applicable Law. 
Any such determination permitting the resignation of the Backup Servicer
shall be evidenced as to clause (i) above by an Opinion of Counsel to such
effect delivered to the Administrative Agent and each Purchaser Agent.  No such resignation shall become effective
until a successor Backup Servicer shall have assumed the responsibilities and
obligations of the Backup Servicer hereunder.


 


ARTICLE VIII



THE TRUSTEE


 


Section 8.1.                                Designation
of Trustee.


 


(a)                                          Initial
Trustee.  The role of Trustee with
respect to the Required Loan Documents shall be conducted by the Person
designated as Trustee hereunder from time to time in accordance with this Section 8.1.  Until the Administrative Agent shall give to
U.S. Bank a Trustee Termination Notice, U.S. Bank is hereby appointed as, and
hereby accepts such appointment and agrees to perform the duties and
obligations of, Trustee pursuant to the terms hereof.


 


(b)                                         Successor
Trustee.  Upon the Trustee’s receipt
of a Trustee Termination Notice from the Administrative Agent of the
designation of a successor Trustee pursuant to the provisions of Section 8.5,
the Trustee agrees that it will terminate its activities as Trustee hereunder.


 


(c)                                          Secured
Party.  The Administrative Agent, the
Purchaser Agents and the Purchasers hereby appoint U.S. Bank, in its capacity
as Trustee hereunder, as their agent for the purposes of perfection of a
security interest in the Loans.  U.S.
Bank, in its capacity as Trustee hereunder, hereby accepts such appointment and
agrees to perform the duties set forth in Section 8.2(b).


 


Section 8.2.                                Duties
of Trustee.


 


(a)                                          Appointment.  The Borrower and the Administrative Agent
each hereby appoints U.S. Bank to act as Trustee, for the benefit of the
Secured Parties.  The Trustee hereby
accepts such appointment and agrees to perform the duties and obligations with
respect thereto set forth herein.


 


(b)                                         Duties.  On or before the initial Funding Date, and
until its removal pursuant to Section 8.5, the Trustee shall
perform, on behalf of the Secured Parties, the following duties and
obligations:


 


(i)                                     The
Trustee shall take and retain custody of the Required Loan Documents delivered
by the Borrower pursuant to Section 3.2(c) hereof in 


 


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accordance
with the terms and conditions of this Agreement, all for the benefit of the
Secured Parties.  Within five Business
Days of its receipt of any Required Loan Documents, the Trustee shall review
the related Collateral and Required Loan Documents to confirm that (A) such
Required Loan Documents have been properly executed and have no missing or
mutilated pages, (B) UCC and other filings (required by the Required Loan
Documents) have been made, (C) if listed on the Loan Checklist, an
Insurance Policy exists with respect to any real or personal property
constituting the Related Property, and (D) the related Outstanding Loan
Balance, Loan number and Obligor name with respect to such Loan is referenced
on the related Loan List and is not a duplicate Loan (such items (A) through
(D) collectively, the “Review Criteria”).  In order to facilitate the foregoing review
by the Trustee, in connection with each delivery of Required Loan Documents
hereunder to the Trustee, the Servicer shall provide to the Trustee an
electronic file (in EXCEL or a comparable format) that contains the related
Loan Checklist or that otherwise contains the Loan identification number and
the name of the Obligor with respect to each related Loan.  If, at the conclusion of such review, the
Trustee shall determine that (i) the Outstanding Loan Balances of the
Loans with respect to which it has received Required Loan Documents is less
than as set forth on the electronic file, the Trustee shall promptly notify the
Administrative Agent and the Servicer of such discrepancy, and (ii) any
Review Criteria is not satisfied, the Trustee shall within one Business Day
notify the Servicer of such determination and provide the Servicer with a list
of the non-complying Loans and the applicable Review Criteria that they fail to
satisfy.  The Servicer shall have five
Business Days to correct any non-compliance with any Review Criteria.  If after the conclusion of such time period
the Servicer has still not cured any non-compliance by a Loan with any Review
Criteria, the Trustee shall promptly notify the Borrower and the Administrative
Agent of such determination by providing a written report to such persons
identifying, with particularity, each Loan and each of the applicable Review
Criteria that such Loan fails to satisfy. 
In addition, if requested in writing by the Servicer and approved by the
Administrative Agent within ten Business Days of the Trustee’s delivery of such
report, the Trustee shall return any Loan which fails to satisfy a Review
Criteria to the Borrower.  Other than the
foregoing, the Trustee shall not have any responsibility for reviewing any
Required Loan Documents.


 


(ii)                                  In
taking and retaining custody of the Required Loan Documents, the Trustee shall
be deemed to be acting as the agent of the Secured Parties; provided, however, that the Trustee makes
no representations as to the existence, perfection or priority of any Lien on
the Required Loan Documents or the instruments therein; and provided, further, that, the Trustee’s
duties shall be limited to those expressly contemplated herein.


 


(iii)                               All
Required Loan Documents shall be kept in fire resistant vaults, rooms or
cabinets at the locations specified on Schedule III attached hereto, or
at such other office as shall be specified to the Administrative Agent and the
Servicer by the Trustee in a written notice delivered at least 45 days prior to
such change.  All Required Loan Documents
shall be placed together with an appropriate identifying label and maintained
in such a manner so as to permit retrieval and access.  All 


 


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Required Loan
Documents shall be clearly segregated from any other documents or instruments
maintained by the Trustee.


 


(iv)                              The
Trustee shall make payments pursuant to the terms of the Servicing Report in
accordance with Section 2.9 and Section 2.10 (the “Payment
Duties”).


 


(v)                                 On
each Reporting Date, the Trustee shall provide a written report to the
Administrative Agent and the Servicer (in a form mutually agreeable to the
Administrative Agent and the Trustee) identifying each Loan for which it holds
Required Loan Documents, the non-complying Loans and the applicable Review
Criteria that any non-complying Loan fails to satisfy.


 


(vi)                              The
Trustee shall provide to the Servicer and the Backup Servicer a copy of all
written notices and communications identified as being sent to it in connection
with the Loans and the other Collateral held hereunder which it receives from
the related Obligor, participating bank and/or agent bank.  In no instance shall the Trustee be under any
duty or obligation to take any action on behalf of the Servicer in respect of the
exercise of any voting or consent rights, or similar actions, unless it
receives specific written instructions from the Servicer, prior to the
occurrence of a Termination Event or the Administrative Agent, after the
occurrence of a Termination Event, in which event the Trustee shall vote, consent
or take such other action in accordance with such instructions.


 


(vii)                           In
performing its duties, the Trustee shall use the same degree of care and
attention as it employs with respect to similar collateral that it holds as
trustee or collateral custodian for others.


 


(c)                                  (i)                                     Each of the
Administrative Agent, each Purchaser Agent and each Secured Party further
authorizes the Trustee to take such action as agent on its behalf and to
exercise such powers under this Agreement and the other Transaction Documents
as are expressly delegated to the Trustee by the terms hereof and thereof,
together with such powers as are reasonably incidental thereto.  In furtherance, and without limiting the
generality of the foregoing, each Secured Party hereby appoints the Trustee as
its agent to execute and deliver all further instruments and documents, and
take all further action that the Trustee or the Administrative Agent deems
necessary or desirable in order to perfect, protect or more fully evidence the
security interests granted by the Borrower hereunder, or to enable any of them
to exercise or enforce any of their respective rights hereunder, including,
without limitation, the execution by the Trustee as secured party/assignee of
such financing or continuation statements, or amendments thereto or assignments
thereof, relative to all or any of the Loans now existing or hereafter arising,
and such other instruments or notices, as may be necessary or appropriate for
the purposes stated hereinabove.  Nothing
in this Section 8.2(c) shall be deemed to relieve the Borrower
of its obligation to protect the interest of the Trustee (for the benefit of
the Secured Parties) in the Collateral, including to file financing and
continuation statements in respect of the Collateral in accordance with Section 5.1(e) and
Section 5.1(n).


 


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                                                (ii)                                  The
Administrative Agent may direct the Trustee to take any such incidental action
hereunder.  With respect to other actions
which are incidental to the actions specifically delegated to the Trustee
hereunder, the Trustee shall not be required to take any such incidental action
hereunder, but shall be required to act or to refrain from acting (and shall be
fully protected in acting or refraining from acting) upon the direction of the
Administrative Agent; provided, however, that the Trustee shall not be
required to take any action hereunder at the request of the Administrative
Agent, any Secured Parties or otherwise if the taking of such action, in the
reasonable determination of the Trustee, (x) shall be in violation of any
Applicable Law or contrary to any provisions of this Agreement or (y) shall
expose the Trustee to liability hereunder or otherwise (unless it has received
indemnity which it reasonably deems to be satisfactory with respect
thereto).  In the event the Trustee
requests the consent of the Administrative Agent and the Trustee does not
receive a consent (either positive or negative) from the Administrative Agent
within 10 Business Days of its receipt of such request, then the Administrative
Agent shall be deemed to have declined to consent to the relevant action.


 


                                                (iii)                               Except
as expressly provided herein, the Trustee shall not be under any duty or
obligation to take any affirmative action to exercise or enforce any power,
right or remedy available to it under this Agreement or any of the Required
Loan Documents (i) unless and until (and to the extent) expressly so
directed by the Administrative Agent or (ii) prior to the occurrence of the
Termination Date pursuant to clause (d) of the definition of “Termination
Date” (and upon such occurrence, the Trustee shall act in accordance with the
written instructions of the Administrative Agent pursuant to clause (i)).  The Trustee shall not be liable for any
action taken, suffered or omitted by it in accordance with the request or
direction of any Secured Party, to the extent that this Agreement provides such
Secured Party the right to so direct the Trustee, or the Administrative Agent.  The Trustee shall not be deemed to have
notice or knowledge of any matter hereunder, including a Termination Event,
unless a Responsible Officer of the Trustee has knowledge of such matter or
written notice thereof is received by the Trustee.


 


Section 8.3.                                Merger
or Consolidation.


 


Any Person (i) into
which the Trustee may be merged or consolidated, (ii) that may result from
any merger or consolidation to which the Trustee shall be a party, or (iii) that
may succeed to the properties and assets of the Trustee substantially as a
whole, which Person in any of the foregoing cases executes an agreement of
assumption to perform every obligation of the Trustee hereunder, shall be the
successor to the Trustee under this Agreement without further act of any of the
parties to this Agreement.


 


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Section 8.4.                                Trustee
Compensation.


 


As
compensation for its Trustee activities hereunder, the Trustee shall be
entitled to a Trustee Fee from the Servicer. 
To the extent that such Trustee Fee is not paid by the Servicer, the
Trustee shall be entitled to receive the unpaid balance of its Trustee Fee to
the extent of funds available therefor pursuant to the provision of Section 2.9(a)(2),
Section 2.9(b)(1) or Section 2.10(a)(2), as applicable.  The Trustee’s entitlement to receive the
Trustee Fee shall cease on the earlier to occur of:  (i) its removal as Trustee pursuant to Section 8.5
or (ii) the termination of this Agreement.


 


Section 8.5.                                Trustee
Removal.


 


The Trustee
may be removed, with or without cause, by the Administrative Agent by notice
given in writing to the Trustee (the “Trustee Termination Notice”); provided, however, notwithstanding its
receipt of a Trustee Termination Notice, the Trustee shall continue to act in
such capacity until a successor Trustee has been appointed, has agreed to act
as Trustee hereunder, and has received all Required Loan Documents held by the
previous Trustee.


 


Section 8.6.                                Limitation
on Liability.


 


(a)                                          The Trustee
may conclusively rely on and shall be fully protected in acting upon any
certificate, instrument, opinion, notice, letter, telegram or other document
delivered to it and that in good faith it reasonably believes to be genuine and
that has been signed by the proper party or parties.  The Trustee may rely conclusively on and
shall be fully protected in acting upon (a) the written instructions of
any designated officer of the Administrative Agent or (b) the verbal
instructions of the Administrative Agent.


