Document:

Exhibit
10.1

 

AMENDMENT NO. 10 TO SALE AND SERVICING
AGREEMENT

(VFCC Transaction with Ares Capital CP
Funding LLC)

 

THIS AMENDMENT NO. 10 TO THE SALE AND SERVICING
AGREEMENT, dated as of July 22, 2008 (this “Amendment”), is entered into in connection
with that certain Sale and Servicing Agreement, dated as of November 3,
2004 (as amended, modified, waived, supplemented or restated through the date
hereof, the “Sale and Servicing Agreement”), by and among Ares Capital
CP Funding LLC, as the borrower (together with its successors and assigns in
such capacity, the “Borrower”), Ares Capital Corporation, as the originator (together with its
successors and assigns in such capacity, the “Originator”) and as the
servicer (together with its successors and assigns in such capacity, the “Servicer”),
each of the Conduit Purchasers and Institutional Purchasers from time to time
party thereto, each of the Purchaser Agents from time to time party thereto, Wachovia Capital Markets, LLC,  as the Administrative Agent
(together with its successors and assigns in such capacity, the “Administrative
Agent”) and as the Purchaser Agent with respect to Variable Funding Capital
Company LLC (f/k/a Variable Funding Capital Corporation), as Conduit Purchaser
(together with its successors and assigns in such capacity, the “VFCC Agent”),
U.S. Bank National Association, as the trustee (together with its successors
and assigns in such capacities, the “Trustee”), and Lyon Financial
Services, Inc. (d/b/a U.S. Bank Portfolio Services) as the backup servicer
(together with its successors and assigns in such capacity, the “Backup Servicer”).  Capitalized terms used and not otherwise
defined herein shall have the meanings given to such terms in the Sale and
Servicing Agreement.

 

R E C I T A L S

 

WHEREAS, the
above-named parties have entered into the Sale and Servicing Agreement, and,
pursuant to and in accordance with Section 13.1 thereof, the parties
hereto desire to amend the Sale and Servicing Agreement, in certain respects as
provided herein;

 

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

 

SECTION 1.         AMENDMENTS.

 

(a)           The
“Recitals” in the Sale and Servicing Agreement are hereby amended and restated
as follows:

 

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

 

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

 

 

WHEREAS,
on the Tenth Amendment Effective Date, the parties hereto wish to amend the
Existing Agreement in order to make certain changes agreed to by the parties
hereto; and

 

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

 

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

 

(b)           Section 1.1
of the Sale and Servicing Agreement is hereby amended by amending and restating
in their entirety the following defined terms:

 

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

 

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

 

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

 

““Borrowing
Notice”:  Each notice required to be
delivered by the Borrower in respect of (a) the Initial Advance and each
incremental Funded Advance, in the form of Exhibit A-1, (b) each
Pre-Funded Advance, in the form of Exhibit A-1-PF, (c) any
reduction of the Facility Amount or repayment of Advances Outstanding, in the
form of Exhibit A-2, or (d)(i) any reinvestment of Principal
Collections under Section 2.9(b) or 

 

2

 

(ii) any investment of amounts on deposit in the Unfunded Exposure
Account pursuant to Section 2.9(c) or Section 2.10(b),
in each case in the form of Exhibit A-3.”

 

““Broadly
Syndicated Loan”: Any Loan that is a Term Loan or a Revolving Loan that (i) is
secured by a valid and perfected first priority Lien on all of the Obligor’s
assets constituting Related Property for the Loan (which may include a pledge
of common equity), subject to such exceptions that are generally acceptable to
lending institutions in connection with their regular commercial lending
activities, and such other exceptions to which similar Related Property is
commonly subject and which do not individually, or in the aggregate, materially
and adversely affect the benefits of the security intended to be provided by
the related Underlying Instruments and UCC financing statements, (ii) has
a Loan-to-Value Ratio not greater than 60%, (iii) provides that the
payment obligation of the Obligor on such Loan is either senior to, or pari passu with, all other Indebtedness to such Obligor, (iv) is
to an Obligor issued as part of a loan facility with an original facility
amount (including any first and second lien loans included in such facility) of
greater than $250,000,000, including for purposes of this definition the
maximum available amount of commitments under Revolving Loans and Delayed Draw
Term Loans, and (v) has a public rating with respect to its Obligor of at
least B- by S&P and B3 by Moody’s. 
For avoidance of doubt, (y) Broadly Syndicated Loans may include
multiple tranches of a single facility and (z) a Broadly Syndicated Loan
that satisfies some but not all of the foregoing provisions of this definition
may still be eligible for purchase by the Borrower as another loan type,
subject to such Loan’s satisfaction of the criteria set forth in the
definitions of those Loans and in the definition of Eligible Loan.”

 

““Commitment”:  With respect to each Purchaser, the
commitment of such Purchaser to make Advances in accordance herewith in an
amount not to exceed (a) prior to the Termination Date or for purposes of
Advances made pursuant to Section 2.1(f), the dollar amount set
forth opposite such Purchaser’s name on Annex B hereto or the amount set forth
as such Purchasers “Commitment” on Schedule I to the Joinder Supplement
relating to such Purchaser, as applicable, and (b) on or after the
Termination Date (other than for purposes of Advances made pursuant to Section 2.1(f)),
such Purchaser’s Pro Rata Share of the aggregate Advances Outstanding.”

 

““Large Obligor
Coverage Amount”:  As of any
Measurement Date, an amount equal to the greater of (i) the sum of the
Outstanding Loan Balances of all Eligible Loans (excluding Charged-Off Loans
and Delinquent Loans) attributable to the three Obligors having the largest
aggregate Outstanding Loan Balance (excluding Charged-Off Loans and Delinquent
Loans) included in the Borrowing Base on such date (net of amounts in excess of
the Concentration Limits) and (ii) $35,000,000.”

 

““LIBOR Rate”:  For any day during the Accrual Period, with
respect to any Advance (or portion thereof) (a) the rate per annum
appearing on Page 3750 of the Bridge Telerate Service (formerly Dow Jones
Market Service) (or on any successor or substitute page of such service,
or any successor to or substitute for such service, providing rate quotations
comparable to those currently provided on such page of such service, as
determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London 

 

3

 

interbank market) at
approximately 11:00 a.m., London time for such day, provided, if such day
is not a Business Day, the immediately preceding Business Day, as the rate for
dollar deposits with a one-month maturity; (b) if for any reason the rate
specified in clause (a) of this definition does not so appear on Page 3750
of the Bridge Telerate Service (or any successor or substitute page or any
such successor to or substitute for such service), the rate per annum appearing
on Reuters Screen LIBOR01 Page (or any successor or substitute page) as
the London interbank offered rate for deposits in dollars at approximately 11:00 a.m.,
London time, for such day, provided, if such day is not a Business Day, the
immediately preceding Business Day, for a one-month maturity; and (c) if
the rate specified in clause (a) of this definition does not so appear on Page 3750
of the Bridge Telerate Service (or any successor or substitute page or any
such successor to or substitute for such service) and if no rate specified in
clause (b) of this definition so appears on Reuters Screen LIBOR01 Page (or
any successor or substitute page), the interest rate per annum at which dollar
deposits of $5,000,000 and for a one-month maturity are offered by the
principal London office of WBNA in immediately available funds in the London
interbank market at approximately 11:00 a.m., London time, for such day.”

 

““Maximum
Availability”:  At any time, an
amount equal to the least of: (i)(A) the Facility Amount minus (B) the
Unfunded Exposure Amount; (ii)(A) the product of the Borrowing Base and
the Weighted Average Advance Rate plus (B) the amount on deposit in
the Principal Collections Account received in reduction of the Outstanding Loan
Balance of any Loan plus (C) the amount on deposit in the
Pre-Funded Advances Account in respect of Pre-Funded Advances, after giving
effect to all repayments of Pre-Funded Advances on such day and the making of
new Pre-Funded Advances on such day minus (D) the Unfunded Exposure
Amount; and (iii)(A) the Borrowing Base minus (B) the Large
Obligor Coverage Amount plus (C) the amount on deposit in the
Principal Collections Account received in reduction of the Outstanding Loan
Balance of any Loan plus (D) the amount on deposit in the
Pre-Funded Advances Account in respect of Pre-Funded Advances, after giving
effect to all repayments of Pre-Funded Advances on such day and the making of
new Pre-Funded Advances on such day minus (E) the Unfunded Exposure
Amount; provided, however,
that at all times during the Amortization Period (other than for purposes of Section 2.1(f)),
the Maximum Availability shall be equal to the Advances Outstanding.”

 

““Outstanding
Loan Balance”:  As of any Measurement
Date, (i) with respect to any Discount Loan, the lesser of (a) the
Fair Market Value of such Loan as of the end of the most recent date of
determination and (b) the purchase price of such Loan (expressed as a
percentage of par) multiplied by its outstanding principal balance (exclusive
of any interest and Accreted Interest); (ii) with respect to any Priced
Loan other than a Discount Loan, the least of (a) the Fair Market Value of
such Loan as of the end of the most recent date of determination, (b) the
purchase price of such Loan (expressed as a percentage of par) multiplied by
its outstanding principal balance (exclusive of any interest and Accreted
Interest) and (c) the outstanding principal balance of such Loan
(exclusive of any interest and Accreted Interest); and (iii) with respect
to any other Loan, the lesser of (a) the Fair Market Value of such Loan as
of the end of the most recent date of determination and (b) the
outstanding principal balance of such Loan (exclusive of any 

 

4

 

interest and Accreted
Interest); provided that the Outstanding Loan
Balance of any Revolving Loan or Delayed Draw Term Loan shall exclude the
principal balance of any Unfunded Exposure Amount in respect of such Loan
except for the purpose of calculating the Excess Concentration Amount.  The Outstanding Loan Balance of (x) any
Prepaid Loan which has been prepaid in full or (y) any Equity Security
shall equal $0.  For the avoidance of
doubt, any principal amount previously covered by a Servicer Advance will be
excluded from the principal amounts outstanding for purposes of this
definition.”

 

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

 

(c)           Section 1.1
of the Sale and Servicing Agreement is hereby amended by adding the following
defined terms in the proper alphabetical order:

 

““Discount Loan”:  Any Loan that has been purchased, acquired or
originated by the Originator (or an Affiliate thereof) at less than 95% of its
par value as of the date of its purchase, acquisition or origination; provided, however, that
any such Loan that is classified as a Discount Loan shall cease to be so
classified (a) with respect to a Priced Loan, on the first day after such
purchase, acquisition or origination on which such Priced Loan shall have
obtained a Market Value equal to or greater than 95% of its par value for a
period of thirty (30) consecutive days and (b) with respect to any Loan
other than a Priced Loan, on the date the Administrative Agent, acting in its
sole discretion, so notifies the Borrower and the Servicer in writing.”

 

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

 

““Exposure
Amount”:   As of any date of
determination, with respect to any Delayed Draw Term Loan or Revolving Loan,
the excess, if any, of (i) the maximum commitment of the Borrower under
the terms of the applicable Underlying Instruments to make loans (and, for the
avoidance of doubt, the Borrower’s commitment in respect of a Loan as to which
the commitment to make additional loans has been terminated shall be zero) over
(ii) the outstanding principal balance of such Loan on such date of
determination.”

 

““Exposure
Amount Shortfall”:  Defined in Section 2.1(f).”

 

““Market Value”:  As of any Measurement Date, the midpoint
between the “ask” price and the “bid” price for any Priced Loan by reference to
information provided by (i) LoanX Mark-It Partners or (ii) if no such
information is available from LoanX Mark-It 

 

5

 

Partners, then
information provided by Loan Pricing Corporation, or (iii) if no such
information is available from either LoanX Mark-It Partners or Loan Pricing
Corporation, then information provided by another pricing service selected by
the Administrative Agent in its sole discretion.”

 

““Market Value
Adjustment Amount”:  An amount
calculated as of each Measurement Date equal to the positive difference, if
any, of (a) the product of (i) the aggregate Outstanding Loan Balance
of all Priced Loans and (ii) 87.5% minus (b) the sum of the current
Market Value of each Priced Loan as determined by the lower of the Market
Values provided by LoanX Mark-It Partners or Loan Pricing Corporation as
calculated on each such Measurement Date.”

 

““Minimum
Weighted Average Spread”: 4.00%.”

 

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

 

““Standstill
Period”: Defined in Section 10.2(c).”

 

““Subordinated
Loan”:  Any Term Loan that (i) may
or may not be secured by a Lien on the Obligor’s assets constituting Related
Property for the Loan, (ii) has a Loan-to-Value Ratio not greater than
75%, and (iii) that contains terms which, upon the occurrence of an event
of default under the Underlying Instruments or in the case of any liquidation
or foreclosure on the Related Property, provide that the Borrower’s portion of
such Loan would be paid only after the other creditors to such Obligor
(including any lender party making any Broadly Syndicated Loan, First Lien
Loan, Second Lien Loan or Subordinated Loan whose right to payment is
contractually senior to the Borrower) is paid in full.”

 

““Tenth
Amendment Effective Date”: July 22, 2008.”

 

““Unfunded
Exposure Account”:  Defined in Section 6.4(j).”

 

““Unfunded
Exposure Amount”: At any time, the amount, if any, by which (i) the
aggregate Exposure Amount exceeds (ii) the aggregate amount on deposit in
the Unfunded Exposure Account.”

 

““Weighted
Average Spread”:  As of any date of
determination, a fraction (expressed as a percentage and rounded up to the next
0.001%), the numerator of which is equal to the sum of (a) the product of (i) the
sum of the products determined by multiplying the Outstanding Loan Balance of
each Floating Rate Loan (excluding Charged-Off Loans and Delinquent Loans) in
the Collateral as of such date of determination by the stated current cash
spread at which interest accrues on such Loan above the Ares LIBOR Rate or the
Ares Prime Rate for such Loan (as applicable) multiplied by (ii) the
Outstanding Loan Balance of all Floating Rate Loans (excluding Charged-Off
Loans and Delinquent Loans) in the Collateral as of such date of determination
plus (b) the product of (i) the sum of the products determined by 

 

6

 

multiplying the
Outstanding Loan Balance of each Fixed Rate Loan (excluding Charged-Off Loans
and Delinquent Loans) in the Collateral as of such date of determination by (x) the
stated cash coupon for such Loan minus (y) the weighted average Ares LIBOR
Rate applicable to the Floating Rate Loans (excluding Charged-Off Loans and
Delinquent Loans) in the Collateral as of such date of determination multiplied
by (ii) the Outstanding Loan Balance of all Fixed Rate Loans (excluding
Charged-Off Loans and Delinquent Loans) in the Collateral as of such date of
determination, and the denominator of which is the Aggregate Outstanding Loan
Balance as of such date of determination; provided that,
in the case of a Floating Rate Loan with an interest rate calculated based on
an Ares Prime Rate, the stated current cash spread for such Loan shall include
an amount equal to the difference between such Ares Prime Rate minus the
equivalent Ares LIBOR Rate for such Loan.”

 

““Weighted
Average Spread Test”: As of any Measurement Date, a test that will be
satisfied if the Weighted Average Spread exceeds the Minimum Weighted Average
Spread.”

 

(d)           The
definition of  “Account” set forth
in Section 1.1 of the Sale and Servicing Agreement is hereby amended by
inserting the phrase “, the Unfunded Exposure Account” immediately after the
words “Pre-Funded Advances Account”.

 

(e)           The
definition of “Advance Rate” in Section 1.1 of the Sale and
Servicing Agreement is hereby amended by replacing the table in the definition
with the following:

 

ELIGIBLE LOANS

 

	
  TYPE OF ELIGIBLE LOAN

  	
   

  	
  ADVANCE RATE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Broadly Syndicated Loans

  	
   

  	
  75

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  First Lien Loans

  	
   

  	
  70

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Second Lien Loans

  	
   

  	
  55

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Subordinated Loans

  	
   

  	
  50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  DIP Loans

  	
   

  	
  50

  	
  %

  

 

(f)            The
definition of  “Aggregate Outstanding
Loan Balance” or “AOLB” set forth in Section 1.1 of the Sale
and Servicing Agreement is hereby amended by inserting the phrase “, minus
the Market Value Adjustment Amount” immediately before the period.

 

(g)           The
definition of “Availability” set forth in Section 1.1 of the Sale
and Servicing Agreement is hereby amended by inserting the phrase “(other than
for purposes of Section 2.1(f))” immediately after the words “Amortization
Period”.

 

7

 

(h)           The
definition of “Concentration Limits” set forth in Section 1.1 of
the Sale and Servicing Agreement is hereby amended by amending and restating
clauses (a) through (d) thereof in their entirety as follows:

 

“(a)         the sum of the Outstanding Loan
Balances of Eligible Loans that are Loans to a single Obligor (including any
Affiliates thereof) shall not exceed $25,000,000;

 

(b)           the sum of the Outstanding Loan
Balances of all Eligible Loans divided by the number of Eligible Obligors
(including Affiliates thereof) shall not exceed the greater of 5% or
$12,500,000;

 

(c)           the sum of the Outstanding Loan
Balances of Eligible Loans that are Loans to Eligible Obligors in the same
Moody’s Industry Classification Group shall not exceed the greater of 20% or
$40,000,000;

 

(d)           the sum of the Outstanding Loan
Balances of Eligible Loans that are Second Lien Loans and Subordinated Loans
shall not exceed the greater of 70% or $100,000,000;”

 

(i)            The
definition of “Concentration Limits” set forth in Section 1.1 of
the Sale and Servicing Agreement is hereby amended by deleting the percentage “20%”
from clause (f) thereof and replacing it with the percentage “5%” and by
deleting the number “$40,000,000” from clause (f) thereof and replacing it
with the number “$10,000,000”.

 

(j)            The
definition of “Concentration Limits” set forth in Section 1.1 of
the Sale and Servicing Agreement is hereby amended by inserting the word “and”
at the end of clause (h) thereof.

 

(k)           The
definition of “Delinquent Loan” set forth in Section 1.1 of the
Sale and Servicing Agreement is hereby amended by deleting the number “60”
where it appears and replacing it with the phrase “five (5)”.

 

(l)            The
definition of “Delinquent Portfolio Loan” set forth in Section 1.1
of the Sale and Servicing Agreement is hereby amended by deleting the number “60”
where it appears and replacing it with the phrase “five (5)”.

 

(m)          The
definition of “Eligible Loan” set forth in Section 1.1 of the Sale
and Servicing Agreement is hereby amended by deleting the phrases “Senior
Secured ABL,” and “Qualified Second Lien Loan,” from clause (f)(i) thereof,
and by deleting the phrase “Senior Subordinated Loan or Junior” from clause (f)(ii) thereof.

 

(n)           The
definition of “Eligible Loan” set forth in Section 1.1 of the Sale
and Servicing Agreement is hereby amended by deleting the phrase “more than ten
days” from clause (h) thereof.

 

(o)           The
definition of “Eligible Loan” set forth in Section 1.1 of the Sale
and Servicing Agreement is hereby amended by deleting the phrase “which are
part of the Retained Interest” from clause (w) thereof.

 

8

 

(p)           The
definition of “Eligible Loan” set forth in Section 1.1 of the Sale
and Servicing Agreement is hereby amended by deleting the phrase “[Reserved]”
from clause (dd) thereof and replacing it with the phrase “such Loan has been
purchased or acquired by the Originator (or directly by the Borrower) for an
amount not less than 85% of the par value of such Loan outstanding as of the
date of such purchase or acquisition unless otherwise approved in writing by
the Administrative Agent in its sole discretion”.

 

(q)           The
definition of “Eligible Loan” set forth in Section 1.1 of the Sale
and Servicing Agreement is hereby amended by deleting the phrase “[Reserved]”
from clause (ee) thereof and replacing it with the phrase “at the time of
inclusion in the Collateral, if the Weighted Average Spread Test was not
satisfied as of the most recent Measurement Date, such Loan shall maintain or
improve the Weighted Average Spread”.

 

(r)            The
definition of “Facility Amount” set forth in Section 1.1 of the
Sale and Servicing Agreement is hereby amended by inserting the phrase “(except
with respect to any Advances made pursuant to Section 2.1(f))”
immediately after the words “Termination Date”.

 

(s)           The
definition of “Facility Termination Date” set forth in Section 1.1
of the Sale and Servicing Agreement is hereby amended by replacing the date “October 6,
2010” with the date “July 19, 2011”.

 

(t)            The
definition of “First Lien Loan” set forth in Section 1.1 of the
Sale and Servicing Agreement is hereby amended by deleting the phrase “(a) 60%
where the Loan is not a Material Mortgage Loan or the Related Property is not
primarily real estate and (b) 75% where the Loan is a Material Mortgage
Loan or the Related Property is primarily real estate” from clause (ii) thereof
and replacing it with the percentage “60%”.

 

(u)           The
definition of “Junior Subordinated Loan” set forth in Section 1.1
of the Sale and Servicing Agreement is hereby deleted in its entirety.

 

(v)           The
definition of “Loan” set forth in Section 1.1 of the Sale and
Servicing Agreement is hereby amended by deleting the phrase “Junior
Subordinated Loan, Qualified Second Lien Loan, Second Lien Loan, Senior Secured
ABL or Senior Subordinated Loan” and replacing it with “Second Lien Loan or
Subordinated Loan”.

 

(w)          The
definition of “Material Adverse Effect” set forth in Section 1.1 of
the Sale and Servicing Agreement is hereby amended by deleting the word “collectibility”
where it appears and replacing it with the word “collectability”.

 

(x)            The
definition of “Material Modification” set forth in Section 1.1 of
the Sale and Servicing Agreement is hereby amended by inserting the phrase “permits
any interest due in cash to be deferred or capitalized and added to the
principal amount of such Loan (other than any deferral or capitalization
already allowed by the terms of the Underlying Instruments of any PIK Loan),”
in clause (c) thereof immediately after the phrase “waives one or more
interest payments,”.

 

(y)           The
definition of “Minimum Pool Yield” set forth in Section 1.1 of the
Sale and Servicing Agreement is hereby deleted in its entirety.

 

9

 

(z)            The
definition of “Permitted Liens” set forth in Section 1.1 of the
Sale and Servicing Agreement is hereby amended by deleting the phrase “Senior
Subordinated Loan or Junior” from clause (d) thereof.

 

(aa)         The
definition of “Pool Yield” set forth in Section 1.1 of the Sale and
Servicing Agreement is hereby deleted in its entirety.

 

(bb)         The
definition of “Pre-Funded Limit” set forth in Section 1.1 of the
Sale and Servicing Agreement is hereby amended by deleting the number “$35,000,000”
and replacing it with the number “$30,000,000”.

 

(cc)         The
definition of “Qualified Second Lien Loan” set forth in Section 1.1
of the Sale and Servicing Agreement is hereby deleted in its entirety.

 

(dd)         The
definition of “Senior Secured ABL” set forth in Section 1.1 of the
Sale and Servicing Agreement is hereby deleted in its entirety.

 

(ee)         The
definition of “Senior Subordinated Loan” set forth in Section 1.1
of the Sale and Servicing Agreement is hereby deleted in its entirety.

 

(ff)           The
definition of “Servicing Standard” set forth in Section 1.1 of the
Sale and Servicing Agreement is hereby amended by inserting the phrase “(i) if
the Servicer is the Originator or an Affiliate thereof, the higher of: (A) the
customary and usual servicing practices that a prudent loan investor or lender
would use in servicing loans like the Loans for its own account, and (B) the
same care, skill, prudence and diligence with which the Servicer services and
administers loans for its own account or for the account of others, and (ii) if
the Servicer is not the Originator or an Affiliate thereof,” immediately before
the phrase “the same care” in clause (a) thereof.

 

(gg)         The
definition of “Termination Date” set forth in Section 1.1 of the
Sale and Servicing Agreement is hereby amended by replacing the date “October 8,
2008” in clause (c) thereof with the date “July 21, 2009” and by
appropriately re-lettering the last two clauses thereof.

 

(hh)         The
definition of “VFCC” set forth in Section 1.1 of the Sale and
Servicing Agreement is hereby amended by deleting the word “Corporation” and
replacing it with the words “Company LLC” and by deleting the word “corporation”
and replacing it with the phrase “limited liability company”.

 

(ii)           Section 2.1
of the Sale and Servicing Agreement is hereby amended by deleting the following
two sentences from clause (d) thereof in their entirety:

 

“In the event that
the term of any Liquidity Agreement or the date set forth in clause (c) of
the definition of Termination Date is not extended for a period of up to 364
days, the Termination Date shall be extended with the consent of the
Administrative Agent (such consent not to be unreasonably withheld) for a
period of 45 days and notice of such termination shall be provided by the
Administrative Agent to the Backup 

 

10

 

Servicer, the Trustee,
the Originator, the Borrower and the Servicer. 
Only one such 45 day extension of the Termination Date shall be
permitted under this Section 2.1(d).”

 

(jj)           Section 2.1
of the Sale and Servicing Agreement is hereby amended by adding the following
clause (f):

 

“(f)          Notwithstanding Section 2.1(b),
if on the Termination Date the amount on deposit in the Unfunded Exposure
Account is less than the aggregate Exposure Amount, the Borrower shall request
the Purchasers to make an Advance under the VFCs in the amount of such
shortfall (the “Exposure Amount Shortfall”).  Following receipt of a Funding Request (which
shall specify the account details of the Unfunded Exposure Account where the
funds will be made available), the Purchasers shall fund such Exposure Amount
Shortfall in accordance with Section 2.3.”

 

(kk)         Section 2.3(b)(ii) of
the Sale and Servicing Agreement is hereby amended and restated in its entirety
as follows:

 

“(ii)         to the Administrative Agent, a
description of the Obligor and the Loan or Loans (A) to be funded by the
proposed Funded Advance or (B) in respect of which cash will be funded
into the Unfunded Exposure Account;”

 

(ll)           Section 2.3(b)(iv) of
the Sale and Servicing Agreement is hereby amended by inserting the phrase “(or
have Exposure Amounts collateralized)” immediately after the words “to be
financed” in clause (c) thereof.

 

(mm)       Section 2.3(c) of
the Sale and Servicing Agreement is hereby amended by adding the following at
the end of the sentence before the period.

 

“; provided that, with respect to a Funded Advance funded
pursuant to Section 2.1(f), the Purchasers shall remit the Exposure
Amount Shortfall in same day funds to the Unfunded Exposure Account”

 

(nn)         Section 2.8(a) of
the Sale and Servicing Agreement is hereby amended by deleting the following in
its entirety:

 

“Unless
sooner prepaid pursuant to Section 2.4(b) or Section 10.2,
the Advances Outstanding shall be repaid in full on the date that occurs 24
months following the Termination Date. 
In addition,”

 

(oo)         Section 2.9(a) of
the Sale and Servicing Agreement is hereby amended by inserting the following
clause (6) and renumbering the existing clauses accordingly:

 

“(6)         in the Servicer’s discretion, to the
Unfunded Exposure Account, an amount sufficient to cause the amount on deposit
therein to equal the aggregate Exposure Amount;”

 

11

 

(pp)         Section 2.9(a) of
the Sale and Servicing Agreement is hereby amended by deleting the number “(6)”
from clause (7) thereof (after giving effect to Section 1(oo) of this
Amendment) and replacing it with the number “(7)”.

