Exhibit 10.1


 




 





PURCHASE AND SALE AGREEMENT


 


 


by and between


 


 


ARES CAPITAL CORPORATION,


as the Seller


 


 


and


 


 


ARES CAPITAL CP FUNDING LLC,


as the Buyer


 


 


Dated as of November 3, 2004


 


 




 
























 


TABLE OF CONTENTS


 


	
  ARTICLE I.

  	
  GENERAL

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  1.1.

  	
  Defined
  Terms

  	
   

  
	
  Section
  1.2.

  	
  Other
  Terms

  	
   

  
	
  Section
  1.3.

  	
  Computation
  of Time Periods

  	
   

  
	
  Section
  1.4.

  	
  Interpretation

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II.

  	
  SALE, TRANSFER AND ASSIGNMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  2.1.

  	
  Sale,
  Transfer and Assignment

  	
   

  
	
  Section
  2.2.

  	
  Purchase
  Price

  	
   

  
	
  Section
  2.3.

  	
  Payment
  of Purchase Price

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III.

  	
  CONDITIONS
  PRECEDENT

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  3.1.

  	
  Conditions
  Precedent to Closing and Initial Purchase

  	
   

  
	
  Section
  3.2.

  	
  Conditions
  Precedent to all Purchases

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV.

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  4.1.

  	
  Seller’s
  Representations and Warranties

  	
   

  
	
  Section
  4.2.

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

  	
   

  
	
  Section
  4.3.

  	
  Representations
  and Warranties of the Buyer

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V.

  	
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  5.1.

  	
  Affirmative
  Covenants of the Seller

  	
   

  
	
  Section
  5.2.

  	
  Negative
  Covenants of Seller

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VI.

  	
  REPURCHASE
  OBLIGATION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  6.1.

  	
  Retransfer
  of Purchased Collateral and Contributed Collateral

  	
   

  
	
  Section
  6.2.

  	
  Substitution
  of Loans

  	
   

  
	
  Section
  6.3.

  	
  Repurchase
  Limitations

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VII.

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

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  7.1.

  	
  Rights
  of the Buyer

  	
   

  
	
  Section
  7.2.

  	
  [Reserved]

  	
   

  
	
  Section
  7.3.

  	
  Rights
  With Respect to Loan Files

  	
   

  



 


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  Section
  7.4.

  	
  Notice
  to Administrative Agent and each Purchaser Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII.

  	
  TERM
  AND TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  8.1.

  	
  Purchase
  Termination Events

  	
   

  
	
  Section
  8.2.

  	
  Remedies

  	
   

  
	
  Section
  8.3.

  	
  Survival
  of Certain Provisions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IX.

  	
  INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  9.1.

  	
  Indemnification
  by the Seller

  	
   

  
	
  Section
  9.2.

  	
  Assignment
  of Indemnities

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE X.

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  10.1.

  	
  Amendments
  and Waivers

  	
   

  
	
  Section
  10.2.

  	
  Notices,
  Etc

  	
   

  
	
  Section
  10.3.

  	
  Limitation
  of Liability

  	
   

  
	
  Section
  10.4.

  	
  Binding
  Effect; Benefit of Agreement

  	
   

  
	
  Section
  10.5.

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

  	
   

  
	
  Section
  10.6.

  	
  WAIVER
  OF JURY TRIAL

  	
   

  
	
  Section
  10.7.

  	
  Costs,
  Expenses and Taxes

  	
   

  
	
  Section
  10.8.

  	
  No
  Proceedings

  	
   

  
	
  Section
  10.9.

  	
  Recourse
  Against Certain Parties

  	
   

  
	
  Section
  10.10.

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

  	
   

  
	
  Section
  10.11.

  	
  Execution
  in Counterparts; Severability; Integration

  	
   

  
	
  Section
  10.12.

  	
  Waiver
  of Setoff

  	
   

  
	
  Section
  10.13.

  	
  Heading
  and Exhibits

  	
   

  
	
  Section
  10.14.