 


(b)                                         The Trustee
may consult counsel satisfactory to it and the advice or opinion of such
counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.


 


(c)                                          The Trustee
shall not be liable for any error of judgment, or for any act done or step
taken or omitted by it, in good faith, or for any mistakes of fact or law, or
for anything that it may do or refrain from doing in connection herewith except
in the case of its willful misconduct or grossly negligent performance or
omission of its duties and in the case of the negligent performance of its
Payment Duties and in the case of its negligent performance of its duties in
taking and retaining custody of the Required Loan Documents.


 


(d)                                         The Trustee
makes no warranty or representation and shall have no responsibility (except as
expressly set forth in this Agreement) as to the content, enforceability,
completeness, validity, sufficiency, value, genuineness, ownership or
transferability of the Collateral, and will not be required to and will not
make any representations as to the validity or value (except as expressly set
forth in this Agreement) of any of the Collateral.  The Trustee shall not be obligated to take
any legal action hereunder that might in its judgment involve any expense or
liability unless it has been furnished with an indemnity reasonably
satisfactory to it.


 


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(e)                                          The Trustee
shall have no duties or responsibilities except such duties and
responsibilities as are specifically set forth in this Agreement and no
covenants or obligations shall be implied in this Agreement against the
Trustee.


 


(f)                                            The Trustee
shall not be required to expend or risk its own funds in the performance of its
duties hereunder.


 


(g)                                         It is
expressly agreed and acknowledged that the Trustee is not guaranteeing
performance of or assuming any liability for the obligations of the other
parties hereto or any parties to the Collateral.


 


(h)                                         In case any
reasonable question arises as to its duties hereunder, the Trustee may, prior
to the occurrence of a Termination Event or the Termination Date, request
instructions from the Servicer and may, after the occurrence of a Termination Event
or the Termination Date, request instructions from the Administrative Agent,
and shall be entitled at all times to refrain from taking any action unless it
has received instructions from the Servicer or the Administrative Agent, as
applicable.  The Trustee shall in all
events have no liability, risk or cost for any action taken pursuant to and in
compliance with the instruction of the Administrative Agent.  In no event shall the Trustee be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Trustee has been
advised of the likelihood of such loss or damage and regardless of the form of
action.


 


Section 8.7.                                The
Trustee Not to Resign.


 


The Trustee
shall not resign from the obligations and duties hereby imposed on it except
upon the Trustee’s determination that (i) the performance of its duties
hereunder is or becomes impermissible under Applicable Law and (ii) there
is no reasonable action that the Trustee could take to make the performance of
its duties hereunder permissible under Applicable Law.  Any such determination permitting the
resignation of the Trustee shall be evidenced as to clause (i) above
by an Opinion of Counsel to such effect delivered to the Administrative Agent
and each Purchaser Agent.  No such
resignation shall become effective until a successor Trustee shall have assumed
the responsibilities and obligations of the Trustee hereunder.


 


Section 8.8.                                Release
of Documents.


 


(a)                                          Release
for Servicing.  From time to time and
as appropriate for the enforcement or servicing of any of the Collateral, the
Trustee is hereby authorized (unless and until such authorization is revoked by
the Administrative Agent), upon written receipt from the Servicer of a request
for release of documents and receipt in the form annexed hereto as Exhibit H,
to release to the Servicer within 2 Business Days of receipt of such request,
the related Required Loan Documents or the documents set forth in such request
and receipt to the Servicer.  All
documents so released to the Servicer shall be held by the Servicer in trust
for the benefit of the Administrative Agent in accordance with the terms of
this Agreement.  The Servicer shall
return to the Trustee the Required Loan Documents or other such documents (i) promptly
upon the request of the Administrative Agent, or (ii) when the Servicer’s
need therefor in connection with such foreclosure or servicing no longer
exists, unless the Loan shall be liquidated, in 


 


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which case, upon receipt of an additional request for release of
documents and receipt certifying such liquidation from the Servicer to the
Trustee in the form annexed hereto as Exhibit H, the Servicer’s
request and receipt submitted pursuant to the first sentence of this subsection
shall be released by the Trustee to the Servicer.


 


(b)                                         Limitation
on Release.  The foregoing provision
with respect to the release to the Servicer of the Required Loan Documents and
documents by the Trustee upon request by the Servicer shall be operative only
to the extent that at any time the Trustee shall not have released to the
Servicer active Required Loan Documents (including those requested) pertaining
to more than 10 Loans at the time being serviced by the Servicer under this
Agreement.  Promptly after delivery to
the Trustee of any request for release of documents, the Servicer shall provide
notice of the same to the Administrative Agent. 
Any additional Required Loan Documents or documents requested to be
released by the Servicer may be released only upon written authorization of the
Administrative Agent.  The limitations of
this paragraph shall not apply to the release of Required Loan Documents to the
Servicer pursuant to the immediately succeeding subsection.


 


(c)                                          Release
for Payment.  Upon receipt by the
Trustee of the Servicer’s request for release of documents and receipt in the
form annexed hereto as Exhibit H (which certification shall include
a statement to the effect that all amounts received in connection with such
payment or repurchase have been credited to the Collection Account as provided
in this Agreement), the Trustee shall promptly release the related Required
Loan Documents to the Servicer.


 


Section 8.9.                                Return
of Required Loan Documents.


 


The Borrower
may, with the prior written consent of the Administrative Agent (such consent
not to be unreasonably withheld), require that the Trustee return each Required
Loan Document (a) delivered to the Trustee in error, (b) for which a
Substitute Loan has been substituted in accordance with Section 2.18,
(c) as to which the lien on the Related Property has been so released
pursuant to Section 9.2, (d) that has been repurchased or sold
by the Borrower pursuant to Section 2.18, (e) that has been
the subject of an Optional Sale pursuant to Section 2.19, (f) that
has been the subject of a Discretionary Sale pursuant to Section 2.20,
or (g) that is required to be redelivered to the Borrower in connection
with the termination of this Agreement, in each case by submitting to the
Trustee and the Administrative Agent a written request in the form of Exhibit H
hereto (signed by both the Borrower and the Administrative Agent) specifying
the Collateral to be so returned and reciting that the conditions to such
release have been met (and specifying the Section or Sections of this
Agreement being relied upon for such release). 
The Trustee shall upon its receipt of each such request for return
executed by the Borrower and the Administrative Agent promptly, but in any
event within five Business Days, return the Required Loan Documents so
requested to the Borrower.


 


Section 8.10.                         Access
to Certain Documentation and Information Regarding the Collateral; Audits of
Servicer.


 


The Trustee
shall provide to the Administrative Agent and each Purchaser Agent access to
the Required Loan Documents and all other documentation regarding the
Collateral including


 


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in
such cases where the Administrative Agent and each Purchaser Agent is required
in connection with the enforcement of the rights or interests of the Secured
Parties, or by applicable statutes or regulations, to review such
documentation, such access being afforded without charge but only (i) upon
two Business Days prior written request, (ii) during normal business hours
and (iii) subject to the Servicer’s and the Trustee’s normal security and
confidentiality procedures.  Prior to the
Closing Date and periodically thereafter at the discretion of the
Administrative Agent and each Purchaser Agent, the Administrative Agent and
each Purchaser Agent may review the Servicer’s collection and administration of
the Collateral in order to assess compliance by the Servicer with the Credit
Policy and the Servicing Standard, as well as with this Agreement and may
conduct an audit of the Collateral, and Required Loan Documents in conjunction
with such a review.  Such review shall be
reasonable in scope and shall be completed in a reasonable period of time.  Without limiting the foregoing provisions of
this Section 8.10, from time to time on request of the
Administrative Agent, the Trustee shall permit certified public accountants or
other auditors acceptable to the Administrative Agent to conduct, at the
Servicer’s expense, a review of the Required Loan Documents and all other
documentation regarding the Collateral.


 


ARTICLE IX



SECURITY INTEREST


 


Section 9.1.           Grant of
Security Interest.


 


The parties to this
Agreement intend that the conveyance of the Collateral by the Borrower to the
applicable Purchasers be treated as sales for all purposes other than financial
accounting purposes.  If, despite such
intention, a determination is made that such transactions not be treated as
sales, then the parties hereto intend that this Agreement constitute a security
agreement and the transactions effected hereby constitute secured loans by the
applicable Purchasers to the Borrower under Applicable Law.  In addition to, and not in limitation of, any
ownership interest now or hereafter acquired by any Purchasers, the Borrower
hereby transfers, conveys, assigns and grants as of the Closing Date to the
Trustee, for the benefit of the Secured Parties, a lien and continuing security
interest in all of the Borrower’s right, title and interest in, to and under
(but none of the obligations under) all Collateral (including any Hedging
Agreements), whether now existing or hereafter arising or acquired by the
Borrower, and wherever the same may be located, to secure the prompt, complete
and indefeasible payment and performance in full when due, whether by lapse of
time, acceleration or otherwise, of the Aggregate Unpaids of the Borrower
arising in connection with this Agreement and each other Transaction Document,
whether now or hereafter existing, due or to become due, direct or indirect, or
absolute or contingent, including, without limitation, all Aggregate
Unpaids.  The assignment under this Section 9.1
does not constitute and is not intended to result in a creation or an
assumption by the Trustee, the Administrative Agent, the Purchaser Agents, any
Hedge Counterparty, the Liquidity Banks or any of the Secured Parties of any
obligation of the Borrower or any other Person in connection with any or all of
the Collateral or under any agreement or instrument relating thereto.  Anything herein to the contrary
notwithstanding, (a) the Borrower shall remain liable under the Collateral
to the extent set forth therein to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been executed, (b) the
exercise by the Trustee, for the benefit of the Secured Parties, of any of its
rights in the Collateral shall not release the Borrower from any of its duties
or obligations under 


 


134

















 


the
Collateral, and (c) none of the Administrative Agent, the Trustee, the
Purchaser Agents, any Hedge Counterparty, the Liquidity Banks or any Secured
Party shall have any obligations or liability under the Collateral by reason of
this Agreement, nor shall the Administrative Agent, the Trustee, the Purchaser
Agents, any Hedge Counterparty, the Liquidity Banks or any Secured Party be
obligated to perform any of the obligations or duties of the Borrower
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.


 


Section 9.2.           Release of
Lien on Collateral.


 


At the same time as (i) any
Collateral expires by its terms and all amounts in respect thereof have been
paid in full by the related Obligor and deposited in the Collection Account, (ii) any
Loan becomes a Prepaid Loan and all amounts in respect thereof have been paid
in full by the related Obligor and deposited in the Collection Account, (iii) such
Loan is repurchased, replaced or sold in accordance with Section 2.18,
(iv) such Loan has been the subject of an Optional Sale pursuant to Section 2.19,
(v) such Loan has been the subject of a Discretionary Sale pursuant to Section 2.20,
or (vi) this Agreement terminates in accordance with Section 13.6,
the Trustee will, to the extent requested by the Servicer, release its interest
in such Collateral.  In connection with
any sale of such Related Property, the Trustee will, after the deposit by the
Servicer of the Proceeds of such sale into the Collection Account, at the sole
expense of the Servicer, execute and deliver to the Servicer any assignments,
bills of sale, termination statements and any other releases and instruments as
the Servicer may reasonably request in order to effect the release and transfer
of such Related Property; provided that
the Trustee will make no representation or warranty, express or implied, with
respect to any such Related Property in connection with such sale or transfer
and assignment.  Nothing in this Section 9.2
shall diminish the Servicer’s obligations pursuant to Section 6.6
with respect to the Proceeds of any such sale.


 


Section 9.3.           Further
Assurances.


 


The provisions of Section 13.12
shall apply to the security interest granted under Section 9.1 as
well as to the Advances hereunder.


 


Section 9.4.           Remedies.


