exv10w7






Exhibit 10.7




EXECUTION COPY




PURCHASE AND SALE AGREEMENT




by and between




FIFTH STREET FUNDING, LLC,




as the Purchaser




and




FIFTH STREET FINANCE CORP.,




as the Seller




Dated as of November 16, 2009




 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	ARTICLE I. DEFINITIONS	 	 	1	 
	 
	 	 	 	 	 	 
	Section 1.1.
	 	General	 	 	1	 
	Section 1.2.
	 	Specific Terms	 	 	2	 
	Section 1.3.
	 	Other Terms	 	 	5	 
	Section 1.4.
	 	Computation of Time Periods	 	 	5	 
	Section 1.5.
	 	Certain References	 	 	5	 
	 
	 	 	 	 	 	 
	ARTICLE II. SALE AND PURCHASE OF THE ELIGIBLE LOAN ASSETS AND OTHER PORTFOLIO ASSETS	 	 	5	 
	 
	 	 	 	 	 	 
	Section 2.1.
	 	Sale and Purchase of the Eligible Loan Assets and the Other Portfolio Assets	 	 	5	 
	Section 2.2.
	 	Purchase Price	 	 	8	 
	Section 2.3.
	 	Payment of Purchase Price	 	 	8	 
	Section 2.4.
	 	Nature of the Sales	 	 	9	 
	 
	 	 	 	 	 	 
	ARTICLE III. CONDITIONS OF SALE AND PURCHASE	 	 	10	 
	 
	 	 	 	 	 	 
	Section 3.1.
	 	Conditions Precedent to Effectiveness	 	 	10	 
	Section 3.2.
	 	Conditions Precedent to All Purchases	 	 	11	 
	 
	 	 	 	 	 	 
	ARTICLE IV. REPRESENTATIONS AND WARRANTIES	 	 	12	 
	 
	 	 	 	 	 	 
	Section 4.1.
	 	Representations and Warranties of the Seller	 	 	12	 
	Section 4.2.
	 	Representations and Warranties of the Seller Relating to the Agreement and the Sale Portfolio	 	 	20	 
	Section 4.3.
	 	Representations and Warranties of the Purchaser	 	 	21	 
	 
	 	 	 	 	 	 
	ARTICLE V. COVENANTS OF THE SELLER	 	 	23	 
	 
	 	 	 	 	 	 
	Section 5.1.
	 	Protection of Title of the Purchaser	 	 	23	 
	Section 5.2.
	 	Affirmative Covenants of the Seller	 	 	26	 
	Section 5.3.
	 	Negative Covenants of the Seller	 	 	30	 
	 
	 	 	 	 	 	 
	ARTICLE VI. REPURCHASES AND SUBSTITUTION BY THE SELLER	 	 	32	 
	 
	 	 	 	 	 	 
	Section 6.1.
	 	Repurchase of Loan Assets	 	 	32	 
	Section 6.2.
	 	Substitution of Loan Assets	 	 	33	 
	Section 6.3.
	 	Repurchase Limitations	 	 	34	 
	 
	 	 	 	 	 	 
	ARTICLE VII. ADDITIONAL RIGHTS AND OBLIGATIONS IN RESPECT OF THE SALE PORTFOLIO	 	 	34	 
	 
	 	 	 	 	 	 
	Section 7.1.
	 	Rights of the Purchaser	 	 	34	 
	Section 7.2.
	 	Rights With Respect to Loan Asset Files	 	 	35	 






i









 






TABLE OF CONTENTS

(cont’d)




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	Section 7.3.
	 	Notice to Collateral Agent, Administrative Agent and each Lender Agent	 	 	35	 
	 
	 	 	 	 	 	 
	ARTICLE VIII. SELLER TERMINATION EVENTS	 	 	35	 
	 
	 	 	 	 	 	 
	Section 8.1.
	 	Seller Termination Events	 	 	35	 
	Section 8.2.
	 	Survival of Certain Provisions	 	 	37	 
	 
	 	 	 	 	 	 
	ARTICLE IX. INDEMNIFICATION	 	 	38	 
	 
	 	 	 	 	 	 
	Section 9.1.
	 	Indemnification by the Seller	 	 	38	 
	Section 9.2.
	 	Assignment of Indemnities	 	 	41	 
	 
	 	 	 	 	 	 
	ARTICLE X. MISCELLANEOUS	 	 	41	 
	 
	 	 	 	 	 	 
	Section 10.1.
	 	Liability of the Seller	 	 	41	 
	Section 10.2.
	 	Limitation on Liability	 	 	41	 
	Section 10.3.
	 	Amendments; Limited Agency	 	 	41	 
	Section 10.4.
	 	Waivers; Cumulative Remedies	 	 	41	 
	Section 10.5.
	 	Notices	 	 	42	 
	Section 10.6.
	 	Merger and Integration	 	 	42	 
	Section 10.7.
	 	Severability of Provisions	 	 	42	 
	Section 10.8.
	 	GOVERNING LAW; JURY WAIVER	 	 	42	 
	Section 10.9.
	 	Consent to Jurisdiction; Service of Process	 	 	42	 
	Section 10.10.
	 	Costs, Expenses and Taxes	 	 	43	 
	Section 10.11.
	 	Counterparts	 	 	43	 
	Section 10.12.
	 	Bankruptcy Non-Petition and Limited Recourse; Claims	 	 	43	 
	Section 10.13.
	 	Binding Effect; Assignability	 	 	44	 
	Section 10.14.
	 	Waiver of Setoff	 	 	44	 
	Section 10.15.
	 	Headings and Exhibits	 	 	44	 
	Section 10.16.
	 	Rights of Inspection	 	 	45	 
	Section 10.17.
	 	Subordination	 	 	45	 
	Section 10.18.
	 	Confidentiality	 	 	45	 






SCHEDULES AND EXHIBITS




	 	 	 	 	 
	Schedule I

	 	—	 	Sale Portfolio List
	 
	 	 	 	 
	Exhibit A

	 	—	 	Form of Loan Assignment
	Exhibit B

	 	—	 	Form of Officer’s Purchase Date Certificate
	Exhibit C

	 	—	 	Form of Power of Attorney for Seller







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PURCHASE AND SALE AGREEMENT




          THIS PURCHASE AND SALE AGREEMENT, dated as of November 16, 2009, by and between FIFTH STREET
FINANCE CORP., a Delaware corporation, as the seller (the “Seller”) and FIFTH STREET
FUNDING, LLC, a Delaware limited liability company, as the purchaser (the “Purchaser”).




WITNESSETH:




          WHEREAS, the Purchaser has agreed to Purchase (as hereinafter defined) from the Seller from
time to time, and the Seller has agreed to Sell (as hereinafter defined) to the Purchaser from time
to time, certain Loan Assets and Portfolio Assets related thereto on the terms set forth herein;




          WHEREAS, it is contemplated that the Loan Assets and Portfolio Assets Purchased hereunder may
be Pledged by the Purchaser pursuant to the Loan and Servicing Agreement (as defined herein) and
the related Transaction Documents, to the Collateral Agent, for the benefit of the Secured Parties;
and




          WHEREAS, the Seller agrees that all representations, warranties, covenants and agreements made
by the Seller herein with respect to the Sale Portfolio shall also be for the benefit of any
Secured Party.




          NOW, THEREFORE, in consideration of the premises and the mutual agreements hereinafter
contained, and for other good and valuable consideration, the receipt of which is hereby
acknowledged, the Purchaser and the Seller, intending to be legally bound, hereby agree as follows:




ARTICLE I.




DEFINITIONS




     Section 1.1. General. The specific terms defined in this Article include the plural
as well as the singular. Words herein importing a gender include the other gender. References
herein to “writing” include printing, typing, lithography and other means of reproducing words in
visible form. References to agreements and other contractual instruments include all subsequent
amendments thereto or changes therein entered into in accordance with their respective terms and
not prohibited by this Agreement or the Loan and Servicing Agreement (as hereinafter defined).
References herein to Persons include their successors and assigns permitted hereunder or under the
Loan and Servicing Agreement. The terms “include” or “including” mean “include without limitation”
or “including without limitation”. The words “herein”, “hereof” and “hereunder” and other words of
similar import refer to this Agreement as a whole and not to any particular Article, Section or
other subdivision, and Article, Section, Schedule and Exhibit references, unless otherwise
specified, refer to Articles and Sections of and Schedules and Exhibits to this Agreement.
References 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. Capitalized terms used
herein but not defined herein shall have the respective meanings assigned to such terms in the Loan
and Servicing Agreement, provided that, if, within such definition in the Loan and Servicing
Agreement a further term is used which is defined herein, then such further term shall have the
meaning given to such further term herein.




     Section 1.2. Specific Terms. Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the following meanings:



          “Agreement” means this Purchase and Sale Agreement, as the same may be amended,
restated, waived, supplemented and/or otherwise modified from time to time hereafter.




          “Available Collections” means all cash collections and other cash proceeds with
respect to any Loan Asset, including, without limitation, all Principal Collections, all Interest
Collections, all proceeds of any sale or disposition with respect to such Loan Asset, cash proceeds
or other funds received by the Seller or the Servicer with respect to any Underlying Collateral
(including from any guarantors).




          “Early Termination” has the meaning specified in Section 8.1.




          “Facility Financing Statements” has the meaning specified in Section 3.1(iv).




          “Indemnified Amounts” has the meaning specified in Section 9.1(a).




          “Indemnified Party” has the meaning specified in Section 9.1(a).




          “Loan and Servicing Agreement” means that certain Loan and Servicing Agreement, dated
as of the Closing Date, by and among the Purchaser, as the Borrower, the Seller, as the Servicer
and the Transferor, Wells Fargo Securities, LLC, as the Administrative Agent, each of the Conduit
Lenders and Institutional Lenders from time to time party thereto, each of the Lender Agents from
time to time party thereto and Wells Fargo Bank, National Association, as the Collateral Agent, as
the Account Bank and as the Collateral Custodian, as such may be amended, restated, supplemented or
otherwise modified from time to time pursuant to the terms thereof.




          “Loan Asset” means any loan listed on Schedule I hereto, as the same may be
amended, supplemented, restated or replaced from time to time, and all accounts, payment
intangibles, instruments and other property related to the foregoing.




          “Loan Assignment” means a Loan Assignment executed by the Seller, substantially in the
form of Exhibit A attached hereto.




          “Non-Consolidation/True Sale Opinion” has the meaning specified in Section
4.1(jj).




          “Pension Plan” has the meaning specified in Section 4.1(r).




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          “Portfolio Assets” means all Loan Assets owned by the Seller, together with all
proceeds thereof and other assets or property related thereto, including all right, title and
interest of the Seller in and to:




          (a) any amounts on deposit in any cash reserve, collection, custody or lockbox accounts
securing the Loan Assets;




          (b) all rights with respect to the Loan Assets to which the Seller is entitled as lender under
the applicable Loan Agreement;




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




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




          (e) all Insurance Policies with respect to any Loan Asset;




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




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




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




          “Purchase” means a purchase by the Purchaser of an Eligible Loan Asset and the related
Portfolio Assets from the Seller pursuant to Article II.




          “Purchase Date” has the meaning specified in Section 2.1(b).




          “Purchase Price” has the meaning specified in Section 2.2.




          “Purchaser” has the meaning specified in the Preamble.




          “Purchaser Restricted Junior Payment” means (i) any dividend or other distribution,
direct or indirect, on account of any class of membership interests of the Purchaser now or
hereafter outstanding, except a dividend paid solely in interests of that class of membership
interests or in any junior class of membership interests of the Purchaser; (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or
indirect, of any class of membership interests of the Purchaser now or hereafter outstanding, (iii)
any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire membership interests of the Purchaser now
or hereafter outstanding, and (iv) any payment of management fees by the




3









 







Purchaser. For the avoidance of doubt, (x) payments and reimbursements due to the Servicer in
accordance with the Transaction Documents do not constitute Purchaser Restricted Junior Payments,
and (y) distributions by the Purchaser to holders of its membership interests of Loan Assets or of
cash or other proceeds relating thereto which have been substituted by the Purchaser in accordance
with the Loan and Servicing Agreement shall not constitute Purchaser Restricted Junior Payments.




          “Replaced Loan Asset” has the meaning specified in Section 6.2(b)(i).