  	
  Rights
  of Inspection

  	
   

  
	
  Section
  10.15.

  	
  Assignment

  	
   

  
	
  Section
  10.16.

  	
  No
  Waiver; Cumulative Remedies

  	
   

  
	
  Section
  10.17.

  	
  Subordination

  	
   

  
	
  Section
  10.18.

  	
  Revolving
  Loan Payments

  	
   

  



 


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  SCHEDULES

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULE I

  	
  Collateral
  List

  	
   

  
	
  SCHEDULE II

  	
  Concentration
  Bank and Concentration Account

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  
	
   

  	
   

  
	
  EXHIBIT A

  	
  Form of Loan
  Assignment

  	
   

  
	
  EXHIBIT B

  	
  Form of
  Officer’s Certificate

  	
   

  
	
   

  	
   

  	
   

  
	
  APPENDICES

  	
   

  
	
   

  	
   

  
	
  APPENDIX A

  	
  Condition
  Precedent Documents

  	
   

  



 


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


 


W I T N E S S E T H:


 


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


 


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


 


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


 


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


 


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


 


ARTICLE I.



GENERAL


 


Section
1.1.                                Defined Terms.


 


Capitalized
terms used but not defined herein have the meanings ascribed to such terms in
the Sale and Servicing Agreement (as defined below).


 


“Agreement”:  Defined in
the Preamble.


 


“Buyer”:  Defined in the Preamble.


 


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


 





















 


“Early Termination”: 
Defined in Section 8.1.


 


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


 


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


 


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


 


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


 


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


 


“Purchase Price”:  Defined
in Section 2.2.


 


“Purchase Termination Events”: 
Defined in Section 8.1.


 


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


 


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


 


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


 


“Seller”:  Defined in the Preamble.


 


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


 


Section
1.2.                                Other Terms.


 


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


 


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Section
1.3.                                Computation of Time
Periods.


 


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


 


Section
1.4.                                Interpretation.


 


In each
Transaction Document, unless a contrary intention appears:


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


ARTICLE II.



SALE, TRANSFER AND ASSIGNMENT


 


Section
2.1.                                Sale, Transfer and
Assignment.


 


(a)                                  On
the terms and subject to the conditions set forth in this Agreement (including
the conditions to Purchase set forth in Article III), on each Purchase
Date, (x) with respect to items of Collateral conveyed by the Seller hereunder,
the Seller hereby sells, contributes, transfers, assigns, sets over and
otherwise conveys to the Buyer, and the Buyer hereby Purchases


 


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


 


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


 


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


 


(iii)                       all income
and Proceeds of the foregoing.


 


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


 


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


 


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


 


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(d)                                 Except
as specifically provided in this Agreement, the sale and purchase of Purchased
Collateral under this Agreement shall be without recourse to the Seller; it
being understood that the Seller shall be liable to the Buyer for all
representations, warranties, covenants and indemnities made by the Seller
pursuant to the terms of this Agreement, all of which obligations are limited
so as not to constitute recourse to the Seller for the credit risk of the
Obligors.


 


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


 


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


 


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


 


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


 


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


 


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


 


(j)                                     It
is the intention of the parties hereto that the conveyance of all right, title
and interest in and to the Purchased Collateral and Contributed Collateral as
provided in Section 2.1 shall constitute an absolute transfer
conveying good title, free and clear of any Lien (other than Permitted Liens)
and that the Purchased Collateral and Contributed Collateral shall not be part
of the Seller’s bankruptcy estate in the event of an Insolvency Event with
respect to the Seller.  Furthermore, it
is not intended that such conveyance be deemed a pledge of the Loans and the
other Purchased Collateral and Contributed Collateral to the Buyer to secure a
debt or other obligation of the Seller. 
If, however, notwithstanding the intention of the parties, the
conveyance provided for in this Section 2.1 is determined to be a
transfer for security, then this Agreement shall also be deemed to be, and
hereby is, a “security agreement” within the meaning of Article 9 of the UCC
and the Seller hereby grants to the Buyer a duly perfected, first priority “security
interest” within the meaning of Article 9 of the UCC in all right, title and
interest in, to and under the Purchased Collateral and Contributed Collateral,
now existing and hereafter created, to secure the prompt and complete payment
of a loan deemed to have been made in an amount equal to the aggregate Purchase
Price of the Purchased Collateral together with all of the other obligations of
the Seller hereunder.  The Buyer shall
have, in addition to the rights and remedies which it may have under this
Agreement, all other rights and remedies provided to a secured creditor under
the UCC and other Applicable Law, which rights and remedies shall be
cumulative.


