Exhibit
10.3


 


EXECUTION VERSION


 


SECOND TIER PURCHASE AND SALE AGREEMENT


 


among


 


ARES CAPITAL CP FUNDING II LLC,


 


as the Purchaser


 


 


and


 


ARES CAPITAL CP FUNDING HOLDINGS II LLC,


 


as the Seller


 


Dated as of July 21, 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

  	
  25

  
	
  Section 5.3.

  	
  Negative
  Covenants of the Seller

  	
  29

  
	
   

  	
   

  
	
  ARTICLE
  VI.

  	
  REPURCHASES
  AND SUBSTITUTION BY THE SELLER

  	
  31

  
	
   

  	
   

  
	
  Section 6.1.

  	
  Repurchase
  of Loan Assets

  	
  31

  
	
  Section 6.2.

  	
  Substitution
  of Loan Assets

  	
  32

  
	
  Section 6.3.

  	
  Repurchase
  Limitations

  	
  33

  
	
   

  	
   

  
	
  ARTICLE
  VII.

  	
  ADDITIONAL
  RIGHTS AND OBLIGATIONS IN RESPECT OF THE SALE PORTFOLIO

  	
  33

  
	
   

  	
   

  
	
  Section 7.1.

  	
  Rights
  of the Purchaser

  	
  33

  
	
  Section 7.2.

  	
  Notice to Trustee, Agent and Note Purchaser

  	
  34

  
				



 


i

















 


TABLE OF CONTENTS


(cont’d)


 


	
    

   	
    

   	
   Page

   
	
  ARTICLE VIII.

  	
  SELLER TERMINATION EVENTS

  	
  34

  
	
   

  	
   

  	
   

  
	
  Section 8.1.

  	
  Seller Termination Events

  	
  34

  
	
  Section 8.2.

  	
  Remedies

  	
  36

  
	
  Section 8.3.

  	
  Survival of Certain Provisions

  	
  37

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX.

  	
  INDEMNIFICATION

  	
  37

  
	
   

  	
   

  	
   

  
	
  Section 9.1.

  	
  Indemnification by the Seller

  	
  37

  
	
  Section 9.2.

  	
  Assignment
  of Indemnities

  	
  40

  
	
   

  	
   

  	
   

  
	
  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

  	
  41

  
	
  Section 10.6.

  	
  Merger
  and Integration

  	
  41

  
	
  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

  	
  42

  
	
  Section 10.11.

  	
  Counterparts

  	
  43

  
	
  Section 10.12.

  	
  Bankruptcy
  Non-Petition and Limited Recourse; Claims

  	
  43

  
	
  Section 10.13.

  	
  Binding
  Effect; Assignability

  	
  43

  
	
  Section 10.14.

  	
  Waiver
  of Setoff

  	
  44

  
	
  Section 10.15.

  	
  Headings
  and Exhibits

  	
  44

  
	
  Section 10.16.

  	
  Rights
  of Inspection

  	
  44

  
	
  Section 10.17.

  	
  Subordination

  	
  45

  
	
  Section 10.18.

  	
  Breaches
  of Representations, Warranties and Covenants

  	
  45

  
	
  Section 10.19.

  	
  Confidentiality

  	
  45

  
	
  Section 10.20.

  	
  Assignments of Loan Assets

  	
  45

  
					



 


SCHEDULES AND EXHIBITS


 


	
  Schedule
  I

  	
  -

  	
  Sale
  Portfolio List

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  -

  	
  Form of
  Second Tier Loan Assignment

  
	
  Exhibit B

  	
  -

  	
  Form of
  Officer’s Purchase Date Certificate

  
	
  Exhibit C

  	
  -

  	
  Form of
  Power of Attorney for Seller

  



 


ii

















 


SECOND TIER PURCHASE AND SALE AGREEMENT


 


THIS SECOND TIER PURCHASE AND SALE AGREEMENT, dated
as of July 21, 2009, among ARES CAPITAL CP FUNDING HOLDINGS II LLC, a
Delaware limited liability company, as the seller (the “Seller”) and
ARES CAPITAL CP FUNDING II LLC, a Delaware limited liability company, as the
purchaser (the “Purchaser”).


 


W  I
T  N  E  S  S  E  T  H:


 


WHEREAS, the Seller acquired certain Loan Assets and
Portfolio Assets (in each case, as hereinafter defined) related thereto
pursuant to the terms of that certain First Tier Purchase and Sale Agreement,
dated as of the date hereof, by and between, the Seller, as the purchaser and
Ares Capital Corporation, as the seller (such agreement as amended, modified,
waived, supplemented or restated from time to time, the “First Tier Purchase
and Sale Agreement”);


 


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 Note Purchase Agreement (as defined herein) and the related Transaction
Documents, to the Trustee, 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 Note Purchase
Agreement (as hereinafter defined). 
References herein to Persons include their successors and assigns
permitted hereunder or under the Note Purchase 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.  Capitalized terms used herein but not defined
herein shall have the respective meanings assigned to such terms in the Note
Purchase Agreement, provided
that, if, within such definition in the Note Purchase 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 Second Tier Purchase
and Sale Agreement, as the same may be amended, restated, waived, supplemented
and/or otherwise modified from time to time hereafter.


 


“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.


 


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


 


“Loan Asset” means
any Eligible Loan Asset listed on Schedule I hereto, as the same may be
amended, supplemented, restated or replaced from time to time.


 


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


 


“Note Purchase Agreement” means that certain
Note Purchase Agreement, dated as of the Closing Date, by and among the
Purchaser, as the Borrower, Ares Capital Corporation, as the Servicer and the
Transferor, Ares Capital CP Funding LLC, as the Guarantor, Wachovia Bank,
National Association, as the Note Purchaser and as the Agent, U.S. Bank
National Association, as the Trustee and as the Bank and Wells Fargo Bank,
National Association, as the Collateral Custodian, as such may be amended,
restated, supplemented or otherwise modified from time to time pursuant to the
terms thereof.


 


“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;


 


2

















 


(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 Purchaser (except for reasonable management fees to the
Transferor or its Affiliates in reimbursement of actual management services
performed).


 


“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, 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.


 


3

















 


“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
(iv) 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, but excluding any
related Attached Equity;


 


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


 


(iii)          all the Seller’s rights under the First Tier
Purchase and Sale Agreement; and


 


(iv)          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 Second Tier 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 Note Purchase Agreement.


 


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


 


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


 


“Seller Purchase Event” means the occurrence
of a breach of the Seller’s representations and warranties under Section 4.2.


 


“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).


 


4

















 


“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”.


 


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, 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 account of any Sale Portfolio hereunder on and after the
Purchase Date with respect to such Sale Portfolio, in each case, within two
Business Days 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
Second Tier 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 Second Tier Loan Assignment shall be deemed to be listed
on Schedule I hereto and constitute part of the  Sale Portfolio hereunder.


 


5

















 


(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). 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 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 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 Note Purchase 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 Note Purchase 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.


 


6
















 


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


 


(j)            In connection
with each Purchase of Sale Portfolio hereunder, the Seller hereby grants to
each of the Purchaser and its assigns, the Agent, the Note Purchaser, the
Trustee, the Collateral Custodian and the Servicer an irrevocable, non—exclusive
license to use, without royalty or payment of any kind, all software used by
the Seller to account for the Sale Portfolio, to the extent necessary to
administer the Sale Portfolio, whether such software is owned by the Seller or
is owned by others and used by the Seller under license agreements with respect
thereto; provided that, should
the consent of any licensor of such software be required for the grant of the
license described herein to be effective or for the Purchaser to assign such
licenses to the Servicer or any successor, the Seller hereby agrees that upon
the request of the Purchaser or its assignees, the Agent, the Note Purchaser,
the Collateral Custodian or the Trustee, the Seller shall use its best efforts
to obtain the consent of such third—party licensor.  The license granted hereby shall be
irrevocable until the Collection Date and shall terminate on the date this
Agreement terminates in accordance with its terms.  The Seller (i) shall take such action
reasonably requested by the Purchaser or the Agent, from time to time
hereafter, that may be necessary or appropriate to ensure that the Purchaser
and its assigns under the Note Purchase Agreement have an enforceable ownership
or security interest, as applicable, in the Sale Portfolio Purchased by the
Purchaser as contemplated by this Agreement, and (ii) shall use its
commercially reasonable efforts to ensure that each of the Purchaser (and its
assignees), the Agent, the Note Purchaser, the Trustee, the Collateral
Custodian and the Servicer (or any successor) has an enforceable right (whether
by license or sublicense or otherwise) to use all of the computer software used
to account for the Sale Portfolio and/or to recreate the related Loan Asset
Files.


 


(k)           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.


 


(l)            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 Second Tier 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.


 


(m)          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 


 


7

















 


Assets,
as applicable) related to any Sale Portfolio purchased hereunder, including
without limitation any obligations pertaining to any Retained Interest.


 


(n)           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 of the Seller
in Article V hereof, will run to and be for the benefit of the
Purchaser and the Trustee (on behalf of the Secured Parties) and the Trustee
(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 respect to breaches of such representations,
warranties and covenants 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 on the related Purchase Date multiplied by the
principal balance of such Loan Asset (exclusive of Accreted Interest).


 


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 Note Purchase 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 Second Tier 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 material 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 


 


8

















 


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.


 


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 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; (iii) the
possession by the Purchaser (or the Collateral Custodian on behalf of the
Trustee, 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.


 


9

















 


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
Second Tier 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 formation of the Seller is a complete and correct copy and
that such certificate of formation has not been amended, modified or
supplemented and is in full force and effect, (C) that the copy of the
amended and restated limited liability company agreement of the Seller is a
complete and correct copy, and that such amended and restated limited liability
company agreement has not been amended, modified or supplemented and is 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 Second Tier 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 formation;


 


(iv)          filed, original copies of
proper financing statements (the “Facility Financing Statements”)
describing the Sale Portfolio, and naming the Seller as the “Debtor/Seller” and
the Purchaser as “Secured Party/Buyer”, 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;


 


(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 


 


10

















 


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 and the Agent, and the
Purchaser and the 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 and the Agent may have reasonably 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 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 material 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;


 


(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.


 


11

















 


(b)           The Purchaser
shall have received a duly executed and completed Second Tier 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 (subject to Section 10.20) 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 Agent
evidencing the approval of the 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 Second Tier 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 Note Purchase Agreement. As of each Purchase Date, the
Seller represents and warrants to the Purchaser for the benefit of the
Purchaser and each of its successors and assigns that:


 


(a)           Organization
and Good Standing.  The Seller
has been duly organized and is validly existing as a limited liability company
in good standing under the laws of the State of Delaware (subject to Section 5.1(f)),
with all requisite limited liability company 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 


 


12

















 


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 power,
authority and legal right to (a) execute and deliver this Agreement, each
Second Tier Loan Assignment and the other Transaction Documents to which it is
a party and (b) carry out the terms of this Agreement, each Second Tier
Loan Assignment 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, each Second Tier 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 Second Tier 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 Second Tier Loan
Assignment and the Transaction Documents to which the Seller is party have been
and, in the case of each Second Tier Loan Assignment delivered after the
Closing Date, will be, duly executed and delivered by the Seller, and this
Agreement, together with the applicable Second Tier 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
Second Tier 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 Second Tier 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 formation or limited
liability company agreement 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 Second Tier Loan Assignment or any other Transaction
Document to which the Seller is a party, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement, any
Second Tier 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.


 


13

















 


(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 Second Tier 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 formation; does not
have tradenames, fictitious names, assumed names or “doing business as” names.
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 formation is Delaware, and, except as permitted hereunder,
Seller has not changed its jurisdiction of formation.


 


(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
material respects with all Applicable Law to which it may be subject, and no
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.  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.


 


(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 


 


14

















 


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)           Second Tier
Loan Assignments.  Each Second
Tier 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, limited liability company 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 (subject to Section 10.20)
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 Trustee as “Secured
Party” or “Assignee”, in each case, for the benefit of the Secured Parties
pursuant to the Note Purchase 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 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 all Pension Plans does not exceed the value
of the assets of the Pension Plan allocable to such vested benefits (based on
the value of such assets as of the last annual valuation date).  No prohibited transactions, failure 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 Benefit Plan other
than a Multiemployer Plan, withdrawals or reportable events have occurred with
respect to any Pension Plans that, in the aggregate, could subject the Seller
to any material tax, penalty or other liability.  No notice of intent to terminate a Pension
Plan has been filed, nor has any Pension Plan been terminated under Section 4041(f) of
ERISA, nor has the Pension Benefit Guaranty Corporation instituted proceedings
to terminate, or appoint a trustee to administer, a Pension Plan and no 


 


15

















 


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 not required to register as an “investment company” under the provisions of
the 1940 Act.


 


(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 (other than the Guarantor), and the Seller hereby
acknowledges that the Agent, the Note Purchaser, the Trustee and the other
Secured Parties are entering into the transactions contemplated by the Note
Purchase 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
(other than the Guarantor).  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 Agent, the Note Purchaser and the Trustee may from time to time reasonably
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 (other than the Guarantor) and not just a division of the Seller or any
such other Affiliate (other than the Guarantor) (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 take, refrain from taking, or fail
to take (as applicable) any action described in Section 9(j) of its
operating agreement and Sections 5.01(a), 5.01(b), 5.02(a) and 5.02(b) of
the Note Purchase Agreement.


 


(y)           Sale Agreement.  This Agreement and the Second Tier 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.


 


16
















 


(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 the Sale Portfolio (subject to Section 10.20)
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 Note Purchase
Agreement and (ii) the security interest granted to the Purchaser, 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, (B) relating
to the closing of a Permitted Securitization contemplated by Section 2.07(c) of
the Note Purchase Agreement or (C) that has been terminated and/or fully
and validly assigned to the Trustee 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;


 


(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 


 


17

















 


bailee of the Trustee, is
holding the underlying promissory notes that constitute or evidence the Loan
Assets solely on behalf of and for the Trustee, for the benefit of the Secured
Parties; provided that the
acknowledgement of the Collateral Custodian set forth in Section 13.11 of
the Note Purchase 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 Trustee, 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 Trustee, for the benefit of the Secured Parties, or in blank by
an effective Indorsement or has been registered in the name of the Trustee, for
the benefit of the Secured Parties, upon original issue or registration 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
Trustee, on behalf of the Secured Parties, as the registered owner of such
uncertificated security.


 


(aa)                            Credit Policy.  The Seller has complied in all material
respects with the Credit Policy with respect to all of the Sale Portfolio.


 


(bb)                          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.


 


(cc)                            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 Note Purchase Agreement.


 


(dd)                          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, 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 Note Purchase
Agreement and in accordance with the Credit Policy and the Servicing Standard.


 


18

















 


(ee)                            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.


 


(ff)                                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.


 


(gg)                          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.


 


(hh)                          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.


 


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


 


(jj)                                  Seller
Termination Event.  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 as
previously disclosed to the Agent as such).


 


19

















 


(kk)                            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 Latham & Watkins LLP, dated as of the date
hereof are true and correct in all material respects.


 


(ll)                                  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 Agent in writing pursuant
hereto or in connection herewith is, as of its date, true and correct in all
material respects.


 


(mm)                      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 Agent, the Note Purchaser and
the Trustee 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 Note Purchase 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 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 Note Purchase Agreement. As of each Purchase 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 Second Tier
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 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
Loan Assets.  As of each
Purchase Date, (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 


 


20

















 


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 material misrepresentation by the Seller or, to the best
of the Seller’s knowledge, on the part of the Obligor.


 


It is understood and agreed that the representations
and warranties provided in this Section 4.2 shall survive (x) the
Sale 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 Note Purchase Agreement by the Purchaser and (z) the
termination of this Agreement, the First Tier Purchase and Sale Agreement and
the Note Purchase 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 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 Sale
Portfolio to the Purchaser hereunder. 
Such representations are made as of the execution and delivery of this
Agreement, but shall survive until the Collection Date, the Sale of Sale
Portfolio hereunder, and the grant of a security interest in such Sale
Portfolio by the Purchaser to the Trustee, on behalf of the Secured Parties,
under the Note Purchase Agreement.


 


(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 as a limited liability company in
good standing, 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 Purchaser
has all necessary power, authority and legal right to execute and deliver this
Agreement and to carry out the terms hereof and to acquire the Sale Portfolio;
and the execution, delivery and performance of this Agreement and all of the
documents required pursuant hereto have been duly authorized by the Purchaser
by all necessary limited liability company action.


 


21

















 


(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 Second Tier 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 constitutes a legal, valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, subject, as to
enforceability, to applicable Bankruptcy Laws and general principles of equity.


 


(f)                                    No Violation.  The consummation of the transactions
contemplated by this Agreement, each Second Tier 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.  No litigation or administrative proceeding of
or before any court, tribunal or governmental body is presently pending or, to
the knowledge of the Purchaser, threatened against the Purchaser or any
properties of the Purchaser or with respect to this Agreement, any Second Tier
Loan Assignment or any other Transaction Document to which the Purchaser is a
party, which, if adversely determined, could have a material adverse effect on
the ability of the Purchaser to perform its obligations under this Agreement,
any Second Tier Loan Assignment or any Transaction Document to which the
Purchaser is a party or any of the other applicable documents forming part of
the Sale Portfolio.


 


(i)                                     Sale Agreement.  This Agreement and the Second Tier 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 material respects with all
Applicable Law to which it may be subject, and no 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 material respects.


 


22

















 


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 Trustee, 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 Trustee for the benefit of the
Secured Parties under the Note Purchase 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 Trustee, the Collateral Custodian,
the Servicer, the Note Purchaser and the 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 Trustee or the 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 Trustee, the 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 (subject to Section 10.20) and a valid and
perfected ownership interest in such Sale Portfolio, free and clear of any
Lien, security interest, charge or 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 Trustee, 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 Trustee’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 


 


23

















 


payments
to be made to the Seller or the Servicer or payments to be made to the
Collection Account, unless the Purchaser and the 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 two Business Days
following receipt thereof, and, at all times prior to such remittance, the
Seller will itself hold or, if applicable, will cause such payments to be held
in trust for the exclusive benefit of the 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 or declaration of the Facility Maturity Date, the
Purchaser, the Trustee or the 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
Trustee or the 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 Trustee and the Agent an opinion of
the counsel for Seller, in form and substance reasonably satisfactory to the
Purchaser, the Trustee and the Agent, confirming and updating the opinion
delivered pursuant to Section 3.1 with respect to perfection and
otherwise to the effect that the security interest hereunder continues to be an
enforceable and perfected security interest, subject to no other Liens of
record except as specified therein, provided herein or otherwise permitted
hereunder, which opinion may contain usual and customary assumptions,
limitations and exceptions.


 


(f)                                    The Seller
shall not change the jurisdiction of its formation, make any change to its
corporate name or use any tradenames, fictitious names, assumed names, “doing
business as” names or other names unless, prior to the effective date of any
such change in the jurisdiction of its formation, name change or use, the
Seller receives prior written consent from the Agent of such change and
delivers to the Purchaser and the Agent such financing statements as the Agent
may request to reflect such name change or use, together with such Opinions of
Counsel and other documents and instruments as the Agent may request in
connection therewith.  The Seller will
not change the location of its chief executive office unless prior to the
effective date of any such change of location, the Seller notifies the
Purchaser and the Agent of such change of location in writing. The Seller will
not move, or consent to the Collateral Custodian or the Servicer moving, the
Required Loan Documents and Loan Asset Files from the location 


 


24

















 


required
under the Transaction Documents, unless 30 days prior to the effective date of
any such move, the Seller notifies the Purchaser and the Agent of such move in
writing.


 


(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 Trustee
for the benefit of the Secured Parties under the Note Purchase 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
Trustee, on behalf of the Secured Parties, under the Note Purchase
Agreement.  Indication of the Trustee’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 Trustee pursuant to Section 2.16
of the Note Purchase Agreement.


 


(i)                                     If the Seller
fails to perform any of its obligations hereunder, the Purchaser, the Trustee
or the Agent may (but shall not be required to) perform, or cause performance
of, such obligation; and the Purchaser’s, the Trustee’s or the 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 Trustee or the Agent at any time and from time to time at the
Purchaser’s, the Trustee’s or the Agent’s sole discretion and appoints the
Purchaser, the Trustee and the 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 Trustee’s or
the Agent’s sole discretion to perfect and to maintain the perfection and
priority of the interest of the Purchaser or the Trustee 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 Trustee or the Agent
in their sole discretion deem necessary or desirable to perfect and to maintain
the perfection and priority of the interests of the Purchaser or  the Trustee 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
material 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 limited liability company existence, rights,
franchises and privileges in the jurisdiction of its formation, and qualify and
remain qualified in good standing as a limited 


 


25

















 


liability
company in each jurisdiction where the failure to preserve and maintain such
existence, rights, franchises, privileges and qualification could reasonably be
expected to have a Material Adverse Effect.


 


(c)                                  Performance and
Compliance with Sale Portfolio.  The Seller will, at its expense, timely and
fully perform and comply in all material respects with all provisions, covenants
and other promises required to be observed by it under the 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 Agent, the Trustee, the Note Purchaser and the other
Secured Parties are entering into the transactions contemplated by this Agreement,
the Note Purchase 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 (other than the Guarantor).  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 Agent, the Trustee, the
Note Purchaser and the other Secured Parties may from time to time reasonably request
to maintain the Purchaser’s identity as a legal entity that is separate from
the Seller and each other Affiliate of the Seller (other than the Guarantor)
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 the Guarantor)(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 Purchaser and Sections
5.01(a), 5.01(b), 5.02(a) and 5.02(b)  of the Note Purchase
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 (other than the
Guarantor);


 


26
















 


(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; and


 


(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.


 


(f)                                    Credit Policy.  The Seller will (i) comply in all
material respects with the Credit Policy in regard to the Sale Portfolio and (ii) furnish
to the Purchaser, the Trustee, the Agent and the Note Purchaser, prior to its
effective date, prompt written notice of any changes in the Credit Policy.


 


(g)                                 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)).


 


(h)                                 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.


 


(i)                                     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.


 


(j)                                     Notices.  The Seller will furnish to the Purchaser, the
Trustee, the Agent and the Note Purchaser:


 


(i)                                     Income Tax
Liability.  Telephonic
or facsimile notice 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 Ares or any “affiliated
group” (within the meaning of Section 1504(a)(l) of the Code) of
which Ares is a member in an amount equal to or greater than $10,000,000 in the
aggregate, or (ii) to the 


 


27

















 


Tax liability of the
Purchaser in an amount equal to or greater than $1,000,000 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, any auditors’ management letters that are received
by the Seller or by its accountants;


 


(iii)                               Representations
and Covenants.  The Seller
shall promptly, upon receipt of notice or discovery thereof, notify the
Purchaser, the Trustee, the Agent and the Note Purchaser (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
Trustee, the Agent and the Note Purchaser 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
Trustee, the Agent and the Note Purchaser 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 Affiliate thereof), a copy of such notice;


 


(v)                                 Proceedings. As soon as
possible and in any event within three Business Days, after the Seller receives
notice or obtains knowledge thereof, notice of any settlement of, 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
Transaction Documents, the Trustee’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(j),
(i) any settlement, judgment, labor controversy, litigation, action, suit
or proceeding affecting the Sale Portfolio, the Transaction Documents, the
Trustee’s, for the benefit of the Secured Parties, interest in the Sale
Portfolio, or the Purchaser or the Seller in excess of $1,000,000 shall be deemed
to be material and (ii) any settlement, judgment, labor controversy,
litigation, action, suit or proceeding affecting the Servicer or the Transferor
or any of their Affiliates (other than the Purchaser or the Seller) in excess
of $5,000,000 shall be deemed to be material;


 


(vi)                              Material Events.  Promptly upon becoming aware thereof, 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 Agent, the Trustee and the Note Purchaser with immediate written
notice of the 


 


28

















 


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 Trustee, the Agent and the Note Purchaser 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; and


 


(viii)                        Seller
Termination Event and Seller Purchase Event. The Seller will provide
the Purchaser, the Agent, the Trustee and the Note Purchaser 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.


 


(k)                                  Other.  The Seller will furnish to the Purchaser, the
Trustee, the Agent and the Note Purchaser 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 Trustee, the Agent and the Note Purchaser may from time to time
reasonably request in order to protect the interests of the Purchaser, the
Agent, the Trustee, the Note Purchaser or the Secured Parties under or as
contemplated by this Agreement and the other Transaction Documents.


 


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


 


(m)                               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 and the Agent,
providing (i) a certification, based upon a review and summary of UCC
search results reasonably satisfactory to the Purchaser and the 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 Trustee
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 Agent, that there is no other
interest in the Sale Portfolio based on any tax or judgment lien.


 


(n)                                 Opinion.  The Seller will comply in all material 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.


 


Section 5.3.                                   Negative Covenants of the
Seller.


 


From the date hereof until the Collection Date:


 


(a)                                  Other Business. Seller will
not (i) engage in any business other than the transactions contemplated by
the Transaction Documents, (ii) incur any Indebtedness, obligation,
liability or contingent obligation of any kind other than pursuant to the
Transaction Documents, or (iii) form any Subsidiary or make any
investments in any other Person (other than the Purchaser and the Sale
Portfolio).


 


29

















 


(b)                                 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.


 


(c)                                  Security
Interests.  Except as
otherwise permitted herein and in the Note Purchase 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 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 Trustee, the Note Purchaser and the 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 Trustee, 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(c) shall prevent or be deemed to
prohibit the Seller from suffering to exist Permitted Liens upon any of the
Sale Portfolio.


 


(d)                                 Mergers,
Acquisitions, Sales, Etc. The Seller shall not change its
organizational structure, enter into any transaction of merger or consolidation
or amalgamation, or asset sale (other than pursuant to Section 2.07 of the
Note Purchase Agreement), or liquidate, wind up or dissolve itself (or suffer
any liquidation, winding up or dissolution) without the prior written consent
of the Agent.


 


(e)                                  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 Agent and the delivery of an acceptable (in the
Agent’s reasonable discretion) non-consolidation opinion (except pursuant to
the terms of the Pledge Agreement).


 


(f)                                    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.


 


(g)                                 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.


 


(h)                                 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 Benefit Plan
other than a Multiemployer Plan, (c) fail to make any payments to a
Multiemployer Plan that the Seller or any ERISA Affiliate may be 


 


30

















 


required
to make under the agreement relating to such Multiemployer Plan or any law
pertaining thereto, (d) terminate any Benefit Plan so as to result,
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.


 


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


 


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


 


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


 


(l)                                     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 Agent.


 


(m)                               Tax Treatment.  The Seller shall not elect to be treated as a
corporation for U.S. federal income tax purposes and shall take all reasonable
steps necessary to avoid being treated as a corporation for U. S. federal
income tax purposes.


 


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, provided that the excess
if any of the Repurchase Price of such Loan Asset over the amount equal to the
Advance Date Assigned Value of such Loan Asset multiplied by the principal
balance of such Loan Asset (exclusive of Accreted Interest) as of the date of
repurchase shall be paid to the Purchaser as otherwise directed by the
Purchaser) the Repurchase Price of such Loan Asset as of the date of the
purchase thereof from the Purchaser or (ii) 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 


 


31

















 


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 (and shall
request the Trustee to), at the sole expense of the Seller,  take such steps as may be reasonably
requested by the Seller in order to Sell to the Seller all of the Purchaser’s
and the Trustee’s right, title and interest in and to such Loan Asset, 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 Trustee. 
Such Sale shall be a sale outright, and not for security.


 


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 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 Agent (with a copy to the Trustee 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; provided that
the Seller may effect a Substitution as necessary to facilitate a cure of a
Borrowing Base Deficiency (and any Unmatured Event of Default arising
therefrom) so long as the Agent shall approve of such sale and immediately
after giving effect to such Substitution and any other sale or transfer
substantially contemporaneous therewith, such Borrowing Base Deficiency shall
be cured or closer to being cured;


 


(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 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 principal balance thereof (exclusive of Accreted Interest);


 


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


 


32

















 


(vi)                              no selection
procedures adverse to the interests of the Purchaser, the Agent, the Note
Purchaser 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 subject to clauses (ii), (iv) or (vi) of
the definition of “Value Adjustment Event” which were dividended from the
Purchaser to the Seller in accordance with Section 2.07(d) of the
Note Purchase Agreement or substituted pursuant to this Section 6.2,
in each case during the 12-month period immediately preceding the proposed date
of such 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);


 


(viii)                        the Outstanding
Balance of all Loan Assets (other than Warranty Loan Assets), sold pursuant to Section 2.07(b) of
the Note Purchase Agreement, sold without the consent of the Agent in
accordance with Section 2.07(c) of the Note Purchase Agreement (in
each case, other than Loan Assets subject to clauses (ii), (iv) or (vi) of
the definition of “Value Adjustment Event”), substituted pursuant to this Section 6.2
or dividended from the Purchaser to the Seller in accordance with Section 2.07(d) of
the Note Purchase Agreement during the 12-month period immediately preceding
the proposed date of Substitution does not exceed 20% 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);;


 


(ix)                                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; and


 


(x)                                   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.


 


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 Trustee, the Agent, the Note
Purchaser 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 Trustee, the Agent, the Note Purchaser and/or their respective
designees or assignees determine are reasonably necessary or appropriate to
collect all amounts due under any and all Sale Portfolio and to enforce or
protect the 


 


33

















 


Purchaser’s,
the Trustee’s, the Agent’s and the Note Purchaser’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 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
Second Tier Purchase and Sale Agreement or the Note Purchase 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.                                   Notice to Trustee, Agent and
Note Purchaser.


 


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 Trustee, the Agent and the Note
Purchaser.


 


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 and such failure shall continue
unremedied for a period of five Business Days from the earlier of (1) the
date any Responsible Officer of the Seller obtains knowledge of such failure
and (2) the date the Seller receives notice of such failure from the
Purchaser, the Servicer, the Trustee or the Agent 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 in any material respect any covenant or
agreement applicable to it contained herein (other than as specified in paragraph
(i) of this Section 8.1); provided
that no such failure shall constitute a Seller 


 


34

















 


Termination Event under this
paragraph (ii) unless 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 Agent, the Trustee 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, which has a Material Adverse Effect on the Purchaser and continues to be
unremedied for a period of 30 days after the earlier to occur of (i) the
date on which written notice of such incorrectness requiring the same to be
remedied shall have been given to the Seller by the Agent, the Servicer, the
Trustee 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 Note
Purchase Agreement or (B) the Facility Maturity Date; or


 


(vi)                              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 


 


35

















 


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 Agent proof of release of such Lien; or


 


(vii)                           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


 


(viii)                        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
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) or (viii) 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 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.                                   Remedies.


 


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


 


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


 


(i)                                     require the
Seller to, and the Seller hereby agrees that it will at the Seller’s expense
and upon request of the Purchaser, the Trustee or the Agent forthwith, assemble
all or any part of the Sale Portfolio as directed by the Purchaser, the Trustee
or 


 


36

















 


the Agent and make the same
available at a place to be designated by the Purchaser, the Trustee or the
Agent; and


 


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


 


Section 8.3.                                   Survival of Certain
Provisions.


 


Notwithstanding any provision contained herein to
the contrary, the Seller’s and the 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. For the avoidance of doubt, in the event that a
Seller Termination Event has occurred but has been waived unconditionally and
in its entirety in accordance with the terms hereof, such Seller Termination
Event shall be deemed to have not “occurred” and references to “after the
occurrence of a Seller Termination Event” shall be inapplicable for all
purposes in this Agreement or any of the Transaction Documents, except to the
extent otherwise provided for in the relevant waiver; provided that any waiver which by its
terms becomes effective upon certain conditions precedent being met will not be
considered a conditional waiver solely due to the existence of such conditions
precedent if all such conditions precedent to effectiveness have been
satisfied.


 


ARTICLE
IX.



INDEMNIFICATION.


 


Section 9.1.                                   Indemnification by the Seller.


 


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, 


 


37

















 


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 Trustee, the Collateral Custodian, the Bank, the
Servicer, the Note Purchaser or the 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 Trustee, the Collateral
Custodian,  the Bank, the Servicer, the
Note Purchaser and the Agent harmless, on an after-tax basis, from and against any
and all such Transfer Taxes (it being understood that the Purchaser, the
Trustee, the Collateral Custodian, the Bank, the Servicer, the Note Purchaser
and the Agent shall have no contractual obligation to pay such Transfer Taxes);


 


(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 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;


 


38
















 


(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 material 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;


 


(xv)                            any action
taken by the Seller in the enforcement or collection of any Sale Portfolio;


 


(xvi)                         any claim, suit
or action of any kind arising out of or in connection with Environmental Laws
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;


 


39

















 


(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; or


 


(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.


 


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


 


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


 


(C)                            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 such tax or refund on the amount of tax measured by net income or
profits that is or was payable by the Indemnified Party.


 


(D)                           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 Note
Purchase Agreement, the Purchaser shall assign its rights of indemnity
hereunder to the Trustee, on behalf of the Secured Parties.  Upon such assignment, (a) the Trustee,
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 Section 9.2 shall inure to the Trustee, on
behalf of the Secured Parties.  The
Seller agrees that, upon such assignment, the Trustee, on behalf of the Secured
Parties, may enforce directly, without joinder of the Purchaser, the
indemnities set forth in this Article IX.


 


40

















 


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 Note Purchaser, the Trustee, the Agent or any other Secured
Party, no claim may be made by the Seller or any other Person against the Note
Purchaser, the Trustee, the 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 Agent
and the Trustee. The Purchaser shall provide not less than ten Business Days’
prior written notice of any such amendment to the Agent, the Trustee and the
Note Purchaser.


 


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 or remedy under this Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise of any such power,
right or remedy preclude any other or future exercise thereof or the exercise
of any other power, right or remedy. The powers, rights and remedies herein
provided are cumulative and not exhaustive of any powers, rights 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 Note Purchase
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
Note Purchase Agreement 


 


41

















 


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.


 


(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 Section 9.1 hereof,
the Seller agrees to pay on demand all reasonable 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, or any waiver or
consent issued in connection with, this Agreement and the other documents to be
delivered hereunder or in connection herewith, including, without limitation,
the reasonable fees and out—of—pocket expenses of counsel with respect thereto
and with respect to advising the Purchaser or its assignees as to its rights
and remedies under this Agreement and the other 


 


42

















 


documents
to be delivered hereunder or in connection herewith, and all out-of-pocket
costs and expenses, if any (including reasonable 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 reasonable out-of-pocket costs, expenses and Taxes (excluding
income taxes) 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.


 


(d)                                  For the avoidance of doubt,
costs and expenses to be paid pursuant to this Section 10.10 shall
exclude all allocable overhead costs and expenses.


 


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 Portfolio to the Trustee, on behalf of the Secured Parties,
pursuant to the Note Purchase Agreement, and (iii) Available Collections
generated by the Sale Portfolio will be applied to payment of the Purchaser’s
obligations under the Note Purchase 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,
the First Tier Purchase and Sale Agreement or the Note Purchase Agreement.  


 


43

















 


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 Trustee, 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 Trustee, for
the benefit of the Secured Parties, under the Note Purchase Agreement and the
Trustee, in such capacity, shall be a third party beneficiary hereof.  The Trustee, for the benefit of the Secured
Parties, under the Note Purchase Agreement upon such assignment 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.


 


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 Agent, the Note Purchaser, the Trustee, 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.


 


Section 10.16.                       Rights of
Inspection.  The
Purchaser and its representatives and assigns may conduct at any reasonable
time, with reasonable notice, and from time to time, and the Seller will fully
cooperate with, a reasonable number of field examinations and audits of the
inventory, the 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 agree that (i) they shall retain in strict
confidence and shall use their best efforts to ensure that their
representatives retain in strict confidence and will not disclose without the
prior written consent of the Seller any or all of such information, practices,
books, correspondence and records furnished to them and (ii) that they
will not, and will use their best efforts to ensure that their representatives
and assigns will not, make any use whatsoever (other than for the purposes
contemplated by this Agreement) of any of such information, practices, books,
correspondence and records without the prior written consent of the Seller,
unless such information is generally available to the public or is required by
law to be disclosed.


 


44

















 


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 Note Purchase
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
the Note Purchaser, the Trustee, the Collateral Custodian, the Agent or any
other Secured Party under the Note Purchase Agreement.


 


Section 10.18.                       Breaches of
Representations, Warranties and Covenants. For the avoidance of
doubt, no breach or default of any representation, warranty or covenant
contained in Sections 4.1, 4.2, 4.3, 5.1, 5.2
or 5.3 that does not constitute an “Unmatured Event of Default” under
the Note Purchase Agreement,  “Event of
Default” under the Note Purchase Agreement or Seller Termination Event under
this Agreement shall be deemed to be a breach or default hereunder; provided that the foregoing shall not
affect the definition of “Seller Purchase Event”, Sections 2.1(n), 2.3(c),
3.2(a), 4.1(ll), 4.1(mm), 5.2(j)(iii), 6.2(b),
8.3,  9.1 and the schedules
and exhibits hereto.


 


Section 10.19.                       Confidentiality. Each of the
parties hereto hereby agrees with the confidentiality provisions set forth in
Sections 11.13 and 11.14 of the Note Purchase Agreement.


 


Section 10.20.                       Assignments of
Loan Assets.


 


(a)                                   Notwithstanding anything to
the contrary herein, solely for administrative convenience and solely in the case
of Third Party Acquired Loan Assets, (i) for purposes of clause (a)(i) of
the definition of “Required Loan Documents” in the Note Purchase Agreement, the
chain of endorsements required therein by the third party to the Transferor,
the Transferor to the Seller and the Seller to the Purchaser may be satisfied
by a direct endorsement from the applicable third party to the Purchaser or (ii) delivery
of the transfer documents or instruments required by clause (a)(ii) of the
definition of “Required Loan Documents” may be satisfied by delivery of
transfer documents or instruments evidencing the assignment of such Loan Asset
by the applicable third party directly to the Purchaser (and by the Purchaser
either to the Trustee or in blank).


 


(b)                                  Nothing in this Section 10.20
shall limit any requirement that all Loan Assets treated as or represented to
be Eligible Loan Assets hereunder or in any Transaction Document be purchased
by the Purchaser from the Seller pursuant to this Agreement and by the Seller
from the Transferor pursuant to the First Tier Purchase and Sale Agreement (as
evidenced by the Assignments applicable to each Purchase and Sale Agreement) or
any representations or warranties with respect to Loan Assets so purchased or
the liabilities or recourse of the Seller or Purchaser, as applicable,
pertaining to such sales.


 


[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.


 


	
   

  	
   

  	
  ARES CAPITAL CP FUNDING II LLC, as the
  Purchaser

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Richard S. Davis

  
	
   

  	
   

  	
   

  	
  Name:
  

  	
  Richard
  S. Davis

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chief
  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Ares
  Capital CP Funding II LLC

  
	
   

  	
   

  	
  2000
  Avenue of the Stars, 12th Floor

  
	
   

  	
   

  	
  Los
  Angeles, California 90067

  
	
   

  	
   

  	
  Attention:
  General Counsel and Chief Financial Officer

  
	
   

  	
   

  	
  Facsimile
  No.: (310) 201-4197

  
	
   

  	
   

  	
  Confirmation
  No.: (310) 201-4205

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Ares
  Capital CP Funding II LLC

  
	
   

  	
   

  	
  280
  Park Avenue, 22nd Floor East

  
	
   

  	
   

  	
  New
  York, New York 10017

  
	
   

  	
   

  	
  Attention:
  General Counsel and Chief Financial Officer

  
	
   

  	
   

  	
  Facsimile
  No.: (212) 750-1777

  
	
   

  	
   

  	
  Confirmation
  No.: (212) 750-7300

  
						



 

















 


	
   

  	
   

  	
  ARES CAPITAL CP FUNDING HOLDINGS II LLC, as the
  Seller

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Richard S. Davis

  
	
   

  	
   

  	
   

  	
  Name:
  

  	
  Richard
  S. Davis

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chief
  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Ares
  Capital CP Funding Holdings II LLC

  
	
   

  	
   

  	
  2000
  Avenue of the Stars, 12th Floor

  
	
   

  	
   

  	
  Los
  Angeles, California 90067

  
	
   

  	
   

  	
  Attention:
  General Counsel and Chief Financial Officer

  
	
   

  	
   

  	
  Facsimile
  No.: (310) 201-4197

  
	
   

  	
   

  	
  Confirmation
  No.: (310) 201-4205

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Ares
  Capital CP Funding Holdings II LLC

  
	
   

  	
   

  	
  280
  Park Avenue, 22nd Floor East

  
	
   

  	
   

  	
  New
  York, New York 10017

  
	
   

  	
   

  	
  Attention:
  General Counsel and Chief Financial Officer

  
	
   

  	
   

  	
  Facsimile
  No.: (212) 750-1777

  
	
   

  	
   

  	
  Confirmation
  No.: (212) 750-7300