          “Repurchase Price” means, with respect to a Loan Asset to be repurchased pursuant to
Article VI hereof, (i) the greater of (a) an amount equal to the Purchase Price less all
Principal Collections received in respect of such Loan Asset from the Purchase Date to the date of
repurchase hereunder and (b) an amount equal to the Advance Date Assigned Value multiplied by the
Outstanding Balance of such Loan Asset, plus (ii) all Hedge Breakage Costs arising as a result
thereof and owed to the relevant Hedge Counterparty for any termination of one or more Hedge
Transactions, in whole or in part, as required by the terms of any Hedging Agreement plus any
expenses or fees with respect to such Loan Asset and costs and damages incurred by the
Administrative Agent or by any Lender in connection with any violation by such Loan Asset of any
predatory or abusive lending law which is an Applicable Law.




          “Sale” and “Sell” have the meanings specified in Section 2.1(a), and
the term “Sold” shall have the corresponding meaning.




          “Sale Portfolio” means all right, title, and interest (whether now owned or hereafter
acquired or arising, and wherever located) of the Seller in the property identified below in
clauses (i) through (iii) 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, or other property consisting of, arising out of, or related to
any of the following (in each case excluding the Retained Interest and the Excluded Amounts):




          (i) the Loan Assets, and all monies due or to become due in payment under such Loan Assets on
and after the related Cut-Off Date, including, but not limited to, all Available Collections;




          (ii) the Portfolio Assets with respect to the Loan Assets referred to in clause (i);
and




          (iii) all income and Proceeds of the foregoing.




          “Schedule I” means the schedule of all Sale Portfolio that is Sold by the Seller to
the Purchaser 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 Asset Schedule attached to the Loan and Servicing Agreement.




4









 








          “SEC” has the meaning specified in Section 5.2(n)(i).




          “Seller Purchase Event” means with respect to any Loan Asset, the occurrence of a
breach of the Seller’s representations and warranties under Section 4.2 on the Cut-Off Date
for such Loan Asset.




          “Seller Termination Event” has the meaning specified in Section 8.1(a).




          “Substitute Eligible Loan Asset” has the meaning specified in Section 6.2(a).




          “Substitution” has the meaning specified in Section 6.2(a).




          “Transfer Taxes” means any tax, fee or governmental charge payable by the Purchaser,
the Seller or any other Person to any federal, state or local government arising from or otherwise
related to the Sale of any Loan Asset, the related Underlying Collateral (if any) and/or any other
related Portfolio Assets from the Seller to the Purchaser under this Agreement (excluding taxes
measured by net income).




     Section 1.3. Other Terms. All accounting terms used but not specifically defined
herein shall be construed in accordance with GAAP. All terms used in Article 9 of the UCC in the
State of New York, and used but not specifically defined herein, are used herein as defined in such
Article 9.



     Section 1.4. Computation of Time Periods. Unless otherwise stated in this Agreement,
in the computation of a period of time from a specified date to later specified date, the word
“from” means “from and including” and the words “to” and “until” each mean “to but excluding”.
Reference to days or days without further qualification means calendar days. Reference to any time
means New York, New York time.



     Section 1.5. Certain References. All references to the Outstanding Balance of a Loan
Asset as of a Purchase Date shall refer to the close of business on such day.



ARTICLE II.




SALE AND PURCHASE OF THE ELIGIBLE LOAN ASSETS

AND OTHER PORTFOLIO ASSETS




     Section 2.1. Sale and Purchase of the Eligible Loan Assets and the Other Portfolio
Assets.



          (a) Subject to the terms and conditions of this Agreement (including the conditions to
Purchase set forth in Article III), on and after the Closing Date, the Seller hereby agrees
to (i) sell, transfer and otherwise convey (collectively, “Sell” and any such sale,
transfer and/or other conveyance, a “Sale”), from time to time, to the Purchaser, without
recourse (except to the extent specifically provided herein), and the Purchaser hereby agrees to
purchase, all right, title and interest of the Seller (whether now owned or hereafter acquired or
arising, and wherever located) in and to certain Sale Portfolio designated by the Seller and (ii)
transfer, or cause the deposit into, the Collection Account of all Available Collections received
by the Seller on




5









 







account of any Sale Portfolio hereunder on and after the Purchase Date with respect to such
Sale Portfolio, in each case, within one Business Day of the receipt thereof. The Seller hereby
acknowledges that each Sale to the Purchaser hereunder is absolute and irrevocable, without
reservation or retention of any interest whatsoever by the Seller.




          (b) The Seller shall on or prior to any Business Day prior to a Seller Termination Event (each
a “Purchase Date”) execute and deliver to the Purchaser a proposed Loan Assignment
identifying the Sale Portfolio to be Sold by the Seller to the Purchaser on such Purchase Date.
From and after such Purchase Date, the Sale Portfolio listed on Schedule I to the related
Loan Assignment shall be deemed to be listed on Schedule I hereto and constitute part of
the Sale Portfolio hereunder.




          (c) On or before any Purchase Date with respect to the Sale Portfolio to be acquired by the
Purchaser on such date, the Seller shall provide the Purchaser 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.




          (d) On and after each Purchase Date hereunder and upon payment of the Purchase Price therefor,
the Purchaser shall own the Sale Portfolio Sold by the Seller to the Purchaser on such Purchase
Date, and the Seller shall not take any action inconsistent with such ownership and shall not claim
any ownership interest in such Sale Portfolio.




          (e) Except as specifically provided in this Agreement, the Sale and Purchase of the Sale
Portfolio under this Agreement shall be without recourse to the Seller; it being understood that
the Seller shall be liable to the Purchaser 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.




          (f) Neither the Purchaser nor any assignee of the Purchaser (including the Secured Parties)
shall have any obligation or liability to any Obligor or client of the Seller (including any
obligation to perform any obligation of the Seller, including with respect to any other related
agreements) in respect of the Sale Portfolio (other than with respect to funding obligations to
Obligors pursuant to the terms of the applicable Loan Agreement for Revolving Loan Assets and
Delayed Draw Loan Assets, as applicable, which shall solely be an obligation of the Purchaser and
not any of the Secured Parties). No such obligation or liability is intended to be assumed by the
Purchaser or any assignee of the Purchaser (including the Secured Parties) and any such assumption
is expressly disclaimed. Without limiting the generality of the foregoing, the Sale of the Sale
Portfolio by the Seller to the Purchaser pursuant to this Agreement does not constitute and is not
intended to result in a creation or assumption by the Purchaser or any assignee of the Purchaser
(including the Secured Parties), of any obligation of the Seller, as lead agent, collateral agent
or paying agent under any Agented Note.




          (g) In connection with each Purchase of Sale Portfolio hereunder, the Seller shall cause to be
delivered to the Collateral Custodian (with a copy to the Administrative Agent), no later than 2:00
p.m. one Business Day prior to the related Purchase Date, a faxed or e-mailed copy of the duly
executed original promissory notes of the Loan Assets (and, in the case of any




6









 







Noteless Loan Asset, a fully executed assignment agreement) and if any Loan Assets are closed
in escrow, a certificate (in the form of Exhibit K to the Loan and Servicing Agreement) from the
closing attorneys of such Loan Assets certifying the possession of the Required Loan Documents;
provided that, notwithstanding the foregoing, the Seller shall cause the Loan Asset Checklist and
the Required Loan Documents to be in the possession of the Collateral Custodian within five
Business Days after the related Purchase Date.




          (h) In accordance with the Loan and Servicing Agreement, certain documents relating to Sale
Portfolio shall be delivered to and held in trust by the Collateral Custodian for the benefit of
the Purchaser and its assignees, and the Purchaser hereby instructs the Seller to cause such
documents to be delivered to the Collateral Custodian. Such delivery to the Collateral Custodian
of such documents and the possession thereof by the Collateral Custodian is at the will of the
Purchaser and its assignees and in a custodial capacity for their benefit only.




          (i) The Seller shall provide all information, and any other reasonable assistance, to the
Servicer, the Collateral Custodian and the Collateral Agent necessary for the Servicer, the
Collateral Custodian and the Collateral Agent, as applicable, to conduct the management,
administration and collection of the Sale Portfolio Purchased hereunder in accordance with the
terms of the Loan and Servicing Agreement.




          (j) In connection with the Purchase by the Purchaser of Sale Portfolio 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 Sale Portfolio has been purchased by the Purchaser in accordance with this
Agreement.




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




          (l) The Seller shall, at all times, continue to fulfill its obligations under, and in strict
conformance with, the terms of all Loan Agreements (other than with respect to funding obligations
to Obligors in connection with Revolving Loan Assets and Delayed Draw Loan Assets, as applicable)
related to any Sale Portfolio purchased hereunder, including without limitation any obligations
pertaining to any Retained Interest.




          (m) The Seller and the Purchaser each acknowledge with respect to itself that the
representations and warranties of the Seller in Sections 4.1 and 4.2 hereof and of
the Purchaser in Section 4.3 hereof, and the covenants and agreements of the Seller herein,
including without limitation, in Article V and Article VI hereof, will run to and
be for the benefit of the Purchaser and the Collateral Agent (on behalf of the Secured Parties) and
the Collateral Agent (on behalf of the Secured Parties) may enforce directly (without joinder of
the Purchaser when enforcing against the Seller), the obligations of the Seller or the Purchaser,
as applicable, with




7









 







respect to breaches of such representations, warranties, covenants and all other obligations
as set forth in this Agreement.




     Section 2.2. Purchase Price.



          The purchase price for each item of Sale Portfolio Sold to the Purchaser hereunder (the
“Purchase Price”) shall be in a dollar amount equal to the fair market value of such Loan
Asset as determined from time to time by the Seller and the Purchaser. Each of the Purchaser and
the Seller hereby agree that the fair market value of each Loan Asset Sold hereunder as of the
related Purchase Date shall not be less than the Advance Date Assigned Value thereof multiplied by
the Outstanding Balance of such Loan Asset on the related Purchase Date.




     Section 2.3. Payment of Purchase Price.



          (a) The Purchase Price for any Sale Portfolio Sold by the Seller to the Purchaser on any
Purchase Date shall be paid in a combination of: (i) immediately available funds; and (ii) if the
Purchaser does not have sufficient funds to pay the full amount of the Purchase Price (after taking
into account the proceeds the Purchaser expects to receive pursuant to the Advances under the Loan
and Servicing Agreement), by means of a capital contribution by the Seller to the Purchaser.




          (b) The portion of such Purchase Price to be paid in immediately available funds shall be paid
by wire transfer on the applicable Purchase Date to an account designated by the Seller on or
before such Purchase Date or by means of proper accounting entries being entered upon the accounts
and records of the Seller and the Purchaser on the applicable Purchase Date.




          (c) In connection with each delivery of a Loan Assignment, the Seller hereunder shall be
deemed to have certified, with respect to the Sale Portfolio to be Sold by it on such day, that its
representations and warranties contained in Sections 4.1 and 4.2 are true and
correct in all respects on and as of such day, with the same effect as though made on and as of
such day (other than any representation or warranty that is made as of a specific date), that no
Event of Default has occurred or would result therefrom and no Unmatured Event of Default exists or
would result therefrom.




          (d) Upon the payment of the Purchase Price for any Purchase, title to the Sale Portfolio
included in such Purchase shall vest in the Purchaser, whether or not the conditions precedent to
such Purchase and the other covenants and agreements contained herein were in fact satisfied;
provided that the Purchaser 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.




8









 








     Section 2.4. Nature of the Sales.



          (a) It is the express intent of the parties hereto that the Sale of the Sale Portfolio by the
Seller to the Purchaser hereunder be, and be treated for all purposes (other than tax and
accounting purposes) as an absolute sale by the Seller (free and clear of any Lien, security
interest, charge or encumbrance other than Permitted Liens) of such Sale Portfolio. It is, further,
not the intention of the parties that such Sale be deemed a pledge of the Sale Portfolio by the
Seller to the Purchaser to secure a debt or other obligation of the Seller. However, in the event
that, notwithstanding the intent of the parties, the Sale Portfolio is held to continue to be
property of the Seller, then the parties hereto agree that: (i) this Agreement shall also be
deemed to be, and hereby is, a “security agreement” within the meaning of Article 9 of the UCC;
(ii) the transfer of the Sale Portfolio provided for in this Agreement shall be deemed to be a
grant by the Seller to the Purchaser of a first priority security interest (subject only to
Permitted Liens) in all of the Seller’s right, title and interest in and to the Sale Portfolio and
all amounts payable to the holders of the Sale Portfolio in accordance with the terms thereof and
all proceeds of the conversion, voluntary or involuntary, of the foregoing into cash, instruments,
securities or other property, including, without limitation, all amounts from time to time held or
invested in the Controlled Accounts, whether in the form of cash, instruments, securities or other
property, 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 Sale Portfolio together with all of the other
obligations of the Seller hereunder; (iii) the possession by the Purchaser (or the Collateral
Custodian on behalf of the Collateral Agent, for the benefit of the Secured Parties) of Sale
Portfolio and such other items of property as constitute instruments, money, negotiable documents
or chattel paper shall be, subject to clause (iv), for purposes of perfecting the security
interest pursuant to the UCC; and (iv) acknowledgements from Persons holding such property shall be
deemed acknowledgements from custodians, bailees or agents (as applicable) of the Purchaser for the
purpose of perfecting such security interest under Applicable Law. The parties further agree in
such event that any assignment of the interest of the Purchaser pursuant to any provision hereof
shall also be deemed to be an assignment of any security interest created pursuant to the terms of
this Agreement. The Purchaser shall, to the extent consistent with this Agreement and the other
Transaction Documents, take such actions as may be necessary to ensure that, if this Agreement were
deemed to create a security interest in the Sale Portfolio, such security interest would be deemed
to be a perfected security interest of first priority (subject only to Permitted Liens) under
Applicable Law and will be maintained as such throughout the term of this Agreement. The Purchaser
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.