 

(qq)         Section 2.9(a) of
the Sale and Servicing Agreement is hereby amended by amending and restating
clause (8) thereof (after giving effect to Section 1(oo) of this
Amendment) in its entirety as follows:

 

“(8)         pro rata in accordance
with the amounts due under this clause, to the Administrative Agent, each
Purchaser Agent, any applicable Purchaser, the Backup Servicer, the Trustee,
the Affected Parties, the Indemnified Parties or the Secured Parties, all other
amounts, including, without duplication, any Increased Costs, Taxes or
Indemnified Amounts, but other than the principal of Advances Outstanding, then
due under this Agreement;”

 

(rr)           Section 2.9(a) of
the Sale and Servicing Agreement is hereby amended by deleting the word “and”
from the end of clause (9) thereof (after giving effect to Section 1(oo)
of this Amendment).

 

(ss)         Section 2.9(a) of
the Sale and Servicing Agreement is hereby amended by inserting the word “and”
at the end of clause (10) thereof (after giving effect to Section 1(oo)
of this Amendment).

 

(tt)           Section 2.9(b) of
the Sale and Servicing Agreement is hereby amended by inserting the following
paragraph at the end of such section:

 

“Upon
the satisfaction of the conditions set forth in this Section 2.9(b) (as
certified by the Borrower in the related Borrowing Notice delivered to the
Trustee), the Trustee will release funds from the Principal Collections Account
to the Servicer in an amount not to exceed the lesser of (A) the amount
requested by the Servicer and (B) the amount on deposit in the Principal
Collections Account on such day.”

 

(uu)         Section 2.9
of the Sale and Servicing Agreement is hereby amended by adding the following
clause (c) thereof:

 

“(c)         On the terms and conditions hereinafter
set forth, from time to time during the Revolving Period, the Servicer may
withdraw funds from the Unfunded Exposure Account for the purpose of funding
the Borrower’s unfunded commitments with respect to Delayed Draw Term Loans and
Revolving Loans, provided that the following conditions are satisfied (unless
otherwise waived in writing by the Administrative Agent):

 

(i)            all
conditions precedent set forth in clauses (i) and (ii) of Section 3.2(b) have
been satisfied;

 

(ii)           the
Servicer provides same day written notice to the Administrative Agent, each
Purchaser Agent and the Trustee by facsimile or email of the request to
withdraw such funds and the amount of such request, 

 

12

 

which notice must be accompanied by a Borrowing Notice in the form of Exhibit A-3,
certifying that such funds are only being used to fund Exposure Amounts with
respect to any Delayed Draw Term Loan or Revolving Loan, and executed by the
Borrower and a Responsible Officer of the Servicer; and

 

(iii)          the
amount actually withdrawn from the Unfunded Exposure Account does not exceed
the Exposure Amount required to be funded by the Borrower on the date of such
withdrawal;

 

and in
connection therewith, the Trustee shall provide to the Administrative Agent by facsimile
or electronic mail a statement reflecting the balance on deposit in the
Unfunded Exposure Account remaining as of such day.

 

Upon
the satisfaction of the conditions set forth in this Section 2.9(c) (as
certified by the Borrower in the related Borrowing Notice delivered to the
Trustee), the Trustee will release funds from the Unfunded Exposure Account to
the Servicer in an amount not to exceed the lesser of (A) the amount
requested by the Servicer and (B) the amount on deposit in the Unfunded
Exposure Account on such day.”

 

(vv)         Section 2.10(a) of
the Sale and Servicing Agreement is hereby amended by inserting the following
clause (6) and renumbering the existing clauses accordingly:

 

“(6)         to the Unfunded Exposure Account, in an
amount sufficient to cause the amount on deposit therein to equal the aggregate
Exposure Amount;”

 

(ww)       Section 2.10(a) of
the Sale and Servicing Agreement is hereby amended by deleting the number “(6)”
from clause (7) thereof (after giving effect to Section 1(vv) of this
Amendment) and replacing it with the number “(7)”.

 

(xx)          Section 2.10(a) of
the Sale and Servicing Agreement is hereby amended by amending and restating
clause (8) thereof (after giving effect to Section 1(vv) of this
Amendment) in its entirety as follows:

 

“(8)         pro rata in
accordance with the amounts due under this clause, to the Administrative Agent,
each Purchaser Agent, the applicable Purchaser, the Backup Servicer, the
Trustee, the Affected Parties, the Indemnified Parties, or the Secured Parties,
all other amounts, including, without duplication, any Increased Costs, Taxes
or Indemnified Amounts, but other than the principal of Advances Outstanding,
then due under this Agreement;”

 

(yy)         Section 2.10(a) of
the Sale and Servicing Agreement is hereby amended by deleting the word “and”
from the end of clause (9) thereof (after giving effect to Section 1(vv)
of this Amendment).

 

(zz)          Section 2.10(a) of
the Sale and Servicing Agreement is hereby amended by inserting the word “and”
at the end of clause (10) thereof (after giving effect to Section 1(vv)
of this Amendment).

 

13

 

(aaa)       Section 2.10
of the Sale and Servicing Agreement is hereby amended by adding the following
clause (b) thereof:

 

“(b)         On the terms and conditions hereinafter
set forth, from time to time during the Amortization Period, the Servicer may
withdraw funds from the Unfunded Exposure Account for the sole purpose of
funding the Borrower’s unfunded commitments with respect to Delayed Draw Term
Loans and Revolving Loans, provided that the following conditions are satisfied
(unless otherwise waived in writing by the Administrative Agent):

 

(i)            all
conditions precedent set forth in clauses (i) and (ii) of Section 3.2(b) have
been satisfied;

 

(ii)           the
Servicer provides same day written notice to the Administrative Agent, each
Purchaser Agent and the Trustee by facsimile or email of the request to
withdraw such funds and the amount of such request, which notice must be
accompanied by a Borrowing Notice in the form of Exhibit A-3,
certifying that such funds are only being used to fund Exposure Amounts with
respect to any Delayed Draw Term Loan or Revolving Loan, and executed by the
Borrower and a Responsible Officer of the Servicer; and

 

(iii)          the
amount actually withdrawn from the Unfunded Exposure Account does not exceed
the Exposure Amount required to be funded by the Borrower on the date of such
withdrawal.

 

Upon
the satisfaction of the conditions set forth in this Section 2.10(b) (as
certified by the Borrower in the related Borrowing Notice delivered to the
Trustee), the Trustee will release funds from the Unfunded Exposure Account to
the Servicer in an amount not to exceed the lesser of (A) the amount
requested by the Servicer and (B) the amount on deposit in the Unfunded
Exposure Account on such day.”

 

(bbb)      Section 2.10
of the Sale and Servicing Agreement is hereby amended by adding the following
clause (c) thereof:

 

“On
each Payment Date during the Amortization Period, the Servicer shall direct the
Trustee in writing (which direction may be contained in the Servicing Report
delivered on the related Reporting Date pursuant to Section 6.10(b))
to distribute from the Unfunded Exposure Account an amount equal to the amount,
if any, of funds held therein which is in excess of the aggregate Exposure
Amount (such excess amount to be calculated as of the Measurement Date for such
Servicing Report) into the Principal Collections Account.”

 

(ccc)       Section 2.12(b) of
the Sale and Servicing Agreement is hereby amended by deleting the number “(7)”
where it appears and replacing it with the number “(8)”.

 

(ddd)      Section 2.12
of the Sale and Servicing Agreement is hereby amended by adding the following
clause (d) thereof:

 

14

 

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

 

(eee)       Section 2.14(b) of
the Sale and Servicing Agreement is hereby amended by deleting the number “(9)”
where it appears and replacing it with the number “(10)”.

 

(fff)         Section 2.14(e) of
the Sale and Servicing Agreement is hereby amended by deleting the word “Closing”
and replacing it with the phrase “Tenth Amendment Effective”, and by deleting
the phrase “and in no event later than April 23, 2005” immediately before
the period.

 

(ggg)      Section 2.15(e) of
the Sale and Servicing Agreement is hereby amended by deleting the phrase “Adjusted
Eurodollar Rate” and replacing it with the phrase “LIBOR Rate or Adjusted Eurodollar
Rate, as applicable,”.

 

(hhh)      Section 2.19(a) of
the Sale and Servicing Agreement is hereby amended by amending and restating
clause (i) in its entirety as follows:

 

“(i)          The Borrower shall have given the
Administrative Agent (with a copy to the Trustee) at least 45 Business Days’
prior written notice of its intent to effect an Optional Sale in connection
with a Permitted Securitization or a Permitted Refinancing, and, in the case of
an Optional Sale occurring at any time after the Termination Date, the
Administrative Agent shall have delivered to the Borrower its prior written
consent (in its sole discretion) to such Optional Sale, unless such notice
and/or consent requirement, as applicable, is waived or reduced by the
Administrative Agent; provided that
no such consent will be required for any Optional Sale of any Loan at a price
equal to or greater than 95% of the par value of such Loan as of the date of
the Optional Sale;”

 

(iii)          Section 2.20(a)(i) of
the Sale and Servicing Agreement is hereby amended by inserting the following
words at the end of the phrase before the semi-colon:

 

“and, in the case
of a Discretionary Sale occurring at any time after the Termination Date, the
Administrative Agent shall have delivered to the Borrower its prior written
consent (in its sole discretion) to such Discretionary Sale; provided that no such consent will be required for any
Discretionary Sale of any Loan at a price equal to or greater than 95% of the
par value of such Loan as of the date of the Discretionary Sale”

 

(jjj)          Section 3.2
of the Sale and Servicing Agreement is hereby amended by amending and restating
clause (a) in its entirety as follows:

 

15

 

“(a)         Each Advance under this Agreement, each
reduction in Advances Outstanding pursuant to Section 2.4(b), each
investment of amounts on deposit in the Principal Collections Account pursuant
to Section 2.9(b) and each investment of amounts on deposit in
the Unfunded Exposure Account pursuant to Section 2.9(c) or Section 2.10(b) (each,
a “Transaction”) shall be subject to the further conditions precedent
that:

 

(i)            with respect to any Advance, the
Servicer shall have delivered to the Administrative Agent and each Purchaser
Agent (with a copy to the Trustee and the Backup Servicer) no later than 2:00 p.m.
on the date that is one Business Day prior to the related Funding Date:

 

(1)           a Borrowing Notice in the form of Exhibit A-1
or A-1-PF, as applicable, a Borrowing Base Certificate or a Pre-Funded
Advance Certificate, as applicable, a Loan List and, if applicable, a Servicing
Report; and

 

(2)           except with respect to an Advance for
the purpose of funding the Unfunded Exposure Account, a Certificate of
Assignment in the form of Exhibit A to the Sale Agreement including Schedule
I thereto and containing such additional information as may be reasonably
requested by the Administrative Agent and each Purchaser Agent;

 

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

 

(iii)          with respect to any investment of
amounts on deposit in the Principal Collections Account or the Pre-Funding
Account permitted by Section 2.9(b), the Servicer shall have
delivered to the Administrative Agent and each Purchaser Agent (with a copy to
the Trustee and the Backup Servicer), no later than 2:00 p.m. on the
Business Day prior to any such investment, with respect to any Advance, a
Borrowing Notice in the form of Exhibit A-3 and a Borrowing Base
Certificate or a Pre-Funded Advance Certificate, as applicable, executed by the
Servicer and the Borrower; and

 

(iv)          with respect to any investment of
funds on deposit in the Unfunded Exposure Account permitted by Section 2.9(c) or
Section 2.10(b), the Servicer shall have delivered to the
Administrative Agent and each Purchaser Agent (with a copy to the Trustee and
the Backup Servicer), no later than 2:00 p.m. on the Business Day prior to
any such investment, with respect to any Advance, a Borrowing Notice in the
form of Exhibit A-3 executed by the Servicer and the Borrower;”

 

16

 

(kkk)       Section 3.2(b) of
the Sale and Servicing Agreement is hereby amended by inserting the phrase “(except
with respect to an Advance required by Section 2.1(f))” immediately
after the word “Availability” in clause (iii) thereof.

 

(lll)          Section 3.2(b) of
the Sale and Servicing Agreement is hereby amended by deleting the word “On” at
the beginning of clause (iv) thereof and replacing it with the phrase “Except
with respect to an Advance required by Section 2.1(f), on”.

 

(mmm)    Section 3.2(c) of
the Sale and Servicing Agreement is hereby amended by inserting the phrase “(other
than a Funded Advance for the purpose of funding the Unfunded Exposure Amount)”
immediately after the words “Funded Advance”.

 

(nnn)      Section 3.2
of the Sale and Servicing Agreement is hereby amended by deleting the word “The”
at the beginning of clause (d) thereof and replacing it with the phrase “Except
with respect to any Transaction required by Section 2.1(f) or Section 2.10(b),
the”.

 

(ooo)      Section 4.1(m)(viii) of
the Sale and Servicing Agreement is hereby amended by deleting the phrase “Senior
Subordinated Loan or a Junior” from clause (D) thereof.

 

(ppp)      Section 4.1(bb)
of the Sale and Servicing Agreement is hereby amended by deleting the phrase “Senior
Subordinated Loans and Junior” from such section.

 

(qqq)      Section 6.3(a) of
the Sale and Servicing Agreement is hereby amended by deleting the word “collectibility”
where it appears and replacing it with the word “collectability”.

 

(rrr)         Section 6.4(a) of
the Sale and Servicing Agreement is hereby amended by deleting the word “collectibility”
where it appears and replacing it with the word “collectability”.

 

(sss)       Section 6.4
of the Sale and Servicing Agreement is hereby amended by adding the following
clause (j):

 

“(j)          Establishment of the Unfunded
Exposure Account.  The Servicer shall
cause to be established, on or before the Tenth Amendment Effective Date, with
the Trustee, and maintained in the name of the Borrower, subject to the lien of
the Administrative Agent, a segregated corporate trust account entitled “Unfunded
Exposure Account for Ares Capital CP Funding LLC, subject to the lien of
Wachovia Capital Markets, LLC, as Administrative Agent for the Secured Parties”
(the “Unfunded Exposure Account”), over which the Trustee as agent for
the Secured Parties, shall have control and from which none of the Originator,
the Servicer nor the Borrower shall have any right of withdrawal except as set
forth in accordance with Section 2.9(c) or Section 2.10(b).”

 

(ttt)         Section 6.5(b) of
the Sale and Servicing Agreement is hereby amended by deleting the number “(8)”
where it appears and replacing it with the number “(9)”.

 

(uuu)      Section 6.8
of the Sale and Servicing Agreement is hereby amended by deleting the number “(9)”
where it appears and replacing it with the number “(10)”.

 

17

 

(vvv)      Section 6.15(a) of
the Sale and Servicing Agreement is hereby amended by inserting the phrase “or
the Unfunded Exposure Account” immediately before the words “as required”.

 

(www)    Section 7.2(b)(iii) of
the Sale and Servicing Agreement is hereby amended by deleting the phrase “and (L) the
Pool Yield” and replacing it with the phrase “, (L) the Weighted Average
Spread and (M) the Weighted Average Life”.

 

(xxx)        Section 10.1(j) of
the Sale and Servicing Agreement is hereby amended by inserting the word “or”
immediately after the semi-colon.

 

(yyy)      Section 10.1(k) of
the Sale and Servicing Agreement is hereby amended by deleting the phrase “as
of any Determination Date, the Pool Yield does not equal or exceed the Minimum
Pool Yield” and replacing it with the phrase “[Reserved]”.

 

(zzz)        Section 10.2
of the Sale and Servicing Agreement is hereby amended and restated in its
entirety as follows:

 

“(a)         Upon the occurrence of a Termination
Event, the Administrative Agent shall, at the request of, or may, with the
consent of, the Required Purchasers, by notice to the Borrower (and the Administrative
Agent shall provide a copy of such notice to the Trustee), declare the
Termination Date to have occurred, the VFCs to be immediately due and payable
in full (without presentment, demand, protest or notice of any kind all of
which are hereby waived by the Borrower) and the Amortization Period to have
commenced; provided, however,
in the case of any event described in Section 10.1(c) or 10.1(d) (in
the case of Section 10.1(d) due to the occurrence of an event
described in Section 6.15(d)), the VFCs shall be immediately due
and payable in full (without presentment, demand, notice of any kind, all of
which are hereby expressly, waived by the Borrower) and the Termination Date
shall be deemed to have occurred automatically upon the occurrence of any such
event.

 

(b)           Upon the declaration or occurrence of
a Termination Date, no Advances will thereafter be made (other than Advances
made pursuant to Section 2.1(f)), the Revolving Period shall end
and the Amortization Period shall commence and the Trustee shall, on each
Payment Date thereafter, make payments in accordance with the provisions of Section 2.10.
For the avoidance of doubt, the occurrence of a Termination Date as defined in clauses
(a) through (f), inclusive, of the definition of “Termination
Date” shall constitute a Termination Date for the purposes of this Section 10.2.  On and after the declaration or occurrence of
a Termination Date, the Trustee, on behalf of the Secured Parties and at the
direction of the Administrative Agent, shall have, in addition to all of the
rights and remedies under this Agreement or otherwise, all other rights and
remedies provided under the UCC of each applicable jurisdiction and other
Applicable Laws, in each case subject to clause (ii) of this Section 10.2(b),
and Sections 10.2(c) – (g), which rights shall be
cumulative. Without limiting the generality of the foregoing sentence, the
Trustee (acting as directed by the Administrative Agent) or the Administrative Agent also may (i) require
the Borrower and Servicer to, and the Borrower and Servicer hereby agree that
they will at the Servicer’s expense and upon the request of the Trustee or the 

 

18

 

Administrative Agent forthwith, assemble all or any part of the
Collateral as directed by the Trustee (acting as directed by the
Administrative Agent) or the
Administrative Agent and make the same available to the Trustee or the
Administrative Agent at a place to be designated by the Trustee or the
Administrative Agent and (ii) sell the Collateral or any part thereof in
one or more parcels at a public or private sale subject to the requirements set
forth in Sections 10.2(c) – (g).  Neither the Administrative Agent nor the
Trustee (acting as directed by the Administrative Agent) shall market, hold discussions with or
otherwise prepare or make arrangements for the sale of any part of the
Collateral prior to the end of the Standstill Period.

 

(c)           The Trustee (acting as
directed by the Administrative Agent) or the Administrative Agent shall provide at least 90 days prior notice
to the Borrower and the Servicer of its intention to sell any Collateral (a “Notice
of Intended Sale”), but no such Notice of Intended Sale shall be valid if
given prior to the occurrence or declaration of a Termination Date.  At any time following such 90-day period (the
“Standstill Period”), the Administrative Agent may use its commercially
reasonable efforts to obtain Eligible Bids with respect to the Collateral.  The delivery of a Notice of Intended Sale
shall not obligate or otherwise commit the Trustee or the Administrative Agent
to sell any Collateral.

 

(d)           If the Trustee (acting
as directed by the Administrative Agent) or the Administrative Agent proposes to sell the Collateral or any part
thereof in one or more parcels at a public or private sale, at the request of
the Trustee or the Administrative Agent, as applicable, the Borrower and the
Servicer shall make available to each prospective bidder, on a timely basis,
all reasonable information relating to the Collateral subject to sale,
including, without limitation, copies of any disclosure documents, contracts,
financial statements of the applicable Obligors, covenant certificates and any
other materials reasonably requested by the Administrative Agent or such
bidders; provided that neither the Borrower nor
the Servicer shall be required to disclose any information which it is required
by law or contract to be kept confidential.

 

(e)           At any time after the Borrower has
received notice of a Termination Date from the Administrative Agent and before
the Collateral has been sold, the Borrower may pay to the Trustee an amount
equal to the Aggregate Unpaids, and, once such payment is applied by the
Trustee to reduce the Aggregate Unpaids to $0, the Collection Date shall have
occurred.

 

(f)            (i)            If the Trustee (acting
as directed by the Administrative Agent) or the Administrative Agent elects to sell the Collateral in whole, but
not in part, at a public or private sale, the Borrower may exercise its right
of first refusal to repurchase the Collateral, in whole but not in part, prior
to such sale at a purchase price that is not less than the amount of the
Aggregate Unpaids as of the date of such proposed sale.  The Borrower’s right of first refusal shall
terminate not later than 4:00 p.m. on the second Business Day following
the Business Day (which must occur after the Standstill Period) on which the
Borrower receives notice of the Trustee’s or the Administrative Agent’s
election to sell such Collateral, such 

 

19

 

notice to attach copies of all Eligible Bids received by the Trustee or
the Administrative Agent in respect of such Collateral.

 

(ii)           If the Trustee (acting
as directed by the Administrative Agent) or the Administrative Agent elects to sell less than all of the
Collateral in one or more parcels at a public or private sale, the Borrower may
exercise its right of first refusal to repurchase such portion of the
Collateral prior to such sale at a purchase price of not less than the highest
Eligible Bid received in respect of such portion of the Collateral as of the
date of such proposed sale, as notified by the Trustee or the Administrative
Agent to the Seller.  The Borrower’s
right of first refusal shall terminate not later than 4:00 p.m. on the
Business Day (which must occur after the Standstill Period) on which the
Borrower receives notice of the Trustee’s or the Administrative Agent’s
election to sell such portion of the Collateral, if such notice is delivered by
12:00 p.m. on such Business Day; provided that
if such notice is delivered after 12:00 p.m. on the Business Day on which
the Borrower receives such notice, or if the highest Eligible Bid received in
respect of such portion of the Collateral is greater than $25,000,000, the
Borrower’s right of first refusal shall terminate not later than 12:00 p.m.
on the following Business Day.

 

(iii)          If the Seller elects not to exercise
its right of first refusal as provided in clauses (i) or (ii) above,
the Trustee (acting as directed by the Administrative Agent) or the Administrative Agent shall sell such
Collateral or portion thereof for a purchase price equal to the highest of the
Eligible Bids then received.  For the
avoidance of doubt, any determination of the highest Eligible Bid shall only
consider bids for the same parcels of the Collateral.

 

(iv)          It is understood that the Borrower may
submit its bid for the Collateral or any portion thereof as a combined bid with
the bids of other members of a group of bidders, and shall have the right to
find bidders to bid on the Collateral or any portion thereof.

 

(v)           It is understood that the Borrower’s
right of first refusal shall apply to each proposed sale of the same parcel of
the Collateral.

 

(g)           All cash Proceeds received by the
Trustee in respect of any sale of, collection from, or other realization upon,
all or any part of the Collateral (after payment of any amounts incurred by the
Trustee or any of the Secured Parties in connection with such sale) shall be
deposited into the Collection Account to be applied against all or any part of
the Aggregate Unpaids pursuant to Section 2.10 or otherwise in such
order as the Trustee shall elect in its discretion.”

 

(aaaa)     Section 12.2
of the Sale and Servicing Agreement is hereby amended by adding the following
sentence to the end of clause (a) thereof:

 

20

 

“Each
Purchaser Agent hereby authorizes the Administrative Agent to file any UCC
financing statement deemed necessary by the Administrative Agent on behalf of
such Purchaser Agent (the terms of which shall be binding on such Purchaser
Agent).”

 

(bbbb)    Section 13.11
of the Sale and Servicing Agreement is hereby amended by amending and restating
clause (b) in its entirety as follows:

 

“(b)         Notwithstanding anything in this
Agreement to the contrary, no Conduit Purchaser shall have any obligation to
pay any amount required to be paid by it hereunder in excess of any amount
available to such Conduit Purchaser after paying or making provision for the
payment of its Commercial Paper Notes. 
All payment obligations of each Conduit Purchaser hereunder are
contingent on the availability of funds in excess of the amounts necessary to
pay its Commercial Paper Notes; and each of the other parties hereto agrees
that it will not have a claim under Section 101(5) of the Bankruptcy
Code if and to the extent that any such payment obligation owed to it by a
Conduit Purchaser exceeds the amount available to such Conduit Purchaser to pay
such amount after paying or making provision for the payment of its Commercial
Paper Notes.”

 

(cccc)     Section 13.16
of the Sale and Servicing Agreement is hereby amended by amending and restating
clause (a) in its entirety as follows:

 

“(a)         With the prior written consent of the
Borrower (which consent shall not be unreasonably withheld), each Purchaser may
at any time assign, or grant a security interest or sell a participation
interest in, any Advance (or portion thereof) or any VFC (or any portion
thereof) to any Person; provided that,
as applicable: (i) no transfer of any Advance (or any portion thereof) or
of any VFC (or any portion thereof) shall be made unless such transfer is
exempt from the registration requirements of the Securities Act and any
applicable state securities laws or is made in accordance with the Securities
Act and such laws, and is made only to either an “accredited investor” as
defined in paragraphs (a)(1), (2), (3), or (7) of Rule 501 of
Regulation D under the Securities Act or any entity in which all of the equity
owners come within such paragraphs or to a “qualified institutional buyer” as
defined in Rule 144A under the Securities Act , (ii) no such consent
of the Borrower shall be required following the occurrence of a Termination
Event, (iii) in the case of an assignment of any Advance (or any portion
thereof) or of any VFC (or of any portion thereof), the assignee executes and
delivers to the Servicer, the Borrower and the Administrative Agent a
fully-executed Joinder Supplement substantially in the form of Exhibit M
hereto and a Transferee Letter substantially in the form of Exhibit K
hereto, (iv) any Institutional Purchaser shall not need prior consent to
at any time assign, or grant a security interest or sell a participation
interest in, any Advance (or portion thereof) to an Affiliate of its related
Purchaser Agent and (v) any Conduit Purchaser shall not need prior consent
to at any time assign, or grant a security interest or sell a participation
interest in, any Advance (or portion thereof) to a Liquidity Bank or any
commercial paper conduit sponsored by a Liquidity Bank or an Affiliate of its
related Purchaser Agent.  The parties to
any such assignment, grant or sale of a participation interest shall execute
and deliver to the related Purchaser Agent for its acceptance and recording in
its books and records, such agreement or document as may be satisfactory to
such parties and the applicable Purchaser Agent.  The Borrower shall 

 

21

 

not assign or delegate, or grant any interest in, or permit any Lien to
exist upon, any of the Borrower’s rights, obligations or duties under this
Agreement without the prior written consent of the Administrative Agent and
each Hedge Counterparty.”

 

(dddd)    Section 13.18
of the Sale and Servicing Agreement is hereby amended by amending and restating
clause (a) in its entirety as follows:

 

“(a)         With respect to any Loan included in
the Collateral subject to the Retained Interest provisions of this Agreement
such that a portion of such Loan is owned by one or more third parties,
Principal Collections received by the Borrower or the Servicer on such Loan
will be allocated first to the portion of such Loan owned by the Borrower,
until the principal amount of such portion is reduced to zero, and then to the
portion not owned by the Borrower; provided that if a payment default occurs
with respect to such Loan, then Principal Collections received on such Loan
will be allocated between the portion owned by the Borrower and the portion not
owned by the Borrower pro rata based
upon the outstanding principal amount of each such portion.”

 

(eeee)     The
name “Variable Funding Capital Corporation” shall be deleted from the signature
page on which the Conduit Purchaser executes the Sale and Servicing
Agreement, and shall be replaced with the name “Variable Funding Capital
Company LLC”.

 

(ffff)        Annex
A, attached hereto as Exhibit A, is hereby amended and restated in
its entirety and incorporated into the Sale and Servicing Agreement.

 

(gggg)    The
name “Variable Funding Capital Corporation” shall be deleted from Annex B and
shall be replaced with the name “Variable Funding Capital Company LLC”.

 

(hhhh)    Exhibit A-1,
attached hereto as Exhibit B, is hereby amended and restated in its
entirety and incorporated into the Sale and Servicing Agreement.

 

(iiii)         Exhibit A-3,
attached hereto as Exhibit C, is hereby amended and restated in its
entirety and incorporated into the Sale and Servicing Agreement.

 

(jjjj)         Schedule
VII of the Sale and Servicing Agreement is hereby amended by deleting reference
to the “Pool Yield”.

 

SECTION 2.         INTENTIONALLY OMITTED.

 

SECTION 3.         AGREEMENT IN FULL FORCE AND EFFECT AS AMENDED.

 

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

 

22

 

SECTION 4.         REPRESENTATIONS.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

SECTION 5.         CONDITIONS TO EFFECTIVENESS.

 

The
effectiveness of this Amendment is conditioned upon: (i) payment of the
outstanding fees and disbursements of the Purchasers; (ii) payment of the
outstanding fees and disbursements of Dechert LLP, as counsel to the
Administrative Agent and the Purchasers; (iii) delivery of executed
signature pages by all parties hereto to the Administrative Agent; and (iv) delivery
and execution of certain amendments to each Purchaser Fee Letter by the parties
thereto.

 

SECTION 6.         MISCELLANEOUS.

 

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

 

23

 

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

 

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

 

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

 

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

 

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

 

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

 

(h)           THIS AMENDMENT AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE CHOICE OF LAW
PROVISIONS SET FORTH IN THE SALE AND SERVICING AGREEMENT AND SHALL BE SUBJECT
TO THE WAIVER OF JURY TRIAL AND NOTICE PROVISIONS SET FORTH IN THE SALE AND
SERVICING AGREEMENT.

 

[Remainder of Page Intentionally Left
Blank]

 

24

 

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

 

 

	
  THE BORROWER:

  	
  ARES CAPITAL CP FUNDING LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Michael L. Smith

  
	
   

  	
   

  	
  Name:

  	
  Michael L. Smith

  
	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  THE ORIGINATOR

  	
   

  	
   

  
	
  AND THE SERVICER:

  	
  ARES CAPITAL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Michael Arougheti

  
	
   

  	
   

  	
  Name:

  	
  Michael Arougheti

  
	
   

  	
   

  	
  Title:

  	
  President

  
					

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

 

	
  CONDUIT PURCHASER:

  	
  VARIABLE FUNDING CAPITAL

  COMPANY LLC (f/k/a Variable Funding

  Capital Corporation)

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Wachovia Capital Markets, LLC,

  
	
   

  	
   

  	
  as attorney-in-fact

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Haojin Wu

  
	
   

  	
   

  	
  Name:

  	
  Haojin Wu

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THE ADMINISTRATIVE AGENT

  	
   

  	
   

  
	
  AND THE VFCC AGENT:

  	
  WACHOVIA CAPITAL MARKETS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Kevin Sunday

  
	
   

  	
   

  	
  Name:

  	
  Kevin Sunday

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
						

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

 

	
  THE TRUSTEE:

  	
  U.S. BANK NATIONAL ASSOCIATION,

  not in its individual capacity but solely as

  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ John T. Edwards

  
	
   

  	
   

  	
  Name:

  	
  John T. Edwards

  
	
   

  	
   

  	
  Title:

  	
  Assistant Vice President

  
					

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

 

	
  Acknowledged and Agreed to

  	
   

  
	
  as of the date first written
  above:

  	
   

  
	
   

  	
   

  
	
  WACHOVIA BANK, NATIONAL ASSOCIATION,

  	
   

  
	
  as a Hedge Counterparty

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Bruce Young

  	
   

  
	
   

  	
  Name:

  	
  Bruce Young

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice PresidentExhibit 10.1

 

CONSULTING AGREEMENT

 

This
Agreement  is made the 22nd day of July 2008
by and among NeuroMetrix, Inc., a Delaware corporation having an address
of 62 Fourth Avenue, Waltham, Massachusetts 02451 (“NeuroMetrix” or the “Company”)
and Joseph A. Calo, an independent contractor (“Consultant”), having a
principal place of business or residence at 97 Green Street, Medfield,
Massachusetts 02052.

 

WHEREAS,
NeuroMetrix is currently engaged in the development of innovative neurological
diagnostic and therapeutic solutions;

 

WHEREAS,
NeuroMetrix previously engaged Consultant to provide various executive
financial services under that certain Consulting Agreement, dated as of March 8,
2004, by and between the Company and Consultant (the “Prior Consulting Agreement”);

 

WHEREAS,
NeuroMetrix wishes to engage the services of Consultant described in this
Agreement, and Consultant desires to provide such services, upon the terms and
conditions set forth herein; and

 

WHEREAS,
NeuroMetrix and Consultant are entering into an Indemnification Agreement
concurrently herewith (the “Indemnification Agreement”);

 

NOW,
THEREFORE, for good and valuable consideration, the sufficiency of which is
hereby acknowledged, the parties hereby agree as follows:

 

1.                                Services
and payment.  As of July 22,
2008 (the “Start Date”), the Prior Consulting Agreement shall be terminated
(except for those provisions that survive termination by the terms of the Prior
Consulting Agreement) and Consultant shall provide the services set forth in
the statement of work attached hereto as Exhibit A (the “Services”).
Such Services shall be performed, unless NeuroMetrix otherwise consents,
personally and exclusively by Consultant. NeuroMetrix shall compensate
Consultant in the amount and manner stated in Exhibit A.

 

2.                                Nondisclosure
and Non-Use Obligations.  (a) During
the term of this Agreement and in the course of Consultant’s performance
hereunder, Consultant may receive and otherwise be exposed to NeuroMetrix
confidential and proprietary information. Any information provided by  NeuroMetrix or on behalf of NeuroMetrix in
connection with this Agreement shall constitute confidential and proprietary
information and shall include, without limitation, marketing and customer
support strategies, website password and password-protected material, financial
information, sales, costs, profits and pricing methods, internal organization
information, employee information, and customer lists, technology information,
discoveries, inventions research and development efforts, processes,
hardware/software design and maintenance tools, samples, media, formulas,
methods, product know-how and show-how, and all derivatives, improvements and
enhancements to any of the above whether created or developed by Consultant
under this Agreement or otherwise, and information of third parties as to which
NeuroMetrix has an obligation of confidentiality (collectively referred to as “Confidential
Information”); provided however, that Confidential Information shall not
include information 

 

 

which
(i) is now or hereafter becomes, through no act or failure of any party
hereto, generally known or available; (ii) is known by the Consultant at
the time of receiving such Confidential Information (and Consultant is not
otherwise obligated to maintain the confidentiality of such information); (iii) is
hereafter furnished to the Consultant without restriction on disclosure; (iv) is
independently developed by the Consultant without any breach of this Agreement
(or Consultant’s other obligations to NeuroMetrix); or (v) is the subject
of written permission to disclose by NeuroMetrix.

 

(b) Consultant
acknowledges the confidential and secret character of the Confidential
Information, and agrees that the Confidential Information is the sole,
exclusive and extremely valuable property of NeuroMetrix. Accordingly,
Consultant agrees (i) not to reproduce any of the Confidential Information
without the prior written consent of NeuroMetrix, (ii) not to use the
Confidential Information except in the performance of this Agreement, and (iii) not
to disclose all or any part of the Confidential Information in any form to any
third party, either during or after the term of this Agreement. Upon
termination of this Agreement for any reason, including expiration of term,
Consultant agrees to cease using and return to NeuroMetrix all whole and
partial copies and derivatives of the Confidential Information, whether in
Consultant’s possession or under Consultant’s direct or indirect control.

 

(c) Consultant
shall not disclose or otherwise make available to NeuroMetrix in any manner any
confidential information of Consultant. Consultant shall not disclose or
otherwise make available to NeuroMetrix in any manner any information received
by Consultant from third parties as to which Consultant has an obligation of
confidentiality.

 

3.                            Non-Solicitation.
The Consultant shall not, directly or indirectly, entice, solicit or
encourage any NeuroMetrix employee to leave the employ of NeuroMetrix, nor
shall the Consultant, directly or indirectly, be involved in the recruitment of
any NeuroMetrix employee, within a period of one year after such person is no
longer employed by NeuroMetrix.

 

4.                            Ownership
of Work Product. (a) Consultant shall specifically describe and
identify in Exhibit B to this Agreement all technology which
Consultant intends to use in performing under this Agreement and which is (i) owned
solely by the Consultant or licensed to Consultant with the right to
sublicense, and (ii) in existence in the form of a writing or working
prototype prior to the effective date of this Agreement (“Background Technology”).

 

(b) Consultant
agrees that any and all reports, summaries, work product, ideas, improvements,
inventions and works of authorship conceived, written, created or first reduced
to practice in the performance of Services (collectively, the “Work Product”)
shall be the sole and exclusive property of NeuroMetrix and hereby assigns to
NeuroMetrix all their respective right, title and interest in and to any and
all such ideas, improvements, inventions and works of authorship. Any works of
authorship shall be deemed works made for hire under U.S. copyright law.

 

(c) Consultant further agrees that except for
Consultant’s rights in Background Technology, NeuroMetrix is and shall be
vested with all rights, title and interests including patent, copyright, trade
secret and trademark rights in all Work Product.

 

2

 

(d) Consultant
shall execute all papers, including, without limitation, patent applications,
invention assignments and copyright assignments, and otherwise shall assist
NeuroMetrix as reasonably required to perfect in NeuroMetrix the rights, title
and other interests in the Work Product. Costs related to such assistance, if
required, shall be paid by NeuroMetrix.

 

5.                            Representations
of Consultant. NeuroMetrix acknowledges that during the term of
this Agreement Consultant may render consulting services on behalf of other
parties. Consultant hereby represents and warrants to NeuroMetrix that the
terms of this Agreement and Consultant’s performance of Services do not and
will not conflict with any of Consultant’s obligations.  Consultant represents that Consultant has not
brought and will not bring with Consultant to NeuroMetrix or use in the
performance of Services any equipment, confidential information or trade
secrets of any third party which are not generally available to the public,
unless Consultant has obtained written authorization for their possession and
use.

 

6.                            Indemnification/Release. Consultant
warrants that Consultant has good and marketable title to all Work Product.
Consultant further warrants that the Work Product shall be free and clear of
all liens, claims, encumbrances or demand of third parties, including any
claims by any third parties of any right, title or interest in or to the Work
Product arising out of any trade secret, copyright, or patent or otherwise.
Consultant shall indemnify, defend and hold harmless NeuroMetrix and its
officers, agents, directors, employees and customers from and against any
claim, loss, judgment or expense (including reasonable attorneys’ and expert
witness’ fees and costs)  resulting from
or arising in any way out of any such claims by any third parties which are
based upon or are the result of any breach of the ongoing warranty, and
Consultant shall, at no additional cost to NeuroMetrix, replace or modify the
Work Product with functionality equivalent and conforming Work Product, obtain
for NeuroMetrix the right to continue using the Work Product and, in all other
respects, use its best efforts to remedy the breach. Consultant shall have no
liability under this Section 6 for any Work Product created in accordance
with detailed and specific design instructions provided to Consultant by
NeuroMetrix.

 

Should
NeuroMetrix permit Consultant to use any of NeuroMetrix equipment, tools or
facilities during the term of this Agreement, such permission will be
gratuitous and Consultant shall indemnify and hold harmless NeuroMetrix and its
officers, agents, directors and employees from and against any claim, loss,
judgment, expense (including reasonable attorneys’ and expert witnesses’ fees
and costs) and injury to person or property (including death) arising out of
the use of any such equipment, tools or facilities, whether or not such claim
is based upon its condition or on the alleged negligence of NeuroMetrix in
permitting its use.

 

7.                            Termination.
NeuroMetrix or Consultant may terminate this Agreement for convenience
with thirty (30) days written notice. In such event, Consultant shall
immediately cease rendering Services after receiving notice from NeuroMetrix,
unless otherwise advised by NeuroMetrix, and shall notify NeuroMetrix of costs
incurred up to the termination date. Notwithstanding the termination of this
Agreement for any reason or cessation of provision of Services, Sections 2, 3,
4, 5, 6, 8, 9, and 10 hereof shall survive.

 

8.                            Independent
Contractor. The Consultant is an independent Consultant, is not
an agent or employee of NeuroMetrix and is not authorized to act on behalf of
NeuroMetrix except 

 

3

 

as
otherwise authorized by the Board of Directors or Chief Executive Officer of
NeuroMetrix. Consultant will not be eligible for any employee benefits of
NeuroMetrix. NeuroMetrix will not make deductions from any amounts payable to
Consultant for taxes. Taxes shall be the sole responsibility of
Consultant.  Consultant shall bear sole
responsibility for paying and reporting his own applicable federal and state
income taxes, social security taxes, unemployment insurance, workers’
compensation, and health or disability insurance, retirement benefits, and
other welfare or pension benefits, if any, and shall indemnify and hold
NeuroMetrix harmless from and against any liability with respect thereto.

 

9.                                      NeuroMetrix Property. All documents, data, records, apparatus, equipment and other physical property
furnished or made available to Consultant in connection with this Agreement
shall be and remain the sole property of NeuroMetrix and shall be returned
promptly to NeuroMetrix when requested. In any event, Consultant shall return
and deliver all such property, including any copies thereof, upon termination
or expiration of this Agreement, irrespective of the reason for such
termination.

 

10.                               General.
The parties’ rights and obligations under this Agreement will bind and
inure to the benefit of their respective successors, heirs, executors, and
administrators and permitted assigns. This Agreement and the Exhibits attached
hereto and hereby incorporated herein (together with the Indemnification
Agreement) constitute the parties’ final, exclusive, and complete understanding
and agreement with respect to the subject matter hereof, and supersede all
prior and contemporaneous understandings and agreements relating to its subject
matter, including without limitation the Prior Consulting Agreement.  Notwithstanding the foregoing, the provisions
of the Prior Consulting Agreement that survive its termination by its terms shall
continue to apply to the extent related to the Prior Consulting Agreement or
the services provided thereunder.  This
Agreement may not be waived, modified, amended or assigned unless mutually
agreed upon in writing by both parties. In the event any provision of this
Agreement is found to be legally unenforceable, such unenforceability shall not
prevent enforcement of any other provision of the Agreement. This Agreement
shall be governed by the laws of the Commonwealth of Massachusetts, excluding
its conflicts of laws principles. Any notices required or permitted hereunder
shall be given to the appropriate party at the address specified above or at
such other address as the party shall specify in writing. Such notice shall be
deemed given upon personal delivery, or sent by certified or registered mail,
postage prepaid, three (3) days after the date of mailing.

 

4

 

IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first set forth above.

 

 

	
  NEUROMETRIX, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Shai N. Gozani, M.D., Ph.D

  	
   

  	
  /s/ Joseph A. Calo

  
	
   

  	
  Name: Shai N. Gozani, M.D., Ph.D.

  	
   

  	
  Joseph A. Calo

  
	
   

  	
  Title:
    President and Chief Executive Officer

  	
   

  	
   

  
	
   

  	
   

  	
  SS#:

  	
   

  

 

5

 

Exhibit A

 

STATEMENT OF WORK

 

I.                 Services
to be performed:  Provide the
services typically performed by the principal financial officer and principal
accounting officer of a public company, including, without limitation,
performing and directing the other financial personnel at the Company in
performing the following:

 

1.              Reviewing and documenting
areas of accounting, preparing financial statements necessary for annual
audited and quarterly financial reporting in conformance with US GAAP and SEC
reporting requirements, preparing annual and quarterly earnings releases and
otherwise assisting in the disclosure of annual and quarterly financial
results.

2.              Reviewing contracts and
agreements from a financial and business perspective.

3.              Completing company budgets,
forecasts, projections and financial modeling as appropriate.

4.              Managing and directing the
Company’s financial policies, procedures and internal controls.

5.              Preparing all reports that
the Company is required to file with the SEC and, to the extent required in his
capacity as a consultant performing the functions of the principal financial
officer and principal accounting officer of the Company, sign SEC filings of
the Company and accompanying certifications.

6.              Overseeing the Company’s
investor relations function and compliance with securities laws.

7.              Together with the Company’s
principal executive officer, designing, maintaining and evaluating the Company’s
disclosure controls and procedures and internal control over financial
reporting.

8.              Performing such other tasks,
consistent with the role of a principal financial officer and principal
accounting officer of the Company, as are requested by the Company.

 

II.    Payment Terms:

 

Fees: 
NeuroMetrix shall pay Consultant a fee of One Hundred Fifty Dollars
($150.00) per hour for Services rendered by Consultant, or such other amount as
is agreed to by the Company and Consultant.

 

Expenses Reimbursement: Reasonable travel and
accommodation expenses and miscellaneous expenses, such as telephone, courier,
etc., in connection with the Services performed under this Agreement.

 

Invoicing:  Consultant shall invoice NeuroMetrix
every two weeks and will include dates and hours of Services rendered, and any
expenses to be reimbursed.  Net payment
due 15 days from receipt of invoice.

 

All
payments made pursuant to this Agreement shall be made to Consultant.

 

 

Exhibit B

 

Background Technology

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