 


Subject to the provisions of
Section 10.2, upon the occurrence of a Termination Event, the
Trustee and the Secured Parties shall have, with respect to the Collateral
granted pursuant to Section 9.1, and in addition to all other
rights and remedies available to the Trustee and the Secured Parties under this
Agreement or other Applicable Law, all rights and remedies of a secured party
upon default under the UCC.


 


Section 9.5.           Waiver of
Certain Laws.


 


Each of the Borrower and the
Servicer agrees, to the full extent that it may lawfully so agree, that neither
it nor anyone claiming through or under it will set up, claim or seek to take
advantage of any appraisement, valuation, stay, extension or redemption law now
or hereafter in force in any locality where any Collateral may be situated in
order to prevent, hinder or delay the enforcement or foreclosure of this
Agreement, or the absolute sale of any of the Collateral or any part thereof,
or the final and absolute putting into possession thereof, immediately after
such 


 


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sale,
of the purchasers thereof, and each of the Borrower and the Servicer, for
itself and all who may at any time claim through or under it, hereby waives, to
the full extent that it may be lawful so to do, the benefit of all such laws,
and any and all right to have any of the properties or assets constituting the
Collateral marshaled upon any such sale, and agrees that the Trustee, or the
Administrative Agent on its behalf, or any court having jurisdiction to
foreclose the security interests granted in this Agreement may sell the
Collateral as an entirety or in such parcels as the Trustee or such court may
determine.


 


Section 9.6.           Power of
Attorney.


 


Each of the Borrower and the
Servicer hereby irrevocably appoints each of the Trustee and the Administrative
Agent its true and lawful attorney (with full power of substitution) in its
name, place and stead and at is expense, in connection with the enforcement of
the rights and remedies provided for in this Agreement, including without
limitation the following powers:  (a) to
give any necessary receipts or acquittance for amounts collected or received
hereunder, (b) to make all necessary transfers of the Collateral in
connection with any such sale or other disposition made pursuant hereto, (c) to
execute and deliver for value all necessary or appropriate bills of sale,
assignments and other instruments in connection with any such sale or other
disposition, the Borrower and the Servicer hereby ratifying and confirming all
that such attorney (or any substitute) shall lawfully do hereunder and pursuant
hereto, and (d) to sign any agreements, orders or other documents in connection
with or pursuant to any Transaction Document or Hedging Agreement.  Nevertheless, if so requested by the Trustee,
the Administrative Agent or a Purchaser Agent, the Borrower shall ratify and
confirm any such sale or other disposition by executing and delivering to the
Trustee, the Administrative Agent or such purchaser all proper bills of sale,
assignments, releases and other instruments as may be designated in any such
request.


 


ARTICLE X



TERMINATION EVENTS


 


Section 10.1.        Termination
Events.


 


The following events shall
be Termination Events (“Termination Events”)
hereunder:


 


(a)           the Borrower or the
Originator defaults in making any payment required to be made under one or more
agreements for borrowed money to which it is a party in an aggregate principal
amount in excess of $5,000,000 and such failure continues unremedied for two
Business Days and such default is not cured within the applicable cure period,
if any, provided for under such agreement; or


 


(b)           any failure on the part of
the Borrower or the Originator duly to observe or perform in any material
respect any other covenants or agreements of the Borrower or the Originator set
forth in this Agreement or the other Transaction Documents to which the
Borrower or the Originator is a party and the same continues unremedied for a
period of 30 days (if such failure can be remedied) after the earlier to occur
of (i) the date on which written notice of such failure requiring the same
to be remedied shall have been given to the Borrower 


 


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or the Originator by the
Administrative Agent and (ii) the date on which the Borrower or the
Originator acquires knowledge thereof; or


 


(c)           the occurrence of an
Insolvency Event relating to the Originator or the Borrower; or


 


(d)           the occurrence of a Servicer
Default (subject to the applicable cure periods set forth in the definition of “Servicer
Default”); or


 


(e)           (1)  the rendering of
one or more final judgments, decrees or orders by a court or arbitrator of
competent jurisdiction for the payment of money in excess individually or in
the aggregate of $7,500,000, against the Originator, or $1,000,000, against the
Borrower, and the Originator or the Borrower, as applicable, shall not have
either (i) discharged or provided for the discharge of any such judgment,
decree or order in accordance with its terms or (ii) perfected a timely
appeal of such judgment, decree or order and caused the execution of same to be
stayed during the pendency of the appeal or (2) the Originator or the
Borrower shall have made payments of amounts in excess of $7,500,000 or
$500,000, respectively, in the settlement of any litigation, claim or dispute
(excluding payments made from insurance proceeds); or


 


(f)            the Borrower shall cease to
be an Affiliate of the Originator or shall fail to qualify as a
bankruptcy-remote entity based upon customary criteria such that reputable
counsel could no longer render a substantive nonconsolidation opinion with
respect thereto; or


 


(g)           (1)         any Transaction Document, or
any lien or security interest granted thereunder, shall (except in accordance
with its terms), in whole or in part, terminate, cease to be effective or cease
to be the legally valid, binding and enforceable obligation of the Borrower the
Originator, or the Servicer,


 


(2)           the Borrower, the
Originator, the Servicer or any other party shall, directly or indirectly,
contest in any manner the effectiveness, validity, binding nature or
enforceability of any Transaction Document or any lien or security interest
thereunder, or


 


(3)           any security interest
securing any obligation under any Transaction Document shall, in whole or in
part, cease to be a first priority perfected security interest except as
otherwise expressly permitted to be released in accordance with the applicable
Transaction Document; or


 


(h)           any portion of the Advances
Outstanding shall be funded by a Liquidity Bank solely due to a default by the
Borrower, the Servicer or the Originator under the Transaction Documents or the
creditworthiness of the Collateral; or


 


(i)            the Advances Outstanding on
any day exceeds the Maximum Availability and has not been remedied in
accordance with Section 2.6(a); provided,
however, that, during the period
of time that such event remains unremedied, any payments required to be made by
the Servicer on a Payment Date shall be made under Section 2.10; or


 


(j)            the CP Funding II Financing
does not close on or before October 19, 2009; or


 


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(k)           the Facility Amount is not equal
to or less than $200,000,000 on May 7, 2010; or


 


(l)            the Facility Amount is not
equal to or less than $175,000,000 on May 7, 2011; or


 


(m)          [Reserved]; or


 


(n)           on any day, the aggregate
Hedge Notional Amount in effect for that day under all Hedge Transactions is
less than the Hedge Amount on that day, and the same continues unremedied for a
period of the later of 15 calendar days or the next succeeding Reporting Date;
or


 


(o)           failure on the part of the
Borrower or the Originator to make any payment or deposit (including, without
limitation, with respect to bifurcation and remittance of Collections or any
other payment or deposit required to be made by the terms of the Transaction
Documents, including, without limitation, to any Secured Party, Affected Party
or Indemnified Party) required by the terms of any Transaction Document (other
than Section 2.6(a)) on the day such payment or deposit is required
to be made and the same continues unremedied for two Business Days; or


 


(p)           the Borrower shall become
required to register as an “investment company” within the meaning of the 1940
Act or the arrangements contemplated by the Transaction Documents shall require
registration as an “investment company” within the meaning of the 1940 Act; or


 


(q)           the Internal Revenue Service
shall file notice of a lien pursuant to Section 6323 of the Code with
regard to any assets of the Borrower or the Originator and such lien shall not
have been released within five Business Days, or the Pension Benefit Guaranty
Corporation shall file notice of a lien pursuant to Section 4068 of ERISA
with regard to any of the assets of the Borrower or the Originator and such
lien shall not have been released within five Business Days; or


 


(r)            any Change of Control shall
occur; or


 


(s)           any representation, warranty
or certification made by the Borrower, the Originator or the Guarantor in any
Transaction Document or in any certificate delivered pursuant to any
Transaction Document shall prove to have been incorrect when made, which has a
Material Adverse Effect on the Secured Parties and which continues to be
unremedied for a period of 30 days after the earlier to occur of (i) the
date on which written notice of such incorrectness requiring the same to be
remedied shall have been given to the Borrower, the Originator or the Guarantor
by the Administrative Agent and (ii) the date on which a Responsible
Officer of the Borrower, the Originator or the Guarantor acquires knowledge
thereof.


 


Section 10.2.        Remedies.


 


(a)           Upon the occurrence of a
Termination Event, the Administrative Agent shall, at the request of, or may,
with the consent of, the Required Purchasers, by notice to the Borrower (and
the Administrative Agent shall provide a copy of such notice to the Trustee),
declare the 


 


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Termination Date to have
occurred, the VFCs to be immediately due and payable in full (without
presentment, demand, protest or notice of any kind all of which are hereby
waived by the Borrower) and the Amortization Period to have commenced; provided, however, in the case of any
event described in Section 10.1(c) or 10.1(d) (in
the case of Section 10.1(d) due to the occurrence of an event
described in Section 6.15(d)) or any Termination Date that arises
other than from the occurrence of a Termination Event, the VFCs shall be
immediately due and payable in full (without presentment, demand, notice of any
kind, all of which are hereby expressly, waived by the Borrower) and the
Termination Date shall be deemed to have occurred automatically upon the
occurrence of any such event.


 


(b)           Upon the declaration or
occurrence of a Termination Date, the Term Period shall end and the
Amortization Period shall commence and the Trustee shall, on each Payment Date
thereafter, make payments in accordance with the provisions of Section 2.10.  For the avoidance of doubt, the occurrence of
a Termination Date as defined in clauses (a) through (d),
inclusive, of the definition of “Termination Date” shall constitute a
Termination Date for the purposes of this Section 10.2.  On and after the declaration or occurrence of
a Termination Date, the Trustee, on behalf of the Secured Parties and at the
direction of the Administrative Agent, shall have, in addition to all of the
rights and remedies under this Agreement or otherwise, all other rights and
remedies provided under the UCC of each applicable jurisdiction and other
Applicable Laws, in each case subject to clause (ii) of this Section 10.2(b),
the proviso of this Section 10.2(b) and Sections 10.2(d) —
(g), which rights shall be cumulative. 
Without limiting the generality of the foregoing sentence, the Trustee
(acting as directed by the Administrative Agent) or the Administrative Agent
also may (i) require the Borrower and Servicer to, and the Borrower and
Servicer hereby agree that they will at the Servicer’s expense and upon the
request of the Trustee or the Administrative Agent forthwith, assemble all or
any part of the Collateral as directed by the Trustee (acting as directed by
the Administrative Agent) or the Administrative Agent and make the same
available to the Trustee or the Administrative Agent at a place to be
designated by the Trustee or the Administrative Agent and (ii) sell the
Collateral or any part thereof in one or more parcels at a public or private
sale subject to the requirements set forth in Sections 10.2(d) — (g);
provided, however, that in the case of any
Termination Date that arises from the occurrence of the Termination Event
described in Section 10.1(d) (due to the occurrence of an
event described in Sections 6.15(i) and 6.15(j)), the
Trustee and Administrative Agent (as applicable) may not order the assembly or
liquidation of the Collateral, or take any action in connection with such
assembly or liquidation, until on or after the date that is twelve (12) months
after the occurrence of such Termination Date.


 


(c)           [Reserved].


 


(d)           If the Trustee (acting as
directed by the Administrative Agent) or the Administrative Agent proposes to
sell the Collateral or any part thereof in one or more parcels at a public or
private sale, at the request of the Trustee or the Administrative Agent, as
applicable, the Borrower and the Servicer shall make available to (i) the
Administrative Agent, on a timely basis, all information (including any
information that the Borrower and the Servicer is required by law or contract
to be kept confidential) relating to the Collateral subject to sale, including,
without limitation, copies of any disclosure documents, contracts, financial
statements of the applicable Obligors, covenant certificates and any other
materials requested by the Administrative Agent, and (ii) each prospective
bidder, on a timely basis, all reasonable 


 


139

















 


information relating to the
Collateral subject to sale, including, without limitation, copies of any
disclosure documents, contracts, financial statements of the applicable
Obligors, covenant certificates and any other materials reasonably requested by
each such bidder; provided that
with respect to this clause (ii), neither the Borrower nor the Servicer
shall be required to disclose to each such bidder any information which it is
required by law or contract to be kept confidential.