          (b) It is the intention of each of the parties hereto that the Sale Portfolio Sold by the
Seller to the Purchaser pursuant to this Agreement shall constitute assets owned by the Purchaser
and shall not be part of the Seller’s estate in the event of the filing of a bankruptcy petition by
or against the Seller under any bankruptcy or similar law.




          (c) The Purchaser agrees to treat, and shall cause the Seller to treat, for all purposes
(other than tax and accounting purposes), the transactions effected by this Agreement as sales of
assets to the Purchaser. The Seller agrees to reflect in the Seller’s financial records and to
include a note in the publicly filed annual and quarterly financial statements of Fifth Street




9









 







indicating that: (i) assets related to transactions (including transactions pursuant to the
Transaction Documents) that do not meet SFAS 140 requirements for accounting sale treatment are
reflected in the consolidated balance sheet of Fifth Street as finance receivables pledged and
non-recourse, secured borrowings and (ii) those assets are owned by a special purpose entity that
is consolidated in the financial statements of Fifth Street, and the creditors of that special
purpose entity have received ownership and/or security interests in such assets and such assets are
not intended to be available to the creditors of sellers (or any affiliate of the sellers) of such
assets to that special purpose entity.




ARTICLE III.




CONDITIONS OF SALE AND PURCHASE




     Section 3.1. Conditions Precedent to Effectiveness. This Agreement shall be effective
upon the satisfaction of the conditions precedent that the Purchaser shall have received on or
before the Closing Date, in form and substance satisfactory to the Purchaser, all of the following:




          (i) a copy of this Agreement duly executed by each of the parties hereto;




          (ii) a certificate of the Secretary or Assistant Secretary of the Seller, dated the
Closing Date, certifying (A) the names and true signatures of the incumbent officers of the
Seller authorized to sign on behalf of the Seller this Agreement, the Loan Assignments and
all other documents to be executed by the Seller hereunder or in connection herewith (on
which certificate the Purchaser and its assignees may conclusively rely until such time as
the Purchaser and such assignees shall receive from the Seller, a revised certificate
meeting the requirements of this Section 3.1(ii)), (B) that the copy of the
certificate of incorporation of the Seller is a complete and correct copy and that such
certificate of incorporation has not been amended, modified or supplemented and is in full
force and effect, (C) that the copy of the by-laws of the Seller are a complete and correct
copy, and that such by-laws have not been amended, modified or supplemented and are in full
force and effect, and (D) the resolutions of the board of directors of the Seller approving
and authorizing the execution, delivery and performance by the Seller of this Agreement, the
Loan Assignments and all other documents to be executed by the Seller hereunder or in
connection herewith;




          (iii) a good standing certificate, dated as of a recent date for the Seller, issued by
the Secretary of State of the Seller’s State of incorporation;




          (iv) filed, original copies of proper financing statements (the “Facility Financing
Statements”) describing the Sale Portfolio, and naming the Seller as the
“Debtor/Seller”, the Purchaser as “Secured Party/Buyer” and the Collateral Agent, for the
benefit of the Secured Parties, as “Total Assignee”, or other similar instruments or
documents, in form and substance sufficient for filing under the UCC or any comparable law
of any and all jurisdictions as may be necessary to perfect the Purchaser’s ownership
interest in all Sale Portfolio;



10









 






          (v) copies of properly authorized termination statements or statements of release (on
Form UCC-3) or other similar instruments or documents, if any, in form and substance
sufficient for filing under the UCC or any comparable law of any and all jurisdictions as
may be necessary to release all security interests and similar rights of any Person in the
Sale Portfolio previously granted by the Seller;




          (vi) copies of tax and judgment lien searches in all jurisdictions reasonably requested
by the Purchaser or its assignees and requests for information (or a similar UCC search
report certified by a party acceptable to the Purchaser and its assigns), dated a date
reasonably near to the Closing Date, and with respect to such requests for information or
UCC searches, listing all effective financing statements which name the Seller (under its
present name and any previous name) as debtor and which are filed in the State of Delaware,
together with copies of such financing statements (none of which shall cover any Sale
Portfolio);




          (vii) all instruments in connection with the transactions contemplated by this
Agreement shall be satisfactory in form and substance to the Purchaser, each Lender Agent
and the Administrative Agent, and the Purchaser, each Lender Agent and the Administrative
Agent 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 Purchaser, each Lender Agent and the Administrative
Agent may have requested;




          (viii) any necessary third party consents to the closing of the transactions
contemplated hereby, in form and substance satisfactory to the Purchaser;




          (ix) the Seller shall have paid all fees then required to be paid by it on the Closing
Date; and




          (x) one or more favorable Opinions of Counsel from counsel to the Seller with respect
to the perfection and enforceability of the security interest hereunder and such other
matters as the Purchaser or any assignee thereof may reasonably request.



     Section 3.2. Conditions Precedent to All Purchases. The Purchase to take place on the
initial Purchase Date and each Purchase to take place on a subsequent Purchase Date hereunder shall
be subject to the further conditions precedent that:



          (a) The following statements shall be true:





          (i) The representations and warranties of the Seller contained in Sections 4.1
and 4.2 shall be true and correct on and as of such Purchase Date in all respects,
before and after giving effect to the Purchase to take place on such Purchase Date and to
the application of proceeds therefrom, as though made on and as of such date (other than any
representation and warranty that is made as of a specific date);




          (ii) The Seller is in compliance in all respects with each of its covenants and other
agreements set forth herein;




11











 






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




          (iv) The Facility Maturity Date has not yet occurred; and




          (v) 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 Purchaser in accordance with the
provisions hereof.



          (b) The Purchaser shall have received 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) The Seller shall have delivered to the Collateral Custodian on behalf of the Purchaser and
any assignee thereof each item required to be contained in the Required Loan Documents and the Loan
Asset Checklist of any of the Eligible Loan Assets or Portfolio Assets related thereto being
acquired by the Purchaser within five Business Days of the related Purchase Date.




          (d) The Seller shall have taken all steps necessary under all Applicable Law in order to Sell
to the Purchaser the Sale Portfolio being Purchased on such Purchase Date and, upon the Sale of
such Sale Portfolio from the Seller to the Purchaser pursuant to the terms hereof, the Purchaser
will have acquired good and marketable title to and a valid and perfected ownership interest in
such Sale Portfolio, free and clear of any Lien, security interest, charge or encumbrance (other
than Permitted Liens); provided that if such item of Sale Portfolio contains a restriction of
transferability, the applicable Loan Agreement provides that any consents necessary for future
assignments shall not be unreasonably withheld by the applicable Obligor and/or agent, and the
rights to enforce rights and remedies in respect of the same under the applicable Loan Agreement
inure to the benefit of the holder of such Loan Asset (subject to the rights of any applicable
agent or other lenders).




          (e) The Seller shall have received a copy of an Approval Notice executed by the Administrative
Agent evidencing the approval of the Administrative Agent, in its sole and absolute discretion of
the Sale to the Purchaser of the Eligible Loan Assets identified on Schedule I to the
applicable Loan Assignment on the applicable Purchase Date.




ARTICLE IV.




REPRESENTATIONS AND WARRANTIES




     Section 4.1. Representations and Warranties of the Seller. The Seller makes the
following representations and warranties, on which the Purchaser relies in acquiring the Sale
Portfolio Purchased hereunder and each of the Secured Parties relies upon in entering into the Loan
and Servicing Agreement. As of each Purchase Date and each Reporting Date (unless a specific date
is specified below), the Seller represents and warrants to the Purchaser for the benefit of the
Purchaser and each of its successors and assigns that:



12









 





          (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 Delaware (subject to
Section 5.1(f)), 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 and own the
Sale Portfolio and to Sell such Sale Portfolio to the Purchaser hereunder.




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




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




          (d) Valid Conveyance; Binding Obligations. This Agreement, each Loan Assignment and
the Transaction Documents to which the Seller is party have been and, in the case of each Loan
Assignment delivered after the Closing Date, will be, duly executed and delivered by the Seller,
and this Agreement, together with the applicable Loan Assignment in each case, shall effect valid
Sales of Sale Portfolio, enforceable against the Seller and creditors of and purchasers from the
Seller, and this Agreement, each Loan Assignment and such Transaction Documents shall constitute
legal, valid and binding obligations of the Seller enforceable against the Seller in accordance
with their respective terms, except as enforceability may be limited by Bankruptcy Laws and general
principles of equity (whether such enforceability is considered in a proceeding in equity or at
law).




          (e) No Violation. The execution, delivery and performance of this Agreement, each
Loan Assignment and all other agreements and instruments executed and delivered or to be executed
and delivered by the Seller pursuant hereto or thereto in connection with the Sale of the Sale
Portfolio 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
certificate 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
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 knowledge of the Seller, threatened against the Seller, before any Governmental Authority
(i) asserting the invalidity of this Agreement, any Loan Assignment or




13









 







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, any Loan Assignment 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 a Material Adverse Effect.




          (g) No Consents. The Seller is not required to obtain the consent or approval of any
other party or any consent, license, approval or authorization, or registration or declaration
with, any Governmental Authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement or any Loan Assignment, except those
which have been obtained.




          (h) State of Organization, Etc. Except as permitted hereunder, the Seller’s legal
name is as set forth in this Agreement. Except as permitted hereunder, the Seller has not changed
its name since its incorporation; does not have tradenames, fictitious names, assumed names or
“doing business as” names. Except as permitted hereunder, the chief executive office of the Seller
(and the location of the Seller’s records regarding the Sale Portfolio (other than those delivered
to the Collateral Custodian)) is at the address of the Seller set forth on the signature pages
hereto. The Seller’s only jurisdiction of incorporation is Delaware, and, except as permitted
hereunder, the Seller has not changed its jurisdiction of incorporation.




          (i) 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.




          (j) Solvency. The Seller is not the subject of any Bankruptcy Proceedings or
Bankruptcy Event. The Seller is Solvent and will not become insolvent after giving effect to the
transactions contemplated by this Agreement and the other Transaction Documents. The Seller after
giving effect to the transactions contemplated by this Agreement and the other Transaction
Documents, will have an adequate amount of capital to conduct its business in the foreseeable
future.




          (k) Selection Procedures. No procedures believed by the Seller to be adverse to the
interests of the Purchaser were utilized by the Seller in identifying and/or selecting the Eligible
Loan Assets included in the Sale Portfolio.




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




          (m) Taxes. The Seller has filed or caused to be filed all tax returns that are
required to be filed by it (subject to any extensions to file properly obtained by the same). The
Seller 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,
assessment or other charge.




14









 








          (n) 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 Sale Portfolio) 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 Sale Portfolio will be used to carry or purchase, any Margin Stock or to extend
“purpose credit” within the meaning of Regulation U.




          (o) Loan Assignments. Each Loan Assignment is accurate in all respects.