 


Section
2.2.                                Purchase Price.


 


The purchase
price for each item of Purchased Collateral sold to the Buyer by the Seller
under this Agreement (the “Purchase Price”) shall be a dollar amount
equal to the Outstanding Loan Balance thereof, to be determined as of the
related Cut-Off Date, and to be paid in accordance with Section 2.3.


 


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Section
2.3.                                Payment of Purchase
Price.


 


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


 


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


 


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


 


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


 


(e)                                  Upon
each Purchase of Purchased Collateral and each contribution of Contributed
Collateral hereunder, title to such Collateral shall rest in the Buyer, whether
or not the conditions precedent to such Purchase and the other covenants and
agreements contained herein were in fact satisfied; provided, however,
that Buyer shall not be deemed to have waived any claim it may have under this
Agreement for the failure by the Seller in fact to satisfy any such condition
precedent, covenant or agreement.


 


ARTICLE
III.



CONDITIONS PRECEDENT


 


Section
3.1.                                Conditions Precedent
to Closing and Initial Purchase.


 


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


 


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Section
3.2.                                Conditions Precedent
to all Purchases.


 


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


 


(a)                                  all
representations and warranties of the Seller contained in Sections 4.1
and 4.2 shall be true and correct in all material respects on and as of
such date as though made on and as of such date and shall be deemed to have
been made on and as of such day;


 


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


 


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


 


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


 


(e)                                  the
Termination Date shall not have occurred;


 


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


 


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


 


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


 


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


 


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


 


8





















 


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


 


ARTICLE
IV.



REPRESENTATIONS AND WARRANTIES


 


Section
4.1.                                Seller’s
Representations and Warranties.


 


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


 


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


 


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


 


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


 


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


 


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


 


9





















 


properties pursuant to the
terms of any such Contractual Obligation, other than this Agreement, or (iii)
violate any Applicable Law.


 


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


 


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


 


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


 


(i)                                     Solvency.  The Seller is not the subject of any
Insolvency Proceedings or Insolvency Event. 
The transactions under this Agreement and any other Transaction Document
to which the Seller is a party do not and will not render the Seller not Solvent.


 


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


 


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


 


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


 


10





















 


(m)                               Security
Interest.


 


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


 


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


 


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


 


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


 


(v)                                 the
Seller has caused the filing of all appropriate financing statements in the
proper filing office in the appropriate jurisdictions under Applicable Law in
order to perfect the security interest in that portion of the Purchased
Collateral and Contributed Collateral in which a security interest may be
perfected by filing granted hereunder to the Buyer and the Trustee, on behalf
of the Secured Parties;


 


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


 


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


 


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


 


11





















 


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


 


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


 


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


 


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


 


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


 


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


 


(s)                                  Value
Given.  The Buyer has given
reasonably equivalent value to the Seller or to any applicable third party from
which the Buyer has acquired any Collateral in consideration for the transfer
to the Buyer of the Purchased Collateral as contemplated by this Agreement, no
such transfer has been made for or on account of an antecedent debt owed by the
Seller or any such third party to the Buyer, and no such transfer is or may be
voidable or subject to avoidance under any section of the Bankruptcy Code.