 


(e)           At any time after the
Borrower has received notice of a Termination Date from the Administrative
Agent and before the Collateral has been sold, the Borrower may pay to the
Trustee an amount equal to the Aggregate Unpaids, and, once such payment is
applied by the Trustee to reduce the Aggregate Unpaids to $0, the Collection
Date shall have occurred.


 


(f)    (i)                  If the Trustee (acting as
directed by the Administrative Agent) or the Administrative Agent elects to
sell the Collateral in whole, but not in part, at a public or private sale, the
Borrower may exercise its right of first refusal to repurchase the Collateral,
in whole but not in part, prior to such sale at a purchase price that is not
less than the amount of the Aggregate Unpaids as of the date of such proposed
sale.  The Borrower’s right of first
refusal shall terminate not later than 4:00 p.m. on the second Business
Day following the Business Day on which the Borrower receives notice of the
Trustee’s or the Administrative Agent’s election to sell such Collateral, such
notice to attach copies of all Eligible Bids received by the Trustee or the
Administrative Agent in respect of such Collateral.


 


(ii)           If the Trustee (acting as
directed by the Administrative Agent) or the Administrative Agent elects to
sell less than all of the Collateral in one or more parcels at a public or
private sale, the Borrower may exercise its right of first refusal to
repurchase such portion of the Collateral prior to such sale at a purchase
price of not less than the highest Eligible Bid received in respect of such
portion of the Collateral as of the date of such proposed sale, as notified by
the Trustee or the Administrative Agent to the Seller.  The Borrower’s right of first refusal shall
terminate not later than 4:00 p.m. on the Business Day on which the
Borrower receives notice of the Trustee’s or the Administrative Agent’s
election to sell such portion of the Collateral, if such notice is delivered by
12:00 p.m. on such Business Day; provided
that if such notice is delivered after 12:00 p.m. on the
Business Day on which the Borrower receives such notice, or if the highest
Eligible Bid received in respect of such portion of the Collateral is greater
than $25,000,000, the Borrower’s right of first refusal shall terminate not
later than 12:00 p.m. on the following Business Day.


 


(iii)          If the Seller elects not to
exercise its right of first refusal as provided in clauses (i) or (ii) above,
the Trustee (acting as directed by the Administrative Agent) or the
Administrative Agent shall sell such Collateral or portion thereof for a
purchase price equal to the highest of the Eligible Bids then received.  For the avoidance of doubt, any determination
of the highest Eligible Bid shall only consider bids for the same parcels of
the Collateral.


 


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(iv)          It is understood that the
Borrower may submit its bid for the Collateral or any portion thereof as a
combined bid with the bids of other members of a group of bidders, and shall
have the right to find bidders to bid on the Collateral or any portion thereof.


 


(v)           It is understood that the
Borrower’s right of first refusal shall apply to each proposed sale of the same
parcel of the Collateral.


 


(g)           All cash Proceeds received
by the Trustee in respect of any sale of, collection from, or other realization
upon, all or any part of the Collateral (after payment of any amounts incurred
by the Trustee or any of the Secured Parties in connection with such sale)
shall be deposited into the Collection Account to be applied against all or any
part of the Aggregate Unpaids pursuant to Section 2.10 or otherwise
in such order as the Trustee shall elect in its discretion.


 


ARTICLE XI



INDEMNIFICATION


 


Section 11.1.        Indemnities
by the Borrower.


 


(a)           Without limiting any other
rights that any such Person may have hereunder or under Applicable Law, the
Borrower hereby agrees to indemnify the Administrative Agent, the Trustee, the
Purchaser Agents, the Backup Servicer, the Secured Parties, the Affected
Parties and each of their respective assigns and officers, directors, employees
and agents thereof (collectively, the “Indemnified Parties”), forthwith
on demand, from and against any and all damages, losses, claims, liabilities
and related costs and expenses, including reasonable attorneys’ fees and
disbursements (all of the foregoing being collectively referred to as the “Indemnified
Amounts”) awarded against or incurred by such Indemnified Party arising out
of or as a result of this Agreement or the ownership of an interest in the
Collateral or in respect of any Loan included in the Collateral, excluding,
however, Indemnified Amounts to the extent resulting from gross negligence or
willful misconduct on the part of the Indemnified Party seeking
indemnification; provided, however, that
nothing contained in this sentence shall limit the liability of the Borrower or
limit the recourse of the Secured Parties to the Borrower for amounts otherwise
specifically provided to be paid by the Borrower under the terms of this
Agreement.  If the Borrower has made any
indemnity payment pursuant to this Section 11.1 and such payment
fully indemnified the recipient thereof and the recipient thereafter collects
any payments from others in respect of such Indemnified Amounts then, the
recipient shall repay to the Borrower an amount equal to the amount it has
collected from others in respect of such indemnified amounts.  Without limiting the foregoing, the Borrower
shall indemnify each Indemnified Party for Indemnified Amounts relating to or
resulting from:


 


(i)            any representation or
warranty made or deemed made by the Borrower, the Servicer (if the Originator
or one of its Affiliates is the Servicer) or any of their respective officers
under or in connection with this Agreement or any other Transaction Document,
which shall have been false or incorrect in any material respect when made or
deemed made or delivered;


 


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(ii)           the failure by the Borrower
or the Servicer (if the Originator or one of its Affiliates is the Servicer) to
comply with any term, provision or covenant contained in this Agreement or any
agreement executed in connection with this Agreement, or with any Applicable
Law, with respect to any Collateral or the nonconformity of any Collateral with
any such Applicable Law;


 


(iii)          the failure to vest and
maintain vested in the Trustee, for the benefit of the Secured Parties, an
undivided ownership interest in the Collateral, together with all Collections,
free and clear of any Lien (other than Permitted Liens) whether existing at the
time of any Advance o at any time thereafter;


 


(iv)          the failure to maintain, as
of the close of business on each Business Day prior to the Termination Date, an
amount of Advances Outstanding that does not exceed the Maximum Availability on
such Business Day.


 


(v)           the failure to file, or any
delay in filing, financing statements, continuation statements or other similar
instruments or documents under the UCC of any applicable jurisdiction or other
Applicable Law with respect to any Collateral, whether at the time of any
Advance or at any subsequent time;


 


(vi)          any dispute, claim, offset
or defense (other than the discharge in bankruptcy of the Obligor) of the
Obligor to the payment with respect to any Collateral (including, without
limitation, a defense based on the Collateral not being a legal, valid and
binding obligation of such Obligor enforceable against it in accordance with
its terms), or any other claim resulting from the sale of the merchandise or
services related to such Collateral or the furnishing or failure to furnish
such merchandise or services;


 


(vii)         any failure of the Borrower
or the Servicer (if the Originator or one of its Affiliates is the Servicer) to
perform its duties or obligations in accordance with the provisions of this
Agreement or any of the other Transaction Documents to which it is a party or
any failure by the Originator, the Borrower or any Affiliate thereof to perform
its respective duties under any Collateral;


 


(viii)        the failure of any
Concentration Account Bank to remit any amounts held in a Concentration Account
pursuant to the instructions of the Servicer or the Administrative Agent (to
the extent such Person is entitled to give such instructions in accordance with
the terms hereof and of the Intercreditor Agreement) whether by reason of the
exercise of set-off rights or otherwise;


 


(ix)           any inability to obtain any
judgment in, or utilize the court or other adjudication system of, any state in
which an Obligor may be located as a result of the failure of the Borrower or
the Originator to qualify to do business or file any notice or business
activity report or any similar report;


 


(x)            any action taken by the
Borrower or the Originator (in its capacity as Servicer) in the enforcement or
collection of any Collateral;


 


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(xi)           any products liability claim
or personal injury or property damage suit or other similar or related claim or
action of whatever sort arising out of or in connection with the Related
Property or services that are the subject of any Collateral;


 


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


 


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


 


(xiv)        any repayment by the
Administrative Agent, the Purchaser Agents or a Secured Party of any amount
previously distributed in reduction of Advances Outstanding or payment of
Interest or any other amount due hereunder or under any Hedging Agreement, in
each case which amount the Administrative Agent, the Purchaser Agents or a
Secured Party believes in good faith is required to be repaid;


 


(xv)         except with respect to funds
held in the Concentration Account, the commingling of Collections on the
Collateral at any time with other funds;


 


(xvi)        any investigation,
litigation or proceeding related to this Agreement or the use of proceeds of
Advances or the security interest in the Collateral;


 


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


 


(xviii)      the use of the proceeds of
any Advance in a manner other than as provided in this Agreement and the Sale
Agreement;


 


(xix)         the failure of the Borrower,
the Originator or any of their respective agents or representatives to remit to
the Servicer or the Administrative Agent or the Purchaser Agents, Collections
on the Collateral remitted to the Borrower, the Originator, the Servicer or any
such agent or representative; as provided in this Agreement; or


 


(xx)          the failure by the Borrower
to comply with any of the covenants relating to the Hedging Agreement in
accordance with the Transaction Documents.


 


(b)           Any amounts subject to the
indemnification provisions of this Section 11.1 shall be paid by
the Borrower to the Indemnified Party within five Business Days following such
Person’s demand therefor.


 


(c)           If for any reason the indemnification
provided above in this Section 11.1 is unavailable to the
Indemnified Party or is insufficient to hold an Indemnified Party harmless in


 


143
















 


respect of any losses,
claims, damages or liabilities, then the Borrower or the Servicer, as the case
may be, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such losses, claims, damages or liabilities in such proportion
as is appropriate to reflect not only the relative benefits received by such
Indemnified Party on the one hand and the Borrower or the Servicer, as the case
may be, on the other hand but also the relative fault of such Indemnified Party
as well as any other relevant equitable considerations.


 


(d)           The obligations of the
Borrower under this Section 11.1 shall survive the resignation or
removal of the Administrative Agent, the Purchaser Agents, the Servicer, the
Backup Servicer or the Trustee and the termination of this Agreement.


 


Section 11.2.        Indemnities
by the Servicer.


 


(a)           Without limiting any other
rights that any such Person may have hereunder or under Applicable Law, the
Servicer hereby agrees to indemnify each Indemnified Party, forthwith on demand,
from and against any and all Indemnified Amounts awarded against or incurred by
any such Indemnified Party by reason of any acts, omissions or alleged acts or
omissions of the Servicer, including, but not limited to (i) any
representation or warranty made by the Servicer under or in connection with any
Transaction Document, any Servicing Report, Servicer’s Certificate or any other
information or report delivered by or on behalf of the Servicer pursuant
hereto, which shall have been false, incorrect or misleading in any material
respect when made or deemed made, (ii) the failure by the Servicer to
comply with any Applicable Law, (iii) the failure of the Servicer to
comply with its duties or obligations in accordance with the Agreement, (iv) the
failure by the Servicer to comply with any of the covenants relating to the
Hedging Agreement in accordance with the Transaction Documents, or (v) any
litigation, proceedings or investigation against the Servicer.  The provisions of this indemnity shall run
directly to and be enforceable by an injured party subject to the limitations
hereof.


 


(b)           Any amounts subject to the
indemnification provisions of this Section 11.2 shall be paid by
the Servicer to the Indemnified Party within five Business Days following such
Person’s demand therefor.


 


(c)           The Servicer shall have no
liability for making indemnification hereunder to the extent any such
indemnification constitutes recourse for uncollectible or uncollected Loans.


 


(d)           The obligations of the
Servicer under this Section 11.2 shall survive the resignation or
removal of the Administrative Agent, the Purchaser Agents, the Backup Servicer
or the Trustee and the termination of this Agreement.


 


(e)           Any indemnification pursuant
to this Section 11.2 shall not be payable from the Collateral.