          (p) No Liens, Etc. The Sale Portfolio to be acquired by Purchaser hereunder is owned
by the Seller free and clear of any Lien, security interest, charge or encumbrance (subject only to
Permitted Liens), and the Seller has the full right, corporate power and lawful authority to Sell
the same and interests therein and, upon the Sale thereof hereunder, the Purchaser will have
acquired good and marketable title to and a valid and perfected ownership interest in such Sale
Portfolio, free and clear of any Lien, security interest, charge or encumbrance (subject only to
Permitted Liens); provided that if such item of Sale Portfolio contains a restriction of
transferability, the applicable Loan Agreement provides that any consents necessary for future
assignments shall not be unreasonably withheld by the applicable Obligor and/or agent, and the
rights to enforce rights and remedies in respect of the same under the applicable Loan Agreement
inure to the benefit of the holder of such Loan Asset (subject to the rights of any applicable
agent or other lenders). No effective financing statement reflecting the Seller or the Seller’s
predecessor in interest, as a “Debtor”, or other instrument similar in effect covering all or any
part of any Sale Portfolio Purchased hereunder is on file in any recording office, except such as
may have been filed in favor of the Collateral Agent as “Secured Party” or “Assignee”, in each
case, for the benefit of the Secured Parties pursuant to the Loan and Servicing Agreement.




          (q) Information True and Correct. All information heretofore furnished by or on
behalf of the Seller to the Purchaser or any assignee thereof in connection with this Agreement or
any transaction contemplated hereby is true and complete and does not omit to state a material fact
necessary to make the statements contained therein, in light of the circumstances under which they
were made, not misleading; provided that, solely with respect to written or electronic information
furnished by or on behalf of the Seller which was provided to the Seller from an Obligor with
respect to a Loan Asset, such information need only be accurate, true and correct to the knowledge
of the Seller; provided, further, that the foregoing proviso shall not apply to any information
presented in a Servicer’s Certificate, Servicing Report, Notice of Borrowing or Borrowing Base
Certificate.




          (r) ERISA Compliance. The present value of all benefits vested under each “employee
pension benefit plan”, as such term is defined in Section 3 of ERISA, that is, or at any time
during the preceding six years was, maintained by the Seller or any ERISA Affiliate of the Seller,
or open to participation by employees of the Seller or of any ERISA Affiliate of the Seller, as
from time to time in effect (each, a “Pension Plan”) 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, failure to meet the minimum




15









 







funding standard set forth in Section 302(a) of ERISA and Section 412(a) of the Code (with
respect to any Pension Plan other than a Multiemployer Plan), withdrawals or reportable events have
occurred with respect to any Pension Plan 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.




          (s) Investment Company Status. The Seller is an “investment company” that has elected
to be regulated as a “business development company” within the meaning of the 1940 Act. The Seller
conducts its business and other activities in compliance in all respects with the applicable
provisions of the 1940 Act and any applicable rules, regulations or orders issued by the SEC
thereunder.




          (t) Intent of The Seller. The Seller has not sold, contributed, transferred, assigned
or otherwise conveyed any interest in any Sale Portfolio to the Purchaser with any intent to
hinder, delay or defraud any of the Seller’s creditors.




          (u) Value Given. The Seller has received reasonably equivalent value from the
Purchaser in exchange for the Sale of such Sale Portfolio Sold hereunder. No such Sale has been
made for or on account of an antecedent debt owed by the Seller and no such transfer is or may be
voidable or subject to avoidance under any section of the Bankruptcy Code.




          (v) 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 Sale Portfolio by the Seller to the
Purchaser.




          (w) No Broker-Dealers. The Seller is not a broker-dealer or subject to the Securities
Investor Protection Act of 1970, as amended.




          (x) Special Purpose Entity. The Purchaser 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 Lenders, the Lender Agents, the Collateral Agent,
the Collateral Custodian and the other Secured Parties are entering into the transactions
contemplated by the Loan and Servicing Agreement in reliance upon the Purchaser’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, without limitation, all steps that the Administrative Agent
and the Collateral Agent may from time to time request, to maintain the Purchaser’s identity as a
separate legal entity and to make it manifest to third parties that the Purchaser 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 (other than for tax purposes). 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 Purchaser has not and will not




16









 







take, refrain from taking, or fail to take (as applicable) any action described in Section
9(j) of its limited liability company operating agreement and Sections 5.01(a), 5.01(b), 5.02(a)
and 5.02(b) of the Loan and Servicing Agreement.




          (y) Sale Agreement. This Agreement and the Loan Assignments contemplated herein are
the only agreements or arrangements pursuant to which the Seller Sells the Sale Portfolio Sold by
it to the Purchaser.




          (z) Security Interest.





          (i) This Agreement creates a valid and continuing security interest (as defined in the
applicable UCC) in the Sale Portfolio in favor of the Purchaser, 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 Loan Assets, along with the related Loan Asset Files, constitute either a
“general intangible,” an “instrument,” an “account,” “securities entitlement,” “tangible
chattel paper”, “certificated security,” “uncertificated security,” “supporting obligation,”
or “insurance” (each as defined in the applicable UCC), real property and/or such other
category of collateral under the applicable UCC as to which the Seller has complied with its
obligations under this Section 4.1(z).




          (iii) the Seller owns and has good and marketable title to (or with respect to assets
securing any Loan Assets, a valid security interest in) the Sale Portfolio Sold by it to the
Purchaser 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 Asset, to the Sale thereof and the granting of a security interest in the Loan Assets
hereunder to the Purchaser;




          (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 Sale Portfolio in which a security
interest may be perfected by filing granted hereunder to the Purchaser; provided that
filings in respect of real property shall not be required;




          (vi) other than (i) as expressly permitted by the terms of this Agreement and the Loan
and Servicing Agreement and (ii) the security interest granted to the Purchaser and the
Collateral Agent, on behalf of the Secured Parties, the Seller has not pledged, assigned,
sold, granted a security interest in or otherwise conveyed any of the Sale Portfolio. 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 Sale Portfolio other than
any financing statement (A) relating to the security interest granted to the Purchaser under
this Agreement, or (B) that has been terminated and/or fully and validly assigned to the
Collateral Agent on or prior to the date hereof. The Seller is not aware of the filing of
any judgment or tax lien filings against the Seller;



17









 






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




          (viii) other than in the case of Noteless Loan Assets, the Seller has received, or
subject to the delivery requirements herein will receive, a written acknowledgment from the
Collateral Custodian that the Collateral Custodian, as the bailee of the Collateral Agent,
is holding the underlying promissory notes that constitute or evidence the Loan Assets
solely on behalf of and for the Collateral Agent, for the benefit of the Secured Parties;
provided that the acknowledgement of the Collateral Custodian set forth in Section 12.11 of
the Loan and Servicing Agreement may serve as such acknowledgement;




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




          (x) with respect to any Sale Portfolio that constitutes a “certificated security”, such
certificated security has been delivered to the Collateral Custodian, on behalf of the
Secured Parties and, if in registered form, has been specifically Indorsed to the Collateral
Agent, for the benefit of the Secured Parties, or in blank by an effective Indorsement or
has been registered in the name of the Collateral Agent, for the benefit of the Secured
Parties, upon original issue or registration or transfer by the Purchaser of such
certificated security; and




          (xi) with respect to any Sale Portfolio that constitutes an “uncertificated security”,
that the Seller shall cause the issuer of such uncertificated security to register the
Collateral Agent, on behalf of the Secured Parties, as the registered owner of such
uncertificated security.



          (aa) Notice to Agents and Obligors. The Seller has directed any agent, administrative
agent or Obligor for any Loan Asset to remit all payments and collections with respect to such Loan
Asset directly to the Collection Account.




          (bb) Collections. The Collection Account is the only account to which Obligors have
been instructed to send Interest Collections and Principal Collections on the Sale Portfolio Sold
by the Seller. The Seller acknowledges that all Interest Collections and Principal Collections
received by it or its Affiliates with respect to the Sale Portfolio Purchased by the Purchaser as
contemplated by this Agreement are held and shall be held in trust for the benefit of the Purchaser
(or its assignees) until deposited into the Collection Account as required by the Loan and
Servicing Agreement.




          (cc) Set-Off, Etc. No Sale Portfolio has been compromised, adjusted, extended,
satisfied, subordinated, rescinded, set-off or modified by the Seller or the Obligor thereof, and
no Sale Portfolio is subject to compromise, adjustment, extension, satisfaction,




18









 







subordination, rescission, set-off, counterclaim, defense, abatement, suspension, deferment,
deduction, reduction, termination or modification, whether arising out of transactions concerning
the Sale Portfolio or otherwise, by the Seller or the Obligor with respect thereto, except for
amendments, extensions or modifications to such Sale Portfolio otherwise permitted under Section
6.04(a) of the Loan and Servicing Agreement and in accordance with the Servicing Standard.




          (dd) 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 Sale Portfolio will not be paid in
full.




          (ee) Ownership of the Purchaser. The Seller owns, directly or indirectly, 100% of the
membership interests of the Purchaser, free and clear of any Lien (other than liens pursuant to the
Pledge Agreement). 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
Purchaser.




          (ff) Confirmation from the Seller. The Seller has provided written confirmation to
the Purchaser that the Seller will not cause the Purchaser to file a voluntary petition under the
Bankruptcy Code.




          (gg) Environmental. With respect to each item of Underlying Collateral as of the
Cut-Off Date for the Loan Asset related to such Underlying Collateral, 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 liability in connection with any
release of any Hazardous Materials into the environment. As of the Cut-Off Date for the Loan Asset
related to such Underlying Collateral, 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 Underlying Collateral, nor does the Seller have
knowledge or reason to believe that any such notice will be received or is being threatened.




          (hh) 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.




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          (ii) Covenants; Seller Termination Event. All covenants, agreements and undertakings
of the Seller hereunder have been fully performed. No event has occurred which constitutes a Seller
Termination Event and no event has occurred and is continuing which, with the passage of time or
the giving of notice, or both would constitute a Seller Termination Event (other than any Seller
Termination Event which has previously been disclosed to the Administrative Agent as such).




          (jj) Opinion. The statements of fact in the section heading “Assumptions” in the
non-consolidation and true sale opinion (the “Non-Consolidation/True Sale Opinion”) of
Rutan & Tucker, LLP, dated as of the date hereof are true and correct in all respects.




          (kk) 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 Purchaser or the Administrative Agent in writing pursuant hereto or in connection
herewith is, as of its date, true and correct in all respects.




          (ll) Representations and Warranties for Benefit of the Purchaser’s Assignees. The
Seller hereby makes each representation and warranty 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 to, and for the benefit of the Purchaser (and its assignees), the
Administrative Agent, the Lenders, the Lender Agents, the Collateral Agent, the Collateral
Custodian and the other Secured Parties as if the same were set forth in full herein.




          It is understood and agreed that the representations and warranties provided in this
Section 4.1 shall survive (x) the Sale of the Sale Portfolio to the Purchaser and (y) and
the grant of a first priority perfected security interest in, to and under the Sale Portfolio
pursuant to the Loan and Servicing Agreement by the Purchaser. Upon discovery by the Seller or the
Purchaser 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 Lender Agent immediately upon obtaining knowledge of such breach.




     Section 4.2. Representations and Warranties of the Seller Relating to the Agreement and
the Sale Portfolio. The Seller makes the following representations and warranties, on which
the Purchaser relies in acquiring the Sale Portfolio Purchased hereunder and each of the Secured
Parties relies upon in entering into the Loan and Servicing Agreement. As of each Purchase Date and
each Reporting Date, the Seller represents and warrants to the Purchaser for the benefit of the
Purchaser and each of its successors and assigns that:




          (a) Binding Obligation, Valid Transfer and Security Interest. This Agreement,
together with the Loan Assignments, constitutes a valid transfer to the Purchaser of all right,
title and interest in, to and under all Sale Portfolio, 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 this
Agreement constitutes a grant of a security interest in all Sale Portfolio to the Purchaser which
upon the delivery of the Required Loan Documents and the filing of the financing statements shall
be a first priority perfected security interest in all Sale Portfolio, subject only to Permitted
Liens. Neither the Seller nor any Person claiming through or under the Seller shall




20









 







have any claim to or interest in the Controlled Accounts; provided if this Agreement
constitutes only a grant of a security interest in such property, then the Seller shall have the
rights in such property as a debtor for purposes of the UCC.




          (b) Eligibility of Sale Portfolio. (i) Schedule I is an accurate and complete
listing of all the Sale Portfolio as of the related Cut-Off Date and the information contained
therein with respect to the identity of such Sale Portfolio and the amounts owing thereunder is
true and correct as of the related Cut-Off Date, (ii) each item of the Sale Portfolio Purchased by
the Purchaser hereunder is an Eligible Loan Asset, and (iii) with respect to each item of the Sale
Portfolio 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 Sale Portfolio to the Purchaser have been duly obtained, effected or given and are in full force
and effect.