 


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


 


(u)                                 Special
Purpose Entity.  The Buyer is an
entity with assets and liabilities separate and distinct from those of the
Seller and any Affiliates thereof, and the Seller hereby acknowledges that the
Administrative Agent, the Trustee, each Purchaser Agent, the Purchasers and the
other Secured Parties are entering into the transactions contemplated by the
Sale and Servicing Agreement in reliance upon the Buyer’s identity as a legal
entity that is separate from the Seller and from each other Affiliate of the
Seller.  Therefore, from and after the
date of execution and delivery of this Agreement, the Seller shall take all
reasonable steps, including,


 


12





















 


without limitation, all steps
that the Administrative Agent, the Trustee, each Purchaser Agent, any
Purchaser, or any other Secured Party may from time to time reasonably request,
to maintain the Buyer’s identity as a separate legal entity and to make it
manifest to third parties that the Buyer is an entity with assets and
liabilities distinct from those of the Seller and each other Affiliate thereof
and not just a division of the Seller or any such other Affiliate.  Without limiting the generality of the
foregoing and in addition to the other covenants set forth herein, the Seller
shall take all reasonable steps to ensure that the Buyer has not and will not
take, refrain from taking, or fail to take (as applicable) any action described
in Section 4.1(u) of the Sale and Servicing Agreement.


 


(v)                                 [Reserved].


 


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


 


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


 


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


 


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


 


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


 


13





















 


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


 


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


 


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


 


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


 


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


 


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


 


(hh)                          Environmental.


 


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


 


14





















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(a)                                  Binding
Obligation, Valid Transfer and Security Interest.  This Agreement constitutes a valid transfer
to the Buyer of all right, title and interest in, to and under all Purchased
Collateral and Contributed Collateral, free and clear of any Lien of any Person
claiming through or under the Seller or its Affiliates, except for Permitted
Liens.  If the conveyances contemplated
by this Agreement are determined to be a transfer for security, then


 


15





















 


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


 


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


 


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


 


It is
understood and agreed that the representations and warranties provided in this Section
4.2 shall survive (x) the sale and assignment or contribution of the
Purchased Collateral and Contributed Collateral to the Buyer, (y) any
subsequent transfer of the Purchased Collateral or Contributed Capital by the
Buyer (including its grant of a perfected security interest in, to and under
the Purchased Collateral and Contributed Collateral pursuant to the Sale and
Servicing Agreement, which shall be a first priority security interest) and (z)
the termination of this Agreement and the Sale and Servicing Agreement.  Upon discovery by the Seller or the Buyer of
a breach of any of the foregoing representations and warranties, the party
discovering such breach shall give prompt written notice thereof to the other
and to the Administrative Agent and each Purchaser Agent immediately upon
obtaining knowledge of such breach.


 


Section
4.3.                                Representations and
Warranties of the Buyer.


 


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


 


(a)                                  Organization
and Good Standing.  The Buyer has
been duly organized, and is validly existing as a limited liability company in
good standing under the laws of the State of


 


16





















 


Delaware, with all requisite
limited liability company power and authority to own or lease its properties
and conduct its business as such business is presently conducted, and had at
all relevant times, and now has, all necessary power, authority and legal right
to acquire and own the Purchased Collateral and Contributed Collateral.


 


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


 


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


 


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


 


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


 


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


 


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


 


17





















 


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


 


ARTICLE V.



COVENANTS


 


Section
5.1.                                Affirmative
Covenants of the Seller.


 


From the date
hereof until the Collection Date:


 


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


 


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


 


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


 


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


 


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


 


18





















 


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


 


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


 


(g)                                 Separate
Identity.  The Seller acknowledges
that the Administrative Agent, the Trustee, each Purchaser Agent, the
Purchasers and the other Secured Parties are entering into the transactions
contemplated by this Agreement, the Sale and Servicing Agreement and the other
Transaction Documents in reliance upon the Buyer’s identity as a legal entity
that is separate from the Seller and each other Affiliate of the Seller.  Therefore, from and after the date of
execution and delivery of this Agreement, the Seller will take all reasonable
steps including, without limitation, all steps that the Administrative Agent,
the Trustee, each Purchaser Agent, the Purchasers and the other Secured Parties
may from time to time reasonably request to maintain the Buyer’s identity as a
legal entity that is separate from the Seller and each other Affiliate of the
Seller and to make it manifest to third parties that the Buyer is an entity
with assets and liabilities distinct from those of the Seller and each other
Affiliate thereof and not just a division of the Seller or any such other
Affiliate.  Without limiting the
generality of the foregoing and in addition to the other covenants set forth
herein, the Seller agrees that:


 


(i)                             the
Seller will take all other actions necessary on its part to ensure that the
Buyer is at all times in compliance with the criteria and the restrictions set
forth in Section 4.1(u) of the Sale and Servicing Agreement;


 


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


 


(iii)                       the annual
financial statements of the Seller shall disclose the effects of the Seller’s
transactions in accordance with GAAP and the annual financial statements


 


19





















 


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


 


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


 


(v)                         the
Seller shall maintain an arm’s-length relationship with the Buyer and will not
hold itself out as being liable for the debts of the Buyer;


 


(vi)                      the Seller
shall keep its assets and its liabilities wholly separate from those of the
Buyer;


 


(vii)                   the Seller will
avoid the appearance, and promptly correct any known misperception of any of
the Seller’s creditors, that the assets of the Buyer are available to pay the
obligations and debts of the Seller; and


 


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


 


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


 


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


 


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


 


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


 


20





















 


information or documents,
necessary or desirable, including the provision of such information or
documents in electronic or machine-readable format, to allow each of the Buyer
and its assignees to carry out their responsibilities under the Transaction
Documents.


 


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


 


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


 


(n)                                 Payment,
Performance and Discharge of Obligations. 
The Seller will pay, perform and discharge all of its obligations and
liabilities, including, without limitation, all taxes, assessments and
governmental charges upon its income and properties, when due, the non-payment,
performance or discharge of which would reasonably be expected to have a
Material Adverse Effect, unless and only to the extent that such obligations,
liabilities, taxes, assessments and governmental charges shall be contested in
good faith and by appropriate proceedings and that, to the extent required by
GAAP, proper and adequate book reserves relating thereto are established by the
Seller and then only to the extent that a bond is filed in cases where the
filing of a bond is necessary to avoid the creation of a Lien against any of
its properties.


 


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


 


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


 


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


 


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


 


21





















 


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


 


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


 


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


 


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


 


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


 


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


 


22





















 


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


 


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


 


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


 


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


 


Section
5.2.                                Negative Covenants
of Seller.


 


From the date
hereof until the Collection Date:


 


(a)                                  [Reserved].


 


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


 


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


 


23





















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


24





















 


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


 


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


 


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


 


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


 


ARTICLE
VI.



REPURCHASE OBLIGATION


 


Section
6.1.                                Retransfer of
Purchased Collateral and Contributed Collateral.


 


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


 


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


 


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


 


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


 


25





















 


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


 


Section
6.2.                                Substitution of
Loans.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(h)                                 [Reserved];


 


(i)                                     [Reserved];


 


26





















 


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


 


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


 


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


 


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


 


Section
6.3.                                Repurchase
Limitations.


 


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


 


ARTICLE
VII.



ADDITIONAL RIGHTS AND OBLIGATIONS IN

RESPECT OF THE PURCHASED COLLATERAL AND CONTRIBUTED COLLATERAL


 


Section
7.1.                                Rights of the Buyer.


 


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


 


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


 


27





















 


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


 


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


 


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


 


Section
7.2.                                [Reserved].


 


Section
7.3.                                Rights With Respect
to Loan Files.


 


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


 


Section
7.4.                                Notice to
Administrative Agent and each Purchaser Agent.


 


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


 


ARTICLE
VIII.



TERM AND TERMINATION


 


Section
8.1.                                Purchase Termination
Events.


 


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


 


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


 


28





















 


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


 


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


 


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


 


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


 


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


 


29





















 


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


 


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


 


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


 


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


 


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


 


Section
8.2.                                Remedies.