 


Section 11.3.        After-Tax
Basis.


 


Indemnification under Section 11.1
and Section 11.2 shall be in an amount necessary to make the
Indemnified Party whole after taking into account any tax consequences to the
Indemnified Party of the receipt of the indemnity provided hereunder, including
the effect of 


 


144

















 


such
tax or refund on the amount of tax measured by net income or profits that is or
was payable by the Indemnified Party.


 


ARTICLE XII



THE ADMINISTRATIVE AGENT

AND PURCHASER AGENTS


 


Section 12.1.        The
Administrative Agent.


 


(a)           Appointment.  Each Purchaser Agent and each Secured Party
hereby appoints and authorizes the Administrative Agent as its agent hereunder
and hereby further authorizes the Administrative Agent to appoint additional
agents to act on its behalf and for the benefit of each of the Purchaser Agents
and each Secured Party.  Each Purchaser
Agent and each Secured Party further authorizes the Administrative Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement and the other Transaction Documents as are delegated to the
Administrative Agent by the terms hereof and thereof, together with such powers
as are reasonably incidental thereto. 
With respect to other actions which are incidental to the actions
specifically delegated to the Administrative Agent hereunder, the
Administrative Agent shall not be required to take any such incidental action
hereunder, but shall be required to act or to refrain from acting (and shall be
fully protected in acting or refraining from acting) upon the direction of the
Purchaser Agents; provided, however,
that the Administrative Agent shall not be required to take any action
hereunder if the taking of such action, in the reasonable determination of the
Administrative Agent, shall be in violation of any Applicable Law or contrary
to any provision of this Agreement or shall expose the Administrative Agent to
liability hereunder or otherwise.  In the
event the Administrative Agent requests the consent of a Purchaser Agent or a
Purchaser pursuant to the foregoing provisions and the Administrative Agent
does not receive a consent (either positive or negative) from such Person
within ten Business Days of such Person’s receipt of such request, then such
Purchaser Agent or Purchaser shall be deemed to have declined to consent to the
relevant action.


 


(b)           Standard of Care.  The Administrative Agent shall exercise such
rights and powers vested in it by this Agreement and the other Transaction
Documents, and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person’s own affairs.


 


(c)           Administrative Agent’s
Reliance, Etc.  Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them as
Administrative Agent under or in connection with this Agreement or any of the
other Transaction Documents, except for its or their own gross negligence or
willful misconduct. Without limiting the foregoing, the Administrative
Agent:  (i) may consult with legal
counsel (including counsel for the Borrower or the Originator), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (ii) makes no warranty
or representation and shall not be responsible for any statements, warranties
or representations made in or in connection with this Agreement; (iii) shall
not have any duty to ascertain or to inquire as to the performance or
observance of 


 


145

















 


any of the terms, covenants
or conditions of this Agreement or any of the other Transaction Documents on
the part of the Borrower, the Originator, or the Servicer or to inspect the
property (including the books and records) of the Borrower, the Originator, or
the Servicer; (iv) shall not be responsible for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement, any of the other Transaction Documents or any other instrument or
document furnished pursuant hereto or thereto; and (v) shall incur no
liability under or in respect of this Agreement or any of the other Transaction
Documents by acting upon any notice (including notice by telephone), consent,
certificate or other instrument or writing (which may be by facsimile) believed
by it to be genuine and signed or sent by the proper party or parties.


 


(d)           Credit Decision with Respect
to the Administrative Agent.  Each Purchaser Agent and Secured Party
acknowledges that it has, independently and without reliance upon the
Administrative Agent, or any of the Administrative Agent’s Affiliates, and
based upon such documents and information as it has deemed appropriate, made
its own evaluation and decision to enter into this Agreement and the other
Transaction Documents to which it is a party. 
Each Purchaser Agent and Secured Party also acknowledges that it will,
independently and without reliance upon the Administrative Agent, or any of the
Administrative Agent’s Affiliates, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own decisions in
taking or not taking action under this Agreement and the other Transaction
Documents to which it is a party.


 


(e)           Indemnification of the
Administrative Agent.  Each
Purchaser Agent agrees to indemnify the Administrative Agent (to the extent not
reimbursed by the Borrower or the Servicer), ratably in accordance the Pro Rata
Share of its related Purchaser from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against the Administrative Agent in any way
relating to or arising out of this Agreement or any of the other Transaction
Documents, or any action taken or omitted by the Administrative Agent hereunder
or thereunder; provided that the
Purchaser Agents shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Administrative Agent’s gross
negligence or willful misconduct. Without limitation of the foregoing, each
Purchaser Agent agrees to reimburse the Administrative Agent, ratably in
accordance with the Pro Rata Share of its related Purchaser promptly upon
demand for any out-of-pocket expenses (including counsel fees) incurred by the
Administrative Agent in connection with the administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement and the other Transaction Documents, to the extent that such
expenses are incurred in the interests of or otherwise in respect of the
Purchaser Agents, or the Purchasers hereunder and/or thereunder and to the
extent that the Administrative Agent is not reimbursed for such expenses by the
Borrower or the Servicer.


 


(f)            Successor Administrative
Agent.  The Administrative Agent may
resign at any time, effective upon the appointment and acceptance of a
successor Administrative Agent as provided below, by giving at least five days’
written notice thereof to each Purchaser Agent and the Borrower and may be
removed at any time with cause by the Purchaser Agents acting 


 


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jointly.  Upon any such resignation or removal, the
Purchaser Agents acting jointly shall appoint a successor Administrative
Agent.  Each Purchaser Agent agrees that
it shall not unreasonably withhold or delay its approval of the appointment of
a successor Administrative Agent.  If no
such successor Administrative Agent shall have been so appointed, and shall
have accepted such appointment, within 30 days after the retiring
Administrative Agent’s giving of notice of resignation or the removal of the
retiring Administrative Agent, then the retiring Trustee may, on behalf of the
Secured Parties, appoint a successor Administrative Agent which successor
Administrative Agent shall be either (i) a commercial bank organized under
the laws of the United States or of any state thereof and have a combined
capital and surplus of at least $50,000,000 or (ii) an Affiliate of such a
bank.  Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations under this Agreement.  After any retiring Administrative Agent’s
resignation or removal hereunder as Administrative Agent, the provisions of
this Article XII shall continue to inure to its benefit as to any
actions taken or omitted to be taken by it while it was Administrative Agent
under this Agreement.


 


(g)           Payments by the
Administrative Agent.  Unless
specifically allocated to a specific Purchaser Agent pursuant to the terms of
this Agreement, all amounts received by the Administrative Agent on behalf of
the Purchaser Agents shall be paid by the Administrative Agent to the Purchaser
Agents in accordance with their related Purchaser’s respective Pro Rata Shares
in the applicable Advances Outstanding, or if there are no Advances Outstanding
in accordance with their related Purchaser’s most recent Commitments, on the
Business Day received by the Administrative Agent, unless such amounts are
received after 12:00 noon on such Business Day, in which case the
Administrative Agent shall use its reasonable efforts to pay such amounts to
each Purchaser Agent on such Business Day, but, in any event, shall pay such
amounts to such Purchaser Agent not later than the following Business Day.


 


Section 12.2.        Additional
Agent.


 


(a)           Authorization and Action. Each
Purchaser, respectively, hereby designates and appoints its applicable
Purchaser Agent to act as its agent hereunder and under each other Transaction
Document, and authorizes such Purchaser Agent to take such actions as agent on
its behalf and to exercise such powers as are delegated to such Purchaser Agent
by the terms of this Agreement and the other Transaction Documents, together
with such powers as are reasonably incidental thereto.  No Purchaser Agent shall have any duties or
responsibilities, except those expressly set forth herein or in any other
Transaction Document, or any fiduciary relationship with its related Purchaser,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities on the part of such Purchaser Agent shall be read into this
Agreement or any other Transaction Document or otherwise exist for such
Purchaser Agent.  In performing its
functions and duties hereunder and under the other Transaction Documents, each
Purchaser Agent shall act solely as agent for its related Purchaser and does
not assume nor shall be deemed to have assumed any obligation or relationship
of trust or agency with or for the Borrower or the Servicer or any of the
Borrower’s or the Servicer’s successors or assigns.  No Purchaser Agent shall be required to take
any action that exposes such Purchaser Agent to personal liability or that is
contrary to this Agreement, any other Transaction Document or 


 


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Applicable Law.  The appointment and authority of each
Purchaser Agent hereunder shall terminate upon the indefeasible payment in full
of all Aggregate Unpaids. Each Purchaser Agent hereby authorizes the
Administrative Agent to file any UCC financing statement deemed necessary by
the Administrative Agent on behalf of such Purchaser Agent (the terms of which
shall be binding on such Purchaser Agent).


 


(b)           Delegation of Duties.  Each Purchaser Agent may execute any of its
duties under this Agreement and each other Transaction Document by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties.  No Purchaser Agent shall be responsible for
the negligence or misconduct of any agents or attorneys-in-fact selected by it
with reasonable care.


 


(c)           Exculpatory Provisions.  Neither any Purchaser Agent nor any of its
directors, officers, agents or employees shall be (i) liable for any
action lawfully taken or omitted to be taken by it or them under or in
connection with this Agreement or any other Transaction Document (except for
its, their or such Person’s own gross negligence or willful misconduct), or (ii) responsible
in any manner to its related Purchaser for any recitals, statements,
representations or warranties made by the Borrower or the Servicer contained in
Article IV, any other Transaction Document or any certificate,
report, statement or other document referred to or provided for in, or received
under or in connection with, this Agreement or any other Transaction Document,
or for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement, any other Transaction Document or any other
document furnished in connection herewith or therewith, or for any failure of
the Borrower or the Servicer to perform its obligations hereunder or
thereunder, or for the satisfaction of any condition specified in this
Agreement, or for the perfection, priority, condition, value or sufficiency of
any collateral pledged in connection herewith. 
No Purchaser Agent shall be under any obligation to its related
Purchaser to ascertain or to inquire as to the observance or performance of any
of the agreements or covenants contained in, or conditions of, this Agreement
or any other Transaction Document, or to inspect the properties, books or
records of the Borrower or the Servicer. 
No Purchaser Agent shall be deemed to have knowledge of any Termination
Event or Unmatured Termination Event unless such Purchaser Agent has received
notice from the Borrower or its related Purchaser.


 


(d)           Reliance by Purchaser Agent.  Each Purchaser Agent shall in all cases be
entitled to rely, and shall be fully protected in relying, upon any document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Borrower),
independent accountants and other experts selected by such Purchaser
Agent.  Each Purchaser Agent shall in all
cases be fully justified in failing or refusing to take any action under this
Agreement or any other Transaction Document unless it shall first receive such
advice or concurrence of its related Purchaser as it deems appropriate and it
shall first be indemnified to its satisfaction by its related Purchaser; provided that, unless and until such
Purchaser Agent shall have received such advice, such Purchaser Agent may take
or refrain from taking any action, as the Purchaser Agent shall deem advisable
and in the best interests of its related Purchaser.  Each Purchaser Agent shall in all cases be
fully protected in acting, or in refraining from acting, in accordance with a
request of its related Purchaser, and such request 


 


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and any action taken or
failure to act pursuant thereto shall be binding upon its related Purchaser.


 


(e)           Non-Reliance on Purchaser
Agent.  Each Purchaser expressly
acknowledges that neither its related Agent, nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by such Purchaser Agent
hereafter taken, including, without limitation, any review of the affairs of
the Borrower or the Servicer, shall be deemed to constitute any representation
or warranty by such Purchaser Agent. 
Each Purchaser represents and warrants to its related Agent that it has
and will, independently and without reliance upon its related Purchaser Agent,
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, operations, property,
prospects, financial and other conditions and creditworthiness of the Borrower
and made its own decision to enter into this Agreement, the other Transaction
Documents and all other documents related hereto or thereto.