          (c) No Fraud. Each Eligible Loan Asset was originated without any fraud or
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 of the Sale Portfolio to the Purchaser, (y) the
grant of a first priority perfected security interest in, to and under the Sale Portfolio pursuant
to the Loan and Servicing Agreement by the Purchaser and (z) the termination of this Agreement and
the Loan and Servicing Agreement. Upon discovery by the Seller or the Purchaser 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 Lender Agent
immediately upon obtaining knowledge of such breach.




     Section 4.3. Representations and Warranties of the Purchaser. The Purchaser makes the
following representations and warranties, on which the Seller relies in selling the Sale Portfolio
Sold hereunder and each of the Secured Parties relies upon in entering into the Loan and Servicing
Agreement. As of each Purchase Date and each Reporting Date, the Purchaser represents and warrants
to the Seller for the benefit of the Seller and each of its successors and assigns that:



          (a) Organization and Good Standing. The Purchaser has been duly organized and is
validly existing and in good standing as a limited liability company under the laws of the State of
Delaware or such other jurisdiction as permitted under the terms of the Transaction Documents, with
the power and authority to own or lease its properties and to conduct its business as such
properties are currently owned and such business is currently conducted, and had at all relevant
times, and has, all necessary power, authority and legal right to acquire and own the Sale
Portfolio.




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




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




          (d) No Consent Required. The Purchaser is not required to obtain the consent of any
other Person, or any consent, license, approval or authorization or registration or declaration
with, any Governmental Authority, bureau or agency in connection with the execution, delivery or
performance of this Agreement, each Loan Assignment and the Transaction Documents to which it is a
party, except for such as have been obtained, effected or made.




          (e) Binding Obligation. This Agreement and each other Transaction Document to which
the Purchaser is a party constitutes a legal, valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its respective terms, subject, as to
enforceability, to applicable Bankruptcy Laws and general principles of equity (whether such
enforceability is considered in a proceeding in equity or at law).




          (f) No Violation. The consummation of the transactions contemplated by this
Agreement, each Loan Assignment 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 Purchaser’s certificate of formation, operating agreement or any contractual
obligation of the Purchaser, (ii) result in the creation or imposition of any Lien (other than
Permitted Liens) upon any of the Purchaser’s properties pursuant to the terms of any such
contractual obligation, other than this Agreement, or (iii) violate any Applicable Law.




          (g) Value Given. The Purchaser has given reasonably equivalent value to the Seller in
exchange for the Sale of such Sale Portfolio, which amount the Purchaser hereby agrees is the fair
market value of such Sale Portfolio. No such Sale has been made for or on account of an antecedent
debt owed by the Seller and no such transfer is or may be voidable or subject to avoidance under
any section of the Bankruptcy Code.




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




22









 








          (i) Sale Agreement. This Agreement and the Loan Assignments contemplated herein are
the only agreements or arrangements pursuant to which the Purchaser Purchases the Sale Portfolio
Sold to it by the Seller.




          (j) Investment Company Act. The Purchaser is not required to register as an
“investment company” under the provisions of the 1940 Act.




          (k) Compliance with Law. The Purchaser has complied in all respects with all
Applicable Law to which it may be subject, and no item of Sale Portfolio contravenes any Applicable
Law.




          (l) Opinions. The statements of fact in the section heading “Assumptions” in the
Non-Consolidation/True Sale Opinion are true and correct in all respects.




ARTICLE V.




COVENANTS OF THE SELLER




     Section 5.1. Protection of Title of the Purchaser.



          (a) On or prior to the Closing Date, the Seller shall have filed or caused to be filed UCC-1
financing statements, naming the Seller as “Debtor/Seller”, naming the Purchaser as “Secured
Party/Buyer”, and naming the Collateral Agent, for the benefit of the Secured Parties, as “Total
Assignee”, and describing the Sale Portfolio to be acquired by the Purchaser, with the office of
the Secretary of State of the state of the jurisdiction of organization of the Seller. From time
to time thereafter, the Seller shall file such financing statements and cause to be filed such
continuation statements, all in such manner and in such places as may be required by law (or deemed
desirable by the Purchaser or any assignee thereof) to fully perfect, preserve, maintain and
protect the ownership interest of the Purchaser under this Agreement and the security interest of
the Collateral Agent for the benefit of the Secured Parties under the Loan and Servicing Agreement,
in the Sale Portfolio acquired by the Purchaser hereunder, as the case may be, and in the proceeds
thereof. The Seller shall deliver (or cause to be delivered) to the Purchaser, the Collateral
Agent, the Collateral Custodian, the Servicer, the Lenders, the Lender Agents and the
Administrative Agent file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing. The Seller agrees that it will from time to
time, at its expense, take all actions, that the Purchaser, the Collateral Agent or the
Administrative 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 Sale Portfolio, or to enable
the Purchaser, the Collateral Agent, the Administrative Agent or the Secured Parties to exercise
and enforce their rights and remedies hereunder or under any Transaction Document.




          (b) On or prior to each Purchase Date hereunder, the Seller shall take all steps necessary
under all Applicable Law in order to Sell to the Purchaser the Sale Portfolio being acquired by the
Purchaser on such Purchase Date to the Purchaser so that, upon the Sale of such Sale Portfolio from
the Seller to the Purchaser pursuant to the terms hereof on such Purchase Date, the Purchaser will
have acquired good and marketable title to and a valid and perfected ownership interest in such
Sale Portfolio, free and clear of any Lien, security interest, charge or




23









 







encumbrance or restrictions on transferability (subject only to Permitted Liens). On or prior
to each Purchase Date hereunder, the Seller shall take all steps required under Applicable Law in
order for the Purchaser to grant to the Collateral Agent, for the benefit of the Secured Parties, a
first priority perfected security interest (subject only to Permitted Liens) in the Sale Portfolio
being Purchased by the Purchaser on such Purchase Date and, from time to time thereafter, the
Seller shall take all such actions as may be required by Applicable Law to fully preserve, maintain
and protect the Purchaser’s ownership interest in, and the Collateral Agent’s first priority
perfected security interest in (subject only to Permitted Liens), the Sale Portfolio which have
been acquired by the Purchaser hereunder.




          (c) The Seller shall direct any agent or administrative agent for any Sale Portfolio
originated or acquired by the Seller to remit all payments and collections with respect to such
Sale Portfolio and direct the Obligor with respect to such Sale Portfolio to remit all such
payments and collections directly to the Collection Account. The Seller will not make any change,
or permit the Servicer to make any change, in its instructions to Obligors regarding payments to be
made to the Seller or the Servicer or payments to be made to the Collection Account, unless the
Purchaser and the Administrative Agent have consented to such change. The Seller shall ensure that
only funds constituting payments and collections relating to Sale Portfolio shall be deposited into
the Collection Account. In the event any payments relating to any Sale Portfolio 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 one Business Day 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 Purchaser
and its assignees. Until so deposited, all such Interest Collections and Principal Collections
shall be held in trust for the Purchaser or its assignees by the Seller.




          (d) At any time after the occurrence an Event of Default, the Purchaser, the Collateral Agent
or the Administrative Agent may direct the Seller or the Servicer to notify the Obligors, at
Seller’s expense, of the Purchaser’s (or its assigns) or the Secured Parties’ interest in the Sale
Portfolio under this Agreement and may direct that payments of all amounts due or that become due
under any or all of the Sale Portfolio be made directly to the Purchaser (or its assigns), the
Collateral Agent or the Administrative Agent.




          (e) 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 Section
3.1 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 Purchaser, the Collateral Agent, the
Administrative Agent and each Lender Agent an opinion of the counsel for Seller, in form and
substance reasonably satisfactory to the Purchaser, the Collateral Agent and the
Administrative Agent, confirming and updating the opinion delivered pursuant to Section
3.1 with respect to perfection and otherwise to the effect that the security interest
hereunder continues to be an enforceable and perfected security interest,



24









 






subject to no other Liens of record except as provided herein or otherwise permitted
hereunder, which opinion may contain usual and customary assumptions, limitations and
exceptions.



          (f) The Seller shall not (x) make any change to its corporate name or use any tradenames,
fictitious names, assumed names, “doing business as” names or other names, move the location of its
principal place of business and chief executive office, change the offices where it keeps records
concerning the Sale Portfolio from the address set forth under its name on the signature pages
hereto, or change the jurisdiction of its incorporation, or (y) move, or consent to the Collateral
Custodian moving, the Required Loan Documents and Loan Asset Files from the location required under
the Transaction Documents, unless, in each case, the Seller shall provide the Administrative Agent
with such Opinions of Counsel and other documents and instruments as the Administrative Agent may
request in connection therewith 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 Purchaser
in the Sale Portfolio.




          (g) The Seller shall at all times maintain each office from which it services Sale Portfolio
and its principal executive office within the United States of America.




          (h) The Seller shall mark its master data processing records so that, from and after the time
of Sale under this Agreement of Sale Portfolio to the Purchaser and the grant of a security
interest in such Sale Portfolio by the Purchaser to the Collateral Agent for the benefit of the
Secured Parties under the Loan and Servicing Agreement, the Seller’s master data processing records
(including archives) that refer to such Sale Portfolio shall indicate clearly that such Sale
Portfolio has been Purchased by the Purchaser hereunder and Pledged by the Purchaser to the
Collateral Agent, on behalf of the Secured Parties, under the Loan and Servicing Agreement.
Indication of the Collateral Agent’s security interest for the benefit of the Secured Parties in
the Sale Portfolio shall be deleted from or modified on the Seller’s computer systems when, and
only when, such Sale Portfolio shall be (i) paid off by the related Obligor, (ii) purchased or
substituted by the Seller in accordance with Section 6.1 or 6.2 hereof or (iii)
released by the Collateral Agent pursuant to Section 2.16 of the Loan and Servicing Agreement.




          (i) If the Seller fails to perform any of its obligations hereunder, the Purchaser, the
Collateral Agent or the Administrative Agent may (but shall not be required to) perform, or cause
performance of, such obligation; and the Purchaser’s, the Collateral Agent’s or the Administrative
Agent’s costs and expenses incurred in connection therewith shall be payable by the Seller as
provided in Section 9.1. The Seller irrevocably authorizes the Purchaser, the Collateral
Agent or the Administrative Agent at any time and from time to time at the Purchaser’s, the
Collateral Agent’s or the Administrative Agent’s sole discretion and appoints the Purchaser, the
Collateral Agent and the Administrative Agent as its attorney-in-fact pursuant to a Power of
Attorney substantially in the form of Exhibit C to act on behalf of the Seller (i) to file
financing statements on behalf of the Seller, as debtor, necessary or desirable in the Purchaser’s,
the Collateral Agent’s or the Administrative Agent’s sole discretion to perfect and to maintain the
perfection and priority of the interest of the Purchaser or the Collateral Agent in the Sale
Portfolio and (ii) to file a carbon, photographic or other reproduction of this Agreement or any
financing statement with respect to the Sale Portfolio as a financing statement in such offices as
the Purchaser, the Collateral Agent or the Administrative Agent in their sole discretion




25









 







deem necessary or desirable to perfect and to maintain the perfection and priority of the
interests of the Purchaser or the Collateral Agent in the Sale Portfolio. This appointment is
coupled with an interest and is irrevocable.




     Section 5.2. Affirmative Covenants of the Seller.



          From the date hereof until the Collection Date:




          (a) Compliance with Law. The Seller will comply in all respects with all Applicable
Law, including those applicable to the Seller as a result of its interest in the Sale Portfolio 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 incorporation,
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 Sale Portfolio. The Seller will, at its expense,
timely and fully perform and comply in all respects with all provisions, covenants and other
promises required to be observed by it under the Sale Portfolio and all other agreements related to
such Sale Portfolio.




          (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 Sale Portfolio 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 Sale Portfolio.




          (e) Separate Identity. The Seller acknowledges that the Administrative Agent, the
Collateral Agent, the Collateral Custodian, the Lenders, the Lender Agents and the other Secured
Parties are entering into the transactions contemplated by this Agreement, the Loan and Servicing
Agreement and the other Transaction Documents in reliance upon the Purchaser’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 or the Collateral
Agent may from time to time request to maintain the Purchaser’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 Purchaser is an entity with assets and liabilities distinct from those of the
Seller and each other Affiliate thereof (other than for tax purposes) 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
Purchaser is at all times in compliance with the criteria and the restrictions set forth in
Section 9(j) of the limited liability company operating agreement of the



26









 






Purchaser and Sections 5.01(a), 5.01(b), 5.02(a) and 5.02(b) of the Loan and Servicing
Agreement;




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




          (iii) the annual financial statements of the Seller shall disclose the effects of the
Seller’s transactions in accordance with GAAP and the annual financial statements of the
Seller shall not reflect in any way that the assets of the Purchaser, including, without
limitation, the Sale Portfolio, 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 Purchaser and will
not hold itself out as being liable for the debts of the Purchaser;




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




          (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 Purchaser are
available to pay the obligations and debts of the Seller; and




          (viii) to the extent that the Seller services the Loan Assets and performs other
services on the Purchaser’s behalf, the Seller will clearly identify itself as an agent of
the Purchaser in the performance of such duties.