 


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


 


30





















 


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


 


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


 


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


 


Section
8.3.                                Survival of Certain
Provisions.


 


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


 


ARTICLE
IX.



INDEMNIFICATION


 


Section
9.1.                                Indemnification by
the Seller.


 


Without
limiting any other rights that the Buyer, any assignee of the Buyer or any of
such Persons’ respective shareholders, officers, employees, agents, or
Affiliates (each, an


 


31





















 


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


 


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


 


(ii)                                  the
failure by the Seller to comply with any term, provision or covenant contained
in this Agreement or any agreement executed in connection with this Agreement,
or with any Applicable Law, with respect to any Purchased Collateral or
Contributed Collateral or the nonconformity of any Purchased Collateral or
Contributed Collateral with any such Applicable Law;


 


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


 


(iv)                              the
failure to file, or any delay in filing, financing statements, continuation
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other Applicable Law with respect to any Purchased
Collateral or Contributed Collateral, whether at the time of any Purchase or
contribution or at any subsequent time;


 


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


 


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


 


(vii)                           [Reserved];


 


32





















 


(viii)                        any
inability to obtain any judgment in, or utilize the court or other adjudication
system of, any state in which an Obligor may be located as a result of the
failure of the Seller to qualify to do business or file any notice or business
activity report or any similar report;


 


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


 


(x)                                   [Reserved];


 


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


 


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


 


(xiii)                          [Reserved];


 


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


 


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


 


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


 


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


 


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


 


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


 


33





















 


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


 


(d)                                 Indemnification
under Section 9.1 shall be in an amount necessary to make the
Indemnified Party whole after taking into account any tax consequences to the
Indemnified Party of the receipt of the indemnity provided hereunder, including
the effect of such tax or refund on the amount of tax measured by net income or
profits that is or was payable by the Indemnified Party.


 


Section
9.2.                                Assignment of
Indemnities.


 


The Seller
acknowledges that, pursuant to the Sale and Servicing Agreement, the Buyer will
assign its rights of indemnity granted hereunder to the Administrative Agent,
each Purchaser Agent, the Purchasers, the other Secured Parties, the Backup
Servicer and the Trustee.  Upon such
assignment, (i) the Administrative Agent, each Purchaser Agent, the Purchasers,
the other Secured Parties, the Backup Servicer and the Trustee, as applicable,
shall have all rights of the Buyer hereunder and may in turn assign such
rights, and (ii) the obligations of the Seller under this Article IX
shall inure to the Administrative Agent, each Purchaser Agent, the Backup
Servicer or the Trustee.  The Seller
agrees that, upon such assignment, the Administrative Agent, each Purchaser
Agent, the Purchasers, the other Secured Parties, the Backup Servicer and the
Trustee or the assignee of any such Person, as applicable, may enforce
directly, without joinder of the Buyer, the indemnities set forth in this Article
IX.


 


ARTICLE X.



MISCELLANEOUS


 


Section
10.1.                         Amendments and Waivers.


 


Except as
provided in this Section 10.1, no amendment, waiver or other
modification of any provision of this Agreement shall be effective unless
signed by the Buyer and the Seller and consented to in writing by the
Administrative Agent, the Trustee, and each Purchaser Agent.  The Buyer shall provide not less than ten
Business Days’ prior written notice of any such amendment to the Administrative
Agent, the Trustee and each Purchaser Agent.


 


Section
10.2.                         Notices, Etc.


 


All notices
and other communications provided for hereunder shall, unless otherwise stated
herein, be in writing (including communication by facsimile copy) and mailed,
faxed, transmitted or delivered, as to each party hereto, at its address set
forth on Annex A hereto or at such other address as shall be designated
by such party in a written notice to the other parties hereto.  All such notices and communications shall be
effective upon receipt, or in the case of (a) notice by mail, five days after
being deposited in the United States mail, first class postage prepaid, or (b)
notice by facsimile copy, when verbal communication of receipt is obtained.