 


(f)            Purchaser Agents are in
their Respective Individual Capacities.  Each Purchaser Agent and its Affiliates may
make loans to, accept deposits from and generally engage in any kind of
business with the Borrower or any Affiliate of the Borrower as though such
Purchaser Agent were not a Purchaser Agent hereunder.  With respect to Advances pursuant to this Agreement,
each Purchaser Agent shall have the same rights and powers under this Agreement
in its individual capacity as any Purchaser and may exercise the same as though
it were not a Purchaser Agent, and the terms “Purchaser,” and “Purchasers,”
shall include the Purchaser Agent in its individual capacity.


 


(g)           Successor Purchaser Agent.  Each Purchaser Agent may, upon five days’
notice to the Borrower and its related Purchaser, and such Purchaser Agent
will, upon the direction of its related Purchaser resign as the Purchaser Agent
for such Purchaser.  If any Purchaser
Agent shall resign, then its related Purchaser during such five day period
shall appoint a successor agent.  If for
any reason no successor agent is appointed by such Purchaser during such five
day period, then effective upon the termination of such five day period, and
the Borrower shall make all payments in respect of the Aggregate Unpaids due to
such Purchaser directly to such Purchaser, and for all purposes shall deal
directly with such Purchaser.  After any
retiring Purchaser Agent’s resignation hereunder as a Purchaser Agent, the
provisions of Articles XI and XII shall inure to its benefit
with respect to any actions taken or omitted to be taken by it while it was an
Additional Agent under this Agreement.


 


ARTICLE XIII



MISCELLANEOUS


 


Section 13.1.        Amendments
and Waivers.


 


Except as provided in this Section 13.1,
no amendment, waiver or other modification of any provision of this Agreement
shall be effective without the written agreement of the Borrower, the
Administrative Agent, the Trustee and each Purchaser and its related Purchaser
Agent; provided that no such
amendment, waiver or modification adversely affecting the rights 


 


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or
obligations of any Hedge Counterparty, the Backup Servicer or the Trustee shall
be effective without the written agreement of such Person.


 


Section 13.2.        Notices,
Etc.


 


All notices, reports and
other communications provided for hereunder shall, unless otherwise stated
herein, be in writing (including communication by facsimile copy) and mailed,
e-mailed, faxed, transmitted or delivered, as to each party hereto, at its
address set forth on Annex A to this Agreement or at such other address
as shall be designated by such party in a written notice to the other parties
hereto (provided, however, that,
for avoidance of doubt, Lord Securities Corp. shall not receive notices,
reports and other communications provided pursuant to Article II,
and Section 6.10, Section 6.11 and Section 6.12
hereof).  All such notices and
communications shall be effective, upon receipt, or in the case of (a) notice
by mail, five days after being deposited in the United States mail, first class
postage prepaid, (b) notice by e-mail, when verbal or electronic
communication of receipt is obtained, or (c) notice by facsimile copy,
when verbal communication of receipt is obtained.


 


Section 13.3.        Ratable
Payments.


 


If any Secured Party,
whether by setoff or otherwise, has payment made to it with respect to any
portion of the Aggregate Unpaids owing to such Secured Party (other than
payments received pursuant to Section 11.1) in a greater proportion
than that received by any other Secured Party, such Secured Party agrees,
promptly upon demand, to purchase for cash without recourse or warranty a
portion of the Aggregate Unpaids held by the other Secured Parties so that
after such purchase each Secured Party will hold its ratable proportion of the
Aggregate Unpaids; provided, however,
that, if all or any portion of such excess amount is thereafter recovered from
such Secured Party, such purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest.


 


Section 13.4.        No Waiver;
Remedies.


 


No failure on the part of
the Administrative Agent, the Trustee, the Purchaser Agents, the Backup
Servicer or a Secured Party to exercise, and no delay in exercising, any right
or remedy hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right.  The rights and remedies herein provided are
cumulative and not exclusive of any rights and remedies provided by law.


 


Section 13.5.        Binding Effect;
Benefit of Agreement.


 


This Agreement shall be
binding upon and inure to the benefit of the Borrower, the Servicer, the
Administrative Agent, the Purchaser Agents, the Backup Servicer, the Trustee,
the Secured Parties and their respective successors and permitted assigns.  Each Hedge Counterparty, each Affected Party
and each Indemnified Party shall be an express third party beneficiary of this
Agreement.


 


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Section 13.6.        Term of
this Agreement.


 


This Agreement, including,
without limitation, the Borrower’s representations and covenants set forth in Articles
IV and V, and the Servicer’s representations, covenants and duties
set forth in Articles VI, VII and VIII, create and
constitute the continuing obligation of the parties hereto in accordance with
its terms, and shall remain in full force and effect until the Collection Date;
provided, however, that the
rights and remedies with respect to any breach of any representation and
warranty made or deemed made by the Borrower pursuant to Articles III
and IV the indemnification and payment provisions of Article XI
and the provisions of Section 13.9, Section 13.10 and Section 13.11,
shall be continuing and shall survive any termination of this Agreement.


 


Section 13.7.        Governing
Law; Consent to Jurisdiction; Waiver of Objection to Venue.


 


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


 


Section 13.8.        Waiver of
Jury Trial.


 


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


 


Section 13.9.        Costs,
Expenses and Taxes.


 


(a)           Subject to the
terms of the Trustee Fee Letter and the Backup Servicer Fee Letter, and in addition
to the rights of indemnification granted under Article XI hereof, each of
the Borrower, the Servicer and the Originator agrees to pay on demand all
reasonable out-of-pocket costs and expenses of the Administrative Agent, the
Purchaser Agents, the Backup Servicer, the Trustee and the Secured Parties
incurred in connection with the preparation, execution, delivery,
administration (including periodic auditing), renewal, amendment or
modification of, or any waiver or consent issued in connection with, this
Agreement and the other documents to be delivered hereunder or in connection
herewith (including any Hedging Agreement), including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Administrative
Agent, the Purchaser Agents, the Backup Servicer, the Trustee and the Secured
Parties with respect thereto and with respect to advising the Administrative
Agent, the Purchaser 


 


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Agents,
the Backup Servicer, the Trustee and the Secured Parties as to their respective
rights and remedies under this Agreement and the other documents to be
delivered hereunder or in connection herewith (including any Hedging
Agreement), and all out-of-pocket costs and expenses, if any (including reasonable
counsel fees and expenses), incurred by the Administrative Agent, the Purchaser
Agents, the Backup Servicer, the Trustee or the Secured Parties in connection
with the enforcement of this Agreement by such Person and the other documents
to be delivered hereunder or in connection herewith (including any Hedging
Agreement).


 


(b)           The Borrower,
the Servicer  and the Originator shall
pay on demand any and all stamp, sales, excise and other taxes and fees payable
or determined to be payable to any Governmental Authority in connection with
the execution, delivery, filing and recording of this Agreement, the other
documents to be delivered hereunder or any agreement or other document
providing liquidity support, credit enhancement or other similar support to the
Purchasers in connection with this Agreement or the funding or maintenance of
Advances hereunder.


 


(c)           Subject to the terms of the
Trustee Fee Letter and the Backup Servicer Fee Letter, the Borrower, the
Servicer and the Originator shall pay on demand all other reasonable
out-of-pocket costs, expenses and Taxes (excluding income taxes) incurred by
the Administrative Agent, the Purchaser Agents, the Secured Parties (“Other
Costs”), including, without limitation, all costs and expenses incurred by
the Administrative Agent and the Purchaser Agents in connection with periodic
audits of the Borrower’s, the Originator’s or the Servicer’s books and records.


 


For
the avoidance of doubt, except with respect to the costs and expenses to be
paid to the Trustee and the Backup Servicer, the costs and expenses to be paid
pursuant to this Section 13.9 shall exclude all allocable overhead
costs and expenses.


 


Section 13.10.      No
Proceedings.


 


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


 


(b)           Each of the parties hereto
(other than the Administrative Agent without the consent of the Purchaser
Agents) hereby agrees that it will not institute against, or join any other
Person in instituting against, the Borrower any Insolvency Proceeding so long
as there shall not have elapsed one year and one day (or such longer preference
period as shall then be in effect) since the Collection Date.


 


Section 13.11.      Recourse
Against Certain Parties.


 


(a)           No recourse under or with respect
to any obligation, covenant or agreement (including, without limitation, the
payment of any fees or any other obligations) of the 


 


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Administrative Agent, the
Purchaser Agents, or any Secured Party as contained in this Agreement or any
other agreement, instrument or document entered into by it pursuant hereto or
in connection herewith shall be had against the Administrative Agent, the
Purchaser Agents, or any Secured Party, or any incorporator, affiliate,
stockholder, officer, employee or director of the Administrative Agent, the
Purchaser Agents, or any Secured Party, by the enforcement of any assessment or
by any legal or equitable proceeding, by virtue of any statute or otherwise; it
being  expressly  agreed  and  understood that
the agreements of the Administrative Agent, the Purchaser Agents, or any
Secured Party contained in this Agreement and all of the other agreements,
instruments and documents entered into by it pursuant hereto or in connection herewith
are, in each case, solely the corporate obligations of the Administrative
Agent, the Purchaser Agents, or any Secured Party, and that no personal
liability whatsoever shall attach to or be incurred by the Administrative
Agent, the Purchaser Agents, or any Secured Party or any incorporator,
stockholder, affiliate, officer, employee or director of the Administrative
Agent, the Purchaser Agents, or any Secured Party under or by reason of any of
the obligations, covenants or agreements of the Administrative Agent, the
Purchaser Agents, or any Secured Party contained in this Agreement or in any
other such instruments, documents or agreements, or that are implied therefrom,
and that any and all personal liability of the Administrative Agent, the
Purchaser Agents, or any Secured Party and each incorporator, stockholder,
affiliate, officer, employee or director of the Administrative Agent, the
Purchaser Agents, or any Secured Party, or any of them, for breaches by the
Administrative Agent, the Purchaser Agents, or any Secured Party of any such
obligations, covenants or agreements, which liability may arise either at
common law or at equity, by statute or constitution, or otherwise, is hereby
expressly waived as a condition of and in consideration for the execution of
this Agreement.


 


(b)           Notwithstanding anything in
this Agreement to the contrary, no Conduit Purchaser shall have any obligation
to pay any amount required to be paid by it hereunder in excess of any amount
available to such Conduit Purchaser after paying or making provision for the
payment of its Commercial Paper Notes. 
All payment obligations of each Conduit Purchaser hereunder are
contingent on the availability of funds in excess of the amounts necessary to
pay its Commercial Paper Notes; and each of the other parties hereto agrees
that it will not have a claim under Section 101(5) of the Bankruptcy
Code if and to the extent that any such payment obligation owed to it by a
Conduit Purchaser exceeds the amount available to such Conduit Purchaser to pay
such amount after paying or making provision for the payment of its Commercial
Paper Notes.


 


(c)           Notwithstanding any contrary
provision set forth herein, no claim may be made by the Borrower, the
Originator or the Servicer or any other Person against the Trustee, the
Administrative Agent and the Secured Parties or their respective Affiliates,
directors, officers, employees, attorneys or agents for any special, indirect,
consequential or punitive damages in respect to any claim for breach of
contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement, or any act, omission or event
occurring in connection therewith; and the Borrower, the Originator and the
Servicer each hereby waives, releases, and agrees not to sue upon any claim for
any such damages, whether or not accrued and whether or not known or suspected.


 


(d)           No obligation or liability
to any Obligor under any of the Loans is intended to be assumed by the Trustee,
the Backup Servicer, the Administrative Agent, the Purchaser Agents


 


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and the Secured Parties
under or as a result of this Agreement and the transactions contemplated
hereby.


 


(e)           The provisions of this Section 13.11
shall survive the termination of this Agreement.


 


Section 13.12.      Protection
of Right, Title and Interest in  the
Collateral; Further Action Evidencing Advances.