          (f) Taxes. The Seller will file or cause to be filed its tax returns and pay any and
all Taxes imposed on it or its property as required by the Transaction Documents (except as
contemplated in Section 4.1(m)).




          (g) Cooperation with Requests for Information or Documents. The Seller will cooperate
fully with all reasonable requests of the Purchaser and its assigns regarding the provision of any
information or documents, necessary or desirable, including the provision of such information or
documents in electronic or machine-readable format, to allow each of the Purchaser and its
assignees to carry out their responsibilities under the Transaction Documents.




          (h) 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, 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.




27









 









     (i) Notices.




          (i) Income Tax Liability. The Seller will furnish telephonic or facsimile
notice to the Purchaser, the Collateral Agent, the Administrative Agent and each Lender
Agent within 10 Business Days (confirmed in writing within five Business Days thereafter) of
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 (i) to the Tax liability of the Seller
or any “affiliated group” (within the meaning of Section 1504(a)(l) of the Code) of which
the Seller is a member in an amount equal to or greater than $1,000,000 in the aggregate, or
(ii) to the Tax liability of the Purchaser in an amount equal to or greater than $500,000 in
the aggregate. Any such notice shall specify the nature of the items giving rise to such
adjustments and the amounts thereof.




          (ii) Auditors’ Management Letters. Promptly after the receipt thereof, the
Seller will provide the Purchaser, the Collateral Agent, the Administrative Agent and each
Lender Agent with any auditors’ management letters that are received by the Seller or by its
accountants.




          (iii) Representations and Covenants. Promptly, upon receipt of notice or
discovery thereof, the Seller will furnish notice to the Purchaser, the Collateral Agent,
the Administrative Agent and each Lender Agent (i) 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 or (ii) of the breach of any covenant under Section
5.1, Section 5.2 or Section 5.3 and at the same time deliver to the
Purchaser, the Collateral Agent, the Administrative Agent and each Lender Agent a written
notice setting forth in reasonable detail the nature of such facts and circumstances. In
particular, but without limiting the foregoing, the Seller shall notify the Purchaser, the
Collateral Agent, the Administrative Agent and each Lender 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, other than an event for which the reporting requirements have
been waived by regulations) with respect to the Seller (or any ERISA Affiliate thereof), the
Seller will provide a copy of such notice to the Purchaser, the Collateral Agent, the
Administrative Agent and each Lender Agent.




          (v) Proceedings. As soon as possible and in any event within three Business
Days, after the Seller receives notice or obtains knowledge thereof, the Seller will provide
the Purchaser, the Collateral Agent, the Administrative Agent and each Lender Agent with
notice of any settlement of, material judgment (including a material judgment with respect
to the liability phase of a bifurcated trial) in or commencement of any material labor
controversy, material litigation, material action, material suit or material proceeding
before any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the Sale Portfolio, the



28









 






Transaction Documents, the Collateral Agent’s, for the benefit of the Secured Parties,
interest in the Sale Portfolio, or the Purchaser, the Servicer, the Seller or the Transferor
or any of their Affiliates. For purposes of this Section 5.2(i), (i) any settlement,
judgment, labor controversy, litigation, action, suit or proceeding affecting the Sale
Portfolio, the Transaction Documents, the Collateral Agent’s, for the benefit of the Secured
Parties, interest in the Sale Portfolio, or the Purchaser in excess of $500,000 shall be
deemed to be material and (ii) any settlement, judgment, labor controversy, litigation,
action, suit or proceeding affecting the Seller or any of its Affiliates (other than the
Purchaser) in excess of $1,000,000 shall be deemed to be material.




          (vi) Material Events. The Seller will, promptly upon becoming aware thereof,
notify the Purchaser, the Collateral Agent, the Administrative Agent and each Lender Agent
of any event or other circumstance that is reasonably likely to have a Material Adverse
Effect.




          (vii) Events of Default. The Seller will provide the Purchaser, the Collateral
Agent, the Administrative Agent and each Lender Agent with immediate written notice of the
occurrence of each Event of Default and each Unmatured Event of Default 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 Event of Default or
Unmatured Event of Default, the Seller will provide to the Purchaser, the Collateral Agent,
the Administrative Agent and each Lender 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.




          (viii) Seller Termination Event and Seller Purchase Event. The Seller will
provide the Purchaser, the Collateral Agent, the Administrative Agent and each Lender Agent
with immediate written notice of the occurrence of each Seller Termination Event and each
Seller Purchase Event of which the Seller has knowledge or has received notice.



          (j) Other. The Seller will furnish to the Purchaser, the Collateral Agent, the
Administrative Agent and each Lender Agent promptly, from time to time such other information,
documents, records or reports respecting the Sale Portfolio or the condition or operations,
financial or otherwise, of the Seller as the Purchaser, the Collateral Agent, the Administrative
Agent and each Lender Agent may from time to time reasonably request in order to protect the
interests of the Purchaser, the Administrative Agent, the Collateral Agent, the Lenders, the Lender
Agents or the Secured Parties under or as contemplated by this Agreement and the other Transaction
Documents.




          (k) Costs and Expenses. The Seller shall pay all reasonable, documented costs and
disbursements in connection with the performance of its obligations hereunder.




          (l) Annual Certificates. On each anniversary of the Closing Date, the Seller shall
deliver an Officer’s Certificate, in form and substance acceptable to the Purchaser, the
Administrative Agent and each Lender Agent, providing (i) a certification, based upon a review and
summary of UCC search results reasonably satisfactory to the Purchaser and the




29









 







Administrative Agent, that there is no other interest in the Sale Portfolio perfected by
filing of a UCC financing statement other than in favor of the Purchaser and the Collateral Agent
pursuant to the terms of the Transaction Documents and (ii) a certification, based upon a review
and summary of tax and judgment lien searches satisfactory to the Purchaser and the Administrative
Agent, that there is no other interest in the Sale Portfolio based on any tax or judgment lien.




          (m) Opinion. The Seller will comply in all respects with any requirements for future
action set forth in the section heading “Assumptions” in the Non-Consolidation/True Sale Opinion,
with respect to the Transaction Documents.




          (n) Copies of Other Information. The Seller will deliver to the Purchaser, the
Collateral Agent, the Administrative Agent and each Lender 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 Sale Portfolio 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 1940 Act) as the Purchaser, the Collateral
Agent, the Administrative Agent or each Lender 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 Purchaser under or as contemplated by this Agreement and the other
Transaction Documents.



          (o) Disregarded Entity. The Seller shall cause the Purchaser to be disregarded as an
entity separate from its owner pursuant to Treasury Regulation Section 301.7701-3(b) and shall
cause that neither the Purchaser nor any other Person on its behalf shall make an election to be
treated as other than an entity disregarded from its owner under Treasury Regulation Section
301.7701-3(c).




     Section 5.3. Negative Covenants of the Seller.



          From the date hereof until the Collection Date:




          (a) Sale Portfolio Not to be Evidenced by Instruments. The Seller will take no action
to cause any Sale Portfolio 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 Sale Portfolio.




          (b) Security Interests. Except as otherwise permitted herein and in the Loan and
Servicing Agreement, 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 Sale Portfolio Sold by the Seller
to the Purchaser hereunder, 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




30









 







Permitted Liens) on its interest in the Sale Portfolio Sold by the Seller to the Purchaser
hereunder. The Seller will promptly notify the Purchaser, the Collateral Agent, each Lender Agent
and the Administrative Agent of the existence of any Lien on any Sale Portfolio and the Seller
shall defend the right, title and interest of the Purchaser and the Collateral Agent, on behalf of
the Secured Parties, in, to and under the Sale Portfolio against all claims of third parties;
provided, that nothing in this Section 5.3(b) shall prevent or be deemed to prohibit the
Seller from suffering to exist Permitted Liens upon any of the Sale Portfolio.




          (c) Mergers, Acquisitions, Sales, Etc. The Seller will not consolidate with or merge
into any other Person or convey or transfer its properties and assets substantially as an entirety
to any Person, or sell or assign with or without recourse any Sale Portfolio or any interest
therein (other than in the ordinary course of business or as permitted pursuant to this Agreement
or the Transaction Documents).




          (d) Transfer of Purchaser Membership Interests. The Seller shall not transfer, pledge,
participate or otherwise encumber its membership interests in the Purchaser without the prior
written consent of the Administrative Agent and the delivery of an acceptable (in the
Administrative Agent’s reasonable discretion) non-consolidation opinion (except pursuant to the
terms of the Pledge Agreement).




          (e) Restricted Payments. The Seller shall not cause or permit the Purchaser to make
any Purchaser Restricted Junior Payment except that, so long as no Event of Default has occurred or
would result therefrom and no Unmatured Event of Default has occurred and is continuing or would
result therefrom, the Purchaser may declare and make distributions to its member on its membership
interests.




          (f) 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 Loan Assets to the
Purchaser.




          (g) ERISA Matters. The Seller will not (a) engage, and will exercise its best efforts
not to permit any ERISA Affiliate to engage, in any prohibited transaction (within the meaning of
ERISA Section 406(a) or (b) or Code Section 4975) for which an exemption is not available or has
not previously been obtained from the United States Department of Labor, (b) fail to meet the
minimum funding standard set forth in Section 302(a) of ERISA and Section 412(a) of the Code with
respect to any Pension 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
Pension Plan so as to result, directly or indirectly, in any liability to the Seller, or (e) permit
to exist any occurrence of any reportable event described in Title IV of ERISA with respect to any
Pension Plan other than an event for which the reporting requirements have been waived by
regulations.




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          (h) Extension or Amendment of Sale Portfolio. The Seller will not, except as
otherwise permitted in Section 6.04(a) of the Loan and Servicing Agreement, extend, amend or
otherwise modify, or permit the Servicer to extend, amend or otherwise modify, the terms of any
Sale Portfolio.




          (i) Limitation on Financing Activities. The Seller shall not, directly or indirectly,
advance or loan to the Purchaser any funds pursuant to any financial accommodation. For the
avoidance of doubt, this clause (i) shall not prohibit the Seller from contributing Loan Assets to
the Purchaser as contemplated herein or providing cash equity contributions to the Purchaser.




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




ARTICLE VI.




REPURCHASES AND SUBSTITUTION BY THE SELLER




     Section 6.1. Repurchase of Loan Assets. In the event of the occurrence of a Seller
Purchase Event, the Seller will within 10 Business Days of the discovery by or notice (from any
Person) to the Seller of the Seller Purchase Event, (i) purchase each Loan Asset hereunder which is
affected by or related to such Seller Purchase Event from the Purchaser, and the Seller shall pay
to the Purchaser (by means of a deposit to the Collection Account) the Repurchase Price of such
Loan Asset as of the date of the purchase thereof from the Purchaser or (ii) with the consent of
the Administrative Agent and subject to the satisfaction of the conditions in Section 6.2,
substitute for such Loan Asset, a Substitute Eligible Loan Asset. It is understood and agreed that
the obligation of the Seller to purchase the Loan Assets or substitute a Substitute Eligible Loan
Asset for the Loan Assets which are affected by or related to such Seller Purchase Event is not
intended to, and shall not, constitute a guaranty of the collectability or payment of any Loan
Asset which is not collected, not paid or uncollectible on account of the insolvency, bankruptcy or
financial inability to pay of the related Obligor. Upon deposit in the Collection Account of the
Repurchase Price for any Loan Asset purchased by the Seller, the Purchaser shall, automatically and
without further action be deemed to transfer, assign and set over to the Seller, without recourse,
representation or warranty of any kind, except as to the absence of Liens, charges or encumbrances
created by or arising solely as a result of actions of the Purchaser or the Collateral Agent, all
the right, title and interest of the Purchaser, in, to and under such Loan Asset and all future
monies due or to become due with respect thereto, the Underlying Collateral, all Proceeds of such
Loan Asset and Recoveries and Insurance Proceeds relating thereto, all rights to security for such
Loan Asset and all Proceeds and products of the foregoing. The Purchaser shall (and shall request
the Collateral Agent to), at the sole expense of the Seller, execute such documents and instruments
of transfer as may be prepared by the Seller and take such other actions as may be reasonably
requested by the Seller in order to effect the transfer of such Loan Asset pursuant to this
Section 6.1. Such Sale shall be a sale outright, and not for security.