 


34





















 


Section
10.3.                         Limitation of Liability.


 


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


 


Section
10.4.                         Binding Effect; Benefit of
Agreement.


 


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


 


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


 


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


 


Section
10.6.                         WAIVER OF JURY TRIAL.


 


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


 


Section
10.7.                         Costs, Expenses and Taxes.


 


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


 


35





















 


pay on demand all reasonable
costs and expenses of the Buyer or its assignees incurred in connection with
the preparation, execution, delivery, administration (including periodic
auditing), renewal, amendment or modification of, or any waiver or consent
issued in connection with, this Agreement and the other documents to be
delivered hereunder or in connection herewith, including, without limitation,
the reasonable fees and out-of-pocket expenses of counsel with respect thereto
and with respect to advising the Buyer or its assignees as to its rights and
remedies under this Agreement and the other documents to be delivered hereunder
or in connection herewith, and all costs and expenses, if any (including
reasonable counsel fees and expenses), incurred by the Buyer or its assignees
in connection with the enforcement of this Agreement and the other documents to
be delivered hereunder or in connection herewith.


 


(b)                                 The
Seller shall pay on demand any and all stamp, sales, excise and other taxes and
fees payable or determined to be payable in connection with the execution,
delivery, filing and recording of this Agreement and the other documents to be
delivered hereunder.


 


(c)                                  The
Seller shall pay on demand all other reasonable costs, expenses and Taxes
(excluding income taxes) incurred by the Buyer or its assignees in connection
with the execution, delivery, filing and recording of this Agreement and the
other documents to be delivered hereunder (“Other Costs”), including,
without limitation, all costs and expenses incurred by the Buyer or its
assignees in connection with periodic audits of the Seller’s books and records.


 


Section
10.8.                         No Proceedings.


 


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


 


(b)                                 The
Seller hereby agrees that it will not institute against, or join any other
Person in instituting against, the Buyer any Insolvency Proceeding so long as
there shall not have elapsed one year and one day (or such longer preference
period as shall then be in effect) since the Collection Date.


 


Section
10.9.                         Recourse Against Certain
Parties.


 


(a)                                  No
recourse under or with respect to any obligation, covenant or agreement
(including, without limitation, the payment of any fees or any other
obligations) of the Seller as contained in this Agreement or any other
agreement, instrument or document entered into by it pursuant hereto or in
connection herewith shall be had against the Seller or any incorporator,
officer, employee or director of the Seller, as such, by the enforcement of any
assessment or by any legal or equitable proceeding, by virtue of any statute or
otherwise, it being expressly agreed and
understood that the agreements of the Seller contained in this Agreement
and all of the other agreements, instruments and documents entered into by it
pursuant hereto or in connection herewith are, in each case, solely the
corporate obligations of the Seller, and that no personal liability whatsoever
shall attach to or be incurred by any incorporator, officer, employee or


 


36





















 


director of the Seller, as
such, or any of them, under or by reason of any of the obligations, covenants
or agreements of the Seller contained in this Agreement or in any other such
instruments, documents or agreements, or which are implied therefrom, and that
any and all personal liability of each incorporator, officer, employee or
director of the Seller, or any of them, for breaches by the Seller of any such
obligations, covenants or agreements, which liability may arise either at
common law or at equity, by statute or constitution, or otherwise, is hereby
expressly waived as a condition of and in consideration for the execution of
this Agreement.  The provisions of this Section
10.9(a) shall survive the termination of this Agreement.


 


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


 


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


 


(a)                                  The
Seller shall cause this Agreement, all amendments hereto and/or all financing
statements and continuation statements and any other necessary documents
covering the Buyer’s right, title and interest to the Purchased Collateral and
Contributed Collateral to be promptly recorded, registered and filed, and at
all times to be kept recorded, registered and filed, all in such manner and in
such places as may be required by law fully to preserve and protect the right,
title and interest of the Buyer hereunder to all property comprising the
Purchased Collateral and Contributed Collateral.  The Seller shall deliver to the Buyer the
file-stamped copies of, or filing receipts for, any document recorded, registered
or filed as provided above, as soon as available following such recording,
registration or filing.  The Seller shall
cooperate fully with the Buyer in connection with the obligations set forth
above and will execute any and all documents reasonably required to fulfill the
intent of this Section 10.10(a).


 


(b)                                 The
Seller agrees that from time to time, at its expense, it will promptly execute
and deliver all instruments and documents, and take all actions, that the
Buyer, the Trustee, the Administrative Agent or any Purchaser Agent may
reasonably request in order to perfect, protect or more fully evidence the
Purchases hereunder and the security and/or interest granted in the


 


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


 


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


 


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


 


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


 


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


 


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


 


Section
10.11.                  Execution in Counterparts;
Severability; Integration.


 


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


 


Section
10.12.                  Waiver of Setoff.


 


(a)                                  The
Seller’s obligations under this Agreement shall not be affected by any right of
setoff, counterclaim, recoupment, defense or other right the Seller might have
against the Buyer, the Administrative Agent, each Purchaser Agent, the
Purchasers, the other Secured Parties, the Backup Servicer, the Trustee or any
assignee of such Persons, all of which rights are hereby waived by the Seller.


 


(b)                                 The
Buyer shall have the right to set-off against the Seller any amounts to which
the Seller may be entitled hereunder and to apply such amounts to any claims
the Buyer may have against the Seller from time to time under this
Agreement.  Upon any such set-off, the
Buyer shall give notice of the amount thereof and the reasons therefor to the
Seller.


 


Section
10.13.                  Heading and Exhibits.


 


The headings
herein are for purposes of references only and shall not otherwise affect the
meaning or interpretation of any provision hereof.  The schedules and exhibits attached hereto
and referred to herein shall constitute a part of this Agreement and are
incorporated into this Agreement for all purposes.


 


Section
10.14.                  Rights of Inspection.


 


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


 


39





















 


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


 


Section
10.15.                  Assignment.


 


Notwithstanding
anything to the contrary contained herein, this Agreement may not be assigned
by the Buyer or the Seller except as permitted by this Section 10.15 or
by the Sale and Servicing Agreement. 
Simultaneously with the execution and delivery of this Agreement, the
Buyer will, pursuant to the Sale and Servicing Agreement, assign all of its
right, title and interest in this Agreement to the Trustee, for the benefit of
the Secured Parties, and each Purchaser Agent as agent for the respective
Purchasers under the Sale and Servicing Agreement, to which assignment the
Seller hereby expressly consents.  Upon
assignment, the Seller agrees to perform its obligations hereunder for the
benefit of the Trustee, for the benefit of the Secured Parties, and each
Purchaser Agent as agent for the respective Purchaser under the Sale and
Servicing Agreement and the Trustee and each Purchaser Agent, in such capacity,
shall be a third party beneficiary hereof. 
The Trustee, for the benefit of the Secured Parties, and each Purchaser
Agent as agent for the respective Purchaser under the Sale and Servicing
Agreement upon such assignment may enforce the provisions of this Agreement,
exercise the rights of the Buyer and enforce the obligations of the Seller hereunder
without joinder of the Buyer.


 


Section
10.16.                  No Waiver; Cumulative Remedies.


 


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


 


Section
10.17.                  Subordination.


 


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


 


40





















 


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


 


Section
10.18.                  Revolving Loan Payments.


 


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


 


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


 


[Remainder of Page Intentionally Left Blank.]


 


41





















 


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


 


	
   

  	
  ARES CAPITAL CORPORATON, as the Seller

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael
  J. Arougheti

  	
   

  
	
   

  	
  Name:

  	
  Michael J.
  Arougheti

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
  ARES CAPITAL
  CP FUNDING LLC, as the Buyer

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael
  J. Arougheti

  	
   

  
	
   

  	
  Name:

  	
  Michael J.
  Arougheti

  	
   

  
	
   

  	
  Title:

  	
  President