 


(a)           The Servicer shall cause
this Agreement, all amendments hereto and/or all financing statements and
continuation statements and any other necessary documents covering the right,
title and interest of the Trustee, for the benefit of the Secured Parties, and
of the Secured Parties to the Collateral to be promptly recorded, registered
and filed, and at all times to be kept recorded, registered and filed, all in
such manner and in such places as may be required by law fully to preserve and
protect the right, title and interest of the Trustee, for the benefit of the
Secured Parties, hereunder to all property comprising the Collateral.  The Servicer shall deliver to the Trustee and
the Administrative Agent file-stamped copies of, or filing receipts for, any
document recorded, registered or filed as provided above, as soon as available
following such recording, registration or filing.  The Borrower shall cooperate fully with the
Servicer in connection with the obligations set forth above and will execute
any and all documents reasonably required to fulfill the intent of this Section 13.12(a).


 


(b)           The Borrower agrees that
from time to time, at its expense, it will promptly authorize, execute and
deliver all instruments and documents, and take all actions, that the Trustee
or the Administrative Agent may reasonably request in order to perfect, protect
or more fully evidence the Advances hereunder and the security interest granted
in the Collateral, or to enable the Trustee or the Secured Parties to exercise
and enforce their rights and remedies hereunder or under any other Transaction
Document.


 


(c)           If the Borrower or the
Servicer fails to perform any of its obligations hereunder, the Trustee, or the
Administrative Agent on its behalf, or any Secured Party may (but shall not be
required to) perform, or cause performance of, such obligation; and the
Trustee, the  Administrative Agent’s or
such Secured Party’s costs and expenses incurred in connection therewith shall
be payable by the Borrower as provided in Article XI.  The Borrower irrevocably authorizes each of
the Trustee and the Administrative Agent and appoints the each of the Trustee
and the Administrative Agent as its attorney-in-fact to act on behalf of the Borrower
(i) to file financing statements necessary or desirable in either of the
Trustee’s or Administrative Agent’s sole discretion to perfect and to maintain
the perfection and priority of the interest of the Secured Parties in the
Collateral and (ii) to file a carbon, photographic or other reproduction
of this Agreement or any financing statement with respect to the Collateral as
a financing statement in such offices as either of the Trustee or the
Administrative Agent in its sole discretion deems necessary or desirable to
perfect and to maintain the perfection and priority of the interests of the
Secured Parties in the Collateral.  This
appointment is coupled with an interest and is irrevocable.


 


(d)           Without limiting the
generality of the foregoing, the Borrower will, not earlier than six months and
not later than three months prior to the fifth anniversary of the date of 


 


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filing of the financing
statement referred to in Section 3.1 or any other financing
statement filed pursuant to this Agreement or in connection with any Advance
hereunder, unless the Collection Date shall have occurred:


 


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


 


(ii)           deliver or cause to be
delivered to the Trustee and the Administrative Agent an opinion of the counsel
for the Borrower, in form and substance reasonably satisfactory to the
Administrative Agent, confirming and updating the opinion delivered pursuant to
Section 3.1 with respect to perfection and otherwise to the effect
that the security interest hereunder continues to be an enforceable and
perfected security interest, subject to no other Liens of record except as
provided herein or otherwise permitted hereunder, which opinion may contain
usual and customary assumptions, limitations and exceptions.


 


Section 13.13.      Confidentiality.


 


(a)           Each of the
Administrative Agent, the Purchaser Agents, the Secured Parties, the Servicer,
the Trustee, the Backup Servicer, the Borrower, the Originator shall maintain
and shall cause each of its employees and officers to maintain the
confidentiality of the Agreement and all information with respect to the other
parties, including all information regarding the business of the Borrower and
the Servicer hereto and their respective businesses, and all information in
connection with or related to the Underlying Instruments (including but
not  limited to any information provided
pursuant to Section 6.10), obtained by it or them in connection
with the structuring, negotiating and execution of the transactions
contemplated herein, except that each such party and its officers and employees
may (i) disclose such information to its external accountants, investigators,
auditors, attorneys or other agents, including any Approved Valuation Firm,
engaged by such party in connection with any due diligence or comparable
activities with respect to the transactions and Loans contemplated herein and
the agents of such Persons (“Excepted Persons”); provided, however, that each Excepted
Person shall, as a condition to any such disclosure, agree for the benefit of
the Administrative Agent, the Purchaser Agents, the Secured Parties, the
Servicer, the Trustee, the Backup Servicer and the Borrower that such
information shall be used solely in connection with such Excepted Person’s
evaluation of, or relationship with, the Borrower and its affiliates, (ii) disclose
the existence of the Agreement, but not the financial terms thereof, (iii) disclose
such information as is required by Applicable Law and (iv) disclose the
Agreement and such information in any suit, action, proceeding or investigation
(whether in law or in equity or pursuant to arbitration) involving any of the Transaction
Documents or any Hedging Agreement for the purpose of defending itself,
reducing its liability, or protecting or exercising any of its claims, rights,
remedies, or interests under or in connection with any of the Transaction
Documents or any Hedging Agreement. 
Notwithstanding the foregoing provisions of this Section 13.13(a),
the Servicer may, subject to Applicable Law and the terms of any Underlying
Instruments, make available copies of the documents in the Servicing Files and
such other documents it holds in its capacity as Servicer pursuant to the terms
of this Agreement, to any of its creditors. 
It is understood that the financial terms that may not be disclosed
except in 


 


155

















 


compliance
with this Section 13.13(a) include, without limitation, all
fees and other pricing terms, and all Termination Events, Servicer Defaults,
and priority of payment provisions.


 


(b)           Anything herein to the
contrary notwithstanding, the Borrower and the Servicer each hereby consents to
the disclosure of any nonpublic information with respect to it (i) to the
Administrative Agent, the Purchaser Agents, the Trustee, the Backup Servicer or
the Secured Parties by each other, (ii) by the Administrative Agent, the
Purchaser Agents, the Trustee, the Backup Servicer and the Secured Parties to
any prospective or actual assignee or participant of any of them provided such
Person agrees to hold such information confidential, or (iii) by the
Administrative Agent, the Purchaser Agents, and the Secured Parties to any
commercial paper dealer or provider of a surety, guaranty or credit or
liquidity enhancement to any Purchaser, as applicable, and to any officers,
directors, employees, outside accountants and attorneys of any of the foregoing,
provided each such Person is informed of the confidential nature of such
information.  In addition, the Secured
Parties, the Administrative Agent and the Purchaser Agents, may disclose any
such nonpublic information as required pursuant to any law, rule, regulation,
direction, request or order of any judicial, administrative or regulatory
authority or proceedings (whether or not having the force or effect of law).


 


(c)           Notwithstanding anything
herein to the contrary, the foregoing shall not be construed to prohibit (i) disclosure
of any and all information that is or becomes publicly known; (ii) disclosure
of any and all information (a) if required to do so by any applicable
statute, law, rule or regulation, (b) to any government agency or
regulatory body having or claiming authority to regulate or oversee any
respects of the Administrative Agents’, the Purchaser Agents’, the Secured
Parties’, the Trustee’s or the Backup Servicer’s business or that of their
affiliates, (c) pursuant to any subpoena, civil investigative demand or
similar demand or request of any court, regulatory authority, arbitrator or
arbitration to which the Administrative Agent, the Purchaser Agents, the
Secured Parties, the Trustee or the Backup Servicer or an officer, director, employer,
shareholder or affiliate of any of the foregoing is a party, (d) in any
preliminary or final offering circular, registration statement or contract or
other document approved in advance by the Borrower, the Servicer or the
Originator or (e) to any affiliate, independent or internal auditor,
agent, employee or attorney of the Trustee or Backup Servicer having a need to
know the same, provided that the
Trustee or Backup Servicer advises such recipient of the confidential nature of
the information being disclosed; or (iii) any other disclosure authorized
by the Borrower, Servicer or the Originator.


 


Section 13.14.      Execution
in Counterparts; Severability; Integration.


 


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


 


156

















 


matter
hereof, superseding all prior oral or written understandings other than any fee
letter delivered by the Originator to the Administrative Agent, the Purchaser
Agents, and the Secured Parties.


 


Section 13.15.      Waiver of
Setoff.


 


Each of the parties hereto
hereby waives any right of setoff it may have or to which it may be entitled
under this Agreement from time to time against any Purchaser or its assets.


 


Section 13.16.      Assignments
by the Purchasers.


 


(a)           With the prior written
consent of the Borrower (which consent shall not be unreasonably withheld),
each Purchaser may at any time assign, or grant a security interest or sell a
participation interest in, any Advance (or portion thereof) or any VFC (or any
portion thereof) to any Person; provided that,
as applicable: (i) no transfer of any Advance (or any portion thereof) or
of any VFC (or any portion thereof) shall be made unless such transfer is
exempt from the registration requirements of the Securities Act and any
applicable state securities laws or is made in accordance with the Securities
Act and such laws, and is made only to either an “accredited investor” as
defined in paragraphs (a)(1), (2), (3), or (7) of Rule 501 of
Regulation D under the Securities Act or any entity in which all of the equity
owners come within such paragraphs or to a “qualified institutional buyer” as
defined in Rule 144A under the Securities Act, (ii) no such consent
of the Borrower shall be required following the occurrence of a Termination
Event, (iii) in the case of an assignment of any Advance (or any portion
thereof) or of any VFC (or of any portion thereof), the assignee executes and
delivers to the Servicer, the Borrower and the Administrative Agent a
fully-executed Joinder Supplement substantially in the form of Exhibit M
hereto and a Transferee Letter substantially in the form of Exhibit K
hereto (a “Transferee Letter”), (iv) any Institutional Purchaser
shall not need prior consent to at any time assign, or grant a security
interest or sell a participation interest in, any Advance (or portion thereof)
to an Affiliate of its related Purchaser Agent and (v) any Conduit Purchaser
shall not need prior consent to at any time assign, or grant a security
interest or sell a participation interest in, any Advance (or portion thereof)
to a Liquidity Bank or any commercial paper conduit sponsored by a Liquidity
Bank or an Affiliate of its related Purchaser Agent.  The parties to any such assignment, grant or
sale of a participation interest shall execute and deliver to the related
Purchaser Agent for its acceptance and recording in its books and records, such
agreement or document as may be satisfactory to such parties and the applicable
Purchaser Agent.  The Borrower shall not
assign or delegate, or grant any interest in, or permit any Lien to exist upon,
any of the Borrower’s rights, obligations or duties under this Agreement
without the prior written consent of the Administrative Agent and each Hedge
Counterparty.


 


Section 13.17.      Heading and
Exhibits.


 


The headings herein are for
purposes of references only and shall not otherwise affect the meaning or
interpretation of any provision hereof. 
The schedules and exhibits attached hereto and referred to herein shall
constitute a part of this Agreement and are incorporated into this Agreement
for all purposes.


 


157

















 


Section 13.18.      Loans Subject
to Retained Interest Provisions.


 


(a)           With respect to any Loan
included in the Collateral subject to the Retained Interest provisions of this
Agreement such that a portion of such Loan is owned by one or more third
parties, Principal Collections received by the Borrower or the Servicer on such
Loan will be allocated first to the portion of such Loan owned by the Borrower,
until the principal amount of such portion is reduced to zero, and then to the
portion not owned by the Borrower; provided
that if a payment default occurs with respect to such Loan, then Principal
Collections received on such Loan will be allocated between the portion owned
by the Borrower and the portion not owned by the Borrower pro rata based upon the outstanding
principal amount of each such portion.


 


(b)           With respect to any Loan
included in the Collateral subject to the Retained Interest provisions of this
Agreement, Interest Collections received by the Servicer on those Loans will be
allocated between the portion owned by the Borrower and the portion not owned
by the Borrower pro rata based
upon the outstanding principal amount of each such portion.


 


Section 13.19.      Non-Confidentiality
of Tax Treatment.