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     Section 6.2. Substitution of Loan Assets.



          (a) The Seller shall have the right, but not the obligation, subject to the prior written
consent of the Administrative Agent and the Purchaser, in their sole discretion, to substitute one
or more Eligible Loan Assets (“Substitute Eligible Loan Asset”) for a Loan Asset (each such
act, a “Substitution”).




          (b) The Substitution shall not occur unless the following conditions are satisfied as of the
date of such Substitution:





          (i) the Seller has recommended to the Purchaser and the Administrative Agent (with a
copy to the Collateral Agent and the Collateral Custodian) in writing that the Loan Asset to
be replaced should be replaced (each, a “Replaced Loan Asset”);




          (ii) no event has occurred, or would result from such Substitution, which constitutes
an Event of Default and no event has occurred and is continuing, or would result from such
Substitution, which constitutes an Unmatured Event of Default or a Borrowing Base
Deficiency;




          (iii) each Substitute Eligible Loan Asset is an Eligible Loan Asset on the date of
Substitution;




          (iv) solely in the case of Substitutions pursuant to this Section 6.2
undertaken because a Seller Purchase Event has occurred, the sum of the Advance Date
Assigned Value multiplied by the Outstanding Balances of such Substitute Eligible Loan
Assets shall be equal or greater than the sum of the Advance Date Assigned Value of the
Replaced Loan Assets multiplied by the Outstanding Balance thereof;




          (v) all representations and warranties contained in Sections 4.1 and
4.2 shall be true and correct in all respects as of the date of Substitution (other
than any representation and warranty that is made as of a specific date);




          (vi) no selection procedures adverse to the interests of the Purchaser, the
Administrative Agent, the Lenders, the Lender Agents or the other Secured Parties were
utilized by the Seller in the selection of the Loan Asset to be replaced by the Substitute
Eligible Loan Asset;




          (vii) the Outstanding Balance of all Loan Assets (other than Warranty Loan Assets),
sold pursuant to Section 2.07(b) of the Loan and Servicing Agreement, substituted pursuant
to this Section 6.2 or released pursuant to Section 2.07(g) of the Loan and
Servicing Agreement for dividend from the Purchaser to the Seller during the 12-month period
(or such lesser number of months as shall have elapsed as of such date) immediately
preceding the proposed date of Substitution does not exceed 10% of the highest aggregate
Outstanding Balance of any month during such 12-month period (or such lesser number of
months as shall have elapsed as of such date);




33











 






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




          (ix) all terms, provisions, representations, warranties and covenants hereunder with
respect to Loan Assets that have been Sold by the Seller to the Purchaser hereunder shall
apply equally to Substitute Eligible Loan Assets; and




          (x) the Seller shall deliver to the Purchaser 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.



          (c) In addition, in connection with such Substitution, the Seller shall deliver or cause to be
delivered to the Collateral Custodian the related Required Loan Documents. On the date any such
Substitution is completed, the Purchaser 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 Purchaser in, to and under such Replaced Loan Asset,
and the Purchaser 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 the Purchaser agree that the
Seller and any Affiliate of the Seller may repurchase any Sale Portfolio only from the Purchaser in
the case of a repurchase or Substitution of any Sale Portfolio pursuant to Sections 6.1 or
6.2.



ARTICLE VII.




ADDITIONAL RIGHTS AND OBLIGATIONS IN

RESPECT OF THE SALE PORTFOLIO




     Section 7.1. Rights of the Purchaser.



          (a) After the occurrence or declaration of the Facility Maturity Date, the Seller hereby
authorizes the Purchaser, the Servicer, the Collateral Agent and the Administrative 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 Purchaser, the Servicer, the Collateral Agent or the Administrative Agent
and/or their respective designees or assignees determine are necessary or appropriate to collect
all amounts due under any and all Sale Portfolio and to enforce or protect the Purchaser’s, the
Collateral Agent’s and the Administrative Agent’s rights under this Agreement, including endorsing
the name of the Seller on checks and other instruments representing Interest Collections and
Principal Collections and enforcing such Sale Portfolio.




          (b) Except as set forth in Sections 6.1 and 6.2 with respect to the repurchase
or Substitution of certain Loan Assets, the Purchaser shall have no obligation to account for,
replace, substitute or return any Sale Portfolio to the Seller. The Purchaser shall have no
obligation to account for or to return Interest Collections or Principal Collections, or any
interest or other finance charge collected pursuant thereto, to the Seller, irrespective of whether
such




34









 







Interest Collections and Principal Collections and charges are in excess of the Purchase Price
for such Sale Portfolio.




          (c) The Purchaser shall have the right to further assign, transfer, deliver, hypothecate,
subdivide or otherwise deal with the Sale Portfolio and all of the Purchaser’s right, title and
interest in, to and under this Agreement, pursuant to the Loan and Servicing Agreement.




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




     Section 7.2. Rights With Respect to Loan Asset Files.



          At any time when a Servicer other than Fifth Street Finance Corp. has been designated pursuant
to Article VI of the Loan and Servicing Agreement, the Seller shall, at the Purchaser’s, the
Collateral Agent’s, the Collateral Custodian’s or the Administrative Agent’s request, assemble all
of the Loan Asset Files which evidence the Sale Portfolio originated by the Seller, or which are
otherwise necessary or desirable to collect such Sale Portfolio, and make the same available to the
Purchaser, the Collateral Agent, the Collateral Custodian or the Administrative Agent at a place
selected by the Purchaser, the Collateral Agent, the Collateral Custodian, the Administrative Agent
or their designee.




     Section 7.3. Notice to Collateral Agent, Administrative Agent and each Lender Agent.



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




ARTICLE VIII.




SELLER TERMINATION EVENTS




     Section 8.1. Seller Termination Events.



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





          (i) the Seller shall fail to pay (A) any amount due pursuant to Section 6.1 in
accordance with the provisions thereof or (B) 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 in any
material respect applicable to it contained herein (other than as specified in paragraph
(i) of this Section 8.1); and such failure shall continue unremedied for a
period of 30 days (if such failure can be remedied) after the earlier to occur of (i) the
date on which written notice of such failure requiring the same to be remedied shall have
been given to the Seller by the Administrative Agent, the Collateral Agent (at the



35









 






direction of the Administrative Agent) or the Purchaser and (ii) the date on which the
Seller acquires knowledge thereof; or




          (iii) any representation, warranty or certification 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 when made or deemed
made in any material respect and shall not have been corrected within 30 Days after the
earlier to occur of (i) the date on which written notice of such incorrectness requiring the
same to be remedied shall have been given to the Seller by the Administrative Agent, the
Collateral Agent (at the direction of the Administrative Agent) or the Purchaser and (ii)
the date on which a Responsible Officer of the Seller acquires knowledge thereof; provided
that a Seller Termination Event shall not be deemed to have occurred under this
paragraph (iii) based upon a Seller Purchase Event 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 Bankruptcy Laws, which decree or order is not stayed or any other similar relief shall
be granted under any applicable federal or state law now or hereafter in effect and shall
not be stayed; (B) (1) any involuntary case is commenced against the Seller under any
Bankruptcy 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
(2) any event referred to in clause (B)(1) 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
Bankruptcy 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 Bankruptcy 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) the occurrence of (A) an Event of Default set forth in Section 7.01 of the Loan and
Servicing Agreement (past any applicable notice or cure period provided in the definition
thereof) or (B) the Facility Maturity Date; or




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



36









 






          (vii) a notice of Lien shall have been filed by the Pension Benefit Guaranty
Corporation against the Seller under Section 430(k) of the Code or Section 303(k) of ERISA
for a failure to make a required installment or other payment to a plan to which Section
430(k) of the Code or Section 303(k) of ERISA applies unless there shall have been delivered
to the Administrative Agent and each Lender 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 Lender Agent proof of release of such Lien;


then, (A) in the case of any Seller Termination Event described in paragraph (iv),
(v)(A), (vi), (vii), (viii) or (ix) above, the obligation
of the Purchaser to Purchase Sale Portfolio from the Seller shall thereupon automatically terminate
without further notice of any kind, which is hereby waived by the Seller, (B) in the case of any
Seller Termination Event described in paragraph (v)(B) above, the obligation of the
Purchaser to Purchase Sale Portfolio from the Seller shall thereupon terminate without notice of
any kind, which is hereby waived by the Seller unless both the Purchaser and the Seller agree in
writing that such event shall not trigger an Early Termination (as hereinafter defined) hereunder,
and (C) in the case of any other Seller Termination Event, so long as such Seller Termination Event
shall be continuing, the Purchaser or the Administrative Agent may terminate its obligation to
Purchase Sale Portfolio 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, that, in the event of any involuntary petition or
proceeding as described in paragraphs (iv)(A) and (iv)(B) above, the Purchaser
shall not Purchase Sale Portfolio 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. Survival of Certain Provisions.



          Notwithstanding any provision contained herein to the contrary, the Seller’s and the
Purchaser’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, 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 5.1, 10.2, 10.8, 10.9, 10.10, 10.12,
10.13, 10.14 and 10.17 shall be continuing and shall survive any
termination of this Agreement.




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ARTICLE IX.




INDEMNIFICATION.




     Section 9.1. Indemnification by the Seller.



          (a) Without limiting any other rights which the Purchaser, any assignee of the Purchaser or
any such Persons’ respective shareholders, officers, employees, agents, or Affiliates (each, an
“Indemnified Party”) may have hereunder or under Applicable Law, the Seller hereby agrees
to indemnify any Indemnified Party from and against any and all costs, expenses, losses, damages,
claims, and liabilities, 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) any such amounts resulting
solely from any gross negligence, bad faith or willful misconduct on the part of the applicable
Indemnified Party or (b) Loan Assets that are uncollectible due to the Obligor’s financial
inability to pay. Without limiting the foregoing, the Seller shall indemnify each Indemnified Party
for Indemnified Amounts relating to or resulting from any of the following (to the extent not
resulting from the conditions set forth in (a) or (b) above):





          (i) any Person’s use, ownership or operation of any Underlying Collateral to the extent
that such use, ownership or operation took place prior to the Purchase Date with respect to
the related Sale Portfolio;




          (ii) any action taken by the Seller, other than in accordance with this Agreement, in
respect of any portion of the Sale Portfolio;




          (iii) any Taxes (other than Taxes based upon the net or gross income of an Indemnified
Party and Taxes that would constitute Excluded Amounts) that may at any time be asserted
against any Indemnified Party with respect to the transactions contemplated in this
Agreement, including, without limitation, any sales, gross receipts, general corporation,
tangible or intangible personal property, privilege, stamp or license Taxes and costs and
expenses in defending against the same, arising by reason of the acts to be performed by the
Seller under this Agreement and imposed against such Indemnified Party. Without limiting
the foregoing, in the event that the Purchaser, the Collateral Agent, the Collateral
Custodian, the Account Bank, the Servicer, any Lender, any Lender Agent or the
Administrative Agent receives actual notice of any Transfer Taxes arising out of the Sale of
any Sale Portfolio from the Seller to the Purchaser under this Agreement, on written demand
by such party, or upon the Seller otherwise being given notice thereof, the Seller shall
pay, and otherwise indemnify and hold the Purchaser, the Collateral Agent, the Collateral
Custodian, the Account Bank, the Servicer, each Lender, each Lender Agent and the
Administrative Agent harmless, on an after-tax basis, from and against any and all such
Transfer Taxes (it being understood that the Purchaser, the Collateral Agent, the Collateral
Custodian, the Account Bank, the Servicer, the Lenders, the Lender Agents and the
Administrative Agent shall have no contractual obligation to pay such Transfer Taxes);



38









 






          (iv) 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 Sale Portfolio;




          (v) the gross negligence, willful misconduct or bad faith of the Seller in the
performance of its duties under this Agreement or by reason of reckless disregard of the
Seller’s obligations and duties under this Agreement;




          (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 Sale Portfolio;




          (vii) the failure of any Sale Portfolio to comply with all requirements of Applicable
Law as of its Purchase Date;




          (viii) the failure by the Seller to comply with all requirements of Section 6.1
hereof;




          (ix) 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, any
Transaction Document or with any Applicable Law;




          (x) 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 respect when made or deemed made
or delivered;




          (xi) the failure to vest and maintain vested in the Purchaser an undivided ownership
interest in the Sale Portfolio, together with all Interest Collections and Principal
Collections, free and clear of any Lien (other than Permitted Liens) whether existing at the
time of any Purchase or at any time thereafter;




          (xii) 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 Sale Portfolio, whether at the time
of any Purchase or at any subsequent time;




          (xiii) 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 Sale Portfolio (including,
without limitation, a defense based on the Sale Portfolio not being a legal, valid and
binding obligation of such Obligor enforceable against it in accordance with its terms);




          (xiv) 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;



39









 






          (xv) any action taken by the Seller in the enforcement or collection of any Sale
Portfolio which results in any claim, suit or action of any kind pertaining to the Sale
Portfolio or which reduces or impairs the rights of the Purchaser with respect to any Loan
Asset or the value of any such Loan Asset;




          (xvi) any claim, suit or action of any kind arising out of or in connection with
Environmental Laws relating to the Seller or the Sale Portfolio including any vicarious
liability;




          (xvii) the commingling of Interest Collections and Principal Collections on the Sale
Portfolio at any time with other funds of the Seller;




          (xviii) any investigation, litigation or proceeding related to this Agreement or the
use of proceeds by the Seller or the security interest in the Sale Portfolio granted
hereunder;




          (xix) any failure by the Purchaser to give reasonably equivalent value to the Seller in
consideration for the transfer by the Seller to the Purchaser of any item of the Sale
Portfolio 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;




          (xx) the failure of the Seller or any of its agents or representatives to remit to the
Purchaser Interest Collections and Principal Collections on the Sale Portfolio remitted to
the Seller or any such agent or representative as provided in this Agreement; or




          (xxi) failure or delay in assisting a successor Servicer in assuming each and all of
the Servicer’s obligations to service and administer the Collateral Portfolio in accordance
with the Loan and Servicing Agreement, or failure or delay in complying with instructions
from the Administrative Agent with respect thereto.



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




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




          (d) Indemnification under this 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




40









 







such Tax or refund on the amount of Tax measured by net income or profits that is or was
payable by the Indemnified Party.




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




     Section 9.2. Assignment of Indemnities.



          The Seller acknowledges that, pursuant to the Loan and Servicing Agreement, the Purchaser
shall assign its rights of indemnity hereunder to the Collateral Agent, on behalf of the Secured
Parties. Upon such assignment, (a) the Collateral Agent, on behalf of the Secured Parties, shall
have all rights of the Purchaser hereunder and may in turn assign such rights, and (b) the
obligations of the Seller under this Article IX shall inure to the Collateral Agent, on
behalf of the Secured Parties. The Seller agrees that, upon such assignment, the Collateral Agent,
on behalf of the Secured Parties, may enforce directly, without joinder of the Purchaser, the
indemnities set forth in this Article IX.




ARTICLE X.




MISCELLANEOUS




     Section 10.1. Liability of the Seller. The Seller shall be liable in accordance
herewith only to the extent of the obligations in this Agreement specifically undertaken by the
Seller and with respect to its representations and warranties expressly set forth hereunder.



     Section 10.2. Limitation on Liability. Except with respect to any claim arising
solely out of the willful misconduct or gross negligence of the Lenders, the Lender Agents, the
Collateral Agent, the Collateral Custodian, the Administrative Agent or any other Secured Party, no
claim may be made by the Seller or any other Person against the Lenders, the Lender Agents, the
Collateral Agent, the Collateral Custodian, the Administrative 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 10.3. Amendments; Limited Agency. Except as provided in this Section
10.3, no amendment, waiver or other modification of any provision of this Agreement shall be
effective unless signed by the Purchaser and the Seller and consented to in writing by the
Administrative Agent, the Collateral Agent and the Required Lenders. The Purchaser shall provide
not less than ten Business Days’ prior written notice of any such amendment to the Administrative
Agent, the Collateral Agent, each Lender and each Lender Agent.



     Section 10.4. Waivers; Cumulative Remedies. No failure or delay on the part of the
Purchaser (or any assignee thereof) or the Seller, in exercising any power, right, privilege or
remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right, privilege or remedy preclude any other or future exercise



41









 




thereof or the exercise of any other power, right, privilege or remedy. The powers, rights,
privileges and remedies herein provided are cumulative and not exhaustive of any powers, rights,
privileges and remedies provided by law. Any waiver of this Agreement shall be effective only in
the specific instance and for the specific purpose for which it is given.




     Section 10.5. Notices. All demands, notices and other communications hereunder shall,
unless otherwise stated herein, be in writing (which shall include facsimile communication and
communication by e-mail in portable document format (.pdf)) and faxed, e-mailed or delivered, to
each party hereto, at its address set forth under its name on the signature pages hereto or at such
other address as shall be designated by such party in a written notice to the other parties hereto.
Notices and communications by facsimile and e-mail shall be effective when sent (and shall be
followed by hard copy sent by regular mail), and notices and communications sent by other means
shall be effective when received.



     Section 10.6. Merger and Integration. Except as specifically stated otherwise herein,
this Agreement, the Loan and Servicing Agreement and the other Transaction Documents set forth the
entire understanding of the parties relating to the subject matter hereof, and all prior
understandings, written or oral, are superseded by this Agreement, the Loan and Servicing Agreement
and the Transaction Documents. This Agreement may not be modified, amended, waived or supplemented
except as provided herein.



     Section 10.7. Severability of Provisions. If any one or more of the covenants,
provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, provisions or terms shall be deemed severable from the remaining covenants, provisions
or terms of this Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Agreement.



     Section 10.8. GOVERNING LAW; JURY WAIVER. THIS AGREEMENT SHALL, IN ACCORDANCE WITH
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING DIRECTLY OR
INDIRECTLY OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREUNDER.



     Section 10.9. Consent to Jurisdiction; Service of Process.



          (a) Each party hereto hereby irrevocably submits to the non-exclusive jurisdiction of any New
York State or Federal court sitting in New York City in any action or proceeding arising out of or
relating to this Agreement, and each party hereto hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined in such New York State court or,
to the extent permitted by law, in such Federal court. The parties hereto hereby irrevocably waive,
to the fullest extent they may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding. The parties hereto agree that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law.




42









 








          (b) Each of the Seller and the Purchaser agrees that service of process may be effected by
mailing a copy thereof by registered or certified mail, postage prepaid, to the Seller or the
Purchaser, as applicable, at its address specified in Section 10.5. Nothing in this
Section 10.9 shall affect the right of the Seller or the Purchaser to serve legal process
in any other manner permitted by law.




     Section 10.10. Costs, Expenses and Taxes.



          (a) In addition to the rights of indemnification granted to the Purchaser and its Affiliates
and officers, directors, employees and agents thereof under Article IX hereof, the Seller
agrees to pay on demand all out-of-pocket costs and expenses of the Purchaser or its assignees
incurred in connection with the preparation, execution, delivery, enforcement, administration
(including periodic auditing), renewal, amendment or modification of, 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 fees and out-of-pocket expenses of
counsel with respect thereto and with respect to advising the Purchaser 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 out-of-pocket costs and expenses, if any (including counsel fees and
expenses), incurred by the Purchaser 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 to any Governmental Authority in connection with the execution,
delivery, filing and recording of this Agreement and the other documents to be delivered hereunder.




          (c) The Seller shall pay on demand all other out-of-pocket costs, expenses and Taxes
(excluding Taxes imposed on or measured by net income) incurred by the Purchaser or its assignees
in connection with the execution, delivery, filing and recording of this Agreement and the other
documents to be delivered hereunder, including, without limitation, all costs and expenses incurred
by the Purchaser or its assignees in connection with periodic audits of the Seller’s books and
records.




     Section 10.11. Counterparts. For the purpose of facilitating the execution of this
Agreement and for other purposes, this Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and all of which
counterparts shall constitute but one and the same instrument. Delivery of an executed counterpart
of a signature page to this Agreement by facsimile or e-mail in portable document format (.pdf)
shall be effective as delivery of a manually executed counterpart of this Agreement.



     Section 10.12. Bankruptcy Non-Petition and Limited Recourse; Claims. The Seller hereby
agrees that it will not institute against, or join any other Person in instituting against, the
Purchaser any Bankruptcy 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. The Seller
hereby acknowledges that (i) the Purchaser has no assets other than the Sale Portfolio, (ii) the
Purchaser shall, immediately upon Purchase hereunder, grant a security interest in the Sale



43









 




Portfolio to the Collateral Agent, on behalf of the Secured Parties, pursuant to the Loan and
Servicing Agreement, and (iii) Available Collections generated by the Sale Portfolio will be
applied to payment of the Purchaser’s obligations under the Loan and Servicing Agreement. In
addition, the Seller shall have no recourse for any amounts payable or any other obligations
arising under this Agreement against any officer, member, director, employee, partner, Affiliate or
security holder of the Purchaser or any of its successors or assigns.




     Section 10.13. Binding Effect; Assignability.



          (a) This Agreement shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.




          (b) Notwithstanding anything to the contrary contained herein, this Agreement may not be
assigned by the Purchaser or the Seller except as permitted by this Section 10.13 or the
Loan and Servicing Agreement. Simultaneously with the execution and delivery of this Agreement,
the Purchaser will assign all of its right, title and interest in this Agreement to the Collateral
Agent, for the benefit of the Secured Parties, to which assignment the Seller hereby expressly
consents. Upon assignment, the Seller agrees to perform its obligations hereunder for the benefit
of the Collateral Agent, for the benefit of the Secured Parties, under the Loan and Servicing
Agreement and the Collateral Agent, in such capacity, shall be a third party beneficiary hereof.
Upon such assignment, the Collateral Agent, for the benefit of the Secured Parties, under the Loan
and Servicing Agreement may enforce the provisions of this Agreement, exercise the rights of the
Purchaser and enforce the obligations of the Seller hereunder without joinder of the Purchaser.




          (c) The Administrative Agent, each Lender Agent, each Lender, the Collateral Custodian, the
Collateral Agent and the other Secured Parties shall be third-party beneficiaries of this
Agreement.




     Section 10.14. 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
Purchaser, the Administrative Agent, the Lenders, the Lender Agents, the Collateral Agent, the
Collateral Custodian, the other Secured Parties or any assignee of such Persons, all of which
rights are hereby waived by the Seller.




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




     Section 10.15. Headings 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.



44









 





     Section 10.16. Rights of Inspection. The Purchaser, the Administrative Agent, each
Lender Agent and their respective 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 Loan Assets and business
affairs of the Seller each calendar year. Each such inspection shall be at the sole expense of the
Seller. The Purchaser and its representatives and successors and assigns acknowledge that in
exercising the rights and privileges conferred in this Section 10.16, 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 Purchaser and its representatives and successors and assigns each agree
that (i) it shall retain in strict confidence and shall use its reasonable efforts to ensure that
its 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 it will not, and will use its reasonable efforts to ensure that its
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 10.17. Subordination. After giving effect to any payment relating to any
indebtedness, obligation or claim the Seller may from time to time hold or otherwise have against
the Purchaser or any assets or properties of the Purchaser, whether arising hereunder or otherwise
existing, the Borrowing Base at such time must exceed the Obligations owed by the Purchaser to the
Secured Parties under the Loan and Servicing Agreement. The Seller hereby agrees that at any time
during which the condition set forth in 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 Purchaser owing to each Lender, each Lender Agent, the Collateral Agent, the Collateral
Custodian, the Administrative Agent or any other Secured Party under the Loan and Servicing
Agreement.



     Section 10.18. Confidentiality. Each of the parties hereto hereby agrees with the
confidentiality provisions set forth in Sections 11.13 and 11.14 of the Loan and Servicing
Agreement.



[Signature pages to follow.]





45









 








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




	 	 	 	 	 
	 	FIFTH STREET FUNDING, LLC, 

as the Purchaser

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



Fifth Street Funding, LLC

10 Bank Street, 12th Floor

White Plains, NY 10606

Attention: Bernard D. Berman

Facsimile: (914) 328-4214

Phone: (914) 286-6800




Fifth Street Funding, LLC

Purchase and Sale Agreement














 








	 	 	 	 	 
	 	FIFTH STREET FINANCE CORP., 

as the Seller 

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



Fifth Street Finance Corp.

10 Bank Street, 12th Floor

White Plains, NY 10606

Attention: Bernard D. Berman

Facsimile: (914) 328-4214

Phone: (914) 286-6800




Fifth Street Funding, LLC

Purchase and Sale Agreement