 


All parties hereto agree
that each of them and each of their employees, representatives, and other
agents may disclose to any and all persons, without limitation of any kind, the
tax treatment and tax structure of the transaction and all materials of any
kind (including, without limitation, opinions or other tax analyses) that are provided
to any of them relating to such tax treatment and tax structure.  “Tax treatment” and “tax structure” shall
have the same meaning as such terms have for purposes of Treasury Regulation Section 1.6011-4;
provided, however, that with
respect to any document or similar item that in either case contains
information concerning the tax treatment or tax structure of the transaction as
well as other information, the provisions of this Section 13.19
shall only apply to such portions of the document or similar item that relate
to the tax treatment or tax structure of the transactions contemplated hereby.


 


ARTICLE XIV



GUARANTY


 


Section 14.1.        The
Guaranty.


 


(a)           In order to induce the
Administrative Agent, the Purchasers and the Purchaser Agents to enter into
this Agreement and any Hedge Counterparty to enter into any Hedge Transaction
and in recognition of the direct benefits to be received by the Guarantor from
the Borrower Guaranty, the Guarantor hereby agrees with the Administrative
Agent, on behalf of the Secured Parties as follows:  the Guarantor hereby unconditionally and
irrevocably guarantees as primary obligor and not merely as surety the full and
prompt payment when due, whether upon maturity, by acceleration or otherwise,
of any and all Aggregate Unpaids (the “Guaranteed Obligations”).  If any or all of the indebtedness becomes due
and payable hereunder, the Guarantor unconditionally promises to deposit (or
cause to be deposited) into the Collections Account sufficient funds to pay
such Guaranteed Obligations together with any and all reasonable expenses which
may be incurred by the Administrative Agent or any other Secured Party in
collecting any of the Guaranteed Obligations. 
The Guaranty set forth in this Article XIV is a guaranty of
timely payment and not of collection. 
The word “indebtedness” is 


 


158

















 


used in this Article XIV
in its most comprehensive sense and includes any and all advances, debts,
obligations and liabilities of the Borrower, including specifically all
Guaranteed Obligations, arising in connection with this Agreement or any other
Transaction Document, in each case, heretofore, now, or hereafter made,
incurred or created, whether voluntarily or involuntarily, absolute or
contingent, liquidated or unliquidated, determined or undetermined, whether or
not such indebtedness is from time to time reduced, or extinguished and
thereafter increased or incurred, whether the Borrower may be liable
individually or jointly with others, whether or not recovery upon such
indebtedness may be or hereafter become barred by any statute of limitations,
and whether or not such indebtedness may be or hereafter become otherwise
unenforceable.


 


(b)           Notwithstanding any
provision to the contrary contained herein or in any other of the Transaction
Documents, to the extent the obligations of the Guarantor shall be adjudicated
to be invalid or unenforceable for any reason (including, without limitation,
because of any applicable state or federal law relating to fraudulent
conveyances or transfers) then the obligations of the Guarantor hereunder shall
be limited to the maximum amount that is permissible under applicable law
(whether federal or state and including, without limitation, the Bankruptcy
Code).


 


Section 14.2.        Bankruptcy.


 


Additionally, the Guarantor
unconditionally and irrevocably guarantees the payment of any and all
Guaranteed Obligations of the Borrower to any of the Secured Parties whether or
not due or payable by the Borrower upon the occurrence of any Insolvency Event
relating to the Borrower, and unconditionally promises to pay such Guaranteed
Obligations to the Trustee for the account of the Secured Parties, or order, on
demand, in lawful money of the United States. 
The Guarantor further agrees that to the extent that the Borrower shall
make a payment or a transfer of an interest in any property to the
Administrative Agent, any other Secured Party or the Trustee, which payment or
transfer or any part thereof is subsequently invalidated, declared to be fraudulent
or preferential, or otherwise is avoided, and/or required to be repaid to the
Borrower, the estate of the Borrower, a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law or equitable cause,
then to the extent of such avoidance or repayment, the obligation or part
thereof intended to be satisfied shall be revived and continued in full force
and effect as if said payment had not been made.


 


Section 14.3.        Nature of
Liability.


 


The liability of the
Guarantor hereunder is exclusive and independent of any security for or other
guaranty of the Guaranteed Obligations of the Borrower whether executed by the
Guarantor, any other guarantor or by any other party, and the Guarantor’s
liability hereunder shall be affected or impaired by (a) any direction as
to application of payment by the Borrower or by any other party, or (b) any
other continuing or other guaranty, undertaking or maximum liability of a
guarantor or of any other party as to the Guaranteed Obligations of the
Borrower, or (c) any payment on or in reduction of any such other guaranty
or undertaking, or (d) any dissolution, termination or increase, decrease
or change in personnel by the Servicer or the Originator, or (e) any
payment made to the Administrative Agent, any other Secured Party or the
Trustee on the Guaranteed Obligations that the Administrative Agent, such
Secured Party or the 


 


159

















 


Trustee
repays to the Borrower pursuant to court order in any bankruptcy,
reorganization, arrangement, moratorium or other debtor relief proceeding, and
the Guarantor waives any right to the deferral or modification of its
obligations hereunder by reason of any such proceeding.


 


Section 14.4.        Independent
Obligation.


 


The obligations of the
Guarantor hereunder is independent of the obligations of the Borrower, and a
separate action or actions may be brought and prosecuted against the Guarantor
whether or not action is brought against the Borrower and whether or not Borrower
is joined in any such action or actions.


 


Section 14.5.        Authorization.


 


The Guarantor expressly
authorizes the Administrative Agent, each Purchaser, each Purchaser Agent, the
Trustee, the Backup Servicer and each Hedge Counterparty without notice or demand
(except as shall be required by applicable statute and cannot be waived), and
without affecting or impairing its liability hereunder, from time to time to (a) renew,
compromise, extend, increase, accelerate or otherwise change the time for
payment of, or otherwise change the terms of the Guaranteed Obligations or any
part thereof in accordance with this Agreement including any increase or
decrease of the rate of interest thereon, (b) take and hold security from
the Guarantor or any other party for the payment of the Guaranty or the
Guaranteed Obligations and exchange, enforce, waive and release any such
security, (c) apply such security and direct the order or manner of sale
thereof as the Administrative Agent in its sole reasonable discretion may
determine and (d) release or substitute any one or more endorsers, the
Guarantor, the Borrower or other obligors.


 


Section 14.6.        Reliance.


 


It is not necessary for the
Administrative Agent or any other Secured Party to inquire into the capacity or
powers of the Borrower or the officers, directors, members, partners or agents
acting or purporting to act on its behalf, and any Guaranteed Obligations made
or created in reliance upon the professed exercise of such powers shall be
guaranteed hereunder.


 


Section 14.7.        Waiver.


 


(a)           The Guarantor hereby waives
any right (except as shall be required by applicable statute and cannot be
waived) to require the Administrative Agent or any other Secured Party to (i) proceed
against the Borrower, any other guarantor or any other party, (ii) proceed
against or exhaust any security held from the Borrower, any other guarantor or
any other party, or (iii) pursue any other remedy in the Administrative
Agent’s or any Secured Party’s power whatsoever.  The Guarantor hereby waives any defense based
on or arising out of any defense of the Borrower, any other guarantor or any
other party other than payment in full of the Guaranteed Obligations (other
than contingent indemnity obligations), including without limitation any
defense based on or arising out of the disability of the Borrower, the
Servicer, the Originator, any other guarantor or any other party, or the
unenforceability of the Guaranteed Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of the Borrower other
than payment in full of the Guaranteed Obligations.  The Administrative Agent may, as set forth in
Section 10.2, foreclose on any security held by the Trustee or 


 


160

















 


exercise any other right or
remedy the Administrative Agent or any other Secured Party may have against the
Borrower or any other party, or any security, without affecting or impairing in
any way the liability of the Guarantor hereunder except to the extent the
Guaranteed Obligations have been paid in full. 
The Guarantor hereby waives any defense arising out of any such election
by the Administrative Agent or any other Secured Party, even though such
election operates to impair or extinguish any right of reimbursement or subrogation
or other right or remedy of the Guarantor against the Borrower or any other
party or any security.


 


(b)           The Guarantor hereby waives
all presentments, demands for performance, protests and notices, including
without limitation notices of nonperformance, notice of protest, notices of
dishonor, notices of acceptance of the Guaranty, and notices of the existence,
creation or incurring of new or additional Guaranteed Obligations.  The Guarantor assumes all responsibility for
being and keeping itself informed of the Borrower’s, Servicer’s and Originator’s
financial condition and assets, and of all other circumstances bearing upon the
risk of nonpayment of the Guaranteed Obligations and the nature, scope and
extent of the risks which such Guarantor assumes and incurs hereunder, and
agrees that neither the Administrative Agent nor any other Secured Party shall
have any duty to advise the Guarantor of information known to it regarding such
circumstances or risks.


 


(c)           The Guarantor hereby agrees
it will not exercise any rights of subrogation which it may at any time
otherwise have as a result of the Guaranty (whether contractual, under Section 509
of the U.S. Bankruptcy Code, or otherwise) to the claims of the Secured Parties
against the Borrower or any other guarantor of the Guaranteed Obligations of
the Borrower owing to the Secured Parties (collectively, the “Other Parties”)
and all contractual, statutory or common law rights of reimbursement,
contribution or indemnity from any Other Party which it may at any time
otherwise have as a result of the Guaranty until such time as the Guaranteed
Obligations shall have been paid in full. 
The Guarantor hereby further agrees not to exercise any right to enforce
any other remedy that the Administrative Agent, the other Secured Parties, the
Trustee or the Backup Servicer now have or may hereafter have against any Other
Party, any endorser or any other guarantor of all or any part of the Guaranteed
Obligations of the Borrower and any benefit of, and any right to participate
in, any security or collateral given to or for the benefit of the Secured
Parties to secure payment of the Guaranteed Obligations of the Borrower until
such time as the Guaranteed Obligations shall have been paid in full (other
than contingent indemnity obligations).


 


Section 14.8.        Limitation
on Enforcement.


 


The Secured Parties agree
that the Guaranty may be enforced only by the action of the Administrative
Agent acting in its sole discretion and that no Purchaser, Purchaser Agent or
Hedge Counterparty shall have any right individually to seek to enforce or to
enforce the Guaranty, it being understood and agreed that such rights and
remedies may be exercised by the Administrative Agent for the benefit of the
Secured Parties under the terms of this Agreement.


 


[Remainder
of Page Intentionally Left Blank.]


 


161

















 


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


 


 


	
  THE
  BORROWER:

  	
  ARES
  CAPITAL CP FUNDING LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  THE
  ORIGINATOR AND SERVICER:

  	
  ARES
  CAPITAL CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  THE
  GUARANTOR:

  	
  ARES
  CAPITAL CP FUNDING II LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				



 


 


[Signatures Continued on the Following Page]


 

















 


	
  CONDUIT
  PURCHASER:

  	
  VARIABLE
  FUNDING CAPITAL COMPANY LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Wachovia Capital Markets,
  LLC,

  
	
   

  	
   

  	
    as
  attorney-in-fact

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  THE
  ADMINISTRATIVE AGENT AND THE VFCC AGENT

  	
  WACHOVIA
  CAPITAL MARKETS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
							



 


 


[Signatures Continued on the Following Page]


 
















 


	
  THE BACKUP SERVICER:

  	
  LYON FINANCIAL SERVICES, INC., d/b/a 

  U.S. Bank Portfolio Services not in its individual 

  capacity but solely as Backup Servicer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  THE TRUSTEE:

  	
  U.S. BANK NATIONAL ASSOCIATION, not in 

  its individual capacity but solely as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					



 


 


[Signatures
Continued on the Following Page]


 

















 


Acknowledged and Agreed to

as of the date first written above.


 


	
  WACHOVIA
  BANK, NATIONAL ASSOCIATION,

  	
   

  
	
  as a Hedge Counterparty

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title: