Document:

Exhibit 10.1

 

 

 

SENIOR SECURED REVOLVING CREDIT AGREEMENT

 

dated as of

 

December 28, 2005

 

between

 

ARES CAPITAL CORPORATION

 

The LENDERS Party Hereto

 

and

 

JPMORGAN CHASE BANK, N.A.

 

as Administrative Agent

 

MERRILL LYNCH CAPITAL CORPORATION

UBS SECURITIES LLC,

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Syndication Agents

 

$250,000,000

 

 

J.P. MORGAN SECURITIES INC.,

as Sole Bookrunner and Sole Lead Arranger

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE I

  	
   

  
	
   

  	
   

  
	
  DEFINITIONS

  	
   

  
	
   

  	
   

  
	
  SECTION 1.01.

  	
  Defined Terms

  	
  1

  
	
  SECTION 1.02.

  	
  Classification of Loans and Borrowings

  	
  21

  
	
  SECTION 1.03.

  	
  Terms Generally

  	
  21

  
	
  SECTION 1.04.

  	
  Accounting Terms; GAAP

  	
  21

  
	
  SECTION 1.06.

  	
  Currencies; Currency Equivalents

  	
  22

  
	
   

  	
   

  
	
  ARTICLE II

  	
   

  
	
   

  	
   

  
	
  THE CREDITS

  	
   

  
	
   

  	
   

  
	
  SECTION 2.01.

  	
  The Commitments

  	
  23

  
	
  SECTION 2.02.

  	
  Loans and Borrowings

  	
  23

  
	
  SECTION 2.03.

  	
  Requests for Borrowings

  	
  24

  
	
  SECTION 2.04.

  	
  Letters of Credit

  	
  25

  
	
  SECTION 2.05.

  	
  Funding of Borrowings

  	
  29

  
	
  SECTION 2.06.

  	
  Interest Elections

  	
  30

  
	
  SECTION 2.07.

  	
  Termination, Reduction or Increase of the Commitments

  	
  32

  
	
  SECTION 2.08.

  	
  Repayment of Loans; Evidence of Debt

  	
  34

  
	
  SECTION 2.09.

  	
  Prepayment of Loans

  	
  35

  
	
  SECTION 2.10.

  	
  Fees

  	
  37

  
	
  SECTION 2.11.

  	
  Interest

  	
  39

  
	
  SECTION 2.12.

  	
  Alternate Rate of Interest

  	
  40

  
	
  SECTION 2.13.

  	
  Increased Costs

  	
  40

  
	
  SECTION 2.14.

  	
  Break Funding Payments

  	
  41

  
	
  SECTION 2.15.

  	
  Taxes

  	
  42

  
	
  SECTION 2.16.

  	
  Payments Generally; Pro Rata Treatment; Sharing of
  Set-offs

  	
  45

  
	
  SECTION 2.17.

  	
  Mitigation Obligations; Replacement of Lenders

  	
  47

  
	
   

  	
   

  
	
  ARTICLE III

  	
   

  
	
   

  	
   

  
	
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  
	
  SECTION 3.01.

  	
  Organization; Powers

  	
  48

  
	
  SECTION 3.02.

  	
  Authorization; Enforceability

  	
  48

  
	
  SECTION 3.03.

  	
  Governmental Approvals; No Conflicts

  	
  49

  
	
  SECTION 3.04.

  	
  Financial Condition; No Material Adverse Change

  	
  49

  
	
  SECTION 3.05.

  	
  Litigation

  	
  50

  
	
  SECTION 3.06.

  	
  Compliance with Laws and Agreements

  	
  50

  

 

i

 

	
  SECTION 3.07.

  	
  Holding Company Status

  	
  50

  
	
  SECTION 3.08.

  	
  Taxes

  	
  50

  
	
  SECTION 3.09.

  	
  ERISA

  	
  51

  
	
  SECTION 3.10.

  	
  Disclosure

  	
  51

  
	
  SECTION 3.11.

  	
  Investment Company Act; Margin Regulations

  	
  51

  
	
  SECTION 3.12.

  	
  Material Agreements and Liens

  	
  52

  
	
  SECTION 3.13.

  	
  Subsidiaries and Investments

  	
  52

  
	
  SECTION 3.14.

  	
  Properties

  	
  52

  
	
  SECTION 3.15.

  	
  Affiliate Agreements

  	
  53

  
	
   

  	
   

  
	
  ARTICLE IV

  	
   

  
	
   

  	
   

  
	
  CONDITIONS

  	
   

  
	
   

  	
   

  
	
  SECTION 4.01.

  	
  Effective Date

  	
  53

  
	
  SECTION 4.02.

  	
  Each Credit Event

  	
  55

  
	
   

  	
   

  
	
  ARTICLE V

  	
   

  
	
   

  	
   

  
	
  AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
   

  
	
  SECTION 5.01.

  	
  Financial Statements and Other Information

  	
  56

  
	
  SECTION 5.02.

  	
  Notices of Material Events

  	
  57

  
	
  SECTION 5.03.

  	
  Existence; Conduct of Business

  	
  58

  
	
  SECTION 5.04.

  	
  Payment of Obligations

  	
  58

  
	
  SECTION 5.05.

  	
  Maintenance of Properties; Insurance

  	
  58

  
	
  SECTION 5.06.

  	
  Books and Records; Inspection and Audit Rights

  	
  58

  
	
  SECTION 5.07.

  	
  Compliance with Laws

  	
  59

  
	
  SECTION 5.08.

  	
  Certain Obligations Respecting Subsidiaries; Further
  Assurances

  	
  59

  
	
  SECTION 5.09.

  	
  Use of Proceeds

  	
  61

  
	
  SECTION 5.10.

  	
  Status of RIC and BDC

  	
  62

  
	
  SECTION 5.11.

  	
  Investment and Valuation Policies

  	
  62

  
	
  SECTION 5.12.

  	
  Portfolio Valuation and Diversification, Etc.

  	
  62

  
	
  SECTION 5.13.

  	
  Calculation of Borrowing Base

  	
  64

  
	
   

  	
   

  
	
  ARTICLE VI

  	
   

  
	
   

  	
   

  
	
  NEGATIVE COVENANTS

  	
   

  
	
   

  	
   

  
	
  SECTION 6.01.

  	
  Indebtedness

  	
  69

  
	
  SECTION 6.02.

  	
  Liens

  	
  70

  
	
  SECTION 6.03.

  	
  Fundamental Changes

  	
  70

  
	
  SECTION 6.04.

  	
  Investments

  	
  71

  
	
  SECTION 6.05.

  	
  Restricted Payments

  	
  72

  
	
  SECTION 6.06.

  	
  Certain Restrictions on Subsidiaries

  	
  73

  
	
  SECTION 6.07.

  	
  Certain Financial Covenants

  	
  74

  
	
  SECTION 6.08.

  	
  Transactions with Affiliates

  	
  74

  

 

ii

 

	
  SECTION 6.09.

  	
  Lines of Business

  	
  74

  
	
  SECTION 6.10.

  	
  No Further Negative Pledge

  	
  74

  
	
  SECTION 6.11.

  	
  Modifications of Certain Documents

  	
  75

  
	
  SECTION 6.12.

  	
  Permitted Indebtedness

  	
  75

  
	
   

  	
   

  
	
  ARTICLE VII

  	
   

  
	
   

  	
   

  
	
  EVENTS OF DEFAULT

  	
  75

  
	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  
	
   

  	
   

  
	
  THE ADMINISTRATIVE AGENT

  	
  79

  
	
   

  	
   

  
	
  ARTICLE IX

  	
   

  
	
   

  	
   

  
	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  
	
  SECTION 9.01.

  	
  Notices; Electronic Communications

  	
  82

  
	
  SECTION 9.02.

  	
  Waivers; Amendments

  	
  83

  
	
  SECTION 9.03.

  	
  Expenses; Indemnity; Damage Waiver

  	
  85

  
	
  SECTION 9.04.

  	
  Successors and Assigns

  	
  87

  
	
  SECTION 9.05.

  	
  Survival

  	
  90

  
	
  SECTION 9.06.

  	
  Counterparts; Integration; Effectiveness; Electronic
  Execution

  	
  90

  
	
  SECTION 9.07.

  	
  Severability

  	
  91

  
	
  SECTION 9.08.

  	
  Right of Setoff

  	
  91

  
	
  SECTION 9.09.

  	
  Governing Law; Jurisdiction; Etc.

  	
  91

  
	
  SECTION 9.10.

  	
  WAIVER OF JURY TRIAL

  	
  92

  
	
  SECTION 9.11.

  	
  Judgment Currency

  	
  92

  
	
  SECTION 9.12.

  	
  Headings

  	
  93

  
	
  SECTION 9.13.

  	
  Treatment of Certain Information; Confidentiality

  	
  93

  
	
  SECTION 9.14.

  	
  USA PATRIOT Act

  	
  94

  

 

	
  SCHEDULE I

  	
  –

  	
  Commitments

  	
   

  
	
  SCHEDULE II

  	
  –

  	
  Material
  Agreements and Liens

  	
   

  
	
  SCHEDULE III

  	
  –

  	
  Litigation

  	
   

  
	
  SCHEDULE IV

  	
  –

  	
  Subsidiaries and
  Investments

  	
   

  
	
  SCHEDULE V

  	
  –

  	
  Transactions
  with Affiliates

  	
   

  
	
  SCHEDULE VI

  	
  –

  	
  Moody’s Industry
  Classification Group List

  	
   

  
	
  SCHEDULE VII

  	
  –

  	
  Approved Dealers
  and Approved Pricing Services

  	
   

  
	
  SCHEDULE VIII

  	
  –

  	
  Mandatory Cost
  Schedule

  	
   

  
	
   

  
	
  EXHIBIT A

  	
  -

  	
  Form of
  Assignment and Assumption

  	
   

  
	
  EXHIBIT B

  	
  -

  	
  Form of
  Guarantee and Security Agreement

  	
   

  
	
  EXHIBIT C-1

  	
  -

  	
  Form of
  Opinion of New York Counsel to Borrower

  	
   

  
						

 

iii

 

	
  EXHIBIT C-2

  	
  -

  	
  Form of
  Opinion of Maryland Counsel to the Borrower

  	
   

  
	
  EXHIBIT D

  	
  -

  	
  Form of
  Opinion of Counsel to JPMCB

  	
   

  
	
  EXHIBIT E

  	
  -

  	
  Form of
  Borrowing Base Certificate

  	
   

  
	
  EXHIBIT F

  	
  -

  	
  Form of
  Borrowing Request

  	
   

  
	
  EXHIBIT G

  	
  -

  	
  Form of
  Interest Election Request

  	
   

  

 

iv

 

SENIOR
SECURED REVOLVING CREDIT AGREEMENT dated as of December 28, 2005, between
ARES CAPITAL CORPORATION, the LENDERS party hereto, and JPMORGAN CHASE BANK,
N.A. as Administrative Agent.

 

The
Borrower (as hereinafter defined) has requested that the Lenders (as so
defined) extend credit to it in an initial aggregate principal or face amount
not exceeding $250,000,000 at any one time outstanding.  The Lenders are prepared to extend such
credit upon the terms and conditions hereof, and, accordingly, the parties
hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.01.  Defined Terms.  As used in this Agreement, the following
terms have the meanings specified below:

 

“ABR”,
when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans constituting such Borrowing, are denominated in Dollars and
bearing interest at a rate determined by reference to the Alternate Base Rate.

 

“Adjusted
Borrowing Base” means the Borrowing Base minus the aggregate amount
of Cash and Cash Equivalents included in the Portfolio Investments held by the
Obligors.

 

“Adjusted
Covered Debt Balance” means, on any date, the aggregate Covered Debt Amount
on such date minus the aggregate amount of Cash and Cash Equivalents
included in the Portfolio Investments held by the Obligors.

 

“Adjusted
LIBO Rate” means, for the Interest Period for any Eurocurrency Borrowing,
an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of
1%) equal to (a) the LIBO Rate for such Interest Period multiplied by
(b) the Statutory Reserve Rate for such Interest Period.

 

“Administrative
Agent” means JPMCB, in its capacity as administrative agent for the Lenders
hereunder.

 

“Administrative
Agent’s Account” means, for each Currency, an account in respect of such
Currency designated by the Administrative Agent in a notice to the Borrower and
the Lenders.

 

“Administrative
Questionnaire” means an Administrative Questionnaire in a form supplied by
the Administrative Agent.

 

 

“Advance
Rate” has the meaning assigned to such term in Section 5.13.

 

“Affiliate”
means, with respect to a specified Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified.  Anything herein to the contrary
notwithstanding, the term “Affiliate” shall not include any Person that
constitutes an Investment held by the Borrower in the ordinary course of
business.

 

“Affiliate Agreements” means collectively, (a) the
Investment Advisory and Management Agreement dated as of September 30,
2004 between the Borrower and Ares Capital Management, (b) the Administration
Agreement dated as of September 30, 2004, between the Borrower and Ares Technical
Administration LLC, (c) the Trademark License Agreement dated as of September 30,
2004 between Ares Capital Corporation and Ares Management LLC and (d) other
than for purposes of Section 6.11, the CP Facility Documents and the
Custodian Agreement.

 

“Agreed
Foreign Currency” means, at any time, any of Canadian Dollars, English
Pounds Sterling, Euros and, with the agreement of each Lender, any other
Foreign Currency, so long as, in respect of any such specified Foreign Currency
or other Foreign Currency, at such time (a) such Foreign Currency is dealt
with in the London (or, in the case of English Pounds Sterling, Paris)
interbank deposit market, (b) such Foreign Currency is freely transferable
and convertible into Dollars in the London foreign exchange market and (c) no
central bank or other governmental authorization in the country of issue of
such Foreign Currency (including, in the case of the Euro, any authorization by
the European Central Bank) is required to permit use of such Foreign Currency
by any Lender for making any Loan hereunder and/or to permit the Borrower to
borrow and repay the principal thereof and to pay the interest thereon, unless
such authorization has been obtained and is in full force and effect.

 

“Alternate
Base Rate” means, for any day, a rate per annum equal to the greater of (a) the
Prime Rate in effect on such day and (b) the Federal Funds Effective Rate
for such day plus 1/2 of 1%.  Any
change in the Alternate Base Rate due to a change in the Prime Rate or the
Federal Funds Effective Rate shall be effective from and including the
effective date of such change in the Prime Rate or the Federal Funds Effective
Rate, as the case may be.

 

“Applicable
Percentage” means, with respect to any Lender, the percentage of the total
Commitments represented by such Lender’s Commitment.  If the Commitments have terminated or
expired, the Applicable Percentages shall be determined based upon the
Commitments most recently in effect, giving effect to any assignments.

 

“Applicable
Margin” means:  (a) with respect
to any ABR Loan, 0.00% per annum; and (b) with respect to any
Eurocurrency Loan, 1.00% per annum.

 

2

 

“Approved
Dealer” means (a) in the case of any Portfolio Investment that is not
a U.S. Government Security, a bank or a broker-dealer registered under the
Securities Exchange Act of 1934 of nationally recognized standing or an
Affiliate thereof, (b) in the case of a U.S. Government Security, any
primary dealer in U.S. Government Securities, and (c) in the case of any
foreign Portfolio Investment, any foreign broker-dealer of internationally
recognized standing or an Affiliate thereof, in the case of each of
clauses (a), (b) and (c) above, as set forth on Schedule VII
or any other bank or broker-dealer acceptable to the Administrative Agent in
its reasonable determination.

 

“Approved
Pricing Service” means a pricing or quotation service as set forth in Schedule VII
or any other pricing or quotation service approved by the Board of Directors of
the Borrower and designated in writing to the Administrative Agent (which
designation shall be accompanied by a copy of a resolution of the Board of
Directors of the Borrower that such pricing or quotation service has been
approved by the Borrower).

 

“Ares
Capital CP” means Ares Capital CP Funding LLC, a wholly owned Subsidiary of
the Borrower.

 

“Ares
Capital Management” means
Ares Capital Management LLC, a Delaware Limited Liability Company.

 

“Asset
Coverage Ratio” means the ratio, determined on a consolidated basis,
without duplication, in accordance with GAAP, of (a) the Value of total
assets of the Borrower and its Subsidiaries, less all liabilities (other than
Indebtedness, including Indebtedness hereunder) of the Borrower and its
Subsidiaries, to (b) the aggregate amount of Indebtedness of the Borrower
and its Subsidiaries.

 

“Assignment
and Assumption” means an Assignment and Assumption entered into by a Lender
and an assignee (with the consent of any party whose consent is required by Section 9.04),
and accepted by the Administrative Agent, in the form of Exhibit A or any
other form approved by the Administrative Agent.

 

“Assuming
Lender” has the meaning assigned to such term in Section 2.07(e).

 

“Availability
Period” means the period from and including the Effective Date to but
excluding the earlier of the Commitment Termination Date and the date of
termination of the Commitments.

 

“Board”
means the Board of Governors of the Federal Reserve System of the United States
of America.

 

“Borrower”
means Ares Capital Corporation, a Maryland corporation.

 

3

 

“Borrowing”
means (a) all ABR Loans made, converted or continued on the same date
or (b) all Eurocurrency Loans denominated in the same Currency that have
the same Interest Period.

 

“Borrowing
Base” has the meaning assigned to such term in Section 5.13.

 

“Borrowing
Base Certificate” means a certificate of a Financial Officer of the
Borrower, substantially in the form of Exhibit E and appropriately
completed.

 

“Borrowing
Base Deficiency” means, at any date on which the same is determined, the
amount, if any, that (a) the aggregate Covered Debt Amount as of such date
exceeds (b) the Borrowing Base as of such date.

 

“Borrowing
Request” means a request by the Borrower for a Borrowing in accordance with
Section 2.03 substantially in the form of Exhibit F.

 

“Business
Day” means any day (a) that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed, (b) if such day relates to a borrowing of, a payment or
prepayment of principal of or interest on, a continuation or conversion of or
into, or the Interest Period for, a Eurocurrency Borrowing, or to a notice by
the Borrower with respect to any such borrowing, payment, prepayment,
continuation, conversion, or Interest Period, that is also a day on which
dealings in deposits denominated in the Currency of such Borrowing are carried
out in the London interbank market and (c) if such day relates to a
borrowing or continuation of, a payment or prepayment of principal of or
interest on, or the Interest Period for, any Borrowing denominated in any
Foreign Currency, or to a notice by the Borrower with respect to any such
borrowing, continuation, payment, prepayment or Interest Period, that is also a
day on which commercial banks and the London foreign exchange market settle
payments in the Principal Financial Center for such Foreign Currency.

 

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

 

“Cash”
means any immediately available funds in Dollars or in any currency other than
Dollars which is a freely convertible currency.

 

4

 

“Cash
Equivalents” means investments (other than Cash) that are one or more of
the following obligations:

 

(a)           U.S.
Government Securities, in each case maturing within one year from the date of
acquisition thereof;

 

(b)           investments
in commercial paper maturing within 270 days from the date of acquisition
thereof and having, at such date of acquisition, a credit rating of at least A-1
from S&P and at least P-1 from Moody’s;

 

(c)           investments
in certificates of deposit, banker’s acceptances and time deposits maturing
within 180 days from the date of acquisition thereof (i) issued or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, any domestic office of any commercial bank organized under the laws
of the United States of America or any State thereof or under the laws of the
jurisdiction or any constituent jurisdiction thereof of any Agreed Foreign Currency,
provided that such certificates of deposit, banker’s acceptances and time
deposits are held in a securities account (as defined in the Uniform Commercial
Code) through which the Collateral Agent can perfect a security interest
therein and (ii) having, at such date of acquisition, a credit rating of
at least A-1 from S&P and at least P-1 from Moody’s; and

 

(d)           fully
collateralized repurchase agreements with a term of not more than 30 days from
the date of acquisition thereof for U.S. Government Securities and entered into
with (i) a financial institution satisfying the criteria described in
clause (c) of this definition or (ii) an Approved Dealer having
(or being a member of a consolidated group having) at such date of acquisition,
a credit rating of at least A-1 from S&P and at least P-1 from Moody’s,

 

provided,
that (i) in no event shall Cash Equivalents include any obligation that
provides for the payment of interest alone (for example, interest-only
securities or “IOs”); (ii) if any of Moody’s or S&P changes its
rating system, then any ratings included in this definition shall be deemed to
be an equivalent rating in a successor rating category of Moody’s or S&P,
as the case may be; (iii) Cash Equivalents (other than U.S. Government
Securities or repurchase agreements) shall not include any such investment of
more than 10% of total assets of the Loan Parties in any single issuer; and (iv) in
no event shall Cash Equivalents include any obligation that is not denominated
in Dollars or an Agreed Foreign Currency.

 

“Change
in Control” means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the
Securities and Exchange Commission thereunder as in effect on the date hereof),
of shares representing more than 35% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of the Borrower; (b) occupation
of a majority of the seats (other than vacant seats) on the board of directors
of the Borrower by Persons who were neither (i) nominated by the requisite
members of the board of directors of the Borrower nor

 

5

 

(ii) appointed by a majority of the directors so nominated; or (c) the
acquisition of direct or indirect Control of the Borrower by any Person or
group other than Ares Capital Management.

 

“Change
in Law” means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender
or the Issuing Bank (or, for purposes of Section 2.13(b), by any lending
office of such Lender or by such Lender’s or the Issuing Bank’s holding
company, if any) with any request, guideline or directive (whether or not
having the force of law) of any Governmental Authority made or issued after the
date of this Agreement.

 

“Code”
means the Internal Revenue Code of 1986, as amended from time to time.

 

“Collateral”
has the meaning assigned to such term in the Guarantee and Security Agreement.

 

“Collateral
Agent” means JPMCB in its capacity as Collateral Agent under the Guarantee
and Security Agreement, and includes any successor Collateral Agent thereunder.

 

“Commitment”
means, with respect to each Lender, the commitment of such Lender to make Loans
and to acquire participations in Letters of Credit hereunder, expressed as an
amount representing the maximum aggregate amount of such Lender’s Revolving
Credit Exposure hereunder, as such commitment may be (a) reduced from time
to time pursuant to Section 2.07 and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to Section 9.04.  The initial amount of each Lender’s
Commitment is set forth on Schedule I, or in the Assignment and Assumption
pursuant to which such Lender shall have assumed its Commitment, as
applicable.  The initial aggregate amount
of the Lenders’ Commitments is $250,000,000.

 

“Commitment
Increase” has the meaning assigned to such term in Section 2.07(e).

 

“Commitment
Increase Date” has the meaning assigned to such term in Section 2.07(e).

 

“Commitment
Termination Date” means December 28, 2010.

 

“Control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled”
have meanings correlative thereto.

 

6

 

“Covered
Debt Amount” means, on any date, (a) all of the Revolving Credit
Exposures of all Lenders on such date plus (b) the aggregate amount
of outstanding Permitted Indebtedness on such date plus (c) the
aggregate amount of any Indebtedness incurred pursuant to Section 6.01(f) minus (d) the
LC Exposures fully cash collateralized on such date pursuant to Section 2.04(k)
and the last paragraph of Section 2.08(a).

 

“CP
Facility” means the credit facility established on November 3, 2004
between, among others, Ares Capital CP and Wachovia Capital Markets, LLC
pursuant to the CP Facility Documents.

 

“CP
Facility Documents” means, collectively, (a) the Purchase and Sale
Agreement dated as of November 3, 2004 by and between the Borrower and
Ares Capital CP, (b) the Sale and Servicing Agreement by and among the
Borrower, Ares Capital CP, the Conduit Purchasers and institutional purchasers
party thereto, the Purchaser Agents party thereto, Wachovia Capital Markets,
LLC, as Administrative Agent, U.S. Bank National Association, as Trustee, and
Lyon Financial Services, Inc., as Backup Servicer, and (c) the
Intercreditor and Concentration Account Administration Agreement dated as of November 3,
2004 by and among U.S. Bank National Association, as Concentration Account
Bank, U.S. Bank National Association, as Account Custodian, the Borrower, as
Originator, Original Servicer and Concentration Account Servicer, and the
Security Interest Grantees from time to time party thereto.  It is understood that the term “CP Facility
Documents” shall not include the exhibits and schedules thereto.

 

“Currency”
means Dollars or any Foreign Currency.

 

“Custodian
Agreement” means the Custodian Agreement dated as of a date in October, 2004
by and among the Borrower and U.S. Bank, National Association.

 

“Default”
means any event or condition which constitutes an Event of Default or which
upon notice, lapse of time or both would, unless cured or waived, become an
Event of Default.

 

“Designated
Subsidiary” means a direct or indirect Subsidiary of the Borrower to which
any Obligor sells, conveys or otherwise transfers (whether directly or
indirectly) Portfolio Investments, which engages in no material activities
other than in connection with the purchase or financing of such assets and
which is designated by the Borrower (as provided below) as a “Designated
Subsidiary” and which meets the following criteria

 

(a)           no
portion of the Indebtedness or any other obligations (contingent or otherwise)
of such Subsidiary (i) is Guaranteed by any Obligor (other than Guarantees
in respect of Standard Securitization Undertakings), (ii) is recourse to
or obligates any Obligor in any way other than pursuant to Standard
Securitization Undertakings or (iii) subjects any property of any Obligor
(other than property that has been contributed or sold, purported to be sold or
otherwise transferred to

 

7

 

such
Subsidiary), directly or indirectly, contingently or otherwise, to the
satisfaction thereof, other than pursuant to Standard Securitization
Undertakings or any Guarantee thereof,

 

(b)           with
which no Obligor has any material contract, agreement, arrangement or understanding
other than on terms no less favorable to such Obligor than those that might be
obtained at the time from Persons that are not Affiliates of any Obligor, other
than fees payable in the ordinary course of business in connection with
servicing receivables, and

 

(c)           to
which no Obligor has any obligation to maintain or preserve such entity’s
financial condition or cause such entity to achieve certain levels of operating
results, other than pursuant to Standard Securitization Undertakings.

 

Any such designation by
the Borrower shall be effected pursuant to a certificate of a Financial Officer
delivered to the Administrative Agent, which certificate shall include a
statement to the effect that, to the best of such officer’s knowledge, such
designation complied with the foregoing conditions.  Each Subsidiary of a Designated Subsidiary
shall be deemed to be a Designated Subsidiary and shall comply with the
foregoing requirements of this definition. 
The parties hereby agree that Ares Capital CP, ARCC Cervantes
Corporation and ARCC Cervantes LLC shall each constitute a Designated
Subsidiary so long as they comply with the foregoing requirements of this
definition.

 

“Disclosed
Matters” means the actions, suits and proceedings disclosed in Schedule III.

 

“Dollar
Equivalent” means, on any date of determination, with respect to an amount
denominated in any Foreign Currency, the amount of Dollars that would be
required to purchase such amount of such Foreign Currency on the date two
Business Days prior to such date, based upon the spot selling rate at which the
Administrative Agent offers to sell such Foreign Currency for Dollars in the
London foreign exchange market at approximately 11:00 a.m., London time,
for delivery two Business Days later.

 

“Dollars”
or “$” refers to lawful money of the United States of America.

 

“Effective
Date” means the date on which the conditions specified in Section 4.01
are satisfied (or waived in accordance with Section 9.02).

 

“Equity
Interests” means shares of capital stock, partnership interests, membership
interests in a limited liability company, beneficial interests in a trust or
other equity ownership interests in a Person, and any warrants, options or
other rights entitling the holder thereof to purchase or acquire any such equity
interest.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time
to time.

 

8

 

“ERISA
Affiliate” means any trade or business (whether or not incorporated) that,
together with the Borrower, is treated as a single employer under Section 414(b) or (c) of
the Code, or, solely for purposes of Section 302 of ERISA and Section 412
of the Code, is treated as a single employer under Section 414 of the
Code.

 

“ERISA
Event” means (a) any “reportable event”, as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an “accumulated funding deficiency” (as
defined in Section 412 of the Code or Section 302 of ERISA), whether
or not waived; (c) the filing pursuant to Section 412(d) of the
Code or Section 303(d) of ERISA of an application for a waiver of the
minimum funding standard with respect to any Plan; (d) the incurrence by
the Borrower or any of its ERISA Affiliates of any liability under Title IV of
ERISA with respect to the termination of any Plan; (e) the receipt by the
Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any
notice relating to an intention to terminate any Plan or Plans or to appoint a
trustee to administer any Plan; (f) the incurrence by the Borrower or any
of its ERISA Affiliates of any liability with respect to the withdrawal or
partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt
by the Borrower or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.

 

“Eurocurrency”,
when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans constituting such Borrowing, are bearing interest at a rate
determined by reference to the Adjusted LIBO Rate.

 

“Event
of Default” has the meaning assigned to such term in Article VII.

 

“Excluded
Taxes” means, with respect to the Administrative Agent, any Lender, the
Issuing Bank or any other recipient of any payment to be made by or on account
of any obligation of the Borrower hereunder, (a) income or franchise taxes
imposed on (or measured by) its net income by the United States of America, or
by the jurisdiction (or any political subdivision thereof) under the laws of
which such recipient is organized or in which its principal office is located
or, in the case of any Lender, in which its applicable lending office is
located, (b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction in which the
Borrower is located, (c) in the case of a Foreign Lender (other than an
assignee pursuant to a request by the Borrower under Section 2.17(b)), any
withholding tax that is imposed on amounts payable to such Foreign Lender at
the time such Foreign Lender becomes a party to this Agreement (or designates a
new lending office) or is attributable to such Foreign Lender’s failure or
inability (other than as a result of a Change in Law described in clause ( a)
or (b) of the definition of Change in Law) to comply with Section 2.15(e),
except to the extent, other than in a case of failure to comply with Section 2.15(e),
that such Foreign Lender’s (or its assignor, if any) was entitled, at the

 

9

 

time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 2.15(a) and (d) in the case of any Lender or
Issuing Bank that is not a Foreign Lender, any withholding tax that is imposed
as a result of such Lender’s or Issuing Bank’s failure or inability to comply
with Section 2.15(e).

 

“Federal
Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it.

 

“Financial
Officer” means the president, chief financial officer, principal accounting
officer, treasurer or controller of the Borrower.

 

“Fitch”
means Fitch Ratings or any successors thereto.

 

“Foreign
Currency” means at any time any Currency other than Dollars.

 

“Foreign
Currency Equivalent” means, with respect to any amount in Dollars, the
amount of any Foreign Currency that could be purchased with such amount of
Dollars using the reciprocal of the foreign exchange rate(s) specified in the
definition of the term “Dollar Equivalent”, as determined by the Administrative
Agent.

 

“Foreign
Lender” means any Lender or Issuing Bank that is organized under the laws
of a jurisdiction other than that in which the Borrower is located.  For purposes of this definition, the United
States of America, each State thereof and the District of Columbia shall be
deemed to constitute a single jurisdiction.

 

“GAAP”
means generally accepted accounting principles in the United States of America.

 

“Governmental
Authority” means the government of the United States of America, or of any
other nation, or any political subdivision thereof, whether state or local, and
any agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

 

“Guarantee”
of or by any Person (the “guarantor”) means any obligation, contingent
or otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any
obligation of the guarantor, direct or indirect, (a) to purchase or pay
(or advance or supply funds for the

 

10

 

purchase or payment of) such Indebtedness or other obligation or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment thereof, (b) to purchase or lease property, securities or
services for the purpose of assuring the owner of such Indebtedness or other
obligation of the payment thereof, (c) to maintain working capital, equity
capital or any other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation or (d) as an account party in respect of any letter of credit
or letter of guaranty issued to support such Indebtedness or obligation; provided,
that the term Guarantee shall not include endorsements for collection or
deposit in the ordinary course of business.

 

“Guarantee
and Security Agreement” means a Guarantee and Security Agreement
substantially in the form of Exhibit B between the Borrower, the
Administrative Agent, each holder (or a representative or trustee therefor)
from time to time of any Other Secured Indebtedness, and the Collateral Agent.

 

“Guarantee
Assumption Agreement” means a Guarantee Assumption Agreement substantially
in the form of Exhibit B to the Guarantee and Security Agreement between
the Administrative Agent and an entity that, pursuant to Section 5.08 is
required to become a “Subsidiary Guarantor” under the Guarantee and Security
Agreement (with such changes as the Administrative Agent shall request,
consistent with the requirements of Section 5.08).

 

“Hedging
Agreement” means any interest rate protection agreement, foreign currency
exchange protection agreement, commodity price protection agreement or other
interest or currency exchange rate or commodity price hedging arrangement.

 

“Increasing Lender” has the meaning
assigned to such term in Section 2.07(e).

 

“Indebtedness”
of any Person means, without duplication, (a) all obligations of such
Person for borrowed money or with respect to deposits or advances of any kind, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such Person under conditional sale or
other title retention agreements relating to property acquired by such Person, (d) all
obligations of such Person in respect of the deferred purchase price of
property or services (excluding accounts payable incurred in the ordinary
course of business), (e) all Indebtedness of others secured by any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (f) all Guarantees by such Person of
Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h) all
obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty and (i) all
obligations, contingent or otherwise, of such Person in respect of bankers’
acceptances.  The Indebtedness of any
Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such
Person is liable therefor as a result of such Person’s ownership interest in or
other relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.

 

11

 

“Indemnified
Taxes” means Taxes other than Excluded Taxes.

 

“Independent”
when used with respect to any specified Person means that such Person (a) does
not have any direct financial interest or any material indirect financial
interest in the Borrower or any of its Subsidiaries or Affiliates (including
its investment advisor or any Affiliate thereof) and (b) is not connected
with the Borrower or of its Subsidiaries or Affiliates (including its
investment advisor or any Affiliate thereof) as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar functions.

 

“Industry
Classification Group” means (a) any of the Moody’s classification
groups set forth in Schedule VI hereto, together with any such
classification groups that may be subsequently established by Moody’s and
provided by the Borrower to the Lenders, (b) up to three additional
industry group classifications established by the Borrower pursuant to Section 5.12
and (c) CDO Securities (treated as a single Industry Classification
Group).

 

“Interest
Election Request” means a request by the Borrower to convert or continue a
Borrowing in accordance with Section 2.06 substantially in the form of Exhibit G.

 

“Interest
Payment Date” means (a) with respect to any ABR Loan, each
Quarterly Date, and (b) with respect to any Eurocurrency Loan, the last
day of each Interest Period therefor and, in the case of any Interest Period of
more than three months’ duration, each day prior to the last day of such
Interest Period that occurs at three-month intervals after the first day of
such Interest Period.

 

“Interest
Period” means, for any Eurocurrency Loan or Borrowing, the period
commencing on the date of such Loan or Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter or, with respect to such portion of any Eurocurrency Loan or
Borrowing denominated in a Foreign Currency that is scheduled to be repaid on
the Commitment Termination Date, a period of less than one month’s duration
commencing on the date of such Loan or Borrowing and ending on the Commitment
Termination Date, as specified in the applicable Borrowing Request or Interest
Election Request; provided, that (i) if any Interest Period would
end on a day other than a Business Day, such Interest Period shall be extended
to the next succeeding Business Day unless such next succeeding Business Day
would fall in the next calendar month, in which case such Interest Period shall
end on the next preceding Business Day, and (ii) any Interest Period
(other than an Interest Period pertaining to a Eurocurrency Borrowing
denominated in a Foreign Currency that ends on the Commitment Termination Date
that is permitted to be of less than one month’s duration as provided in this
definition) that commences on the last Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the last calendar
month of such Interest Period) shall end on the last Business Day of the last
calendar month of such Interest Period. 
For purposes hereof, the date of a Loan

 

12

 

initially shall be the date on which such Loan is made and thereafter
shall be the effective date of the most recent conversion or continuation of
such Loan, and the date of a Borrowing comprising Loans that have been
converted or continued shall be the effective date of the most recent
conversion or continuation of such Loans.

 

“Investment”
means, for any Person:  (a) Equity
Interests, bonds, notes, debentures or other securities of any other Person or
any agreement to acquire any Equity Interests, bonds, notes, debentures or
other securities of any other Person (including any “short sale” or any sale of
any securities at a time when such securities are not owned by the Person
entering into such sale); (b) deposits, advances, loans or other
extensions of credit made to any other Person (including purchases of property
from another Person subject to an understanding or agreement, contingent or
otherwise, to resell such property to such Person); or (c) Hedging
Agreements.

 

“Investment
Policies” has the meaning assigned to such term in Section 3.11(c).

 

“Investment
Company Act” means the Investment Company Act of 1940, as amended from time
to time.

 

“Issuing
Bank” means JPMCB, in its capacity as the issuer of Letters of Credit
hereunder, and its successors in such capacity as provided in Section 2.04(j).

 

“JPMCB”
means JPMorgan Chase Bank, N.A.

 

“LC Disbursement”
means a payment made by the Issuing Bank pursuant to a Letter of Credit.

 

“LC Exposure”
means, at any time, the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on
behalf of the Borrower at such time.  The
LC Exposure of any Lender at any time shall be its Applicable Percentage
of the total LC Exposure at such time.

 

“Lenders”
means the Persons listed on Schedule I and any other Person that shall
have become a party hereto pursuant to an Assignment and Assumption, other than
any such Person that ceases to be a party hereto pursuant to an Assignment and
Assumption.

 

“Letter
of Credit” means any letter of credit issued pursuant to this Agreement.

 

“Letter
of Credit Collateral Account” has the meaning assigned to such term in Section 2.04(k).

 

13

 

“Letter
of Credit Documents” means, with respect to any Letter of Credit,
collectively, any application therefor and any other agreements, instruments,
guarantees or other documents (whether general in application or applicable
only to such Letter of Credit) governing or providing for (a) the rights
and obligations of the parties concerned or at risk with respect to such Letter
of Credit or (b) any collateral security for any of such obligations, each
as the same may be modified and supplemented and in effect from time to time.

 

“LIBO
Rate” means, for the Interest Period for any Eurocurrency Borrowing
denominated in any Currency, the rate appearing on Page 3750 of the Telerate 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 deposits in such currency in the London or other applicable
interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period, as LIBOR for
deposits denominated in such Currency with a maturity comparable to such
Interest Period.  In the event that such
rate is not available as described above for any reason, then the LIBO Rate for
such Interest Period shall be the rate at which deposits in such Currency in
the amount of $5,000,000 and for a maturity comparable to such Interest Period
are offered by the principal London office of the Administrative Agent in
immediately available funds in the London (or, in the case of English Pounds
Sterling, Paris) interbank market at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period.  Notwithstanding the foregoing, the LIBO Rate
for any Eurocurrency Loan denominated in English Pounds Sterling for any
Interest Period shall be the sum of (i) the rate referred to above plus
(ii) the MCR Cost.

 

“LIBOR”
means, for any Currency, the rate at which deposits denominated in such
Currency are offered to leading banks in the London interbank market (or, in
the case of English Pounds Sterling, in the eurocurrency market).

 

“Lien”
means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of
such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset and (c) in the case of securities, any purchase
option, call or similar right of a third party with respect to such securities,
except in favor of the issuer thereof.

 

“Loan
Documents” means, collectively, this Agreement, the Letter of Credit Documents
and the Security Documents.

 

“Loans”
means the loans made by the Lenders to the Borrower pursuant to Section 2.01.

 

14

 

“Local
Time” means, with respect to any Loan denominated in or any payment to be
made in any Currency, the local time in the Principal Financial Center for the
Currency in which such Loan is denominated or such payment is to be made.

 

“Margin
Stock” means “margin stock” within the meaning of Regulations T, U and X.

 

“Material
Adverse Effect” means a material adverse effect on (a) the business,
Portfolio Investments and other assets, liabilities and financial condition of
the Borrower taken as a whole (excluding in any case a decline in the net asset
value of the Borrower or a change in general market conditions or values of the
Borrower’s Portfolio Investments), or (b) the validity or enforceability
of any of the Loan Documents or the rights or remedies of the Administrative
Agent and the Lenders thereunder.

 

“Material
Indebtedness” means (a) Indebtedness (other than the Loans, Letters of
Credit and Hedging Agreements), of any one or more of the Borrower and its
Subsidiaries in an aggregate principal amount exceeding $10,000,000 and (b) obligations
in respect of one or more Hedging Agreements under which the maximum aggregate
amount (giving effect to any netting agreements) that the Borrower and the
Subsidiaries would be required to pay if such Hedging Agreement(s) were
terminated at such time would exceed $10,000,000.

 

“MCR
Cost” means, with respect to any Lender, the cost imputed to such Lender of
compliance with the Mandatory Cost Rate requirements of the Bank of England
during the relevant period, determined in accordance with Schedule VIII.

 

 “Moody’s” means Moody’s Investors
Service, Inc. or any successor thereto.

 

“Multiemployer
Plan” means a multiemployer plan as defined in Section 4001(a)(3) of
ERISA.

 

“National
Currency” means the currency, other than the Euro, of a Participating
Member State.

 

“Obligor”
means, collectively, the Borrower and the Subsidiary Guarantors.

 

“Other
Permitted Indebtedness” means (a) accrued expenses and current trade
accounts payable incurred in the ordinary course of the Borrower’s business
which are not overdue for a period of more than 90 days or which are being
contested in good faith by appropriate proceedings, (b) Indebtedness
(other than Indebtedness for borrowed money) arising in connection with
transactions in the ordinary course of the Borrower’s business in connection
with its purchasing of securities, derivatives transactions, reverse repurchase
agreements or dollar rolls to the extent such transactions are permitted under
the Investment Company Act and the Investment Policies, provided that
such

 

15

 

Indebtedness does not arise in connection with the purchase of
Portfolio Investments other than Cash Equivalents and U.S. Government
Securities and (c) Indebtedness in respect of judgments or awards that
have been in force for less than the applicable period for taking an appeal so
long as such judgments or awards do not constitute an Event of Default under
clause (l) of Article VII.

 

“Other
Secured Indebtedness” means, as at any date, Indebtedness (other than
Indebtedness hereunder) of the Borrower (which may be Guaranteed by Subsidiary
Guarantors) that (a) has no amortization prior to, and a final maturity
date not earlier than, six months after the Commitment Termination Date, (b) is
incurred pursuant to documentation containing other terms (including interest,
amortization, covenants and events of default) that are no more restrictive in
any material respect upon the Borrower and its Subsidiaries than those set
forth in this Agreement and (c) is not secured by any assets of any
Obligor other than pursuant to the Security Documents and the holders of which
have agreed, in a manner satisfactory to the Administrative Agent and the
Collateral Agent, to be bound by the provisions of the Security Documents.

 

“Other
Taxes” means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.

 

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

 

“PBGC”
means the Pension Benefit Guaranty Corporation referred to and defined in ERISA
and any successor entity performing similar functions.

 

“Permitted
Indebtedness” means, collectively, Other Secured Indebtedness and Unsecured
Indebtedness.

 

“Permitted
Liens” means (a) Liens imposed by any Governmental Authority for
taxes, assessments or charges not yet due or that are being contested in good
faith and by appropriate proceedings if adequate reserves with respect thereto
are maintained on the books of the Borrower in accordance with GAAP; (b) Liens
of clearing agencies, broker-dealers and similar Liens incurred in the ordinary
course of business, provided that such Liens (i) attach only to the
securities (or proceeds) being purchased or sold and (ii) secure only
obligations incurred in connection with such purchase or sale, and not any
obligation in connection with margin financing; (c) Liens imposed by law,
such as materialmen’s, mechanics’, carriers’, workmens’, storage and repairmen’s
Liens and other similar Liens arising in the ordinary course of business and
securing obligations (other than Indebtedness for borrowed money); (d) Liens
incurred or pledges or deposits made to secure obligations incurred in the
ordinary course of business under workers’ compensation laws, unemployment
insurance or other similar social security legislation (other than in respect
of employee benefit plans subject to ERISA) or to secure public or

 

16

 

statutory obligations; (e) Liens securing the performance of, or
payment in respect of, bids, insurance premiums, deductibles or co-insured
amounts, tenders, government or utility contracts (other than for the repayment
of borrowed money), surety, stay, customs and appeal bonds and other
obligations of a similar nature incurred in the ordinary course of business; (f) Liens
arising out of judgments or awards that have been in force for less than the
applicable period for taking an appeal so long as such judgments or awards do
not constitute an Event of Default under clause (l) of Article VII; (g) customary rights
of setoff and liens upon (i) deposits of cash in favor of banks or other
depository institutions in which such cash is maintained in the ordinary course
of business, (ii) cash and financial assets held in securities accounts in
favor of banks and other financial institutions with which such accounts are
maintained in the ordinary course of business and (iii) assets held by a
custodian in favor of such custodian in the ordinary course of business
securing payment of fees, indemnities and other similar obligations; (h) Liens
arising solely from precautionary filings of financing statements under the
Uniform Commercial Code of the applicable jurisdictions in respect of operating
leases entered into by the Borrower or any of its Subsidiaries in the ordinary
course of business; and (i) precautionary Liens, and filings of financing
statements under the Uniform Commercial Code, covering assets sold or
contributed to a Designated Subsidiary pursuant to a securitization permitted
hereunder.

 

“Person”
means any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other
entity.

 

“Plan”
means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069
of ERISA be deemed to be) an “employer” as defined in Section 3(5) of
ERISA.

 

“Portfolio
Investment” means any Investment held by the Obligors in their asset portfolio (and solely for purposes of
determining the Borrowing Base, and of Sections 6.02(d) and 6.04(d) and
clause (p) of Article VII, Cash).  Without limiting the generality of the
foregoing, it is understood and agreed that any Portfolio Investments that have
been contributed or sold, purported to be sold or otherwise transferred to any
Designated Subsidiary, or which secure obligations in respect of the CP
Facility, shall not be treated as Portfolio Investments.  Notwithstanding the foregoing, nothing herein
shall limit the provisions of Section 5.12(b)(i), which provides that, for
purposes of this Agreement, all determinations of whether an investment is to
be included as a Portfolio Investment shall be determined on a settlement-date
basis (meaning that any investment that has been purchased will not be treated
as a Portfolio Investment until such purchase has settled, and any Portfolio
Investment which has been sold will not be excluded as a Portfolio Investment
until such sale has settled), provided that no such investment shall be
included as a Portfolio Investment to the extent it has not been paid for in
full.

 

17

 

“Prime
Rate” means the rate of interest per annum publicly announced from time to
time by JPMCB as its prime rate in effect at its principal office in New York
City; each change in the Prime Rate shall be effective from and including the
date such change is publicly announced as being effective.

 

“Principal
Financial Center” means, in the case of any Currency, the principal
financial center where such Currency is cleared and settled, as determined by
the Administrative Agent.

 

“Quarterly
Dates” means the last Business Day of March, June, September and December in
each year, commencing on March 31, 2006.

 

“Register”
has the meaning set forth in Section 9.04.

 

“Regulations
D, T, U and X” means, respectively, Regulations D, T, U and X of the Board
of Governors of the Federal Reserve System (or any successor), as the same may
be modified and supplemented and in effect from time to time.

 

“Related
Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person’s Affiliates.

 

“Required
Lenders” means, at any time, Lenders having Revolving Credit Exposures and
unused Commitments representing more than 50% of the sum of the total Revolving
Credit Exposures and unused Commitments at such time.

 

“Restricted
Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any shares of any class of capital
stock of the Borrower or any of its Subsidiaries, or any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such shares of capital stock of the Borrower
or any option, warrant or other right to acquire any such shares of capital
stock of the Borrower.

 

“Revolving
Credit Exposure” means, with respect to any Lender at any time, the sum of
the outstanding principal amount of such Lender’s Loans and its
LC Exposure at such time.

 

“RIC”
means a person qualifying for treatment as a “regulated investment company”
under the Code.

 

“S&P”
means Standard & Poor’s Ratings Services, a division of The McGraw
Hill Companies, Inc., a New York corporation, or any successor thereto.

 

“Security
Documents” means, collectively, the Guarantee and Security Agreement, all
Uniform Commercial Code financing statements filed with respect to the

 

18

 

security interests in personal property created pursuant to the
Guarantee and Security Agreement and all other assignments, pledge agreements,
security agreements, intercreditor agreements, control agreements and other
instruments executed and delivered on or after the date hereof by any of the
Obligors pursuant to the Guarantee and Security Agreement or otherwise
providing or relating to any collateral security for any of the Secured
Obligations under and as defined in the Guarantee and Security Agreement.

 

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

 

“Special
Equity Interest” means any Equity Interest that is subject to a Lien in
favor of creditors of the issuer of such Equity Interest, provided that (a) such
Lien was created to secure Indebtedness owing by such issuer to such creditors,
(b) such Indebtedness was (i) in existence at the time the Obligors
acquired such Equity Interest, (ii) incurred or assumed by such issuer
substantially contemporaneously with such acquisition or (iii) already
subject to a Lien granted to such creditors and (c) unless such Equity
Interest is not intended to be included in the Collateral, the documentation
creating or governing such Lien does not prohibit the inclusion of such Equity
Interest in the Collateral.

 

“Standard
Securitization Undertakings” means, collectively, (a) customary
arms-length servicing obligations (together with any related performance
guarantees), (b) obligations (together with any related performance
guarantees) to refund the purchase price or grant purchase price credits for
dilutive events or misrepresentations (in each case unrelated to the
collectibility of the assets sold or the creditworthiness of the associated
account debtors ) and (c) representations, warranties, covenants and
indemnities (together with any related performance guarantees) of a type that
are reasonably customary in accounts receivable securitizations.

 

“Statutory
Reserve Rate” means, for the Interest Period for any Eurocurrency
Borrowing, a fraction (expressed as a decimal), the numerator of which is the
number one and the denominator of which is the number one minus the
arithmetic mean, taken over each day in such Interest Period, of the aggregate
of the maximum reserve percentages (including any marginal, special, emergency
or supplemental reserves) expressed as a decimal established by the Board to
which the Administrative Agent is subject for eurocurrency funding (currently
referred to as “Eurocurrency liabilities” in Regulation D).  Such reserve percentages shall include those
imposed pursuant to Regulation D. 
Eurocurrency Loans shall be deemed to constitute eurocurrency funding
and to be subject to such reserve requirements without benefit of or credit for
proration, exemptions or offsets that may be available from time to time to any
Lender under Regulation D or any comparable regulation.  The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.

 

19

 

“Subsidiary”
means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent’s consolidated financial statements if such financial statements
were prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing
more than 50% of the equity or more than 50% of the ordinary voting power or,
in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, controlled or held, or (b) that is,
as of such date, otherwise Controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.  Anything herein to the contrary
notwithstanding, the term “Subsidiary” shall not include any Person that
constitutes an Investment held by the Borrower in the ordinary course of
business and that is not, under GAAP, consolidated on the financial statements
of the Borrower and its Subsidiaries. 
Unless otherwise specified, “Subsidiary” means a Subsidiary of the
Borrower.

 

“Subsidiary
Guarantor” means any Subsidiary that is a Guarantor under the Guarantee and
Security Agreement.  It is understood and
agreed that Designated Subsidiaries shall not be required to be Subsidiary
Guarantors.

 

“Taxes”
means any and all present or future taxes, levies, imposts, duties, deductions,
charges or withholdings imposed by any Governmental Authority.

 

“Transactions”
means the execution, delivery and performance by the Borrower of this Agreement
and the other Loan Documents, the borrowing of Loans, the use of the proceeds
thereof and the issuance of Letters of Credit hereunder.

 

“Type”,
when used in reference to any Loan or Borrowing, refers to whether the rate of
interest on such Loan, or on the Loans constituting such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

 

“Uniform
Commercial Code” means the Uniform Commercial Code as in effect from time
to time in the State of New York.

 

“Unsecured
Indebtedness” means any Indebtedness of the Borrower (which may be
Guaranteed by Subsidiary Guarantors) that (a) has no amortization prior
to, and a final maturity date not earlier than, six months after the Commitment
Termination Date, (b) is incurred pursuant to documentation containing
other terms (including interest, amortization, covenants and events of default)
and, in each case, no more restrictive in any material respect upon the
Borrower and its Subsidiaries than those set forth in this Agreement and (c) is
not secured by any assets of any Obligor.

 

“U.S.
Government Securities” means securities that are direct obligations of, and
obligations the timely payment of principal and interest on which is fully
guaranteed by, the United States or any agency or instrumentality of the United
States the

 

20

 

obligations of which are backed by the full faith and credit of the
United States and in the form of conventional bills, bonds, and notes.

 

“Valuation
Policy” has the meaning assigned to such term in Section 5.12(b)(ii)(B).

 

“Value”
has the meaning assigned to such term in Section 5.13.

 

“Withdrawal
Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.

 

SECTION 1.02.  Classification of Loans and Borrowings.  For purposes of this Agreement, Loans may be
classified and referred to by Type (e.g., an “ABR Loan”).  Borrowings also may be classified and
referred to by Type (e.g., an “ABR Borrowing”). 
Loans and Borrowings may also be identified by Currency.

 

SECTION 1.03.  Terms Generally.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have
the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented, renewed or otherwise
modified (subject to any restrictions on such amendments, supplements, renewals
or modifications set forth herein), (b) any reference herein to any Person
shall be construed to include such Person’s successors and assigns, (c) the
words “herein”, “hereof” and “hereunder”, and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (d) all references herein to Articles, Sections,
Exhibits and Schedules shall be construed to refer to Articles and Sections of,
and Exhibits and Schedules to, this Agreement and (e) the words “asset”
and “property” shall be construed to have the same meaning and effect and to
refer to any and all tangible and intangible assets and properties, including
cash, securities, accounts and contract rights.

 

SECTION 1.04.  Accounting Terms; GAAP.  Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if the
Borrower notifies the Administrative Agent that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied

 

21

 

immediately before such change shall have
become effective until such notice shall have been withdrawn or such provision
amended in accordance herewith.

 

SECTION 1.06.  Currencies; Currency Equivalents.

 

(a)           Currencies Generally.  At any time, any reference in the definition
of the term “Agreed Foreign Currency” or in any other provision of this
Agreement to the Currency of any particular nation means the lawful currency of
such nation at such time whether or not the name of such Currency is the same
as it was on the date hereof.  Except as
provided in Section 2.09(b) and the last sentence of Section 2.16(a),
for purposes of determining (i) whether the amount of any Borrowing or
Letter of Credit, together with all other Borrowings and Letters of Credit then
outstanding or to be borrowed at the same time as such Borrowing, would exceed
the aggregate amount of the Commitments, (ii) the aggregate unutilized
amount of the Commitments, (iii) the Revolving Credit Exposure, (iv) the
LC Exposure, (v) the Covered Debt Amount and (vi) the Borrowing Base
or the Value or the fair market value of any Portfolio Investment, the
outstanding principal amount of any Borrowing or Letter of Credit that is
denominated in any Foreign Currency or the Value or the fair market value of
any Portfolio Investment that is denominated in any Foreign Currency shall be
deemed to be the Dollar Equivalent of the amount of the Foreign Currency of
such Borrowing, Letter of Credit or Portfolio Investment, as the case may be,
determined as of the date of such Borrowing or Letter of Credit (determined in
accordance with the last sentence of the definition of the term “Interest
Period”) or the date of valuation of such Portfolio Investment, as the case may
be.  Wherever in this Agreement in
connection with a Borrowing or Loan an amount, such as a required minimum or
multiple amount, is expressed in Dollars, but such Borrowing or Loan is
denominated in a Foreign Currency, such amount shall be the relevant Foreign
Currency Equivalent of such Dollar amount (rounded to the nearest 1,000 units
of such Foreign Currency).

 

(b)           Special Provisions Relating to
Euro.  Each obligation hereunder of
any party hereto that is denominated in the National Currency of a state that
is not a Participating Member State on the date hereof shall, effective from
the date on which such state becomes a Participating Member State, be redenominated
in Euro in accordance with the legislation of the European Union applicable to
the European Monetary Union; provided that, if and to the extent that
any such legislation provides that any such obligation of any such party
payable within such Participating Member State by crediting an account of the
creditor can be paid by the debtor either in Euros or such National Currency,
such party shall be entitled to pay or repay such amount either in Euros or in
such National Currency.  If the basis of
accrual of interest or fees expressed in this Agreement with respect to an
Agreed Foreign Currency of any country that becomes a Participating Member
State after the date on which such currency becomes an Agreed Foreign Currency
shall be inconsistent with any convention or practice in the interbank market
for the basis of accrual of interest or fees in respect of the Euro, such
convention or practice shall replace such expressed basis effective as of and
from the date on which such state becomes a Participating Member State; provided
that, with respect to any

 

22

 

Borrowing denominated in such currency that is outstanding immediately
prior to such date, such replacement shall take effect at the end of the
Interest Period therefor.

 

Without
prejudice to the respective liabilities of the Borrower to the Lenders and the
Lenders to the Borrower under or pursuant to this Agreement, each provision of
this Agreement shall be subject to such reasonable changes of construction as the
Administrative Agent may from time to time, in consultation with the Borrower,
reasonably specify to be necessary or appropriate to reflect the introduction
or changeover to the Euro in any country that becomes a Participating Member
State after the date hereof; provided that the Administrative Agent
shall provide the Borrower and the Lenders with prior notice of the proposed
change with an explanation of such change in sufficient time to permit the
Borrower and the Lenders an opportunity to respond to such proposed change.

 

ARTICLE II

 

THE CREDITS

 

SECTION 2.01.  The Commitments.  Subject to the terms and conditions set forth
herein, each Lender agrees to make Loans in Dollars or in any Agreed Foreign
Currency to the Borrower from time to time during the Availability Period in an
aggregate principal amount that will not result in (a) such Lender’s
Revolving Credit Exposure exceeding such Lender’s Commitment, (b) the
aggregate Revolving Credit Exposure of all of the Lenders exceeding the
aggregate Commitments or (c) the total Covered Debt Amount exceeding the
Borrowing Base then in effect.  Within
the foregoing limits and subject to the terms and conditions set forth herein,
the Borrower may borrow, prepay and reborrow Loans.

 

SECTION 2.02.  Loans and Borrowings.

 

(a)           Obligations of Lenders.  Each Loan shall be made as part of a
Borrowing consisting of Loans of the same Currency and Type made by the Lenders
ratably in accordance with their respective Commitments.  The failure of any Lender to make any Loan required
to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Commitments of the Lenders are several and
no Lender shall be responsible for any other Lender’s failure to make Loans as
required.

 

(b)           Type of Loans.  Subject to Section 2.12, each Borrowing
shall be constituted entirely of ABR Loans or of Eurocurrency Loans
denominated in a single Currency as the Borrower may request in accordance
herewith.  Each ABR Loan shall be
denominated in Dollars.  Each Lender at
its option may make any Eurocurrency Loan by causing any domestic or foreign
branch or Affiliate of such Lender to make such Loan; provided that any
exercise of such option shall not affect the obligation of the Borrower to
repay such Loan in accordance with the terms of this Agreement.

 

23

 

(c)           Minimum Amounts.  Each Borrowing (whether Eurocurrency or ABR)
shall be in an aggregate amount of $1,000,000 or a larger multiple of
$1,000,000; provided that an ABR Borrowing may be in an aggregate
amount that is equal to the entire unused balance of the total Commitments or
that is required to finance the reimbursement of an LC Disbursement as
contemplated by Section 2.04(f). 
Borrowings of more than one Currency and Type may be outstanding at the
same time.

 

(d)           Limitations on Interest Periods.  Notwithstanding any other provision of this
Agreement, the Borrower shall not be entitled to request (or to elect to
convert to or continue as a Eurocurrency Borrowing) any Borrowing if the
Interest Period requested therefor would end after the Commitment Termination
Date.

 

SECTION 2.03.  Requests for Borrowings.

 

(a)           Notice by the Borrower.  To request a Borrowing, the Borrower shall
notify the Administrative Agent of such request by telephone (i) in the
case of a Eurocurrency Borrowing denominated in Dollars, not later than 11:00 a.m.,
New York City time, three Business Days before the date of the proposed
Borrowing, (ii) in the case of a Eurocurrency Borrowing denominated in a
Foreign Currency, not later than 11:00 a.m., London time, three Business
Days before the date of the proposed Borrowing or (iii) in the case of an
ABR Borrowing, not later than 11:00 a.m., New York City time, on the
date of the proposed Borrowing.  Each
such telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Borrowing Request in a form approved by the Administrative Agent and signed by
the Borrower.

 

(b)           Content of Borrowing Requests.  Each telephonic and written Borrowing Request
shall specify the following information in compliance with Section 2.02:

 

(i)            the
aggregate amount and Currency of the requested Borrowing;

 

(ii)           the
date of such Borrowing, which shall be a Business Day;

 

(iii)          in
the case of a Borrowing denominated in Dollars, whether such Borrowing is to be
an ABR Borrowing or a Eurocurrency Borrowing;

 

(iv)          in
the case of a Eurocurrency Borrowing, the Interest Period therefor, which shall
be a period contemplated by the definition of the term “Interest Period” and
permitted under Section 2.02(d); and

 

(v)           the
location and number of the Borrower’s account to which funds are to be
disbursed, which shall comply with the requirements of Section 2.05.

 

(c)           Notice by the Administrative Agent
to the Lenders.  Promptly following
receipt of a Borrowing Request in accordance with this Section, the

 

24

 

Administrative Agent shall advise each Lender of the details thereof
and of the amounts of such Lender’s Loan to be made as part of the requested
Borrowing.

 

(d)           Failure to Elect.  If no election as to the Currency of a
Borrowing is specified, then the requested Borrowing shall be denominated in
Dollars.  If no election as to the Type
of a Borrowing is specified, then the requested Borrowing shall be a
Eurocurrency Borrowing having an Interest Period of one month and, if an
Agreed Foreign Currency has been specified, the requested Borrowing shall be a
Eurocurrency Borrowing denominated in such Agreed Foreign Currency and having
an Interest Period of one month.  If a
Eurocurrency Borrowing is requested but no Interest Period is specified, (i) if
the Currency specified for such Borrowing is Dollars (or if no Currency has
been so specified), the requested Borrowing shall be a Eurocurrency Borrowing
denominated in Dollars having an Interest Period of one month’s duration, and (ii) if
the Currency specified for such Borrowing is an Agreed Foreign Currency, the
Borrower shall be deemed to have selected an Interest Period of one month’s
duration.

 

SECTION 2.04.  Letters of Credit.

 

(a)           General.  Subject to the terms and conditions set forth
herein, in addition to the Loans provided for in Section 2.01, the
Borrower may request the Issuing Bank to issue, at any time and from time to
time during the Availability Period, Letters of Credit denominated in Dollars
or in any Agreed Foreign Currency for its own account in such form as is
acceptable to the Issuing Bank in its reasonable determination and for the
benefit of such named beneficiary or beneficiaries as are specified by the
Borrower.  Letters of Credit issued
hereunder shall constitute utilization of the Commitments up to the aggregate
amount available to be drawn thereunder.

 

(b)           Notice of Issuance, Amendment,
Renewal or Extension.  To request the
issuance of a Letter of Credit (or the amendment, renewal or extension of an
outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or
transmit by electronic communication, if arrangements for doing so have been
approved by the Issuing Bank) to the Issuing Bank and the Administrative Agent
(reasonably in advance of the requested date of issuance, amendment, renewal or
extension) a notice requesting the issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or extended, and
specifying the date of issuance, amendment, renewal or extension (which shall
be a Business Day), the date on which such Letter of Credit is to expire (which
shall comply with paragraph (d) of this Section), the amount and
Currency of such Letter of Credit, the name and address of the beneficiary
thereof and such other information as shall be necessary to prepare, amend,
renew or extend such Letter of Credit. 
If requested by the Issuing Bank, the Borrower also shall submit a
letter of credit application on the Issuing Bank’s standard form in connection
with any request for a Letter of Credit. 
In the event of any inconsistency between the terms and conditions of
this Agreement and the terms and conditions of any form of letter of credit
application or other agreement submitted by the Borrower to, or entered into by
the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms
and conditions of this Agreement shall control.

 

25

 

(c)           Limitations on Amounts.  A Letter of Credit shall be issued, amended,
renewed or extended only if (and upon issuance, amendment, renewal or extension
of each Letter of Credit the Borrower shall be deemed to represent and warrant
that), after giving effect to such issuance, amendment, renewal or extension (i) the
aggregate LC Exposure of the Issuing Bank (determined for these purposes
without giving effect to the participations therein of the Lenders pursuant to
paragraph (e) of this Section) shall not exceed $25,000,000, (ii) the
total Revolving Credit Exposures shall not exceed the aggregate Commitments and
(iii) the total Covered Debt Amount shall not exceed the Borrowing Base
then in effect.

 

(d)           Expiration Date.  Each Letter of Credit shall expire at or
prior to the close of business on the date twelve months after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension
thereof, twelve months after the then-current expiration date of such Letter of
Credit, so long as such renewal or extension occurs within three months of such
then-current expiration date); provided that any Letter of Credit with a
one-year term may provide for the renewal thereof for additional one-year
periods.

 

(e)           Participations.  By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) by the Issuing
Bank, and without any further action on the part of the Issuing Bank or the
Lenders, the Issuing Bank hereby grants to each Lender, and each Lender hereby
acquires from the Issuing Bank, a participation in such Letter of Credit equal
to such Lender’s Applicable Percentage of the aggregate amount available to be
drawn under such Letter of Credit.  Each
Lender acknowledges and agrees that its obligation to acquire participations
pursuant to this paragraph in respect of Letters of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including any amendment, renewal or extension of any Letter of Credit or the
occurrence and continuance of a Default or reduction or termination of the Commitments, provided that no Lender shall be required to purchase
a participation in a Letter of Credit pursuant to this Section 2.04(e) if
(x) the conditions set forth in Section 4.02 would not be satisfied
in respect of a Borrowing at the time such Letter of Credit was issued and
(y) the Required Lenders shall have so notified the Issuing Bank in
writing and shall not have subsequently determined that the circumstances giving
rise to such conditions not being satisfied no longer exist.

 

In
consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
account of the Issuing Bank, such Lender’s Applicable Percentage of each
LC Disbursement made by the Issuing Bank promptly upon the request of the
Issuing Bank at any time from the time of such LC Disbursement until such
LC Disbursement is reimbursed by the Borrower or at any time after any
reimbursement payment is required to be refunded to the Borrower for any
reason.  Such payment shall be made
without any offset, abatement, withholding or reduction whatsoever.  Each such payment shall be made in the same
manner as provided in Section 2.05 with respect to Loans made by such
Lender (and

 

26

 

Section 2.05 shall apply, mutatis  mutandis, to the
payment obligations of the Lenders), and the Administrative Agent shall
promptly pay to the Issuing Bank the amounts so received by it from the
Lenders.  Promptly following receipt by
the Administrative Agent of any payment from the Borrower pursuant to the next
following paragraph, the Administrative Agent shall distribute such payment to
the Issuing Bank or, to the extent that the Lenders have made payments pursuant
to this paragraph to reimburse the Issuing Bank, then to such Lenders and the
Issuing Bank as their interests may appear. 
Any payment made by a Lender pursuant to this paragraph to reimburse the
Issuing Bank for any LC Disbursement shall not constitute a Loan and shall
not relieve the Borrower of its obligation to reimburse such
LC Disbursement.

 

(f)            Reimbursement.  If the Issuing Bank shall make any
LC Disbursement in respect of a Letter of Credit, the Borrower shall
reimburse the Issuing Bank in respect of such LC Disbursement by paying to
the Administrative Agent an amount equal to such LC Disbursement not later
than 12:00 noon, New York City time, on (i) the Business Day that the
Borrower receives notice of such LC Disbursement, if such notice is
received prior to 10:00 a.m., New York City time, or (ii) the
Business Day immediately following the day that the Borrower receives such
notice, if such notice is not received prior to such time, provided that,
if such LC Disbursement is not less than $1,000,000, the Borrower may,
subject to the conditions to borrowing set forth herein, request in accordance
with Section 2.03 that such payment be financed with an ABR Borrowing
in an equivalent amount and, to the extent so financed, the Borrower’s
obligation to make such payment shall be discharged and replaced by the
resulting ABR Borrowing.

 

If the
Borrower fails to make such payment when due, the Administrative Agent shall
notify each Lender of the applicable LC Disbursement, the payment then due
from the Borrower in respect thereof and such Lender’s Applicable Percentage
thereof.

 

(g)           Obligations Absolute.  The Borrower’s obligation to reimburse
LC Disbursements as provided in paragraph (f) of this Section shall
be absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability
of any Letter of Credit, or any term or provision therein, (ii) any draft
or other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a
Letter of Credit against presentation of a draft or other document that does
not comply strictly with the terms of such Letter of Credit, and (iv) any
other event or circumstance whatsoever, whether or not similar to any of the
foregoing, that might, but for the provisions of this Section, constitute a
legal or equitable discharge of the Borrower’s obligations hereunder.

 

Neither
the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their
Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit by the Issuing
Bank or any payment or failure to make any payment thereunder (irrespective of
any of the

 

27

 

circumstances referred to in the preceding sentence), or any error,
omission, interruption, loss or delay in transmission or delivery of any draft,
notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of the Issuing Bank; provided that the foregoing shall not
be construed to excuse the Issuing Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by the Issuing Bank’s
gross negligence or willful misconduct when determining whether drafts and
other documents presented under a Letter of Credit comply with the terms
thereof.  The parties hereto expressly
agree that:

 

(i)            the
Issuing Bank may accept documents that appear on their face to be in
substantial compliance with the terms of a Letter of Credit without
responsibility for further investigation, regardless of any notice or
information to the contrary, and may make payment upon presentation of
documents that appear on their face to be in substantial compliance with the
terms of such Letter of Credit;

 

(ii)           the
Issuing Bank shall have the right, in its sole discretion, to decline to accept
such documents and to make such payment if such documents are not in strict compliance
with the terms of such Letter of Credit; and

 

(iii)          this
sentence shall establish the standard of care to be exercised by the Issuing
Bank when determining whether drafts and other documents presented under a
Letter of Credit comply with the terms thereof (and the parties hereto hereby
waive, to the extent permitted by applicable law, any standard of care
inconsistent with the foregoing).

 

(h)           Disbursement Procedures.  The Issuing Bank shall, within a reasonable
time following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit.  The Issuing Bank shall promptly after such
examination notify the Administrative Agent and the Borrower by telephone (confirmed
by telecopy) of such demand for payment and whether the Issuing Bank has made
or will make an LC Disbursement thereunder; provided that any
failure to give or delay in giving such notice shall not relieve the Borrower
of its obligation to reimburse the Issuing Bank and the Lenders with respect to
any such LC Disbursement.

 

(i)            Interim Interest.  If the Issuing Bank shall make any
LC Disbursement, then, unless the Borrower shall reimburse such
LC Disbursement in full on the date such LC Disbursement is made, the
unpaid amount thereof shall bear interest, for each day from and including the
date such LC Disbursement is made to but excluding the date that the
Borrower reimburses such LC Disbursement, at the rate per annum then
applicable to ABR Loans; provided that, if the Borrower fails to
reimburse such LC Disbursement within two Business Days following the date
when due pursuant

 

28

 

to paragraph (f) of this Section, then the provisions of Section 2.11(c) shall
apply.  Interest accrued pursuant to this
paragraph shall be for account of the Issuing Bank, except that interest
accrued on and after the date of payment by any Lender pursuant to
paragraph (f) of this Section to reimburse the Issuing Bank
shall be for account of such Lender to the extent of such payment.

 

(j)            Replacement of the Issuing Bank.  The Issuing Bank may be replaced at any time
by written agreement between the Borrower, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank.  The Administrative Agent shall notify the
Lenders of any such replacement of the Issuing Bank.  At the time any such replacement shall become
effective, the Borrower shall pay all unpaid fees accrued for account of the
replaced Issuing Bank pursuant to Section 2.10(b).  From and after the effective date of any such
replacement, (i) the successor Issuing Bank shall have all the rights and
obligations of the replaced Issuing Bank under this Agreement with respect to
Letters of Credit to be issued thereafter and (ii) references herein to
the term “Issuing Bank” shall be deemed to refer to such successor or to any
previous Issuing Bank, or to such successor and all previous Issuing Banks, as
the context shall require.  After the
replacement of the Issuing Bank hereunder, the replaced Issuing Bank shall
remain a party hereto and shall continue to have all the rights and obligations
of the Issuing Bank under this Agreement with respect to Letters of Credit
issued by it prior to such replacement, but shall not be required to issue
additional Letters of Credit.

 

(k)           Cash Collateralization.  If the Borrower shall be required to provide
cover for LC Exposure pursuant to Section 2.08(a), Section 2.09(c) or
the last paragraph of Article VII, the Borrower shall immediately deposit
into a segregated collateral account or accounts (herein, collectively, the “Letter
of Credit Collateral Account”) in the name and under the dominion and
control of the Administrative Agent Cash denominated in the Currency of the
Letter of Credit under which such LC Exposure arises in an amount equal to the
amount required under Section 2.08(a), Section 2.09(c) or the
last paragraph of Article VII, as applicable.  Such deposit shall be held by the
Administrative Agent as collateral in the first instance for the
LC Exposure under this Agreement and thereafter for the payment of the “Secured
Obligations” under and as defined in the Guarantee and Security Agreement, and
for these purposes the Borrower hereby grants a security interest to the
Administrative Agent for the benefit of the Lenders in the Letter of Credit
Collateral Account and in any financial assets (as defined in the Uniform
Commercial Code) or other property held therein.

 

SECTION 2.05.  Funding of Borrowings.

 

(a)           Funding by Lenders.  Each Lender shall make each Loan to be made
by it hereunder on the proposed date thereof by wire transfer of immediately
available funds by 1:00 p.m., Local Time, to the account of the
Administrative Agent most recently designated by it for such purpose by notice
to the Lenders.  The Administrative Agent
will make such Loans available to the Borrower by promptly crediting the
amounts so received, in like funds, to an account of the Borrower designated by
the Borrower in the applicable Borrowing Request; provided that
ABR Borrowings

 

29

 

made to finance the reimbursement of an LC Disbursement as
provided in Section 2.04(f) shall be remitted by the Administrative
Agent to the Issuing Bank.

 

(b)           Presumption by the Administrative
Agent.  Unless the Administrative
Agent shall have received notice from a Lender prior to the proposed date of
any Borrowing that such Lender will not make available to the Administrative
Agent such Lender’s share of such Borrowing, the Administrative Agent may assume
that such Lender has made such share available on such date in accordance with
paragraph (a) of this Section and may, in reliance upon such
assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrower severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the Federal Funds
Effective Rate or (ii) in the case of the Borrower, the interest rate
applicable to ABR Loans.  If such
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender’s Loan included in such Borrowing.

 

SECTION 2.06.  Interest Elections.

 

(a)           Elections by the Borrower for
Borrowings.  Subject to Section 2.03(d),
the Loans constituting each Borrowing initially shall be of the Type specified
in the applicable Borrowing Request and, in the case of a Eurocurrency
Borrowing, shall have the Interest Period specified in such Borrowing Request.  Thereafter, the Borrower may elect to convert
such Borrowing to a Borrowing of a different Type or to continue such Borrowing
as a Borrowing of the same Type and, in the case of a Eurocurrency Borrowing,
may elect the Interest Period therefor, all as provided in this Section; provided,
however, that (i) a Borrowing denominated in one Currency may not
be continued as, or converted to, a Borrowing in a different Currency, (ii) no
Eurocurrency Borrowing denominated in a Foreign Currency may be continued if,
after giving effect thereto, the aggregate Revolving Credit Exposures would
exceed the aggregate Commitments, and (iii) a Eurocurrency Borrowing
denominated in a Foreign Currency may not be converted to a Borrowing of a
different Type.  The Borrower may elect
different options with respect to different portions of the affected Borrowing,
in which case each such portion shall be allocated ratably among the Lenders
holding the Loans constituting such Borrowing, and the Loans constituting each
such portion shall be considered a separate Borrowing.

 

(b)           Notice of Elections.  To make an election pursuant to this Section,
the Borrower shall notify the Administrative Agent of such election by
telephone by the time that a Borrowing Request would be required under Section 2.03
if the Borrower were requesting a Borrowing of the Type resulting from such
election to be made on the effective date of such election.  Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly (but no later than
the close of business on the date of such request) by hand delivery or telecopy
to the Administrative Agent of a

 

30

 

written Interest Election Request in a form approved by the
Administrative Agent and signed by the Borrower.

 

(c)           Content of Interest Election
Requests.  Each telephonic and
written Interest Election Request shall specify the following information in
compliance with Section 2.02:

 

(i)            the
Borrowing to which such Interest Election Request applies and, if different
options are being elected with respect to different portions thereof, the
portions thereof to be allocated to each resulting Borrowing (in which case the
information to be specified pursuant to clauses (iii) and (iv) of
this paragraph shall be specified for each resulting Borrowing);

 

(ii)           the
effective date of the election made pursuant to such Interest Election Request,
which shall be a Business Day;

 

(iii)          whether,
in the case of a Borrowing denominated in Dollars, the resulting Borrowing is
to be an ABR Borrowing or a Eurocurrency Borrowing; and

 

(iv)          if
the resulting Borrowing is a Eurocurrency Borrowing, the Interest Period
therefor after giving effect to such election, which shall be a period
contemplated by the definition of the term “Interest Period” and permitted
under Section 2.02(d).

 

(d)           Notice by the Administrative Agent
to the Lenders.  Promptly following
receipt of an Interest Election Request, the Administrative Agent shall advise
each Lender of the details thereof and of such Lender’s portion of each
resulting Borrowing.

 

(e)           Failure to Elect; Events of
Default.  If the Borrower fails to
deliver a timely and complete Interest Election Request with respect to a
Eurocurrency Borrowing prior to the end of the Interest Period therefor, then,
unless such Borrowing is repaid as provided herein, (i) if such Borrowing
is denominated in Dollars, at the end of such Interest Period such Borrowing
shall be converted to a Eurocurrency Borrowing having an Interest Period of one
month, and (ii) if such Borrowing is denominated in a Foreign Currency,
the Borrower shall be deemed to have selected an Interest Period of one month’s
duration.  Notwithstanding any contrary
provision hereof, if an Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so notifies the
Borrower, then, so long as an Event of Default is continuing no outstanding
Eurocurrency Borrowing may have an Interest Period of more than one month’s
duration.

 

31

 

SECTION 2.07.  Termination, Reduction or Increase of the
Commitments.

 

(a)           Scheduled Termination.  Unless previously terminated, the Commitments
shall terminate on the Commitment Termination Date.

 

(b)           Voluntary Termination or Reduction.  The Borrower may at any time terminate, or
from time to time reduce, the Commitments; provided that (i) each
reduction of the Commitments shall be in an amount that is $25,000,000 or a
larger multiple of $5,000,000 in excess thereof the Borrower shall not
terminate or reduce the Commitments if, after giving effect to any concurrent
prepayment of the Loans in accordance with Section 2.09, the total
Revolving Credit Exposures would exceed the total Commitments and (ii) in
no event may the Commitments hereunder be reduced to an amount less than or
equal to the aggregate commitments in respect of Designated Indebtedness under
and as defined in the Guarantee and Security Agreement, and any such requested
reduction shall be ineffective.

 

(c)           Notice of Voluntary Termination or
Reduction.  The Borrower shall notify
the Administrative Agent of any election to terminate or reduce the Commitments
under paragraph (b) of this Section at least three Business Days
prior to the effective date of such termination or reduction, specifying such
election and the effective date thereof. 
Promptly following receipt of any notice, the Administrative Agent shall
advise the Lenders of the contents thereof. 
Each notice delivered by the Borrower pursuant to this Section shall
be irrevocable; provided that a notice of termination of the Commitments
delivered by the Borrower may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such notice may be
revoked by the Borrower (by notice to the Administrative Agent on or prior to
the specified effective date) if such condition is not satisfied.

 

(d)           Effect of Termination or Reduction.  Any termination or reduction of the
Commitments shall be permanent.  Each
reduction of the Commitments shall be made ratably among the Lenders in
accordance with their respective Commitments.

 

(e)           Increase of the Commitments.

 

(i)            Requests
for Increase by Borrower.  The
Borrower may at any time propose that the Commitments hereunder be increased
(each such proposed increase being a “Commitment Increase”) by notice to
the Administrative Agent, specifying each existing Lender (each an “Increasing
Lender”) and/or each additional lender (each an “Assuming Lender”)
that shall have agreed to an additional Commitment and the date on which such
increase is to be effective (the “Commitment Increase Date”), which
shall be a Business Day at least three Business Days after delivery of such
notice and 30 days prior to the Commitment Termination Date; provided
that:

 

32

 

(A)          the
minimum amount of such increase shall be $25,000,000 or a larger multiple of
$25,000,000 in excess thereof, and the maximum amount of such increase shall
not exceed $250,000,000;

 

(B)           the
minimum amount of the Commitment of any Assuming Lender, and the minimum amount
of the increase of the Commitment of any Increasing Lender, as part of such
Commitment Increase shall be $25,000,000 or a larger multiple of $5,000,000 in excess
thereof;

 

(C)           each
Assuming Lender shall be consented to by the Administrative Agent and the
Issuing Bank;

 

(D)          no
Default shall have occurred and be continuing on such Commitment Increase Date
or shall result from the proposed Commitment Increase; and

 

(E)           the
representations and warranties contained in this Agreement shall be true and
correct on and as of the Commitment Increase Date as if made on and as of such
date (or, if any such representation or warranty is expressly stated to have
been made as of a specific date, as of such specific date).

 

(ii)           Effectiveness
of Commitment Increase by Borrower. 
The Assuming Lender, if any, shall become a Lender hereunder as of such
Commitment Increase Date and the Commitment of any Increasing Lender and such
Assuming Lender shall be increased as of such Commitment Increase Date; provided
that:

 

(x)            the
Administrative Agent shall have received on or prior to 11:00 a.m., New
York City time, on such Commitment Increase Date a certificate of a duly
authorized officer of the Borrower stating that each of the applicable
conditions to such Commitment Increase set forth in the foregoing
paragraph (i) has been satisfied; and

 

(y)           each
Assuming Lender or Increasing Lender shall have delivered to the Administrative
Agent, on or prior to 11:00 a.m., New York City time, on such Commitment
Increase Date, an agreement, in form and substance satisfactory to the Borrower
and the Administrative Agent, pursuant to which such Lender shall, effective as
of such Commitment Increase Date, undertake a Commitment or an increase of
Commitment, duly executed by such Assuming Lender and the Borrower and
acknowledged by the Administrative Agent.

 

33

 

(iii)          Recordation
into Register.  Upon its receipt of
an agreement referred to in clause (ii)(y) above executed by an Assuming
Lender or any Increasing Lender, together with the certificate referred to in
clause (ii)(x) above, the Administrative Agent shall, if such agreement
has been completed, (x) accept such agreement, (y) record the
information contained therein in the Register and (z) give prompt notice
thereof to the Borrower.

 

(iv)          Adjustments of Borrowings upon
Effectiveness of Increase.  In the
event that the Administrative Agent shall have received notice from the
Borrower as to any agreement with respect to a Commitment Increase on or prior
to the relevant Commitment Increase Date and the actions provided for in
clauses (ii)(x) and (ii)(y) above shall have occurred by 9:00 a.m.,
New York City time, on such Commitment Increase Date, the Administrative Agent
shall notify the Lenders (including any Assuming Lenders) of the occurrence of
such Commitment Increase Date promptly on such date by facsimile transmission
or electronic messaging system.  If on
the Commitment Increase Date any Loans shall be outstanding, the Borrower will
borrow from each of the Increasing Lenders, and the Increasing Lenders will
make Loans to the Borrower (in the case of Eurocurrency Loans, with Interest
Period(s) ending on the date(s) of any then outstanding Interest Period(s)),
and (notwithstanding the provisions in this Agreement requiring that borrowings
and prepayments be made ratably in accordance with the principal amounts of the
Loans held by the Lenders) the Borrower shall prepay the Loans held by the
other Lenders (other than the Increasing Lenders) in such amounts as may be
necessary, together with any amounts payable under Section 2.14 as a
result of such prepayment, so that after giving effect to such Loans and
prepayments, the Loans (and Interest Period(s) of Eurocurrency Loan(s)) shall
be held by the Lenders pro rata in accordance with the respective amounts of
their Commitments (as modified hereby). 
Concurrently therewith, the Lenders shall be deemed to have adjusted
their participation interests in any outstanding Letters of Credit so that such
interests are held ratably in accordance with their Commitments as so
increased.

 

SECTION 2.08.  Repayment of Loans; Evidence of Debt.

 

(a)           Repayment.  The Borrower hereby unconditionally promises
to pay to the Administrative Agent for account of the Lenders the outstanding
principal amount of the Loans on the Commitment Termination Date.

 

In
addition, on the Commitment Termination Date, the Borrower shall deposit into
the Letter of Credit Collateral Account Cash in an amount equal to 102% of the
undrawn face amount of all Letters of Credit outstanding on the close of
business on the Commitment Termination Date, such deposit to be held by the
Administrative Agent as collateral security for the LC Exposure under this
Agreement in respect of the undrawn portion of such Letters of Credit.

 

(b)           Manner of Payment.  Prior to any repayment or prepayment of any
Borrowings hereunder, the Borrower shall select the Borrowing or Borrowings to
be paid and shall notify the Administrative Agent by telephone (confirmed by
telecopy) of such

 

34

 

selection not later than 11:00 a.m., New York City time, three
Business Days before the scheduled date of such repayment; provided that
each repayment of Borrowings shall be applied to repay any outstanding
ABR Borrowings before any other Borrowings.  If the Borrower fails to make a timely
selection of the Borrowing or Borrowings to be repaid or prepaid, such payment
shall be applied, first, to pay any outstanding ABR Borrowings and,
second, to other Borrowings in the order of the remaining duration of their
respective Interest Periods (the Borrowing with the shortest remaining Interest
Period to be repaid first).  Each payment
of a Borrowing shall be applied ratably to the Loans included in such
Borrowing.

 

(c)           Maintenance of Records by Lenders.  Each Lender shall maintain in accordance with
its usual practice records evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts and
Currency of principal and interest payable and paid to such Lender from time to
time hereunder.

 

(d)           Maintenance of Records by the
Administrative Agent.  The
Administrative Agent shall maintain records in which it shall record (i) the
amount and Currency of each Loan made hereunder, the Type thereof and each
Interest Period therefor, (ii) the amount and Currency of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount and Currency of any sum received by
the Administrative Agent hereunder for account of the Lenders and each Lender’s
share thereof.

 

(e)           Effect of Entries.  The entries made in the records maintained
pursuant to paragraph (c) or (d) of this Section shall
be prima  facie evidence, absent obvious error, of the existence
and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such records or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.

 

(f)            Promissory Notes.  Any Lender may request that Loans made by it
be evidenced by a promissory note.  In
such event, the Borrower shall prepare, execute and deliver to such Lender a
promissory note payable to such Lender (or, if requested by such Lender, to
such Lender and its registered assigns) and in a form approved by the
Administrative Agent.  Thereafter, the
Loans evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 9.04) be represented by
one or more promissory notes in such form payable to the payee named therein
(or, if such promissory note is a registered note, to such payee and its
registered assigns).

 

SECTION 2.09.  Prepayment of Loans.

 

(a)           Optional Prepayments.  The Borrower shall have the right at any time
and from time to time to prepay any Borrowing in whole or in part, without

 

35

 

premium or penalty except for payments under Section 2.14, subject
to the requirements of this Section.

 

(b)           Mandatory Prepayments due to
Changes in Exchange Rates.

 

(i)            Determination
of Amount Outstanding.  On each
Quarterly Date and, in addition, promptly upon the receipt by the
Administrative Agent of a Currency Valuation Notice (as defined below), the
Administrative Agent shall determine the aggregate Revolving Credit
Exposure.  For the purpose of this
determination, the outstanding principal amount of any Loan that is denominated
in any Foreign Currency shall be deemed to be the Dollar Equivalent of the
amount in the Foreign Currency of such Loan, determined as of such Quarterly
Date or, in the case of a Currency Valuation Notice received by the
Administrative Agent prior to 11:00 a.m., New York City time, on a
Business Day, on such Business Day or, in the case of a Currency Valuation
Notice otherwise received, on the first Business Day after such Currency
Valuation Notice is received.  Upon
making such determination, the Administrative Agent shall promptly notify the
Lenders and the Borrower thereof.

 

(ii)           Prepayment.  If, on the date of such determination the
aggregate Revolving Credit Exposure exceeds 105% of the aggregate amount of the
Commitments as then in effect, the Borrower shall, if requested by the Required
Lenders (through the Administrative Agent), prepay the Loans (and/or provide
cover for LC Exposure as specified in Section 2.04(k)) within 15
Business Days following the Borrower’s receipt of such request in such amounts
as shall be necessary so that after giving effect thereto the aggregate
Revolving Credit Exposure does not exceed the Commitments.

 

For purposes hereof, “Currency
Valuation Notice” means a notice given by the Required Lenders to the
Administrative Agent stating that such notice is a “Currency Valuation Notice”
and requesting that the Administrative Agent determine the aggregate Revolving
Credit Exposure.  The Administrative
Agent shall not be required to make more than one valuation determination
pursuant to Currency Valuation Notices within any rolling three month period.

 

Any
prepayment pursuant to this paragraph shall be applied, first, to Loans
outstanding and second, as cover for LC Exposure.

 

(c)           Mandatory Prepayments due to
Borrowing Base Deficiency.  In the
event that at any time any Borrowing Base Deficiency shall exist, the Borrower
shall prepay the Loans (or provide cover for Letters of Credit as contemplated
by Section 2.04(k)), or reduce Permitted Indebtedness or Indebtedness
incurred pursuant to Section 6.01(f), in such amounts as shall be
necessary so that such Borrowing Base Deficiency is immediately cured, provided
that (i) the aggregate amount of such prepayment of Loans (and cover for
Letters of Credit) shall be at least equal to the Revolving Credit Exposure’s
ratable share of the aggregate prepayment and reduction of

 

36

 

Permitted Indebtedness and of Indebtedness incurred pursuant to Section 6.01(f) and
(ii) if, within five Business Days after delivery of a Borrowing Base
Certificate demonstrating such Borrowing Base Deficiency (and/or at such other
times as the Borrower has knowledge of such Borrowing Base Deficiency), the
Borrower shall present the Administrative Agent a reasonably feasible plan to
enable such Borrowing Base Deficiency to be cured within 30 Business Days
(which 30-Business Day period shall include the five Business Days permitted
for delivery of such plan), then such prepayment or reduction shall not be
required to be effected immediately but may be effected in accordance with such
plan (with such modifications as the Borrower may reasonably determine), so
long as such Borrowing Base Deficiency is cured within such 30-Business Day
period.

 

(d)           Notices, Etc.  The Borrower shall notify the Administrative
Agent by telephone (confirmed by telecopy) of any prepayment hereunder (i) in
the case of prepayment of a Eurocurrency Borrowing, not later than 11:00 a.m.,
New York City time (or, in the case of a Borrowing denominated in a Foreign
Currency, 11:00 a.m., London time), three Business Days before the date of
prepayment or (ii) in the case of prepayment of an ABR Borrowing, not
later than 11:00 a.m., New York City time, on the date of prepayment.  Each such notice shall be irrevocable and
shall specify the prepayment date, the principal amount of each Borrowing or
portion thereof to be prepaid and, in the case of a mandatory prepayment, a
reasonably detailed calculation of the amount of such prepayment; provided
that, if a notice of prepayment is given in connection with a conditional
notice of termination of the Commitments as contemplated by Section 2.07,
then such notice of prepayment may be revoked if such notice of termination is
revoked in accordance with Section 2.07. 
Promptly following receipt of any such notice relating to a Borrowing,
the Administrative Agent shall advise the Lenders of the contents thereof.  Each partial prepayment of any Borrowing
shall be in an amount that would be permitted in the case of a Borrowing of the
same Type as provided in Section 2.02, except as necessary to apply fully
the required amount of a mandatory prepayment. 
Each prepayment of a Borrowing shall be applied ratably to the Loans
included in the prepaid Borrowing. 
Prepayments shall be accompanied by accrued interest to the extent
required by Section 2.11 and shall be made in the manner specified in Section 2.08(b).

 

SECTION 2.10.  Fees.

 

(a)           Commitment Fee.  The Borrower agrees to pay to the
Administrative Agent for account of each Lender a commitment fee, which shall
accrue at a rate per annum equal to 2/10 of 1% on the average daily unused
amount of the Commitment of such Lender during the period from and including
the date hereof to but excluding the earlier of the date such Commitment
terminates and the Commitment Termination Date. 
Accrued commitment fees shall be payable within one Business Day after
each Quarterly Date and on the earlier of the date the Commitments terminate
and the Commitment Termination Date, commencing on the first such date to occur
after the date hereof.  All commitment
fees shall be computed on the basis of a year of 360 days and shall be payable
for the actual number of days elapsed (including the first day but

 

37

 

excluding the last day).  For
purposes of computing commitment fees, the Commitment of a Lender shall be
deemed to be used to the extent of the outstanding Loans and LC Exposure
of such Lender.

 

(b)           Letter of Credit Fees.  The Borrower agrees to pay (i) to the
Administrative Agent for account of each Lender a participation fee with
respect to its participations in Letters of Credit, which shall accrue at a
rate per annum equal to the Applicable Margin applicable to interest on
Eurocurrency Loans on the average daily amount of such Lender’s
LC Exposure (excluding any portion thereof attributable to unreimbursed
LC Disbursements) during the period from and including the Effective Date
to but excluding the later of the date on which such Lender’s Commitment
terminates and the date on which such Lender ceases to have any
LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall
accrue at the rate of 0.125% per annum on the average daily amount of the
LC Exposure (excluding any portion thereof attributable to unreimbursed
LC Disbursements) during the period from and including the Effective Date
to but excluding the later of the date of termination of the Commitments and
the date on which there ceases to be any LC Exposure, as well as the
Issuing Bank’s standard fees with respect to the issuance, amendment, renewal
or extension of any Letter of Credit or processing of drawings thereunder.  Participation fees and fronting fees accrued
through and including each Quarterly Date shall be payable on the third
Business Day following such Quarterly Date, commencing on the first such date
to occur after the Effective Date; provided that, on the date on which
the Commitments terminate (the “termination date”) the Borrower shall
pay any such fees that have accrued and that are unpaid on the termination date
and, in the event any Letters of Credit shall be outstanding that have
expiration dates after the termination date, the Borrower shall prepay on the
termination date the full amount of the participation and fronting fees that
will accrue on such Letters of Credit subsequent to the termination date
through but not including the date such outstanding Letters of Credit are
scheduled to expire (and in that connection, the Lenders agree not later than
the date two Business Days after the date upon which the last such Letter of
Credit shall expire or be terminated to rebate to the Borrower the excess, if
any, of the aggregate participation and fronting fees that have been prepaid by
the Borrower over the amount of such fees that ultimately accrue through the
date of such expiration or termination). 
Any other fees payable to the Issuing Bank pursuant to this paragraph
shall be payable within 10 days after demand. 
All participation fees and fronting fees shall be computed on the basis
of a year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).

 

(c)           Administrative Agent Fees.  The Borrower agrees to pay to the
Administrative Agent, for its own account, fees payable in the amounts and at
the times separately agreed upon between the Borrower and the Administrative
Agent.

 

(d)           Payment of Fees.  All fees payable hereunder shall be paid on
the dates due, in Dollars and immediately available funds, to the
Administrative Agent (or to the Issuing Bank, in the case of fees payable to
it) for distribution, in the case of facility fees and participation fees, to
the Lenders entitled thereto.  Fees paid
shall not be refundable under any circumstances absent obvious error.

 

38

 

SECTION 2.11.  Interest.

 

(a)           ABR Loans.  The Loans constituting each
ABR Borrowing shall bear interest at a rate per annum equal to the
Alternate Base Rate plus the Applicable Margin.

 

(b)           Eurocurrency Loans.  The Loans constituting each Eurocurrency
Borrowing shall bear interest at a rate per annum equal to the Adjusted LIBO
Rate for the related Interest Period for such Borrowing plus the
Applicable Margin.

 

(c)           Default Interest.  Notwithstanding the foregoing, if any
principal of or interest on any Loan or any fee or other amount payable by the
Borrower hereunder is not paid when due, whether at stated maturity, upon
acceleration, by mandatory prepayment or otherwise, such overdue amount shall
bear interest, after as well as before judgment, at a rate per annum equal to (i) in
the case of overdue principal of any Loan, 2% plus the rate otherwise
applicable to such Loan as provided above or (ii) in the case of any other
amount, 2% plus the rate applicable to ABR Loans as provided in
paragraph (a) of this Section.

 

(d)           Payment of Interest.  Accrued interest on each Loan shall be
payable in arrears on each Interest Payment Date for such Loan in the Currency
in which such Loan is denominated and, in the case of Loans, upon termination
of the Commitments; provided that (i) interest accrued pursuant to
paragraph (c) of this Section shall be payable on demand, (ii) in
the event of any repayment or prepayment of any Loan (other than a prepayment
of an ABR Loan prior to the Commitment Termination Date), accrued interest
on the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any
Eurocurrency Borrowing denominated in Dollars prior to the end of the Interest
Period therefor, accrued interest on such Borrowing shall be payable on the
effective date of such conversion.

 

(e)           Computation.  All interest hereunder shall be computed on
the basis of a year of 360 days, except that interest computed by reference to
the Alternate Base Rate at times when the Alternate Base Rate is based on the
Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in
a leap year), and in each case shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).  The applicable Alternate Base Rate or
Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.

 

39

 

SECTION 2.12.  Alternate Rate of Interest.  If prior to the commencement of the Interest
Period for any Eurocurrency Borrowing (the Currency of such Borrowing herein
called the “Affected Currency”):

 

(a)           the
Administrative Agent determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for
ascertaining the Adjusted LIBO Rate for the Affected Currency for such Interest
Period; or

 

(b)           the
Administrative Agent is advised by the Required Lenders that the Adjusted LIBO
Rate for the Affected Currency for such Interest Period will not adequately and
fairly reflect the cost to such Lenders of making or maintaining their
respective Loans included in such Borrowing for such Interest Period;

 

then the Administrative
Agent shall give notice thereof to the Borrower and the Lenders by telephone or
telecopy as promptly as practicable thereafter and, until the Administrative
Agent notifies the Borrower and the Lenders that the circumstances giving rise
to such notice no longer exist, (i) any Interest Election Request that
requests the conversion of any Borrowing to, or the continuation of any
Borrowing as, a Eurocurrency Borrowing denominated in the Affected Currency
shall be ineffective and, if the Affected Currency is Dollars, such Borrowing
(unless prepaid) shall be continued as, or converted to, an ABR Borrowing,
(ii) if the Affected Currency is Dollars and any Borrowing Request
requests a Eurocurrency Borrowing denominated in Dollars, such Borrowing shall
be made as an ABR Borrowing and (iii) if the Affected Currency is a
Foreign Currency, any Borrowing Request that requests a Eurocurrency Borrowing
denominated in the Affected Currency shall be ineffective.

 

SECTION 2.13.  Increased Costs.

 

(a)           Increased Costs Generally.  If any Change in Law shall:

 

(i)            impose,
modify or deem applicable any reserve, special deposit or similar requirement
against assets of, deposits with or for account of, or credit extended by, any
Lender (except any such reserve requirement reflected in the Adjusted LIBO
Rate) or the Issuing Bank; or

 

(ii)           impose
on any Lender or the Issuing Bank or the London interbank market any other
condition affecting this Agreement or Eurocurrency Loans made by such Lender or
any Letter of Credit or participation therein;

 

and the result of any of
the foregoing shall be to increase the cost to such Lenders of making or
maintaining any Eurocurrency Loan (or of maintaining its obligation to make any
such Loan) or to increase the cost to such Lender or the Issuing Bank of
participating in, issuing or maintaining any Letter of Credit or to reduce the
amount of any sum received or receivable by such Lender or the Issuing Bank
hereunder (whether of

 

40

 

principal, interest or
otherwise), then the Borrower will pay to such Lender or the Issuing Bank, as
the case may be, in Dollars, such additional amount or amounts as will
compensate such Lender or the Issuing Bank, as the case may be, for such
additional costs incurred or reduction suffered.

 

(b)           Capital Requirements.  If any Lender or the Issuing Bank determines
that any Change in Law regarding capital requirements has or would have the
effect of reducing the rate of return on such Lender’s or the Issuing Bank’s
capital or on the capital of such Lender’s or the Issuing Bank’s holding
company, if any, as a consequence of this Agreement or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of
Credit issued by the Issuing Bank, to a level below that which such Lender or
the Issuing Bank or such Lender’s or the Issuing Bank’s holding company could
have achieved but for such Change in Law (taking into consideration such Lender’s
or the Issuing Bank’s policies and the policies of such Lender’s or the Issuing
Bank’s holding company with respect to capital adequacy), by an amount deemed
to be material by such Lender or Issuing Bank, then from time to time the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, in
Dollars, such additional amount or amounts as will compensate such Lender or the
Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any
such reduction suffered.

 

(c)           Certificates from Lenders.  A certificate of a Lender or the Issuing Bank
setting forth the amount or amounts, in Dollars, necessary to compensate such
Lender or the Issuing Bank or its holding company, as the case may be, as
specified in paragraph (a) or (b) of this Section shall
be promptly delivered to the Borrower and shall be conclusive absent manifest
error.  The Borrower shall pay such
Lender or the Issuing Bank, as the case may be, the amount shown as due on any
such certificate within 10 days after receipt thereof.

 

(d)           Delay in Requests.  Failure or delay on the part of any Lender or
the Issuing Bank to demand compensation pursuant to this Section shall not
constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such
compensation; provided that the Borrower shall not be required to
compensate a Lender or the Issuing Bank pursuant to this Section for any
increased costs or reductions incurred more than six months prior to the date
that such Lender or the Issuing Bank, as the case may be, notifies the Borrower
of the Change in Law giving rise to such increased costs or reductions and of
such Lender’s or the Issuing Bank’s intention to claim compensation therefor; provided
further that, if the Change in Law giving rise to such increased costs
or reductions is retroactive, then the six-month period referred to above shall
be extended to include the period of retroactive effect thereof.

 

SECTION 2.14.  Break Funding Payments.  In the event of (a) the payment of any
principal of any Eurocurrency Loan other than on the last day of an Interest
Period therefor (including as a result of an Event of Default), (b) the
conversion of any Eurocurrency Loan other than on the last day of an Interest
Period therefor, (c) the failure to borrow, convert, continue or prepay
any Loan on the date specified in any notice delivered pursuant hereto
(regardless of whether such notice is permitted to be

 

41

 

revocable under Section 2.09(d) and
is revoked in accordance herewith), or (d) the assignment as a result of a
request by the Borrower pursuant to Section 2.17(b) of any
Eurocurrency Loan other than on the last day of an Interest Period therefor,
then, in any such event, the Borrower shall compensate each Lender for the
loss, cost and expense attributable to such event.  In the case of a Eurocurrency Loan, the loss
to any Lender attributable to any such event shall be deemed to include an
amount determined by such Lender to be equal to the excess, if any, of

 

(i)            the
amount of interest that such Lender would pay for a deposit equal to the
principal amount of such Loan denominated in the Currency of such Loan for the
period from the date of such payment, conversion, failure or assignment to the
last day of the then current Interest Period for such Loan (or, in the case of
a failure to borrow, convert or continue, the duration of the Interest Period
that would have resulted from such borrowing, conversion or continuation) if
the interest rate payable on such deposit were equal to the Adjusted LIBO Rate
for such Currency for such Interest Period, over

 

(ii)           the
amount of interest that such Lender would earn on such principal amount for
such period if such Lender were to invest such principal amount for such period
at the interest rate that would be bid by such Lender (or an affiliate of such
Lender) for deposits denominated in such Currency from other banks in the
eurocurrency market at the commencement of such period.

 

Payment under this Section shall
be made upon request of a Lender delivered not later than five Business Days
following the payment, conversion, or failure to borrow, convert, continue or
prepay that gives rise to a claim under this Section accompanied by a
certificate of such Lender setting forth the amount or amounts that such Lender
is entitled to receive pursuant to this Section, which certificate shall be
conclusive absent manifest error.  The Borrower
shall pay such Lender the amount shown as due on any such certificate within 10
days after receipt thereof.

 

SECTION 2.15.  Taxes.

 

(a)           Payments Free of Taxes.  Any and all payments by or on account of any
obligation of the Borrower hereunder or under any other Loan Document shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes; provided that if the Borrower shall be required to deduct any
Indemnified Taxes or Other Taxes from such payments, then (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) the Administrative Agent, Lender or Issuing Bank (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.

 

42

 

(b)           Payment of Other Taxes by the
Borrower.  In addition, the Borrower
shall pay any Other Taxes to the relevant Governmental Authority in accordance
with applicable law.

 

(c)           Indemnification by the Borrower.
 The Borrower shall indemnify the
Administrative Agent, each Lender and the Issuing Bank for, and within 30
Business Days after written demand therefor, pay the full amount of any
Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section)
paid by the Administrative Agent, such Lender or the Issuing Bank, as the case
may be, and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority.  A certificate as to the
amount of such payment or liability delivered to the Borrower by a Lender or
the Issuing Bank, or by the Administrative Agent on its own behalf or on behalf
of a Lender or the Issuing Bank, shall be conclusive absent manifest error.

 

(d)           Evidence of Payments.  As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority,
the Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.

 

(e)           Foreign Lenders.  Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the
jurisdiction in which the Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall
deliver to the Borrower (with a copy to the Administrative Agent), at the time
or times prescribed by applicable law or reasonably requested by the Borrower,
such properly completed and executed documentation prescribed by applicable law
as will permit such payments to be made without withholding or at a reduced
rate.

 

In
addition, any Foreign Lender, if requested by the Borrower or the
Administrative Agent, shall deliver such other documentation prescribed by
applicable law or reasonably requested by the Borrower or the Administrative
Agent as will enable the Borrower or the Administrative Agent to determine
whether or not such Foreign Lender is subject to backup withholding or
information reporting requirements.

 

Without
limiting the generality of the foregoing, if the Borrower is resident for tax
purposes in the United States, any Foreign Lender shall deliver to the Borrower
and the Administrative Agent (in such number of copies as shall be requested by
the recipient) on or prior to the date on which such Foreign Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the
reasonable request of the Borrower or the Administrative Agent, but only if
such Foreign Lender is legally entitled to do so), whichever of the following
is applicable:

 

43

 

(i)            duly
completed copies of Internal Revenue Service Form W-8BEN or any successor
form claiming eligibility for benefits of an income tax treaty to which the
United States is a party,

 

(ii)           duly
completed copies of Internal Revenue Service Form W-8ECI or any successor
form certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States,

 

(iii)          in
the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under section 881(c) of the Code, (A) a
certificate to the effect that such Foreign Lender is not (1) a “bank”
within the meaning of section 881(c)(3)(A) of the Code, (2) a “10
percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of
the Code, or (3) a “controlled foreign corporation” described in section 881(c)(3)(C) of
the Code and (B) duly completed copies of Internal Revenue Service Form W-8BEN
(or any successor form) certifying that the Foreign Lender is not a United
States Person, or

 

(iv)          any
other form including Internal Revenue Service Form W-8IMY as applicable
prescribed by applicable law as a basis for claiming exemption from or a
reduction in United States Federal withholding tax duly completed together with
such supplementary documentation as may be prescribed by applicable law to
permit the Borrower to determine the withholding or deduction required to be
made.

 

In
addition, upon reasonable request of the Borrower or the Administrative Agent,
each Foreign Lender shall deliver such forms promptly upon the expiration or
invalidity of any form previously delivered by such Foreign Lender, provided it
is legally able to do so at the time. 
Each Foreign Lender shall promptly notify the Borrower and the
Administrative Agent at any time the chief tax officer of such Foreign Lender
becomes aware that it no longer satisfies the legal requirements to provide any
previously delivered form or certificate to the Borrower (or any other form of
certification adopted by the U.S. or other taxing authorities for such
purpose).

 

(f)            United States Lenders.  Each Lender and Issuing Bank that is not a
Foreign Lender shall deliver to the Borrower (with a copy to the Administrative
Agent), prior to the date on which such Issuing Bank or Lender becomes a party
to this Agreement, upon the expiration or invalidity of any forms previously
delivered and at times reasonably requested by the Borrower, duly completed
copies of Internal Revenue Service Form W-9 or any successor form,
provided it is legally able to do so at the time.

 

(g)           Treatment of Certain Refunds.  If the Administrative Agent, any Lender or an
Issuing Bank determines, in its sole discretion, that it has received a refund
or credit (in lieu of such refund) of any Taxes or Other Taxes as to which it
has been indemnified by the Borrower or with respect to which the Borrower has
paid additional

 

44

 

amounts pursuant to this Section, it shall pay to the Borrower an
amount equal to such refund (but only to the extent of indemnity payments made,
or additional amounts paid, by the Borrower under this Section with
respect to the Taxes or Other Taxes giving rise to such refund), net of all
reasonable out-of-pocket expenses of the Administrative Agent, any Lender or an
Issuing Bank, as the case may be, and without interest (other than any interest
paid by the relevant Governmental Authority with respect to such refund),
provided that the Borrower, upon the request of the Administrative Agent, any
Lender or an Issuing Bank, agrees to repay the amount paid over to the Borrower
(plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Administrative Agent, any Lender or an Issuing
Bank in the event the Administrative Agent, any Lender or an Issuing Bank is
required to repay such refund to such Governmental Authority.  This subsection shall not be construed
to require the Administrative Agent, any Lender or an Issuing Bank to make
available its tax returns or its books or records (or any other information
relating to its taxes that it deems confidential) to the Borrower or any other
Person.

 

SECTION 2.16.  Payments Generally; Pro Rata Treatment;
Sharing of Set-offs.

 

(a)           Payments by the Borrower.  The Borrower shall make each payment required
to be made by it hereunder (whether of principal, interest, fees or
reimbursement of LC Disbursements, or under Section 2.13, 2.14 or
2.15, or otherwise) or under any other Loan Document (except to the extent
otherwise provided therein) prior to 2:00 p.m., Local Time, on the date
when due, in immediately available funds, without set-off or counterclaim.  Any amounts received after such time on any
date may, in the discretion of the Administrative Agent, be deemed to have been
received on the next succeeding Business Day for purposes of calculating interest
thereon.  All such payments shall be made
to the Administrative Agent at the Administrative Agent’s Account, except as
otherwise expressly provided in the relevant Loan Document and except payments
to be made directly to the Issuing Bank as expressly provided herein and
payments pursuant to Sections 2.13, 2.14, 2.15 and 9.03, which shall be
made directly to the Persons entitled thereto. 
The Administrative Agent shall distribute any such payments received by
it for account of any other Person to the appropriate recipient promptly
following receipt thereof.  If any
payment hereunder shall be due on a day that is not a Business Day, the date
for payment shall be extended to the next succeeding Business Day and, in the
case of any payment accruing interest, interest thereon shall be payable for
the period of such extension.  All
amounts owing under this Agreement (including commitment fees, payments
required under Section 2.13, and payments required under Section 2.14
relating to any Loan denominated in Dollars, but not including principal of,
and interest on, any Loan denominated in any Foreign Currency or payments
relating to any such Loan required under Section 2.14, which are payable
in such Foreign Currency) or under any other Loan Document (except to the
extent otherwise provided therein) are payable in Dollars.  Notwithstanding the foregoing, if the
Borrower shall fail to pay any principal of any Loan when due (whether at
stated maturity, by acceleration, by mandatory prepayment or otherwise), the
unpaid portion of such Loan shall, if such Loan is not denominated in Dollars,
automatically be redenominated in Dollars on the due date

 

45

 

thereof (or, if such due date is a day other than the last day of the
Interest Period therefor, on the last day of such Interest Period) in an amount
equal to the Dollar Equivalent thereof on the date of such redenomination and
such principal shall be payable on demand; and if the Borrower shall fail to
pay any interest on any Loan that is not denominated in Dollars, such interest
shall automatically be redenominated in Dollars on the due date therefor (or,
if such due date is a day other than the last day of the Interest Period
therefor, on the last day of such Interest Period) in an amount equal to the
Dollar Equivalent thereof on the date of such redenomination and such interest
shall be payable on demand.

 

(b)           Application of Insufficient
Payments.  If at any time
insufficient funds are received by and available to the Administrative Agent to
pay fully all amounts of principal, unreimbursed LC Disbursements,
interest and fees then due hereunder, such funds shall be applied (i) first,
to pay interest and fees then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of interest and fees then due to such
parties, and (ii) second, to pay principal and unreimbursed
LC Disbursements then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of principal and unreimbursed
LC Disbursements then due to such parties.

 

(c)           Pro Rata Treatment.  Except to the extent otherwise provided
herein:  (i) each Borrowing shall be
made from the Lenders, each payment of commitment fee under Section 2.10
shall be made for account of the Lenders, and each termination or reduction of
the amount of the Commitments under Section 2.07 shall be applied to the
respective Commitments of the Lenders, pro rata according to the amounts of
their respective Commitments; (ii) each Borrowing shall be allocated pro
rata among the Lenders according to the amounts of their respective Commitments
(in the case of the making of Loans) or their respective Loans that are to be
included in such Borrowing (in the case of conversions and continuations of Loans);
(iii) each payment or prepayment of principal of Loans by the Borrower
shall be made for account of the Lenders pro rata in accordance with the
respective unpaid principal amounts of the Loans held by them; and (iv) each
payment of interest on Loans by the Borrower shall be made for account of the
Lenders pro rata in accordance with the amounts of interest on such Loans then
due and payable to the respective Lenders.

 

(d)           Sharing of Payments by Lenders.  If any Lender shall, by exercising any right
of set-off or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any of its Loans or participations in
LC Disbursements resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Loans and participations in
LC Disbursements and accrued interest thereon then due than the proportion
received by any other Lender, then the Lender receiving such greater proportion
shall purchase (for cash at face value) participations in the Loans and participations
in LC Disbursements of other Lenders to the extent necessary so that the
benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Loans and participations in LC Disbursements; provided
that (i) if any such participations are purchased and all or any portion
of the payment giving rise thereto is recovered, such

 

46

 

participations shall be rescinded and the purchase price restored to
the extent of such recovery, without interest, and (ii) the provisions of
this paragraph shall not be construed to apply to any payment made by the
Borrower pursuant to and in accordance with the express terms of this Agreement
or any payment obtained by a Lender as consideration for the assignment of or
sale of a participation in any of its Loans or participations in
LC Disbursements to any assignee or participant, other than to the
Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of
this paragraph shall apply).  The
Borrower consents to the foregoing and agrees, to the extent it may effectively
do so under applicable law, that any Lender acquiring a participation pursuant
to the foregoing arrangements may exercise against the Borrower rights of set-off
and counterclaim with respect to such participation as fully as if such Lender
were a direct creditor of the Borrower in the amount of such participation.

 

(e)           Presumptions of Payment.  Unless the Administrative Agent shall have
received notice from the Borrower prior to the date on which any payment is due
to the Administrative Agent for account of the Lenders or the Issuing Bank
hereunder that the Borrower will not make such payment, the Administrative
Agent may assume that the Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to
the Lenders or the Issuing Bank, as the case may be, the amount due.  In such event, if the Borrower has not in
fact made such payment, then each of the Lenders or the Issuing Bank, as the
case may be, severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender or the Issuing Bank with
interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the Administrative
Agent, at the Federal Funds Effective Rate.

 

(f)            Certain Deductions by the
Administrative Agent.  If any Lender
shall fail to make any payment required to be made by it pursuant to Section 2.04(e),
2.05(b) or 2.16(e), then the Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter
received by the Administrative Agent for account of such Lender to satisfy such
Lender’s obligations under such Sections until all such unsatisfied obligations
are fully paid.

 

SECTION 2.17.  Mitigation Obligations; Replacement of
Lenders.

 

(a)           Designation of a Different Lending
Office.  If any Lender requests
compensation under Section 2.13, or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for account of
any Lender pursuant to Section 2.15, then such Lender shall use reasonable
efforts to designate a different lending office for funding or booking its
Loans hereunder or to assign its rights and obligations hereunder to another of
its offices, branches or affiliates, if, in the judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable
pursuant to Section 2.13 or 2.15, as the case may be, in the future
and (ii) would not subject such Lender to any cost or expense not required
to be reimbursed by the Borrower and would not otherwise be disadvantageous to
such Lender.  The

 

47

 

Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.

 

(b)           Replacement of Lenders.  If any Lender requests compensation under Section 2.13,
or if the Borrower is required to pay any additional amount to any Lender or
any Governmental Authority for account of any Lender pursuant to Section 2.15,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and
the Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in Section 9.04),
all its interests, rights and obligations under this Agreement to an assignee
that shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent (and,
if a Commitment is being assigned, the Issuing Bank), which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of
an amount equal to the outstanding principal of its Loans and participations in
LC Disbursements, accrued interest thereon, accrued fees and all other
amounts payable to it hereunder, from the assignee (to the extent of such
outstanding principal and accrued interest and fees) or the Borrower (in the
case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.13 or payments
required to be made pursuant to Section 2.15, such assignment will result
in a reduction in such compensation or payments.  A Lender shall not be required to make any
such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.

 

ARTICLE III

 

REPRESENTATIONS
AND WARRANTIES

 

The
Borrower represents and warrants to the Lenders that:

 

SECTION 3.01.  Organization; Powers.  Each of the Borrower and its Subsidiaries is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to
carry on its business as now conducted and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required of the
Borrower or such Subsidiary, as applicable.

 

SECTION 3.02.  Authorization; Enforceability.  The Transactions are within the Borrower’s
corporate powers and have been duly authorized by all necessary corporate and,
if required, by all necessary shareholder action.  This Agreement has been duly executed and
delivered by the Borrower and constitutes, and each of the other Loan Documents
when executed and delivered will constitute, a legal, valid and binding

 

48

 

obligation of the Borrower, enforceable in
accordance with its terms, except as such enforceability may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or similar laws of general applicability
affecting the enforcement of creditors’ rights and (b) the application of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

 

SECTION 3.03.  Governmental Approvals; No Conflicts.  The Transactions (a) do not require any
consent or approval of, registration or filing with, or any other action by,
any Governmental Authority, except for (i) such as have been or will be
obtained or made and are in full force and effect and (ii) filings and
recordings in respect of the Liens created pursuant to the Security Documents, (b) will
not violate any applicable law or regulation or the charter, by-laws or other
organizational documents of the Borrower or any of its Subsidiaries or any
order of any Governmental Authority, (c) will not violate or result in a
default in any material respect under any indenture, agreement or other
instrument binding upon the Borrower or any of its Subsidiaries or assets, or
give rise to a right thereunder to require any payment to be made by any such
Person, and (d) except for the Liens created pursuant to the Security
Documents, will not result in the creation or imposition of any Lien on any
asset of the Borrower or any of its Subsidiaries.

 

SECTION 3.04.  Financial Condition; No Material Adverse
Change.

 

(a)           Financial Statements.  The Borrower has heretofore delivered to the
Lenders the following financial statements:

 

(i)            the
audited consolidated balance sheet and statements of operations, stockholders’
equity and cash flows of the Borrower and its Subsidiaries as of and for the
fiscal year ended December 31, 2004, reported on by KPMG LLP, independent
public accountants; and

 

(ii)           the
unaudited interim consolidated balance sheet and statements of operations,
stockholders’ equity and cash flows of the Borrower and its Subsidiaries as of
and for the three, six and nine-month periods ended, respectively, March 31,
2005, June 30, 2005 and September 30, 2005, in each case certified by
a Financial Officer of the Borrower.

 

Such financial statements
present fairly, in all material respects, the consolidated financial position
and results of operations and cash flows of the Borrower and its Subsidiaries
as of such dates and for such periods in accordance with generally accepted
accounting principles applied on a consistent basis, subject to, in the case of
such interim statements, year-end audit adjustments and the absence of
footnotes.  None of the Borrower or any
of its Subsidiaries has on the date hereof any material contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized
or anticipated losses from any unfavorable commitments not reflected in the
financial statements referred to above.

 

49

 

(b)           No Material Adverse Change.  Since December 31, 2004, there has not
been any event, development or circumstance that has had or could reasonably be
expected to have a material adverse effect on (i) the business, Portfolio
Investments and other assets, liabilities and financial condition of the
Borrower taken as a whole (excluding in any case a decline in the net asset
value of the Borrower or a change in general market conditions or values of the
Borrower’s Portfolio Investments), or (ii) the validity or enforceability
of any of the Loan Documents or the rights or remedies of the Administrative
Agent and the Lenders thereunder.

 

SECTION 3.05.  Litigation.

 

(a)           Actions, Suits and Proceedings.  There are no actions, suits, investigations
or proceedings by or before any arbitrator or Governmental Authority now
pending against or, to the knowledge of the Borrower, threatened against or
affecting the Borrower or any of its Subsidiaries (i) as to which there is
a reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect (other than the Disclosed Matters) or (ii) that
involve this Agreement or the Transactions.

 

(b)           Disclosed Matters.  Since the date of this Agreement, there has
been no change in the status of the Disclosed Matters that, individually or in
the aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.

 

SECTION 3.06.  Compliance with Laws and Agreements.  Each of the Borrower and its Subsidiaries is
in compliance with all laws, regulations and orders of any Governmental
Authority applicable to it or its property and all indentures, agreements and
other instruments binding upon it or its property, except where the failure to
do so, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect. 
None of the Obligors is subject to any contract or other arrangement,
the performance of which by them could reasonably be expected to result in a
Material Adverse Effect.

 

SECTION 3.07.  Holding Company Status.  Neither the Borrower nor any of its
Subsidiaries is a “holding company” as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935, provided that the
Borrower makes no representation under this Section at any time on or
after February 8, 2006.

 

SECTION 3.08.  Taxes.  Each of the Borrower and its Subsidiaries has
timely filed or caused to be filed all material Tax returns and reports
required to have been filed and has paid or caused to be paid all material
Taxes required to have been paid by it, except (a) Taxes that are being
contested in good faith by appropriate proceedings and for which such Person
has set aside on its books adequate reserves or (b) to the extent that the
failure to do so could not reasonably be expected to result in a Material
Adverse Effect.

 

50

 

SECTION 3.09.  ERISA.  No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events
for which liability is reasonably expected to occur, could reasonably be
expected to result in a Material Adverse Effect.

 

SECTION 3.10.  Disclosure.  The Borrower has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which it or any
of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.  None of the
reports, financial statements, certificates or other information furnished by
or on behalf of the Borrower to the Lenders in connection with the negotiation
of this Agreement and the other Loan Documents or delivered hereunder or
thereunder (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that, with respect
to projected financial information, the Borrower represents only that such
information was prepared in good faith based upon assumptions believed to be
reasonable at the time.

 

SECTION 3.11.  Investment Company Act; Margin Regulations.

 

(a)           Status as Business Development
Company.  The Borrower is an “investment
company” that has elected to be regulated as a “business development company”
within the meaning of the Investment Company Act and qualifies as a RIC.

 

(b)           Compliance with Investment Company
Act.  The business and other
activities of the Borrower and its Subsidiaries, including the making of the
Loans hereunder, the application of the proceeds and repayment thereof by the
Borrower and the consummation of the Transactions contemplated by the Loan
Documents do not result in a violation or breach in any material respect of the
provisions of the Investment Company Act or any rules, regulations or orders
issued by the Securities and Exchange Commission thereunder.

 

(c)           Investment Policies.  The Borrower is in compliance with all
investment objectives, policies, restrictions and limitations set forth in the “Ares
Capital Corporation Policies and Procedures” for the Borrower previously
delivered to the Lenders (the
“Investment Policies”), except to the extent that the failure to so
comply could not reasonably be expected to result in a Material Adverse Effect.

 

(d)           Use of Credit.  Neither the Borrower nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose, whether immediate, incidental
or ultimate, of buying or carrying Margin Stock, and no part of the proceeds of
any extension of credit hereunder will be used to buy or carry any Margin
Stock.

 

51

 

SECTION 3.12.  Material Agreements and Liens.

 

(a)           Material Agreements.  Part A of Schedule II is a complete
and correct list of each credit agreement, loan agreement, indenture, purchase
agreement, guarantee, letter of credit or other arrangement providing for or
otherwise relating to any Indebtedness or any extension of credit (or
commitment for any extension of credit) to, or guarantee by, the Borrower or any
of its Subsidiaries outstanding on the date hereof, and the aggregate principal
or face amount outstanding or that is, or may become, outstanding under each
such arrangement is correctly described in Part A of Schedule II.

 

(b)           Liens.  Part B of Schedule II is a complete
and correct list of each Lien securing Indebtedness of any Person outstanding
on the date hereof covering any property of the Borrower or any of its
Subsidiaries, and the aggregate Indebtedness secured (or that may be secured)
by each such Lien and the property covered by each such Lien is correctly
described in Part B of Schedule II.

 

SECTION 3.13.  Subsidiaries and Investments.

 

(a)           Subsidiaries.  Set forth in Part A of Schedule IV
is a complete and correct list of all of the Subsidiaries of the Borrower on
the date hereof together with, for each such Subsidiary, (i) the
jurisdiction of organization of such Subsidiary, (ii) each Person holding
ownership interests in such Subsidiary, (iii) the nature of the ownership
interests held by each such Person and the percentage of ownership of such
Subsidiary represented by such ownership interests and (iv) whether such
Subsidiary is a Designated Subsidiary. 
Except as disclosed in Part A of Schedule IV, (x) the
Borrower owns, free and clear of Liens, and has (and will have) the
unencumbered right to vote, all outstanding ownership interests in each Person
shown to be held by it in Part A of Schedule IV, (y) all of the
issued and outstanding capital stock of each such Person organized as a
corporation is validly issued, fully paid and nonassessable and (z) there
are no outstanding Equity Interests with respect to such Person.  Each Subsidiary identified on said Part A
of Schedule IV as a “Designated Subsidiary” qualifies as such under the
definition of “Designated Subsidiary” set forth in Section 1.01.

 

(b)           Investments.  Set forth in Part B of Schedule IV
is a complete and correct list of all Investments (other than Investments of
the types referred to in clauses (b), (c) and (d) of Section 6.04)
held by any of the Obligors in any Person on the date hereof and, for each such
Investment, (x) the identity of the Person or Persons holding such
Investment and (y) the nature of such Investment.  Except as disclosed in Part B of Schedule IV,
each of the Borrower and its Subsidiaries owns, free and clear of all Liens
(other than Liens created pursuant to the Security Documents), all such
Investments.

 

SECTION 3.14.  Properties.

 

(a)           Title Generally.  Each of the Borrower and its Subsidiaries has
good title to, or valid leasehold interests in, all its real and personal
property material to

 

52

 

its business, except for minor defects in title that do not interfere
with its ability to conduct its business as currently conducted or to utilize
such properties for their intended purposes.

 

(b)           Intellectual Property.  Each of the Borrower and its Subsidiaries
owns, or is licensed to use, all trademarks, tradenames, copyrights, patents
and other intellectual property material to its business, and the use thereof
by the Borrower and its Subsidiaries does not infringe upon the rights of any
other Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

 

SECTION 3.15.  Affiliate Agreements.  As of the date hereof, the Borrower has
heretofore delivered to each of the Lenders true and complete copies of each of
the Affiliate Agreements (including any amendments, supplements or waivers
executed and delivered thereunder and, except in the case of the CP Facility
Documents, any schedules and exhibits thereto). 
As of the date of hereof, each of the Affiliate Agreements is in full
force and effect.

 

ARTICLE IV

 

CONDITIONS

 

SECTION 4.01.  Effective Date.  The obligations of the Lenders to make Loans
and of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective until the date on which the Administrative Agent shall have received
each of the following documents, each of which shall be satisfactory to the
Administrative Agent (and to the extent specified below, to each Lender) in
form and substance (or such condition shall have been waived in accordance with
Section 9.02):

 

(a)           Executed
Counterparts.  From each party hereto
either (i) a counterpart of this Agreement signed on behalf of such party
or (ii) written evidence satisfactory to the Administrative Agent (which
may include telecopy transmission of a signed signature page to this
Agreement) that such party has signed a counterpart of this Agreement.

 

(b)           Opinion
of Counsel to the Borrower.  A
favorable written opinion (addressed to the Administrative Agent and the
Lenders and dated the Effective Date) of Latham & Watkins LLP, New
York counsel for the Borrower, in substantially the form of Exhibit C-1
and of Venable LLP, Maryland counsel for the Borrower, in substantially the
form of Exhibit C-2, and in each case covering such other matters relating
to the Borrower, this Agreement or the Transactions as the Required Lenders
shall reasonably request (and the Borrower hereby instructs such counsel to
deliver such opinion to the Lenders and the Administrative Agent).

 

53

 

(c)           Opinion
of Special New York Counsel to JPMCB. 
An opinion, dated the Effective Date, of Milbank, Tweed, Hadley &
McCloy, LLP, special New York counsel to JPMCB in substantially the form of Exhibit D
(and JPMCB hereby instructs such counsel to deliver such opinion to the
Lenders).

 

(d)           Corporate
Documents.  Such documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the organization, existence and good standing of the Borrower, the
authorization of the Transactions and any other legal matters relating to the
Borrower, this Agreement or the Transactions, all in form and substance
satisfactory to the Administrative Agent and its counsel.

 

(e)           Officer’s
Certificate.  A certificate, dated
the Effective Date and signed by the President, a Vice President or a Financial
Officer of the Borrower, confirming compliance with the conditions set forth in
the lettered clauses of the first sentence of Section 4.02.

 

(f)            Liens.  Results of a recent lien search in each
relevant jurisdiction with respect to the Borrower and such search shall reveal
no liens on any of the assets of the Borrower or its Subsidiaries except for
liens permitted under Section 6.02 or liens to be discharged on or prior
to the Effective Date pursuant to documentation satisfactory to the
Administrative Agent.

 

(g)           Guarantee
and Security Agreement.  The
Guarantee and Security Agreement, duly executed and delivered by the Borrower,
the Administrative Agent and the Collateral Agent.  In addition, the Borrower and its counsel
shall have taken such other action (including delivering to the Collateral
Agent, for filing, appropriately completed and duly executed copies of Uniform
Commercial Code financing statements) as the Administrative Agent shall have
requested to perfect the security interests created pursuant to the Guarantee
and Security Agreement.

 

(h)           Borrowing Base Certificate.  A Borrowing Base Certificate as of a date not
more than five days prior to the Effective Date.

 

(i)            Other
Documents.  Such other documents as
the Administrative Agent or any Lender or special New York counsel to JPMCB may
reasonably request.

 

The
obligation of each Lender to make its initial extension of credit hereunder is
also subject to the payment by the Borrower of such fees as the Borrower shall
have agreed to pay to any Lender or the Administrative Agent in connection
herewith, including the reasonable fees and expenses of Milbank, Tweed, Hadley &
McCloy, LLP, special New York counsel to JPMCB in connection with the
negotiation, preparation, execution and delivery of this Agreement and the
other Loan Documents and

 

54

 

the extensions of credit hereunder (to the extent that statements for
such fees and expenses have been delivered to the Borrower and subject to the
limitations set forth in Section 9.03(a)(i)).

 

Notwithstanding
the foregoing, the obligations of the Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit hereunder shall not become effective unless, in
addition to the satisfaction of the conditions set forth above in this Section,
this Agreement shall have been entered into on or prior to 3:00 p.m. (or
such later time as the Administrative Agent may, in its sole discretion,
agree), New York City time, on January 13, 2006.  The Administrative Agent shall notify the
Borrower and the Lenders of the Effective Date, and such notice shall be
conclusive and binding.

 

SECTION 4.02.  Each Credit Event.  The obligation of each Lender to make any
Loan, and of the Issuing Bank to issue, amend, renew or extend any Letter of
Credit, is additionally subject to the satisfaction of the following
conditions:

 

(a)           the
representations and warranties of the Borrower set forth in this Agreement and
in the other Loan Documents shall be true and correct in all material respects
(or, in the case of the representations and warranties in Sections 3.01 (first
sentence with respect to the Obligors), 3.02, 3.04, 3.07, 3.11 and 3.15 of this
Agreement, and in Sections 2.01, 2.02 and 2.04 through 2.09 of the Guarantee
and Security Agreement, true and correct in all respects) on and as of the date
of such Loan or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, or, as to any such representation or warranty
that refers to a specific date, as of such specific date;

 

(b)           at
the time of and immediately after giving effect to such Loan or the issuance,
amendment, renewal or extension of such Letter of Credit, as applicable, no
Default shall have occurred and be continuing; and

 

(c)           either
(i) the aggregate Covered Debt Amount (after giving effect to such
extension of credit) shall not exceed the Borrowing Base reflected on the
Borrowing Base Certificate most recently delivered to the Administrative Agent
or (ii) the Borrower shall have delivered an updated Borrowing Base
Certificate demonstrating that the Covered Debt Amount (after giving effect to
such extension of credit) shall not exceed the Borrowing Base after giving
effect to such extension of credit as well as any concurrent acquisitions of Portfolio
Investments or payment of outstanding Loans or Permitted Indebtedness or
Indebtedness incurred pursuant to Section 6.01(f).

 

Each Borrowing and each
issuance, amendment, renewal or extension of a Letter of Credit shall be deemed
to constitute a representation and warranty by the Borrower on the date thereof
as to the matters specified in the preceding sentence.

 

55

 

ARTICLE V

 

AFFIRMATIVE COVENANTS

 

Until
the Commitments have expired or been terminated and the principal of and
interest on each Loan and all fees payable hereunder shall have been paid in
full and all Letters of Credit shall have expired or been terminated and all
LC Disbursements shall have been reimbursed, the Borrower covenants and
agrees with the Lenders that:

 

SECTION 5.01.  Financial Statements and Other Information.  The Borrower will furnish to the
Administrative Agent and each Lender:

 

(a)           within
90 days after the end of each fiscal year of the Borrower, the audited
consolidated balance sheet and related statements of operations, stockholders’
equity and cash flows of the Borrower and its Subsidiaries as of the end of and
for such year, setting forth in each case in comparative form the figures for
the previous fiscal year, all reported on by KPMG LLP or other independent
public accountants of recognized national standing to the effect that such
consolidated financial statements present fairly in all material respects the
financial condition and results of operations of the Borrower and its
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied; provided that the requirements set forth in this clause (a) may
be fulfilled by providing to the Administrative Agent and the Lenders the
report of the Borrower to the SEC on Form 10-K for the applicable fiscal
year;

 

(b)           within
45 days after the end of each of the first three fiscal quarters of each fiscal
year of the Borrower, the consolidated balance sheet and related statements of
operations, stockholders’ equity and cash flows of the Borrower and its
Subsidiaries as of the end of and for such fiscal quarter and the then elapsed
portion of the fiscal year, setting forth in each case in comparative form the
figures for (or, in the case of the balance sheet, as of the end of) the
corresponding period or periods of the previous fiscal year, all certified by a
Financial Officer of the Borrower as presenting fairly in all material respects
the financial condition and results of operations of the Borrower and its Subsidiaries
on a consolidated basis in accordance with GAAP consistently applied, subject
to normal year-end audit adjustments and the absence of footnotes; provided
that the requirements set forth in this clause (b) may be fulfilled
by providing to the Lenders the report of the Borrower to the SEC on Form 10-Q
for the applicable quarterly period;

 

(c)           concurrently
with any delivery of financial statements under clause (a) or (b) of
this Section, a certificate of a Financial Officer of the Borrower (i) certifying
as to whether the Borrower has knowledge that a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations demonstrating compliance with Sections 6.01, 6.02, 6.04,
6.04 and 6.07 and (iii) stating whether any change in GAAP as applied

 

56

 

by (or
in the application of GAAP by) the Borrower has occurred since the date of the
audited financial statements referred to in Section 3.04 and, if any such
change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate;

 

(d)           as
soon as available and in any event not later than the last Business Day of the
calendar month following each monthly accounting period (ending on the last day
of each calendar month) of the Borrower, a Borrowing Base Certificate as at the
last day of such accounting period;

 

(e)           promptly
but no later than five Business Days after the Borrower shall at any time have
knowledge that there is a Borrowing Base Deficiency, a Borrowing Base
Certificate as at the date the Borrower has knowledge of such Borrowing Base
Deficiency indicating the amount of the Borrowing Base Deficiency as at the
date the Borrower obtained knowledge of such deficiency and the amount of the
Borrowing Base Deficiency as of the date not earlier than one Business Day
prior to the date the Borrowing Base Certificate is delivered pursuant to this
paragraph;

 

(f)            promptly
upon receipt thereof, copies of all significant reports submitted by the
Borrower’s independent public accountants in connection with each annual,
interim or special audit or review of any type of the financial statements or
related internal control systems of the Borrower or any of its Subsidiaries
delivered by such accountants to the management or board of directors of the
Borrower;

 

(g)           promptly
after the same become publicly available, copies of all periodic and other
reports, proxy statements and other materials filed by any of the Obligors with
the Securities and Exchange Commission, or any Governmental Authority
succeeding to any or all of the functions of said Commission, or with any
national securities exchange, as the case may be; and

 

(h)           promptly
following any request therefor, such other information regarding the
operations, business affairs and financial condition of the Borrower or any of
its Subsidiaries, or compliance with the terms of this Agreement and the other
Loan Documents, as the Administrative Agent or any Lender may reasonably
request.

 

SECTION 5.02.  Notices of Material Events.  The Borrower will furnish to the
Administrative Agent and each Lender prompt written notice of the following:

 

(a)           the
occurrence of any Default;

 

(b)           the
filing or commencement of any action, suit or proceeding by or before any
arbitrator or Governmental Authority against or affecting the Borrower

 

57

 

or any
of its Affiliates that, if adversely determined, could reasonably be expected
to result in a Material Adverse Effect;

 

(c)           the
occurrence of any ERISA Event that, alone or together with any other ERISA
Events that have occurred, could reasonably be expected to result in liability
of the Borrower and its Subsidiaries in an aggregate amount exceeding
$5,000,000; and

 

(d)           any
other development that results in, or could reasonably be expected to result
in, a Material Adverse Effect.

 

Each notice delivered
under this Section shall be accompanied by a statement of a Financial
Officer or other executive officer of the Borrower setting forth the details of
the event or development requiring such notice and any action taken or proposed
to be taken with respect thereto.

 

SECTION 5.03.  Existence; Conduct of Business.  The Borrower will, and will cause each of its
Subsidiaries to, do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its legal existence and the rights, licenses,
permits, privileges and franchises material to the conduct of its business; provided
that the foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.03.

 

SECTION 5.04.  Payment of Obligations.  The Borrower will, and will cause each of its
Subsidiaries to, pay its obligations, including tax liabilities and material
contractual obligations, that, if not paid, could reasonably be expected to
result in a Material Adverse Effect before the same shall become delinquent or
in default, except where (a) the validity or amount thereof is being
contested in good faith by appropriate proceedings, (b) the Borrower or
such Subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.

 

SECTION 5.05.  Maintenance of Properties; Insurance.  The Borrower will, and will cause each of its
Subsidiaries to, (a) keep and maintain all property material to the
conduct of its business in good working order and condition, ordinary wear and
tear excepted, and (b) maintain, with financially sound and reputable
insurance companies, insurance in such amounts and against such risks as are
customarily maintained by companies engaged in the same or similar businesses
operating in the same or similar locations.

 

SECTION 5.06.  Books and Records; Inspection and Audit
Rights.

 

(a)           Books and Records; Inspection
Rights.  The Borrower will, and will
cause each of its Subsidiaries to, keep books of record and account in
accordance with GAAP.  The Borrower will,
and will cause each other Obligor to, permit any

 

58

 

representatives designated by the Administrative Agent or any Lender,
upon reasonable prior notice, to visit and inspect its properties, to examine
and make extracts from its books and records (including books and records
maintained by it in its capacity as a “servicer” in respect of Ares Capital CP,
or in a similar capacity with respect to any other Designated Subsidiary, and
any books, records and documents held by the Custodian), and to discuss its
affairs, finances and condition with its officers and independent accountants,
all at such reasonable times and as often as reasonably requested, provided
that the Borrower shall be entitled to have its representatives and advisors
present during any inspection of its books and records.

 

(b)           Audit Rights.  The Borrower will, and will cause each other
Obligor to, permit any representatives designated by Administrative Agent
(including any consultants, accountants, lawyers and appraisers retained by the
Administrative Agent) to conduct evaluations and appraisals of the Borrower’s
computation of the Borrowing Base and the assets included in the Borrowing
Base, all at such reasonable times and as often as reasonably requested.  The Borrower shall pay the reasonable fees
and expenses of any representatives retained by the Administrative Agent to
conduct any such evaluation or appraisal; provided that the Borrower
shall not be required to pay such fees and expenses for more than one such
evaluation or appraisal during any calendar year unless an Event of Default has
occurred and is continuing at the time of any subsequent evaluation or
appraisal during such calendar year.  The
Borrower also agrees to modify or adjust the computation of the Borrowing Base
to the extent required by the Administrative Agent or the Required Lenders as a
result of any such evaluation or appraisal, provided that if the
Borrower demonstrates that such evaluation or appraisal is incorrect, the
Borrower shall be permitted to re-adjust its computation of the Borrowing Base.

 

SECTION 5.07.  Compliance with Laws.  The Borrower will, and will cause each of its
Subsidiaries to, comply with all laws, rules, regulations, including the
Investment Company Act, and orders of any Governmental Authority applicable to
it or its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.  Without limiting the generality
of the foregoing, the Borrower will, and will cause its Subsidiaries to,
conduct its business and other activities in compliance in all material respects
with the provisions of the Investment Company Act and any applicable rules,
regulations or orders issued by the Securities and Exchange Commission
thereunder.

 

SECTION 5.08.  Certain Obligations Respecting
Subsidiaries; Further Assurances.

 

(a)           Subsidiary Guarantors.  In the event that any Obligor shall form or
acquire any new Subsidiary (other than a Designated Subsidiary), the Borrower
will cause such new Subsidiary to become a “Subsidiary Guarantor” (and,
thereby, an “Obligor”) under the Guarantee Assumption Agreement and to deliver
such proof of corporate or other action, incumbency of officers, opinions of
counsel and other documents as is consistent with those delivered by the
Borrower pursuant to Section 4.01 upon the Effective Date or as the Administrative
Agent shall have requested.

 

59

 

(b)           Ownership of Subsidiaries.  The Borrower will, and will cause each of its
Subsidiaries to, take such action from time to time as shall be necessary to
ensure that each of its Subsidiaries is a wholly owned Subsidiary.

 

(c)           Further Assurances.  The Borrower will, and will cause each of the
Subsidiary Guarantors to, take such action from time to time as shall
reasonably be requested by the Administrative Agent to effectuate the purposes
and objectives of this Agreement. 
Without limiting the generality of the foregoing, the Borrower will, and
will cause each of the Subsidiary Guarantors to, take such action from time to
time (including filing appropriate Uniform Commercial Code financing statements
and executing and delivering such assignments, security agreements and other
instruments) as shall be reasonably requested by the Administrative Agent

 

(i)            to
create, in favor of the Collateral Agent for the benefit of the Lenders (and
any affiliate thereof that is a party to any Hedging Agreement entered into
with the Borrower) and the holders of any Other Secured Indebtedness, perfected
security interests and Liens in the Collateral; provided that any such
security interest or Lien shall be subject to the relevant requirements of the
Security Documents,

 

(ii)           to
cause any bank or securities intermediary (within the meaning of the Uniform
Commercial Code) to enter into such arrangements with the Collateral Agent as
shall be appropriate in order that the Collateral Agent has “control” over each
bank account or securities account of the Obligors (other than any thereof that
are maintained by the Obligors in their capacity as “servicer” for Ares Capital
CP or any other Designated Subsidiary, or which hold solely money or financial
assets of Ares Capital CP or any other Designated Subsidiary), and in that
connection, the Borrower agrees to cause all cash and other proceeds of
Portfolio Investments received by any Obligor to be promptly deposited into
such an account (or otherwise delivered to, or registered in the name of, the
Collateral Agent) and, until such deposit, delivery or registration such cash
and other proceeds shall be held in trust by the Borrower for and as the property
of the Collateral Agent and shall not be commingled with any other funds or
property of such Obligor or of any Designated Subsidiary or other Person
(including with any money or financial assets of any Obligor in its capacity as
“servicer” for Ares Capital CP or any other Designated Subsidiary, or any money
or financial assets of any Designated Subsidiary)

 

(iii)          to
cause its Designated Subsidiaries, and any custodians or account banks and
securities intermediaries acting on their behalf, or trustee or representative
acting for any Person extending credit to any Designated Subsidiary, to execute
and deliver such intercreditor and other agreements, in form and substance
reasonably satisfactory to the Administrative Agent, as it shall determine are
necessary to confirm that none of such Designated Subsidiaries or custodians
claims any interest or Lien upon any property of any Obligor and that

 

60

 

any
custodian that holds documentation on behalf of both the Obligors and any
Designated Subsidiary will provide access to such documentation consistent with
the provisions of Section 5.06,

 

(iv)          in
the case of any Portfolio Investment consisting of a Bank Loan that does not
constitute all of the credit extended to the underlying borrower under the
relevant underlying loan documents and a Designated Subsidiary holds any
interest in the loans or other extensions of credit under such loan documents,
(x) cause such Designated Subsidiary to be party to such underlying loan
documents as a “lender” having a direct interest (or a participation not
acquired from an Obligor) in such underlying loan documents and the extensions
of credit thereunder and (y) ensure that all amounts owing to such Obligor
or Designated Subsidiary by the underlying borrower or other obligated party
are remitted by such borrower or obligated party directly to separate accounts
of such Obligor and such Designated Subsidiary,

 

(v)           in
the event that any Obligor is acting as an agent or administrative agent under
any loan documents with respect to any Bank Loan that does not constitute all
of the credit extended to the underlying borrower under the relevant underlying
loan documents, ensure that all funds held by such Obligor in such capacity as
agent or administrative agent is segregated from all other funds of such
Obligor and clearly identified as being held in an agency capacity and

 

(vi)          cause
all loan and other documents relating to any Portfolio Investment to be held by
(x) the Collateral Agent or (y) the Custodian pursuant to the terms
of the Custodian Agreement (or another custodian reasonably satisfactory to the
Administrative Agent), or pursuant to an appropriate intercreditor agreement,
so long as the Custodian (or custodian) has agreed to grant access to such loan
and other documents to the Administrative Agent and the Lenders pursuant to an
access or similar agreement between the Borrower and such Custodian (or
custodian) in form and substance reasonably satisfactory to the Administrative
Agent.

 

SECTION 5.09.  Use of Proceeds.  The Borrower will use the proceeds of the
Loans only for general corporate purposes of the Borrower in the ordinary
course of business, including the acquisition and funding (either directly or
through one or more wholly-owned Subsidiaries) of first and second lien senior
loans, mezzanine debt, equity securities, high-yield bonds, debt and equity
securities in collateralized debt obligation vehicles, distressed debt and
other Portfolio Investments; provided that neither the Administrative
Agent nor any Lender shall have any responsibility as to the use of any of such
proceeds.  No part of the proceeds of any
Loan will be used in violation of
applicable law or, directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of buying or carrying any Margin Stock.  Margin Stock shall be purchased by the
Obligors only with the proceeds of Indebtedness not directly or indirectly
secured by Margin Stock (within the meaning of Regulation U), or with the
proceeds of equity capital of the Borrower.

 

61

 

SECTION 5.10.  Status of RIC and BDC.  The Borrower shall at all times maintain its
status as a RIC under the Code, and as a “business development company” under
the Investment Company Act.

 

SECTION 5.11.  Investment and Valuation Policies.  The Borrower shall promptly advise the
Lenders and the Administrative Agent of any material change in either its
Investment Policies or Valuation Policy.

 

SECTION 5.12.  Portfolio Valuation and Diversification,
Etc.

 

(a)           Industry Classification Groups.  For purposes of this Agreement, the Borrower
shall assign each Portfolio Investment to an Industry Classification
Group.  To the extent that any Portfolio
Investment is not correlated with the risks of other Portfolio Investments in
an Industry Classification Group established by Moody’s, such Portfolio
Investment may be assigned by the Borrower to an Industry Classification Group
that is more closely correlated to such Portfolio Investment.  In the absence of any correlation, the
Borrower shall be permitted, upon notice to the Administrative Agent and each
Lender to create up to three additional industry classification groups for
purposes of this Agreement.

 

(b)           Portfolio Valuation Etc.

 

(i)            Settlement
Date Basis.  For purposes of this
Agreement, all determinations of whether an investment is to be included as a
Portfolio Investment shall be determined on a settlement-date basis (meaning
that any investment that has been purchased will not be treated as a Portfolio
Investment until such purchase has settled, and any Portfolio Investment which
has been sold will not be excluded as a Portfolio Investment until such sale
has settled), provided that no such investment shall be included as a
Portfolio Investment to the extent it has not been paid for in full.

 

(ii)           Determination
of Values.  The Borrower will conduct
reviews of the value to be assigned to each of its Portfolio Investment as
follows:

 

(A)          Quoted
Investments—External Review.  With
respect to Portfolio Investments (including Cash Equivalents) for which market
quotations are readily available, the Borrower shall, not less frequently than
once each calendar week, determine the market value of such Portfolio
Investments which shall, in each case, be determined in accordance with one of
the following methodologies (as selected by the Borrower):

 

(w)          in the case of public
and 144A securities, the average of the mean prices as determined by two
Approved Dealers selected by the Borrower,

 

62

 

(x)            in the case of bank
loans, the mean price as determined by one Approved Dealer or Approved Pricing
Service selected by the Borrower,

 

(y)           in the case of any
Portfolio Investment traded on an exchange, the closing price for such
Portfolio Investment most recently posted on such exchange, and

 

(z)            in the case of any
other Portfolio Investment, the fair market value thereof as determined by an
Approved Pricing Service; and

 

(B)           Unquoted
Investments—External Review.  With
respect to Portfolio Investments for which market quotations are not readily
available, the Borrower shall value such Portfolio Investments quarterly in a
manner consistent with its valuation policy (the “Valuation Policy”), as
more specifically set forth Part D.3 of the Investment Policies (as
supplemented by the “Net Asset Valuation Policy” for the Borrower previously delivered to the Lenders).

 

(C)           Internal
Review.  The Borrower shall conduct
an internal review of the aggregate value of the Portfolio Investments, and of
the Borrowing Base, at least once each calendar week which shall take into
account any events of which the Borrower has knowledge that materially affects
the aggregate value of the Portfolio Investments or the Borrowing Base.  If, based upon such weekly internal review,
the Borrower determines that a Borrowing Base Deficiency exists, then the
Borrower shall, within five Business Days as provided in Section 5.01(c),
deliver a Borrowing Base Certificate reflecting the new amount of the Borrowing
Base and shall take the actions, and make the payments and prepayments (and
provide cover for Letters of Credit), all as more specifically set forth in Section 2.09(c).

 

(D)          Failure
to Determine Values.  If the Borrower
shall fail to determine the value of any Portfolio Investment as at any date
pursuant to the requirements of the foregoing sub-clauses (A), (B) or
(C), then the “Value” of such Portfolio Investment as at such date shall be
deemed to be zero.

 

(c)           Investment Company Diversification
Requirements.  The Borrower will, and
will cause its Subsidiaries (other than Designated Subsidiaries that are exempt
from the Investment Company Act) at all times to (i) comply in all
material respects with the portfolio diversification and similar requirements
set forth in the Investment Company Act applicable to business development
companies and (ii) subject to applicable grace periods set forth in the
Code, comply with the portfolio diversification and similar requirements set
forth in the Code applicable to RIC’s.

 

63

 

SECTION 5.13.  Calculation of Borrowing Base.  For purposes of this Agreement, the “Borrowing
Base” shall be determined, as at any date of determination, as the sum of
the Advance Rates of the Value of each Portfolio Investment, provided
that:

 

(a)           the
Advance Rate applicable to that portion of the aggregate Value of the Portfolio
Investments of all issuers in a consolidated group of corporations or other
entities, in accordance with GAAP, that exceeds 10% of Shareholders’ Equity of
the Borrower (which, for purposes of this calculation shall exclude the
aggregate amount of investments in, and advances to, Designated Subsidiaries)
as of the end of the most recent quarter shall be 50% of the Advance Rate
otherwise applicable;

 

(b)           the
Advance Rate applicable to that portion of the aggregate Value of the Portfolio
Investments of all issuers in a consolidated group of corporations or other
entities, exceeding 20% of Shareholders’ Equity of the Borrower (which, for
purposes of this calculation shall exclude the aggregate amount of investments
in, and advances to, Designated Subsidiaries) shall be 0%;

 

(c)           the
portion of the Borrowing Base attributable to common equity, warrants, Non-Cash
Pay Bank Loans, Non-Performing Bank Loans and Other Category CDO Securities
shall not exceed 25% of the Covered Debt Amount and the Borrowing Base shall be
reduced to the extent such portion would otherwise exceed 25% of the Covered
Debt Amount;

 

(d)           the
Advance Rate applicable to that portion of the aggregate Value of the Portfolio
Investments in any single Industry Classification Group (which, for purposes of
this calculation shall exclude the aggregate amount of investments in, and
advances to, Designated Subsidiaries) that exceeds 20% of Shareholders’ Equity
shall be 0%, provided that, with respect to the Portfolio Investments
(other than CDO Securities) in a single Industry Classification Group from time
to time designated by the Borrower to the Administrative Agent, such 20% figure
shall be increased to 30% and, accordingly, only to the extent that the Value
for such single Industry Classification Group exceeds 30% of the Shareholders’
Equity shall the Advance Rate applicable to such excess Value be 0%; and

 

(e)           no
Portfolio Investment may be included in the Borrowing Base until such time as
such Portfolio Investment has been Delivered (as defined in the Guarantee and
Security Agreement) to the Collateral Agent, and then only for so long as such
Portfolio Investment continues to be Delivered as contemplated therein.

 

The
Borrower shall from time to time deliver a Borrowing Base Certificate to the
Administrative Agent and each Lender as provided in Sections 4.01(h),
5.01(d), 5.01(e) and 6.05(d).

 

64

 

As used herein, the following terms have the following
meanings:

 

“Advance
Rate” means, as to any Portfolio Investment and subject to adjustment as
provided in Section 5.13(a), (b) and (c), the following percentages
with respect to such Portfolio Investment:

 

	
  Portfolio Investment

  	
   

  	
  Quoted

  	
   

  	
  Unquoted

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cash, Cash Equivalents and Short-Term U.S.
  Government Securities

  	
   

  	
  100

  	
  %

  	
  n.a.

  	
   

  
	
  Long-Term U.S. Government Securities

  	
   

  	
  95

  	
  %

  	
  n.a.

  	
   

  
	
  Performing First Lien Bank Loans

  	
   

  	
  90

  	
  %

  	
  80

  	
  %

  
	
  Performing Second Lien Bank Loans

  	
   

  	
  80

  	
  %

  	
  70

  	
  %

  
	
  Performing Cash Pay High Yield Securities

  	
   

  	
  70

  	
  %

  	
  60

  	
  %

  
	
  Investment Grade CDO Securities

  	
   

  	
  70

  	
  %

  	
  60

  	
  %

  
	
  Performing Cash Pay Mezzanine Investments

  	
   

  	
  65

  	
  %

  	
  55

  	
  %

  
	
  Performing Non-Cash Pay High Yield Securities

  	
   

  	
  60

  	
  %

  	
  50

  	
  %

  
	
  Non-Investment Grade CDO Securities

  	
   

  	
  60

  	
  %

  	
  50

  	
  %

  
	
  Performing Non-Cash Pay Mezzanine Investments

  	
   

  	
  55

  	
  %

  	
  45

  	
  %

  
	
  Non-Performing First Lien Bank Loans

  	
   

  	
  65

  	
  %

  	
  55

  	
  %

  
	
  Non-Performing Second Lien Bank Loans

  	
   

  	
  55

  	
  %

  	
  45

  	
  %

  
	
  Non-Performing High Yield Securities

  	
   

  	
  50

  	
  %

  	
  40

  	
  %

  
	
  Non-Performing Mezzanine Investments

  	
   

  	
  50

  	
  %

  	
  40

  	
  %

  
	
  Performing Common Equity

  	
   

  	
  50

  	
  %

  	
  40

  	
  %

  
	
  Other Category CDO Securities

  	
   

  	
  35

  	
  %

  	
  25

  	
  %

  
	
  Non-Performing Common Equity

  	
   

  	
  25

  	
  %

  	
  0

  	
  %

  

 

“Bank
Loans” means debt obligations (including, without limitation, term loans,
revolving loans, debtor-in-possession financings, the funded and unfunded
portion of revolving credit lines and letter of credit facilities and other
similar loans and investments including interim loans and senior subordinated
loans) which are generally under a syndicated loan or credit facility.

 

“Capital
Stock” of any Person means any and all shares of corporate stock (however
designated) of, and any and all other equity interests and participations
representing ownership interests (including membership interests and limited
liability company interests) in, such Person.

 

“Cash”
has the meaning assigned to such term in Section 1.01 of the Credit
Agreement.

 

“Cash
Equivalents” has the meaning assigned to such term in Section 1.01 of
the Credit Agreement.

 

“CDO
Securities” means debt securities, equity securities or composite or
combination securities (i.e. securities consisting of a combination of debt and
equity

 

65

 

securities that are issued in effect as a unit), including synthetic
securities that provide synthetic credit exposure to debt securities, equity
securities or composite or combination securities, that entitle the holders
thereof to receive payments that (i) depend on the cash flow from a portfolio
consisting primarily of ownership interests in debt securities, corporate loans
or asset-backed securities or (ii) are subject to losses owing to credit
events (howsoever defined) under credit derivative transactions with respect to
debt securities, corporate loans or asset-backed securities.

 

“First
Lien Bank Loan” means a Bank Loan that is entitled to the benefit of a
first lien and first priority perfected security interest on a substantial
portion of the assets of the respective borrower and guarantors obligated in
respect thereof.

 

“High
Yield Securities” means debt Securities and Preferred Stock, in each case (a) issued
by public or private issuers, (b) issued pursuant to an effective
registration statement or pursuant to Rule 144A under the Securities Act
(or any successor provision thereunder) and (c) that are not Cash
Equivalents, Mezzanine Investments or Bank Loans.

 

“Investment
Grade CDO Securities” means Rated CDO Securities that are direct or
synthetic debt securities (and not composite or combination securities) and are
(a) Performing and (b) rated as follows by two of the following three
rating agencies: “BBB-” or higher by S&P, “BBB-” or higher by Fitch and “Baa3”
or higher by Moody’s.

 

“Long-Term
U.S. Government Securities” means U.S. Government Securities maturing more
than one year from the applicable date of determination.

 

“Mezzanine
Investments” means debt Securities (including convertible debt Securities
(other than the “in-the-money” equity component thereof)) and Preferred Stock
in each case (a) issued by public or private issuers, (b) issued
without registration under the Securities Act, (c) not issued pursuant to Rule 144A
under the Securities Act (or any successor provision thereunder), (d) that
are not Cash Equivalents and (e) contractually subordinated in right of
payment to other debt of the same issuer.

 

“Non-Cash
Pay Bank Loans” means all Bank Loans other than Performing Cash Pay Bank
Loans.

 

“Non-Investment
Grade CDO Securities” means Rated CDO Securities that are direct or
synthetic debt securities (and not composite or combination securities) and
that are (a) Performing and (b) neither Investment Grade CDO
Securities nor Other Category CDO Securities.

 

“Non-Performing
Common Equity” means Capital Stock (other than Preferred Stock) and
warrants of an issuer having any debt outstanding that is non-Performing.

 

66

 

“Non-Performing
First Lien Bank Loans” means First Lien Bank Loans other than Performing
First Lien Bank Loans.

 

“Non-Performing
High Yield Securities” means High Yield Securities other than Performing
High Yield Securities.

 

“Non-Performing
Bank Loans” means, collectively, Non-Performing First Lien Bank Loans and
Non-Performing Second Lien Bank Loans.

 

“Non-Performing
Mezzanine Investments” means Mezzanine Investments other than Performing
Mezzanine Investments.

 

“Non-Performing
Second Lien Bank Loans” means Second Lien Bank Loans other than Performing
Second Lien Bank Loans.

 

“Other
Category CDO Securities” means (a) CDO Securities that are direct or
synthetic debt securities (and not composite or combination securities) and
that are (i) Performing and (ii) either (x) not-secured or
(y) not Rated CDO Securities and (b) CDO Securities that are direct
or synthetic equity securities or direct or synthetic composite or combination
securities and that are Performing.

 

“Performing”
means (a) with respect to any Portfolio Investment that is debt, the
issuer of such Portfolio Investment is not in default of any payment obligations
in respect thereof, after the expiration of any applicable grace period and (b) with
respect to any Portfolio Investment that is Preferred Stock or Other Category
CDO Securities, the issuer of such Portfolio Investment has not failed to meet
any scheduled redemption obligations or to pay its latest declared cash
dividend, after the expiration of any applicable grace period.

 

“Performing
Cash Pay Bank Loans” means First Lien Bank Loans and Second Lien Bank Loans
(a) as to which, at the time of determination, all of the interest on
which is payable in cash not less frequently than quarterly and (b) which
are Performing.

 

“Performing
Cash Pay High Yield Securities” means High Yield Securities (a) as to
which, at the time of determination, not less than 2/3rds of the interest
(including accretions and “pay-in-kind” interest) for the current monthly,
quarterly, semi-annual or annual period (as applicable) is payable in cash and (b) which
are Performing.

 

“Performing
Cash Pay Mezzanine Investments” means Mezzanine Investments (a) as to
which, at the time of determination, not less than 2/3rds of the interest
(including accretions and “pay-in-kind” interest) for the current monthly,
quarterly, semi-annual or annual period (as applicable) is payable in cash and (b) which
are Performing.

 

67

 

“Performing
Common Equity” means Capital Stock (other than Preferred Stock) and
warrants of an issuer all of whose outstanding debt is Performing.

 

“Performing
First Lien Bank Loans” means First Lien Bank Loans which are Performing.

 

“Performing
Non-Cash Pay High Yield Securities” means Performing High Yield Securities
other than Performing Cash Pay High Yield Securities.

 

“Performing
Non-Cash Pay Mezzanine Investments” means Performing Mezzanine Investments
other than Performing Cash Pay Mezzanine Investments.

 

“Performing
Second Lien Bank Loans” means Second Lien Bank Loans which are Performing.

 

“Preferred
Stock,” as applied to the Capital Stock of any Person, means Capital Stock
of such Person of any class or classes (however designated) that ranks prior,
as to the payment of dividends or as to the distribution of assets upon any
voluntary or involuntary liquidation, dissolution or winding up of such Person,
to any shares (or other interests) of other Capital Stock of such Person, and
shall include, without limitation, cumulative preferred, non-cumulative
preferred, participating preferred and convertible preferred Capital Stock.

 

“Rated
CDO Securities” means CDO Securities that are rated by at least two of
S&P, Fitch and Moody’s.

 

“Second
Lien Bank Loan” means a Bank Loan that is entitled to the benefit of a
second lien and second priority perfected security interest on a substantial
portion of the assets of the respective borrower and guarantors obligated in
respect thereof.

 

“Securities”
means common and preferred stock, units and participations, member interests in
limited liability companies, partnership interests in partnerships, notes,
bonds, debentures, trust receipts and other obligations, instruments or
evidences of indebtedness, including debt instruments of public and private
issuers and tax-exempt securities (including warrants, rights, put and call
options and other options relating thereto, representing rights, or any
combination thereof) and other property or interests commonly regarded as
securities or any form of interest or participation therein, but not including
Bank Loans.

 

“Securities
Act” means the United States Securities Act of 1933, as amended.

 

“Short-Term
U.S. Government Securities” means U.S. Government Securities maturing
within one year of the applicable date of determination.

 

68

 

“U.S.
Government Securities” has the meaning assigned to such term in Section 1.01
of the Credit Agreement.

 

“Value”
means, with respect to any Portfolio Investment, the lower of the most recent
internal fair market value as determined pursuant to Section 5.12(b)(ii)(C) and
the most recent external fair market value as determined pursuant to Section 5.12(b)(ii)(A) and
(B).

 

ARTICLE VI

 

NEGATIVE COVENANTS

 

Until
the Commitments have expired or terminated and the principal of and interest on
each Loan and all fees payable hereunder have been paid in full and all Letters
of Credit have expired or terminated and all LC Disbursements shall have
been reimbursed, the Borrower covenants and agrees with the Lenders that:

 

SECTION 6.01.  Indebtedness.  The Borrower will not, nor will it permit any
other Obligor to, create, incur, assume or permit to exist any Indebtedness,
except:

 

(a)           Indebtedness
created hereunder;

 

(b)           Permitted
Indebtedness in an aggregate amount that, taken together with Indebtedness
permitted under clauses (a) and (f) of this Section 6.01,
does not exceed the lesser of (i) the Borrowing Base and (ii) the
amount required to comply with the provisions of Section 6.07(b);

 

(c)           Other
Permitted Indebtedness;

 

(d)           repurchase
obligations arising in the ordinary course of business with respect to U.S.
Government Securities;

 

(e)           obligations
payable to clearing agencies, brokers or dealers in connection with the
purchase or sale of securities in the ordinary course of business;

 

(f)            other
Indebtedness in an aggregate amount not exceeding $25,000,000 at any one time
outstanding and that, taken together with Indebtedness permitted under
clauses (a) and (b) of this Section 6.01, does not exceed
the lesser of (i) the Borrowing Base and (ii) the amount required to
comply with the provisions of Section 6.07(b); and

 

(g)           obligations
(including Guarantees) in respect of Standard Securitization Undertakings.

 

69

 

SECTION 6.02.  Liens.  The Borrower will not, nor will it permit any
other Obligor to, create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it, or assign or sell any
income or revenues (including accounts receivable) or rights in respect of any
thereof, except:

 

(a)           any
Lien on any property or asset of the Borrower existing on the date hereof and
set forth in Part B of Schedule II, provided that (i) no
such Lien shall extend to any other property or asset of the Borrower or any of
its Subsidiaries and (ii) any such Lien shall secure only those
obligations which it secures on the date hereof and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof;

 

(b)           Liens
created pursuant to the Security Documents;

 

(c)           Liens on Special Equity Interests included in the
Portfolio Investments of the Borrower but only to the extent securing obligations in the manner provided in
the definition of “Special Equity Interests” in Section 1.01;

 

(d)           Liens
securing Indebtedness or other obligations in an aggregate principal amount not
exceeding $10,000,000 at any one time outstanding (which may cover Portfolio
Investments, but only to the extent released from the Lien in favor of the
Collateral Agent in accordance with the requirements of Section 10.03 of
the Guarantee and Security Agreement), so long as at the time thereof the
aggregate amount of Indebtedness permitted under clauses (a), (b) and (f) of
Section 6.01, does not exceed the lesser of (i) the Borrowing Base and (ii) the
amount required to comply with the provisions of Section 6.07(b); and

 

(e)           Permitted
Liens.

 

SECTION 6.03.  Fundamental Changes.  The Borrower will not, nor will it permit any
other Obligor to, enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation
or dissolution).  The Borrower will not,
nor will it permit any other Obligor to, acquire any business or property from,
or capital stock of, or be a party to any acquisition of, any Person, except
for purchases or acquisitions of Portfolio Investments and other assets in the
normal course of the day-to-day business activities of the Borrower and its
Subsidiaries and not in violation of the terms and conditions of this Agreement
or any other Loan Document.  The Borrower
will not, nor will it permit any other Obligor to, convey, sell, lease,
transfer or otherwise dispose of, in one transaction or a series of
transactions, any part of its assets, whether now owned or hereafter acquired,
but excluding (x) assets sold or disposed of in the ordinary course of
business (including to make expenditures of cash in the normal course of the
day-to-day business activities of the Borrower and its Subsidiaries) and
(y) subject to the provisions of clause (d) below, Portfolio
Investments (to the extent not otherwise included in clause (x) of this
Section).

 

70

 

Notwithstanding
the foregoing provisions of this Section:

 

(a)           any
Subsidiary Guarantor of the Borrower may be merged or consolidated with or into
the Borrower or any other Subsidiary Guarantor; provided that if any
such transaction shall be between a Subsidiary Guarantor and a wholly owned
Subsidiary Guarantor, the wholly owned Subsidiary Guarantor shall be the
continuing or surviving corporation;

 

(b)           any
Subsidiary Guarantor may sell, lease, transfer or otherwise dispose of any or
all of its assets (upon voluntary liquidation or otherwise) to the Borrower or
any wholly owned Subsidiary Guarantor of the Borrower;

 

(c)           the
capital stock of any Subsidiary of the Borrower may be sold, transferred or
otherwise disposed of to the Borrower or any wholly owned Subsidiary Guarantor
of the Borrower;

 

(d)           the
Obligors may sell, transfer or otherwise dispose of Portfolio Investments to a
Designated Subsidiary so long as (i) after giving effect to such release
(and any concurrent acquisitions of Portfolio Investments or payment of
outstanding Loans) the Covered Debt Amount does not exceed the Borrowing Base
and delivers a certificate of a Financial Officer to such effect to the Administrative
Agent and (ii) either (x) the amount of any excess availability under
the Borrowing Base immediately prior to such release is not diminished as a
result of such release or (y) the Borrowing Base immediately after giving
effect to such release is at least 110% of the Covered Debt Amount;

 

(e)           the
Borrower may merge or consolidate with any other Person so long as (i) the
Borrower is the continuing or surviving entity in such transaction and (ii) at
the time thereof and after giving effect thereto, no Default shall have
occurred or be continuing; and

 

(f)            the
Borrower and the other Obligors may sell, lease, transfer or otherwise dispose
of equipment or other property or assets that do not consist of Portfolio
Investments so long as the aggregate amount of all such sales, leases, transfer
and dispositions does not exceed $5,000,000 in any fiscal year.

 

SECTION 6.04.  Investments.  The Borrower will not, nor will it permit any
other Obligor to, acquire, make or enter into, or hold, any Investments except:

 

(a)           operating
deposit accounts with banks;

 

(b)           Investments
by the Borrower and the Subsidiary Guarantors in the Borrower and the
Subsidiary Guarantors;

 

(c)           Hedging
Agreements entered into in the ordinary course of the Borrower’s financial
planning and not for speculative purposes;

 

71

 

(d)           Portfolio
Investments by the Borrower and its Subsidiaries to the extent such Portfolio
Investments are permitted under the Investment Company Act and the Borrower’s
Investment Policies;

 

(e)           Investments
in Designated Subsidiaries; and

 

(f)            additional
Investments up to but not exceeding $25,000,000 in the aggregate.

 

For purposes of
clause (f) of this Section, the aggregate amount of an Investment at
any time shall be deemed to be equal to (A) the aggregate amount of cash,
together with the aggregate fair market value of property, loaned, advanced,
contributed, transferred or otherwise invested that gives rise to such
Investment minus (B) the aggregate amount of dividends,
distributions or other payments received in cash in respect of such Investment,
provided that in no event shall the aggregate amount of such Investment
be deemed to be less than zero; the amount of an Investment shall not in any
event be reduced by reason of any write-off of such Investment nor increased by
any increase in the amount of earnings retained in the Person in which such
Investment is made that have not been dividended, distributed or otherwise paid
out.

 

SECTION 6.05.  Restricted Payments

 

.  The Borrower will not, nor will it permit any
other Obligor to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, except that the Borrower may declare and
pay:

 

(a)           dividends
with respect to the capital stock of the Borrower payable solely in additional
shares of the Borrower’s common stock;

 

(b)           dividends
and distributions in either case in cash or other property (excluding for this
purpose the Borrower’s common stock) in any taxable year of the Borrower in
amounts not to exceed the amount that is estimated in good faith by the
Borrower to be required to (i) reduce to zero for such taxable year or for
the previous taxable year, its investment company taxable income (within the
meaning of section 852(b)(2) of the Code, and reduce to zero the tax
imposed by section 852(b)(3) of the Code, and (ii) avoid federal
excise taxes for such taxable year imposed by section 4982 of the Code;

 

(c)           dividends
and distributions in each case in cash or other property (excluding for this
purpose the Borrower’s common stock) in addition to the dividends and
distributions permitted under the foregoing clauses (a) and (b), so
long as on the date of such Restricted Payment and after giving effect thereto:

 

(i)            no
Default shall have occurred and be continuing; and

 

(ii)           the
aggregate amount of Restricted Payments made during any taxable year of the
Borrower after the date hereof under this clause (c)

 

72

 

shall
not exceed the sum of (x) an amount equal to 10% of the taxable income of
the Borrower for such taxable year determined under section 852(b)(2) of
the Code, but without regard to subparagraphs (A), (B) or (D) thereof,
minus (y) the amount, if any, by which dividends and distributions
made during such taxable year pursuant to the foregoing clause (b) (whether
in respect of such taxable year or the previous taxable year) based upon the
Borrower’s estimate of taxable income exceeded the actual amounts specified in
subclauses (i) and (ii) of such foregoing clause (b) for
such taxable year.

 

(d)           other
Restricted Payments so long as (i) on the date of such other Restricted
Payment and after giving effect thereto (x) the Covered Debt Amount does
not exceed 90% of the Borrowing Base and (y) no Default shall have
occurred and be continuing and (ii) on the date of such other Restricted
Payment the Borrower delivers to the Administrative Agent and each Lender a
Borrowing Base Certificate as at such date demonstrating compliance with
subclause (x) after giving effect to such Restricted Payment.  For purposes of preparing such Borrowing Base
Certificate, (A) the fair market value of Portfolio Investments for which
market quotations are readily available shall be the most recent quotation
available for such Portfolio Investment and (B) the fair market value of
Portfolio Investments for which market quotations are not readily available
shall be the Value set forth in the Borrowing Base Certificate most recently
delivered by the Borrower to the Administrative Agent and the Lenders pursuant
to Section 5.01(d), provided that the Borrower shall reduce the
Value of any Portfolio Investment referred to in this sub-clause (B) to
the extent necessary to take into account any events of which the Borrower has
knowledge that adversely affect the value of such Portfolio Investment.

 

In
calculating the amount of Restricted Payments made by the Borrower during any
period referred to in paragraphs (b) or (c) above, any
Restricted Payments made by Designated Subsidiaries during such period (other
than any such Restricted Payments that are made to Obligors) shall be treated
as Restricted Payments made by the Borrower during such period.

 

Nothing
herein shall be deemed to prohibit the payment of Restricted Payments by any
Subsidiary Guarantor of the Borrower to the Borrower or to any other Subsidiary
Guarantor.

 

SECTION 6.06.  Certain Restrictions on Subsidiaries.  The Borrower will not permit any of its
Subsidiaries (other than Designated Subsidiaries) to enter into or suffer to
exist any indenture, agreement, instrument or other arrangement that prohibits
or restrains, in each case in any material respect, or imposes materially
adverse conditions upon, the incurrence or payment of Indebtedness, the
granting of Liens, the declaration or payment of dividends, the making of
loans, advances, guarantees or Investments or the sale, assignment, transfer or
other disposition of property.

 

73

 

SECTION 6.07.  Certain Financial Covenants.

 

(a)           Minimum Shareholders’ Equity.  The Borrower will not permit Shareholders’
Equity at the last day of any fiscal quarter of the Borrower to be less than
the greater of (i) 40% of the total assets of the Borrower and its
Subsidiaries as at the last day of such fiscal quarter (determined on a
consolidated basis, without duplication, in accordance with GAAP) and (ii) $300,000,000
plus 25% of the net proceeds of the sale of Equity Interests by the
Borrower and its Subsidiaries after the Effective Date.

 

(b)           Asset Coverage Ratio.  The Borrower will not permit the Asset
Coverage Ratio to be less than 2.00 to 1 at any time.

 

(c)           Liquidity Test.  The Borrower will not permit the aggregate
Value of the Portfolio Investments that can be converted to Cash in fewer than
10 Business Days without more than a 5% change in price to be less than 10% of
the Covered Debt Amount for more than 30 Business Days during any period when
the Adjusted Covered Debt Balance is greater than 90% of the Adjusted Borrowing
Base.

 

SECTION 6.08.  Transactions with Affiliates.  The Borrower will not, and will not permit
any of its Subsidiaries to enter into any transactions with any of its
Affiliates, even if otherwise permitted under this Agreement, except (a) transactions
in the ordinary course of business at prices and on terms and conditions not
less favorable to the Borrower or such Subsidiary than could be obtained on an
arm’s-length basis from unrelated third parties, (b) transactions between
or among the Borrower and its Subsidiaries not involving any other Affiliate, (c) Restricted
Payments permitted by Section 6.05, (d) the transactions provided in
the Affiliate Agreements, (e) transactions described on Schedule V or
(f) any Investment that results in the creation of an Affiliate.

 

SECTION 6.09.  Lines of Business.  The Borrower will not, nor will it permit any
of its Subsidiaries to, engage to any material extent in any business other
than in accordance with its Investment Policies.

 

SECTION 6.10.  No Further Negative Pledge.  The Borrower will not, and will not permit
any of its Subsidiaries to, enter into any agreement, instrument, deed or lease
which prohibits or limits the ability of any Obligor to create, incur, assume
or suffer to exist any Lien upon any of its properties, assets or revenues,
whether now owned or hereafter acquired, or which requires the grant of any
security for an obligation if security is granted for another obligation,
except the following: (a) this Agreement and the other Loan Documents; (b) covenants
in documents creating Liens permitted by Section 6.02 prohibiting further
Liens on the assets encumbered thereby; (c) customary restrictions
contained in leases not subject to a waiver; (d) any agreement that
imposes such restrictions only on Equity Interests in Designated Subsidiaries);
and (e) any other agreement that does not restrict in any manner (directly
or indirectly) Liens created pursuant to the Loan Documents on any Collateral
securing the “Secured Obligations” under and as defined in the Guarantee and
Security Agreement and does not require the direct or indirect granting of any
Lien securing any Indebtedness or other obligation by

 

74

 

virtue of the granting of Liens on or pledge
of property of any Obligor secure the Loans or any Hedging Agreement.

 

SECTION 6.11.  Modifications of Certain Documents.  The Borrower will not consent to any
modification, supplement or waiver of (a) any of the provisions of any agreement,
instrument or other document evidencing or relating to any Permitted
Indebtedness that would result in such Permitted Indebtedness not meeting the
requirements of the definition of “Permitted Indebtedness” set forth in Section 1.01
of this Agreement or (b) any of the Affiliate Agreements, unless such
modification, supplement or waiver is not less favorable to the Borrower than
could be obtained on an arm’s-length basis from unrelated third parties, in
each case, without the prior consent of the Administrative Agent (with the
approval of the Required Lenders).

 

SECTION 6.12.  Permitted Indebtedness.  The Borrower will not, nor will it permit any
other Obligor to, purchase, redeem, retire or otherwise acquire for value, or
set apart any money for a sinking, defeasance or other analogous fund for the purchase,
redemption, retirement or other acquisition of, or make any voluntary payment
or prepayment of the principal of or interest on, or any other amount owing in
respect of, any Permitted Indebtedness (other than the refinancing of such
Indebtedness with Indebtedness permitted under Section 6.01), except for (a)
regularly scheduled payments, prepayments or redemptions of principal and
interest in respect thereof required pursuant to the instruments evidencing
such Permitted Indebtedness, or (b) payments and prepayments thereof required
to comply with requirements of Section 2.09(c).

 

ARTICLE VII

 

EVENTS OF
DEFAULT

 

If any
of the following events (“Events of Default”) shall occur and be
continuing:

 

(a)           the
Borrower shall (i) fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the
same shall become due and payable, whether at the due date thereof or at a date
fixed for prepayment thereof or otherwise or (ii) fail to deposit any
amount into the Letter of Credit Collateral Account as required by Section 2.08(a) on
the Commitment Termination Date;

 

(b)           the
Borrower shall fail to pay any interest on any Loan or any fee or any other
amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement or under any other Loan Document, when
and as the same shall become due and payable, and such failure shall continue
unremedied for a period of five or more Business Days;

 

75

 

(c)           any
representation or warranty made (or deemed made pursuant to Section 4.02)
by or on behalf of the Borrower or any of its Subsidiaries in or in connection
with this Agreement or any other Loan Document or any amendment or modification
hereof or thereof, or in any report, certificate, financial statement or other
document furnished pursuant to or in connection with this Agreement or any
other Loan Document or any amendment or modification hereof or thereof, shall
prove to have been incorrect when made or deemed made in any material respect;

 

(d)           the
Borrower shall fail to observe or perform any covenant, condition or agreement
contained in (i) Section 5.03 (with respect to the Borrower’s
existence) or Sections 5.08(a) and (b) or in Article VI or any
Obligor shall default in the performance of any of its obligations contained in
Section 7 of the Guarantee and Security Agreement or (ii) Sections
5.01(e) and (f) or 5.02 and such failure shall continue unremedied
for a period of five or more days after notice thereof by the Administrative
Agent (given at the request of any Lender) to the Borrower;

 

(e)           a
Borrowing Base Deficiency shall occur and continue unremedied for a period of
five or more Business Days after delivery of a Borrowing Base Certificate
demonstrating such Borrowing Base Deficiency pursuant to Section 5.01(e), provided
that it shall not be an Event of Default hereunder if the Borrower shall
present the Administrative Agent with a reasonably feasible plan to enable such
Borrowing Base Deficiency to be cured within 30 Business Days (which 30-Business
Day period shall include the five Business Days permitted for delivery of such
plan), so long as such Borrowing Base Deficiency is cured within such 30-Business
Day period;

 

(f)            the
Borrower or any Obligor, as applicable, shall fail to observe or perform any
covenant, condition or agreement contained in this Agreement (other than those
specified in clause (a), (b), (d) or (e) of this Article)
or any other Loan Document and such failure shall continue unremedied for a
period of 30 or more days after notice thereof from the Administrative Agent
(given at the request of any Lender) to the Borrower;

 

(g)           the
Borrower or any of its Subsidiaries shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material
Indebtedness, when and as the same shall become due and payable, taking into
account (other than with respect to payments of principal) any applicable grace
period;

 

(h)           any
event or condition occurs that results in any Material Indebtedness becoming
due prior to its scheduled maturity or that enables or permits (with or without
the giving of notice, the lapse of time or both) the holder or holders of any
Material Indebtedness or any trustee or agent on its or their behalf to cause
any Material Indebtedness to become due, or to require the

 

76

 

prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided
that this clause (h) shall not apply to secured Indebtedness that
becomes due as a result of the voluntary sale or transfer of the property or
assets securing such Indebtedness;

 

(i)            an
involuntary proceeding shall be commenced or an involuntary petition shall be
filed seeking (i) liquidation, reorganization or other relief in respect
of the Borrower or any of its Subsidiaries or its debts, or of a substantial
part of its assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any of its Subsidiaries or for a
substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed and unstayed for a period of 60 or more
days or an order or decree approving or ordering any of the foregoing shall be
entered;

 

(j)            the
Borrower or any of its Subsidiaries shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution
of, or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (i) of this Article, (iii) apply
for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any of its
Subsidiaries or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or (vi) take
any action for the purpose of effecting any of the foregoing;

 

(k)           the
Borrower or any of its Subsidiaries shall become unable, admit in writing its
inability or fail generally to pay its debts as they become due;

 

(l)            one
or more judgments for the payment of money in an aggregate amount in excess of
$25,000,000 shall be rendered against the Borrower or any of its Subsidiaries
or any combination thereof and the same shall remain undischarged for a period
of 30 consecutive days during which execution shall not be effectively stayed,
or any action shall be legally taken by a judgment creditor to attach or levy
upon any assets of the Borrower or any of its Subsidiaries to enforce any such
judgment;

 

(m)          an
ERISA Event shall have occurred that, in the opinion of the Required Lenders,
when taken together with all other ERISA Events that have occurred, could
reasonably be expected to result in a Material Adverse Effect;

 

(n)           a
Change in Control shall occur;

 

77

 

(o)           Ares
Capital Management shall cease to be the investment advisor for the Borrower;

 

(p)           the
Liens created by the Security Documents shall, at any time with respect to
Portfolio Investments having an aggregate Value in excess of 5% of the
aggregate Value of all Portfolio Investments, not be valid and perfected (to
the extent perfection by filing, registration, recordation, possession or
control is required herein or therein) in favor of the Administrative Agent,
free and clear of all other Liens (other than Liens permitted under Section 6.02
or under the respective Security Documents);

 

(q)           except
for expiration in accordance with its terms, any of the Security Documents
shall for whatever reason be terminated or cease to be in full force and effect
in any material respect, or the enforceability thereof shall be contested by
the Borrower;

 

(r)            the
Obligors shall at any time, without the consent of the Required Lenders, (i) modify,
supplement or waive in any material respect the Investment Policies or the
Valuation Policy, (ii) fail to comply with the Valuation Policy in any
material respect or (iii) fail to comply with the Investment Policies if
the same could reasonably be expected to result in a Material Adverse Effect;
or

 

(s)           any
Designated Subsidiary shall either (i) make any dividend or other
distribution (whether in cash, securities or other property) with respect to
any shares of any class of capital stock of the Borrower, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such shares of capital stock of
the Borrower or any option, warrant or other right to acquire any such shares
of capital stock of the Borrower that, if such actions were undertaken by the
Obligors, would not be permitted under Section 6.05 or (ii) purchase,
redeem, retire or otherwise acquire for value, or set apart any money for a
sinking, defeasance or other analogous fund for the purchase, redemption,
retirement or other acquisition of, or make any voluntary payment or prepayment
of the principal of or interest on, or any other amount owing in respect of,
any Permitted Indebtedness that, if such actions were undertaken by the
Obligors, would not be permitted under Section 6.12;

 

then, and in every such
event (other than an event with respect to the Borrower described in
clause (i) or (j) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either
or both of the following actions, at the same or different times: (i) terminate
the Commitments, and thereupon the Commitments shall terminate immediately, and
(ii) declare the Loans then outstanding to be due and payable in whole (or
in part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all

 

78

 

fees and other
obligations of the Borrower accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; and in case of any event with
respect to the Borrower described in clause (i) or (j) of this
Article, the Commitments shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
other obligations of the Borrower accrued hereunder, shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.

 

In the
event that the Loans shall be declared, or shall become, due and payable
pursuant to the immediately preceding paragraph then, upon notice from the
Administrative Agent or Lenders with LC Exposure representing more than
50% of the total LC Exposure demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall immediately deposit into the
Letter of Credit Collateral Account cash in an amount equal to the
LC Exposure as of such date plus any accrued and unpaid interest
thereon; provided that the obligation to deposit such cash shall become
effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to the Borrower described in clause (i) or (j)
of this Article.

 

ARTICLE VIII

 

THE
ADMINISTRATIVE AGENT

 

Each
of the Lenders and the Issuing Bank hereby irrevocably appoints the Administrative
Agent as its agent hereunder and under the other Loan Documents and authorizes
the Administrative Agent to take such actions on its behalf and to exercise
such powers as are delegated to the Administrative Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental
thereto.

 

The
Person serving as the Administrative Agent hereunder shall have the same rights
and powers in its capacity as a Lender as any other Lender and may exercise the
same as though it were not the Administrative Agent, and such Person and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Borrower or any Subsidiary or other Affiliate thereof
as if it were not the Administrative Agent hereunder.

 

The
Administrative Agent shall not have any duties or obligations except those
expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to
take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated hereby or by the other
Loan Documents that the Administrative Agent is required to exercise in writing
by the Required Lenders, and (c) except as

 

79

 

expressly set forth herein and in the other Loan Documents, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Borrower or
any of its Subsidiaries that is communicated to or obtained by the bank serving
as Administrative Agent or any of its Affiliates in any capacity.  The Administrative Agent shall not be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders or in the absence of its own gross negligence or willful
misconduct.  The Administrative Agent
shall be deemed not to have knowledge of any Default unless and until written
notice thereof is given to the Administrative Agent by the Borrower or a
Lender, and the Administrative Agent shall not be responsible for or have any
duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement or any other Loan
Document, (ii) the contents of any certificate, report or other document
delivered hereunder or thereunder or in connection herewith or therewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein or therein, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Loan Document or any
other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Article IV or elsewhere herein or therein, other
than to confirm receipt of items expressly required to be delivered to the
Administrative Agent.

 

The
Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing (including any electronic
message, Internet or intranet website posting or other distribution) believed
by it to be genuine and to have been signed or sent by the proper Person.  The Administrative Agent also may rely upon
any statement made to it orally or by telephone and believed by it to be made
by the proper Person, and shall not incur any liability for relying
thereon.  The Administrative Agent may
consult with legal counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.

 

The
Administrative Agent may perform any and all its duties and exercise its rights
and powers by or through any one or more sub-agents appointed by the
Administrative Agent.  The Administrative
Agent and any such sub-agent may perform any and all its duties and exercise
its rights and powers through their respective Related Parties.  The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.

 

The
Administrative Agent may resign at any time by notifying the Lenders, the
Issuing Bank and the Borrower.  Upon any
such resignation, the Required Lenders shall have the right, with the consent
of the Borrower not to be unreasonably withheld (or, if an Event of Default has
occurred and is continuing in consultation with the Borrower), to appoint a
successor.  If no successor shall have
been so appointed by

 

80

 

the Required Lenders and shall have accepted such appointment within 30
days after the retiring Administrative Agent gives notice of its resignation,
then the retiring Administrative Agent’s resignation shall nonetheless become
effective and (1) the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder and (2) the Required Lenders
shall perform the duties of the Administrative Agent (and all payments and
communications provided to be made by, to or through the Administrative Agent
shall instead be made by or to each Lender directly) until such time as the
Required Lenders appoint a successor agent as provided for above in this
paragraph.  Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring (or retired) Administrative Agent and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder (if not already discharged therefrom as provided above in this
paragraph).  The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor.  After the Administrative
Agent’s resignation hereunder, the provisions of this Article and Section 9.03
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Administrative Agent.

 

Each
Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. 
Each Lender also acknowledges that it will, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or
based upon this Agreement, any other Loan Document or any related agreement or
any document furnished hereunder or thereunder.

 

Except
as otherwise provided in Section 9.02(b) with respect to this
Agreement, the Administrative Agent may, with the prior consent of the Required
Lenders (but not otherwise), consent to any modification, supplement or waiver
under any of the Loan Documents, provided that, without the prior
consent of each Lender, the Administrative Agent shall not (except as provided
herein or in the Security Documents) release all or substantially all of the
Collateral or otherwise terminate all or substantially all of the Liens under
any Security Document providing for collateral security, agree to additional
obligations being secured by all or substantially all of such collateral
security, alter the relative priorities of the obligations entitled to the
benefits of the Liens created under the Security Documents with respect to all
or substantially all of the Collateral, except that no such consent shall be
required, and the Administrative Agent is hereby authorized, to release any
Lien covering property that is the subject of either a disposition of property
permitted hereunder or a disposition to which the Required Lenders have
consented.

 

81

 

ARTICLE IX

 

MISCELLANEOUS

 

SECTION 9.01.  Notices; Electronic Communications

 

(a)           Notices Generally.  Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

 

(i)            if
to the Borrower, to it at 780 Third Avenue, 46th Floor, New York, NY
10017, Attention of Michael J. Arougheti, President (Telecopy No. (212) 750-1777; Telephone
No. (212) 750-7300); with a copy to Ares Management LLC, at 1999 Avenue of
the Stars, Los Angeles, CA 90067, Attention of Daniel Nguyen (Telephone No. (310)
201-4204);

 

(ii)           if
to the Administrative Agent, to JPMorgan Chase Bank, N.A., 1111 Fannin Street,
10th Floor, Houston, Texas 77002-8069, Attention of Missy Barbosa (Telecopy No. (713) 750-2223;
Telephone No. (713) 750-3570);

 

(iii)          if
to the Issuing Bank, to JPMorgan Chase Bank, N.A., Attention of Letter of
Credit Department, 10420
Highland Manor Drive, Floor 4, Tampa, FL 33610-9128, (Telecopy No. (813) 432-5162; Telephone No. (866) 632-5101);
and

 

(iv)          if
to any other Lender, to it at its address (or telecopy number) set forth in its
Administrative Questionnaire.

 

Any party hereto may
change its address or telecopy number for notices and other communications
hereunder by notice to the other parties hereto.  All notices and other communications given to
any party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt.  Notices delivered through electronic
communications to the extent provided in paragraph (b) below, shall
be effective as provided in said paragraph (b).

 

(b)           Electronic Communications.  Notices and other communications to the
Lenders and the Issuing Bank hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites)
pursuant to procedures approved by the Administrative Agent, provided
that the foregoing shall not apply to notices to any Lender or the Issuing Bank
pursuant to Section 2.05 if such Lender or the Issuing Bank, as
applicable, has notified the Administrative Agent that it is incapable of
receiving notices under such Article by electronic communication.  The Administrative Agent or the Borrower may,
in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to

 

82

 

procedures approved by it, provided that approval of such
procedures may be limited to particular notices or communications.

 

Unless
the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other
communication is not sent during the normal business hours of the recipient,
such notice or communication shall be deemed to have been sent at the opening
of business on the next business day for the recipient, and (ii) notices
or communications posted to an Internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail
address as described in the foregoing clause (i) of notification that
such notice or communication is available and identifying the website address
therefor.

 

(c)           Documents to be Delivered under
Sections 5.01 and 5.12(a).  For
so long as an IntralinksTM or equivalent website is available to each of the
Lenders hereunder, the Borrower may satisfy its obligation to deliver documents
to the Administrative Agent or the Lenders under Sections 5.01 and 5.12(a) by
delivering one hard copy thereof to the Administrative Agent and either an
electronic copy or a notice identifying the website where such information is
located for posting by the Administrative Agent on IntralinksTM or such
equivalent website, provided that the Administrative Agent shall have no
responsibility to maintain access to intralinks or an equivalent website.

 

SECTION 9.02.  Waivers; Amendments.

 

(a)           No Deemed Waivers; Remedies
Cumulative.  No failure or delay by
the Administrative Agent, the Issuing Bank or any Lender in exercising any right
or power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Administrative
Agent, the Issuing Bank and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have.  No waiver of any provision of this Agreement
or consent to any departure by the Borrower therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.  Without limiting the generality of the
foregoing, the making of a Loan or issuance of a Letter of Credit shall not be
construed as a waiver of any Default, regardless of whether the Administrative
Agent, any Lender or the Issuing Bank may have had notice or knowledge of such
Default at the time.

 

(b)           Amendments to this Agreement.  Neither this Agreement nor any provision
hereof may be waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by the Borrower and the Required Lenders or
by the

 

83

 

Borrower and the Administrative Agent with the consent of the Required
Lenders; provided that no such agreement shall

 

(i)            increase
the Commitment of any Lender without the written consent of such Lender,

 

(ii)           reduce
the principal amount of any Loan or LC Disbursement or reduce the rate of
interest thereon, or reduce any fees payable hereunder, without the written
consent of each Lender affected thereby,

 

(iii)          postpone
the scheduled date of payment of the principal amount of any Loan or
LC Disbursement, or any interest thereon, or any fees payable hereunder,
or reduce the amount of, waive or excuse any such payment, or postpone the
scheduled date of expiration of any Commitment, without the written consent of
each Lender affected thereby,

 

(iv)          change
Section 2.16(b) or (d) in a manner that would alter the pro rata
sharing of payments required thereby without the written consent of each Lender,
or

 

(v)           change
any of the provisions of this Section or the percentage in the definition
of the term “Required Lenders” or any other provision hereof specifying the
number or percentage of Lenders required to waive, amend or modify any rights
hereunder or make any determination or grant any consent hereunder, without the
written consent of each Lender;

 

provided
further that (x) no such agreement shall amend, modify or otherwise
affect the rights or duties of the Administrative Agent, the Issuing Bank
hereunder without the prior written consent of the Administrative Agent, the
Issuing Bank, as the case may be and (y) the consent of Lenders holding
not less than two-thirds of the Revolving Credit Exposure and unused
Commitments will be required (A) for any adverse change affecting the
provisions of this Agreement relating to the Borrowing Base (including the
definitions used therein), or the provisions of Section 5.12(c)(ii), and (B) for
any release of Collateral other than for fair value or as otherwise permitted
hereunder or under the other Loan Documents.

 

For
purposes of this Section, the “scheduled date of payment” of any amount shall
refer to the date of payment of such amount specified in this Agreement, and
shall not refer to a date or other event specified for the mandatory or
optional prepayment of such amount.  In
addition, whenever a waiver, amendment or modification requires the consent of
a Lender “affected” thereby, such waiver, amendment or modification shall, upon
consent of such Lender, become effective as to such Lender whether or not it
becomes effective as to any other Lender, so long as the Required Lenders
consent to such waiver, amendment or modification as provided above.

 

84

 

(c)           Amendments to Security Documents.  No Security Document nor any provision
thereof may be waived, amended or modified, nor may the Liens thereof be spread
to secure any additional obligations (excluding any increase in the Loans and
Letters of Credit hereunder pursuant to a Commitment Increase under Section 2.07(e))
except pursuant to an agreement or agreements in writing entered into by the
Borrower, and by the Administrative Agent with the consent of the Required
Lenders; provided that, (i) without the written consent of each
Lender, no such agreement shall release all or substantially all of the
Obligors from their respective obligations under the Security Documents and (ii) without
the written consent of each Lender, no such agreement shall release all or substantially
all of the collateral security or otherwise terminate all or substantially all
of the Liens under the Security Documents, alter the relative priorities of the
obligations entitled to the Liens created under the Security Documents (except
in connection with securing additional obligations equally and ratably with the
Loans and other obligations hereunder) with respect to all or substantially all
of the collateral security provided thereby, or release all or substantially
all of the guarantors under the Guarantee and Security Agreement from their
guarantee obligations thereunder, except that no such consent shall be
required, and the Administrative Agent is hereby authorized (and so agrees with
the Borrower) to direct the Administrative Agent under the Guarantee and
Security Agreement, to release any Lien covering property (and to release any
such guarantor) that is the subject of either a disposition of property
permitted hereunder or a disposition to which the Required Lenders have
consented.

 

SECTION 9.03.  Expenses; Indemnity; Damage Waiver.

 

(a)           Costs and Expenses.  The Borrower shall pay (i) all
reasonable and documented out-of-pocket expenses incurred by the Administrative
Agent and its Affiliates, including the reasonable fees, charges and disbursements
of counsel for the Administrative Agent, in connection with the syndication of
the credit facilities provided for herein, the preparation and administration
of this Agreement and the other Loan Documents or any amendments, modifications
or waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), subject to any limitation
previously agreed in writing, (ii) all reasonable and documented out-of-pocket
expenses incurred by the Issuing Bank in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or any demand for
payment thereunder, (iii) all documented out-of-pocket expenses incurred
by the Administrative Agent, the Issuing Bank or any Lender, including the
fees, charges and disbursements of any counsel for the Administrative Agent,
the Issuing Bank or any Lender, in connection with the enforcement or
protection of its rights in connection with this Agreement and the other Loan
Documents, including its rights under this Section, or in connection with the
Loans made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect thereof and (iv) and all costs, expenses, taxes,
assessments and other charges incurred in connection with any filing,
registration, recording or perfection of any security interest contemplated by
any Security Document or any other document referred to therein.

 

85

 

(b)           Indemnification by the Borrower.  The Borrower shall indemnify the
Administrative Agent, the Issuing Bank and each Lender, and each Related Party
of any of the foregoing Persons (each such Person being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses (other than Taxes or Other Taxes
which shall only be indemnified by the Borrower to the extent provided in Section 2.15),
including the fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Agreement or any agreement or instrument contemplated hereby, the performance
by the parties hereto of their respective obligations hereunder or the
consummation of the Transactions or any other transactions contemplated hereby,
(ii) any Loan or Letter of Credit or the use of the proceeds therefrom
(including any refusal by the Issuing Bank to honor a demand for payment under
a Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit) or (iii) any
actual or prospective claim, litigation, investigation or proceeding relating
to any of the foregoing, whether based on contract, tort or any other theory
and regardless of whether any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from (i) the willful misconduct or gross
negligence of such Indemnitee or (ii) a claim brought by the Borrower or
any Obligor against such Indemnitee for breach in bad faith of such Indemnitee’s
obligations under this Agreement or the other Loan Documents, if the Borrower
or such Obligor has obtained a final and nonappealable judgment in its favor on
such claim as determined by a court of competent jurisdiction.

 

The
Borrower shall not be liable to any Indemnitee for any special, indirect,
consequential or punitive damages arising out of, in connection with, or as a
result of the Transactions asserted by an Indemnitee against the Borrower or
any other Obligor, provided that the foregoing limitation shall not be deemed
to impair or affect the Obligations of the Borrower under the preceding
provisions of this subsection.

 

(c)           Reimbursement by Lenders.  To the extent that the Borrower fails to pay
any amount required to be paid by it to the Administrative Agent, the Issuing
Bank under paragraph (a) or (b) of this Section, each
Lender severally agrees to pay to the Administrative Agent, the Issuing Bank,
as the case may be, such Lender’s Applicable Percentage (determined as of the
time that the applicable unreimbursed expense or indemnity payment is sought)
of such unpaid amount; provided that the unreimbursed expense or indemnified
loss, claim, damage, liability or related expense, as the case may be, was
incurred by or asserted against the Administrative Agent, the Issuing Bank in
its capacity as such.

 

(d)           Waiver of Consequential Damages,
Etc.  To the extent permitted by
applicable law, the Borrower shall not assert, and hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as

 

86

 

a result of, this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or Letter of Credit or the use of the
proceeds thereof.

 

(e)           Payments.  All amounts due under this Section shall
be payable promptly after written demand therefor.

 

SECTION 9.04.  Successors and Assigns.

 

(a)           Assignments Generally.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit), except that (i) the Borrower may
not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by the Borrower without such consent shall be null and void) and (ii) no
Lender may assign or otherwise transfer its rights or obligations hereunder
except in accordance with this Section. 
Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent,
the Issuing Banks and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.

 

(b)           Assignments by Lenders.

 

(i)            Assignments Generally.  Subject to the conditions set forth in
clause (ii) below, any Lender may assign to one or more assignees all
or a portion of its rights and obligations under this Agreement (including all
or a portion of its Commitment and the Loans and LC Exposure at the time owing
to it) with the prior written consent (such consent not to be unreasonably
withheld or delayed) of:

 

(A)          the
Borrower, provided that no consent of the Borrower shall be required for an
assignment to a Lender, an Affiliate of a Lender, or, if an Event of Default
has occurred and is continuing, any other assignee; and

 

(B)           the
Administrative Agent and the Issuing Bank.

 

(ii)           Certain Conditions to Assignments.  Assignments shall be subject to the following
additional conditions:

 

(A)          except
in the case of an assignment to a Lender or an Affiliate of a Lender or an
assignment of the entire remaining amount of the assigning Lender’s Commitment
or Loans and LC Exposure, the amount of the Commitment or Loans and LC Exposure
of the assigning Lender subject to each such assignment (determined as of the
date the Assignment and Assumption with respect to such assignment is delivered
to the Administrative Agent) shall not be less than

 

87

 

U.S. $5,000,000
unless each of the Borrower and the Administrative Agent otherwise consent,
provided that no such consent of the Borrower shall be required if an Event of
Default has occurred and is continuing;

 

(B)           each
partial assignment of any Commitments or Loans and LC Exposure shall be made as
an assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement in respect of such Commitments, Loans and LC
Exposure;

 

(C)           the
parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption in substantially the form of Exhibit A
hereto, together with a processing and recordation fee of U.S. $3,500
(which fee shall not be payable in connection with an assignment to a Lender or
to an Affiliate of a Lender) (for which the Borrower and the Guarantors shall
not be obligated); and

 

(D)          the
assignee, if it shall not already be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire.

 

(iii)          Effectiveness of Assignments.  Subject to acceptance and recording thereof
pursuant to paragraph (c) of this Section, from and after the
effective date specified in each Assignment and Assumption the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Assumption, be released from
its obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.13, 2.14, 2.15 and 9.03 with
respect to facts and circumstances occurring prior to the effective date of
such assignment).  Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does
not comply with this Section 9.04 shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.

 

(c)           Maintenance of Registers by
Administrative Agent.  The
Administrative Agent, acting for this purpose as an agent of the Borrower,
shall maintain at one of its offices in New York City a copy of each Assignment
and Assumption delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitments of, and principal amount of
the Loans and LC Disbursements owing to, each Lender pursuant to the terms
hereof from time to time (the “Registers” and each individually, a “Register”).  The entries in the Registers shall be
conclusive, and the Borrower, the Administrative Agent, the Issuing Bank and
the Lenders may treat each Person whose name is recorded in the Registers
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary.  The Registers shall be available for
inspection by the Borrower,

 

88

 

the Issuing Bank and any
Lender, at any reasonable time and from time to time upon reasonable prior notice.

 

(d)           Acceptance of Assignments by
Administrative Agent.  Upon its
receipt of a duly completed Assignment and Assumption executed by an assigning
Lender and an assignee, the assignee’s completed Administrative Questionnaire
(unless the assignee shall already be a Lender hereunder), the processing and
recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of
this Section, the Administrative Agent shall accept such Assignment and
Assumption and record the information contained therein in the Register.  No assignment shall be effective for purposes
of this Agreement unless it has been recorded in the Register as provided in
this paragraph.

 

(e)           Participations.  Any Lender may, with the consent of the
Borrower (such consent not to be unreasonably withheld or delayed), sell
participations to one or more banks or other entities (a “Participant”)
in all or a portion of such Lender’s rights and obligations under this
Agreement and the other Loan Documents (including all or a portion of its
Commitments and the Loans and LC Disbursements owing to it); provided
that (i) such Lender’s obligations under this Agreement and the other Loan
Documents shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrower, the Administrative Agent, the Issuing Bank and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement and
the other Loan Documents.  Any agreement
or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement
and the other Loan Documents and to approve any amendment, modification or
waiver of any provision of this Agreement or any other Loan Document; provided
that such agreement or instrument may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, modification or
waiver described in the first proviso to Section 9.02(b) that affects
such Participant.  Subject to
paragraph (f) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.13, 2.14
and 2.15 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this
Section.  To the extent permitted by law,
each Participant also shall be entitled to the benefits of Section 9.08 as
though it were a Lender, provided such Participant agrees to be subject
to Section 2.16(d) as though it were a Lender hereunder.

 

(f)            Limitations on Rights of
Participants.  A Participant shall
not be entitled to receive any greater payment under Section 2.13, 2.14
or 2.15 than the applicable Lender would have been entitled to receive
with respect to the participation sold to such Participant, unless the sale of
the participation to such Participant is made with the Borrower’s prior written
consent.  A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.15
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.15
as though it were a Lender and in the case of a Participant claiming exemption
for portfolio interest under

 

89

 

Section 871(h) or 881(c) of the Code, the applicable
Lender shall provide the Borrower with satisfactory evidence that the
participation is in registered form and shall permit the Borrower to review
such register as reasonably needed for the Borrower to comply with its
obligations under applicable laws and regulations.

 

(g)           Certain Pledges.  Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including any such pledge or assignment to a
Federal Reserve Bank, and this Section shall not apply to any such pledge
or assignment of a security interest; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such assignee for such Lender as a
party hereto.

 

(h)           No Assignments to the Borrower or
Affiliates.  Anything in this Section to
the contrary notwithstanding, no Lender may assign or participate any interest
in any Loan or LC Exposure held by it hereunder to the Borrower or any of
its Affiliates or Subsidiaries without the prior consent of each Lender.

 

SECTION 9.05.  Survival.  All covenants, agreements, representations
and warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any
Loans and issuance of any Letters of Credit, regardless of any investigation
made by any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated.  The provisions of
Sections 2.13, 2.14, 2.15 and 9.03 and Article VIII shall survive and
remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the expiration or
termination of the Letters of Credit and the Commitments or the termination of
this Agreement or any provision hereof.

 

SECTION 9.06.  Counterparts; Integration; Effectiveness;
Electronic Execution.

 

(a)           Counterparts; Integration;
Effectiveness.  This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which
when taken together shall constitute a single contract.  This Agreement and any separate letter
agreements with respect to fees payable to the Administrative Agent constitute
the entire contract between and among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings,
oral or written, relating to the subject matter hereof.  Except as provided in Section 4.01, this
Agreement shall become effective when it shall

 

90

 

have been executed by the Administrative Agent and when the
Administrative Agent shall have received counterparts hereof which, when taken
together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. 
Delivery of an executed counterpart of a signature page to this
Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.

 

(b)           Electronic Execution of Assignments.  The words “execution,” “signed,” “signature,”
and words of like import in any Assignment and Assumption shall be deemed to
include electronic signatures or the keeping of records in electronic form,
each of which shall be of the same legal effect, validity or enforceability as
a manually executed signature or the use of a paper-based recordkeeping system,
as the case may be, to the extent and as provided for in any applicable law,
including the Federal Electronic Signatures in Global and National Commerce
Act, the New York State Electronic Signatures and Records Act, or any other
similar state laws based on the Uniform Electronic Transactions Act.

 

SECTION 9.07.  Severability.  Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

 

SECTION 9.08.  Right of Setoff.  If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of the Borrower
against any of and all the obligations of the Borrower now or hereafter
existing under this Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured.  The
rights of each Lender under this Section are in addition to other rights
and remedies (including other rights of setoff) which such Lender may have.

 

SECTION 9.09.  Governing Law; Jurisdiction; Etc.

 

(a)           Governing Law.  This Agreement shall be construed in
accordance with and governed by the law of the State of New York.

 

(b)           Submission to Jurisdiction.  The Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement, or

 

91

 

for recognition or enforcement of any judgment, and each of the parties
hereto hereby irrevocably and unconditionally agrees that all claims in respect
of any such action or proceeding may be heard and determined in such New York
State or, to the extent permitted by law, in such Federal court.  Each of the parties hereto agrees 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.  Nothing in this
Agreement shall affect any right that the Administrative Agent, the Issuing Bank
or any Lender may otherwise have to bring any action or proceeding relating to
this Agreement against the Borrower or its properties in the courts of any
jurisdiction.

 

(c)           Waiver of Venue.  The Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any court referred to in paragraph (b) of this Section.  Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

 

(d)           Service of Process.  Each party to this Agreement irrevocably
consents to service of process in the manner provided for notices in Section 9.01.  Nothing in this Agreement will affect the
right of any party to this Agreement to serve process in any other manner
permitted by law.

 

SECTION 9.10.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). 
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.

 

SECTION 9.11.  Judgment Currency.  This is an international loan transaction in
which the specification of Dollars or any Foreign Currency, as the case may be
(the “Specified Currency”), and payment in New York City or the country
of the Specified Currency, as the case may be (the “Specified Place”),
is of the essence, and the Specified Currency shall be the currency of account
in all events relating to Loans denominated in the Specified Currency.  The payment obligations of the Borrower under
this Agreement shall not be discharged or satisfied by an amount paid in
another currency or in another place, whether pursuant to a judgment or
otherwise, to the extent that the

 

92

 

amount so paid on conversion to the Specified
Currency and transfer to the Specified Place under normal banking procedures
does not yield the amount of the Specified Currency at the Specified Place due
hereunder.  If for the purpose of
obtaining judgment in any court it is necessary to convert a sum due hereunder
in the Specified Currency into another currency (the “Second Currency”),
the rate of exchange that shall be applied shall be the rate at which in
accordance with normal banking procedures the Administrative Agent could
purchase the Specified Currency with the Second Currency on the Business Day
next preceding the day on which such judgment is rendered.  The obligation of the Borrower in respect of
any such sum due from it to the Administrative Agent or any Lender hereunder or
under any other Loan Document (in this Section called an “Entitled
Person”) shall, notwithstanding the rate of exchange actually applied in
rendering such judgment, be discharged only to the extent that on the Business
Day following receipt by such Entitled Person of any sum adjudged to be due
hereunder in the Second Currency such Entitled Person may in accordance with
normal banking procedures purchase and transfer to the Specified Place the
Specified Currency with the amount of the Second Currency so adjudged to be
due; and the Borrower hereby, as a separate obligation and notwithstanding any
such judgment, agrees to indemnify such Entitled Person against, and to pay
such Entitled Person on demand, in the Specified Currency, the amount (if any)
by which the sum originally due to such Entitled Person in the Specified Currency
hereunder exceeds the amount of the Specified Currency so purchased and
transferred.

 

SECTION 9.12.  Headings.  Article and Section headings and
the Table of Contents used herein are for convenience of reference only, are
not part of this Agreement and shall not affect the construction of, or be
taken into consideration in interpreting, this Agreement.

 

SECTION 9.13.  Treatment of Certain Information;
Confidentiality.

 

(a)           Treatment of Certain Information.  The Borrower acknowledges that from time to
time financial advisory, investment banking and other services may be offered
or provided to the Borrower or one or more of its Subsidiaries (in connection
with this Agreement or otherwise) by any Lender or by one or more subsidiaries
or affiliates of such Lender and the Borrower hereby authorizes each Lender to
share any information delivered to such Lender by the Borrower and its
Subsidiaries pursuant to this Agreement, or in connection with the decision of
such Lender to enter into this Agreement, to any such subsidiary or affiliate,
it being understood that any such subsidiary or affiliate receiving such
information shall be bound by the provisions of paragraph (b) of this
Section as if it were a Lender hereunder. 
Such authorization shall survive the repayment of the Loans, the
expiration or termination of the Letters of Credit and the Commitments or the
termination of this Agreement or any provision hereof.

 

(b)           Confidentiality.  Each of the Administrative Agent, the Lenders
and the Issuing Bank agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (i) to its
Affiliates and to its and its Affiliates’ respective partners, directors,
officers, employees, agents, advisors and other representatives (it being
understood that the Persons to whom such disclosure is made

 

93

 

will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (ii) to the extent
requested by any regulatory authority purporting to have jurisdiction over it
or its Affiliates (including any self-regulatory authority), (iii) to the
extent required by applicable laws or regulations or by any subpoena or similar
legal process, (iv) to any other party hereto, (v) in connection with
the exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (vi) subject to an
agreement containing provisions substantially the same as those of this
Section, to (x) any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement or (y) any actual or prospective counterparty (or its advisors)
to any swap or derivative transaction relating to the Borrower and its
obligations, (vii) with the consent of the Borrower or (viii) to the
extent such Information (x) becomes publicly available other than as a
result of a breach of this Section or (y) becomes available to the
Administrative Agent, any Lender, the Issuing Bank or any of their respective
Affiliates on a nonconfidential basis from a source other than the Borrower.

 

For
purposes of this Section, “Information” means all information received
from the Borrower or any of its Subsidiaries relating to the Borrower or any of
its Subsidiaries or any of their respective businesses, other than any such
information that is available to the Administrative Agent, any Lender or the
Issuing Bank on a nonconfidential basis prior to disclosure by the Borrower or
any of its Subsidiaries, provided that, in the case of information
received from the Borrower or any of its Subsidiaries after the date hereof,
such information is clearly identified at the time of delivery as
confidential.  Any Person required to
maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

 

SECTION 9.14.  USA PATRIOT Act.  Each Lender hereby notifies the Borrower that
pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)), it is required to obtain,
verify and record information that identifies the Borrower, which information
includes the name and address of the Borrower and other information that will
allow such Lender to identify the Borrower in accordance with said Act.

 

94

 

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

 

 

	
   

  	
  ARES CAPITAL
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Michael Arougheti

  	
   

  
	
   

  	
   

  	
  Title: President

  

 

95

 

	
   

  	
  LENDERS

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE
  BANK, N.A.,

  individually, as Issuing Bank and as

  Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Elisabeth Schwabe

  	
   

  
	
   

  	
   

  	
  Title:   Managing Director

  

 

96

 

	
   

  	
  MERRILL LYNCH
  CAPITAL

  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  John C. Rowland

  	
   

  
	
   

  	
   

  	
  Title:   Vice President

  

 

97

 

	
   

  	
  UBS LOAN FINANCE
  LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Joselin Fernandes

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Associate
  Director Banking

  Products Services, US

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Sailoz Sikka

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Associate
  Director Banking

  Products Services, US

  
					

 

98

 

	
   

  	
  WACHOVIA BANK,
  NATIONAL

  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Raj Shah

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Director

  
					

 

99

 

	
   

  	
  SUNTRUST BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Bob Ashcom

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Director

  
					

 

100Exhibit 4.1

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933
ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SHARES NOR ANY INTEREST
THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED
UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE
UNDER THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT.

 

IN ADDITION, A PREFERRED STOCK PURCHASE AGREEMENT
DATED AS OF DECEMBER 22, 2005 (THE “PURCHASE AGREEMENT”), A COPY OF WHICH MAY BE
OBTAINED FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE, CONTAINS CERTAIN
ADDITIONAL AGREEMENTS BETWEEN THE PARTIES WITH RESPECT TO THIS WARRANT.

 

Corgenix
Medical Corporation

 

(Form of)
COMMON STOCK PURCHASE WARRANT

 

	
  Number of Shares: 5,000,000.0

  	
   

  	
  Holder: Barron Partners LP

  
	
   

  	
   

  	
  c/o Barron Capital Advisors LLC

  
	
   

  	
   

  	
   

  
	
  Original Issue Date: December 28, 2005

  	
   

  	
  Managing Partner

  
	
   

  	
   

  	
  Attn: Andrew Barron Worden

  
	
   

  	
   

  	
  730 Fifth Avenue, 9th Floor

  
	
   

  	
   

  	
   

  
	
  Expiration Date: December 28, 2010

  	
   

  	
  New York NY 10019

  
	
   

  	
   

  	
  tel 212-659-7790

  
	
   

  	
   

  	
   

  
	
  Exercise Price per Share: $              

  	
   

  	
  fax 646-607-2223

  

 

Corgenix Medical
Corporation a company organized and existing under the laws of the State of
Nevada (the “Company”), hereby certifies
that, for value received, BARRON PARTNERS LP,
or its registered assigns (the “Warrant Holder”),
is entitled, subject to the terms set forth below, to purchase from the Company
up to Five Million (5,000,000.0) shares (as adjusted from time to time as
provided in Section 7, the “Warrant Shares”)
of common stock, $.001 par value (the “Common Stock”),
of the Company at a price of                   
($      ) per Warrant Share (as adjusted from
time to time as provided in Section 7, the “Exercise
Price”), at any time and from time to time from and after the
date thereof and through and including 5:00 p.m.  New York City time on December 28, 2010
(or eighteen months after effectiveness of a Registration Statement subsequent
to the issuance hereof (such eighteen months to be extended by one month for
each 

 

 

month or portion of a
month during which a Registration Statement’s effectiveness has lapsed or been
suspended), whichever is longer) (the “Expiration Date”), and subject to the
following terms and conditions:

 

1.                                       Registration of Warrant.  The Company shall register this Warrant upon
records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of
the record Warrant Holder hereof from time to time.  The Company may deem and treat the registered
Warrant Holder of this Warrant as the absolute owner hereof for the purpose of
any exercise hereof or any distribution to the Warrant Holder, and for all
other purposes, and the Company shall not be affected by notice to the
contrary.

 

2.                                       Investment Representation.  The Warrant Holder by accepting this Warrant
represents that the Warrant Holder is acquiring this Warrant for its own
account or the account of an affiliate for investment purposes and not with the
view to any offering or distribution and that the Warrant Holder will not sell
or otherwise dispose of this Warrant or the underlying Warrant Shares in
violation of applicable securities laws. 
The Warrant Holder acknowledges that the certificates representing any
Warrant Shares will bear a legend indicating that they have not been registered
under the United States Securities Act of 1933, as amended (the “1933 Act”) and may not be sold by
the Warrant Holder except pursuant to an effective registration statement or
pursuant to an exemption from registration requirements of the 1933 Act and in
accordance with federal and state securities laws. “Person”
means an individual, partnership, firm, limited liability company, trust, joint
venture, association, corporation, or any other legal entity.

 

3.                                       Validity of Warrant and Issue of Shares.   The Company represents and warrants that
this Warrant has been duly authorized and validly issued.  The Company does not currently have enough common
shares authorized to satisfy the exercise of this Warrant.  Within 90 days after the date hereof, the
Company will call a special meeting of the shareholders of the Company to
approve an amendment to the Articles of Incorporation increasing the number of
authorized shares of common stock from the current 40,000,000 to 100,000,000
(the “Share Increase Amendment”). 
Subject to the Company complying with the preceding sentence, pending
adoption of the Share Increase Amendment, the Holder hereby covenants and
agrees that under no circumstances will it seek to exercise any of the Warrants
until March 31, 2006.

 

4.                                       Registration of Transfers and Exchange of Warrants.

 

(a)                                  Subject
to compliance with the legend set forth on the face of this Warrant, the Company
shall register the transfer of any portion of this Warrant in the Warrant
Register, upon surrender of this Warrant with the Form of Assignment
attached hereto duly completed and signed, to the Company at the office
specified in or pursuant to Section 12. 
Upon any such registration or transfer, a new warrant to purchase Common
Stock, in substantially the form of this Warrant (any such new warrant, a “New Warrant”), evidencing the
portion of this Warrant so transferred shall be issued to the transferee and a
New Warrant evidencing the remaining portion of this Warrant not so
transferred, if any, shall be issued to the transferring Warrant Holder.  The acceptance of the New Warrant by the
transferee thereof shall be deemed the acceptance of such transferee of all of
the rights and obligations of a Warrant Holder of a Warrant.

 

2

 

(b)                                 This
Warrant is exchangeable, upon the surrender hereof by the Warrant Holder to the
office of the Company specified in or pursuant to Section 12 for one or
more New Warrants, evidencing in the aggregate the right to purchase the number
of Warrant Shares which may then be purchased hereunder.  Any such New Warrant will be dated the date
of such exchange.

 

5.                                       Exercise of Warrants.

 

(a)                                  Upon
surrender of this Warrant with the Form of Election to Purchase attached
hereto duly completed and signed to the Company, at its address set forth in Section 12,
and upon payment and delivery of the Exercise Price per Warrant Share
multiplied by the number of Warrant Shares that the Warrant Holder intends to
purchase hereunder, in lawful money of the United States of America, in cash or
by certified or official bank check or checks, to the Company, all as specified
by the Warrant Holder in the Form of Election to Purchase, the Company
shall promptly (but in no event later than 7 business days after the Date of
Exercise (as defined herein)) issue or cause to be issued and cause to be
delivered to or upon the written order of the Warrant Holder and in such name
or names as the Warrant Holder may designate (subject to the restrictions on
transfer described in the legend set forth on the face of this Warrant), a
certificate for the Warrant Shares issuable upon such exercise, with such
restrictive legend as required by the 1933 Act. 
Any person so designated by the Warrant Holder to receive Warrant Shares
shall be deemed to have become holder of record of such Warrant Shares as of
the Date of Exercise of this Warrant.

 

(b)                                 A
“Date of Exercise” means the date on which the Company shall have received (i) this
Warrant (or any New Warrant, as applicable), with the Form of Election to
Purchase attached hereto (or attached to such New Warrant) appropriately
completed and duly signed, and (ii) payment of the Exercise Price for the
number of Warrant Shares so indicated by the Warrant Holder to be purchased.

 

(c)                                  This
Warrant shall be exercisable at any time and from time to time for such number
of Warrant Shares as is indicated in the attached Form of Election To Purchase.  If less than all of the Warrant Shares which
may be purchased under this Warrant are exercised at any time, the Company
shall issue or cause to be issued, at its expense, a New Warrant evidencing the
right to purchase the remaining number of Warrant Shares for which no exercise
has been evidenced by this Warrant.

 

(d)                                 (i)  Notwithstanding
anything contained herein to the contrary, but subject to Section 6, Section 5(e),
and the second sentence of Section 2 of this Warrant, the holder of this
Warrant may, at its election exercised in its sole discretion, exercise this
Warrant in whole or in part and, in lieu of making the cash payment otherwise
contemplated to be made to the Company upon such exercise in payment of the
Aggregate Exercise Price, elect instead to receive upon such exercise the “Net Number” of shares of Common Stock determined according
to the following formula (a “Cashless Exercise”):

 

Net Number = (A x (B - C))/B

 

(ii)                                  For purposes of the foregoing formula:

 

3

 

A= the total number shares with
respect to which this Warrant is then being exercised.

 

B= the last reported sale price
(as reported by Bloomberg) of the Common Stock on the trading day immediately
preceding the date of the Exercise Notice.

 

C= the Warrant Exercise Price
then in effect at the time of such exercise.

 

(e)                                  The holder of this Warrant agrees not to elect a
Cashless Exercise for a period of six (6) months. The holder of this
Warrant also agrees not to elect a Cashless Exercise so long as there is an
effective registration statement for the Warrant Shares.

 

6.                                       Maximum Exercise.  The Warrant Holder shall not be entitled to
exercise this Warrant on a Date of Exercise in connection with that number of
shares of Common Stock which would be in excess of the sum of (i) the
number of shares of Common Stock beneficially owned by the Warrant Holder and
its affiliates on an exercise date, and (ii) the number of shares of
Common Stock issuable upon the exercise of this Warrant with respect to which
the determination of this limitation is being made on an exercise date, which
would result in beneficial ownership by the Warrant Holder and its affiliates
of more than 4.9% of the outstanding shares of Common Stock on such date.  This Section 6 may be waived or amended
only with the consent of the Holder and the consent of holders of a majority of
the shares of outstanding Common Stock of the Company who are not
Affiliates.  For the purposes of the
immediately preceding sentence, the term “Affiliate” shall mean any person: (a) that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Company; or (b) who
beneficially owns (i) any shares of the Company’s Series A Convertible
Preferred Stock, (ii) the Company’s Common Stock Purchase Warrant        
or Common Stock Purchase Warrant        ,
each dated December 28, 2005, or (iii) this Warrant.  For the purposes of the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section 13(d) of
the Securities Exchange Act of 1934, as amended, and Regulation 13d-3
thereunder.

 

7.                                       Adjustment of Exercise Price and Number of Shares.  The character of the shares of stock or other
securities at the time issuable upon exercise of this Warrant and the Exercise
Price therefore, are subject to adjustment upon the occurrence of the following
events, and all such adjustments shall be cumulative:

 

(a)                                  Adjustment for Stock Splits, Stock Dividends, Recapitalizations, Etc.  The Exercise Price of this Warrant and the
number of shares of Common Stock or other securities at the time issuable upon
exercise of this Warrant shall be appropriately adjusted to reflect any stock
dividend, stock split, combination of shares, reclassification,
recapitalization or other similar event affecting the number of outstanding
shares of stock or securities.

 

(b)                                 Adjustment for Reorganization, Consolidation, Merger, Etc.  In case of any consolidation or merger of the
Company with or into any other corporation, entity or person, or any other
corporate reorganization, in which the Company shall not be the continuing or
surviving entity of such consolidation, merger or reorganization (any such
transaction being hereinafter referred to as a “Reorganization”), then,
in each case, the holder of this Warrant, on 

 

4

 

exercise hereof at any time after the consummation or
effective date of such Reorganization (the “Effective
Date”), shall receive, in lieu of the shares of stock or other
securities at any time issuable upon the exercise of the Warrant issuable on
such exercise prior to the Effective Date, the stock and other securities and
property (including cash) to which such holder would have been entitled upon
the Effective Date if such holder had exercised this Warrant immediately prior
thereto (all subject to further adjustment as provided in this Warrant).

 

(c)                                  Certificate as to Adjustments.  In case of any adjustment or readjustment in
the price or kind of securities issuable on the exercise of this Warrant, the
Company will promptly give written notice thereof to the holder of this Warrant
in the form of a certificate, certified and confirmed by the Board of Directors
of the Company, setting forth such adjustment or readjustment and showing in
reasonable detail the facts upon which such adjustment or readjustment is
based.

 

(d)                                 The Company sells, grants or issues any shares, options, warrants, or
any instrument convertible into shares or equity in any form below the exercise
price per share of the warrant.  If
the Company, at any time while this Warrant is outstanding, shall issue any
additional shares of Common Stock (“Additional Shares”) (otherwise than as
provided in the foregoing subsections (a) and (b) of this Section 7),
to a party other than as contemplated in the Preferred Stock Purchase Agreement
between the Warrant Holder and the Company dated the date hereof at a price per
share that is less than the then current Exercise Price then in effect, or
without consideration, then the shares issuable upon exercise of this Warrant
shall be adjusted, as of the opening of business on the date of such issuance,
to that number determined by multiplying the shares issuable upon exercise of
this Warrant immediately prior thereto by a fraction:

 

(i)                                     the
numerator of which shall be equal to the number of shares of Common Stock
outstanding immediately after the issuance of such Additional Shares, and

 

(ii)                                  the
denominator of which shall be equal to the sum of (A) the number of shares
of Common Stock outstanding immediately prior to the issuance of such
Additional Shares plus (B) a number equal to the quotient obtained by
dividing (x) an amount equal to the aggregate consideration received by
the Company for the Additional Shares so issued by (y) the then current
Exercise Price.

 

In the event of an
adjustment to the number of shares the Exercise Price shall be adjusted to a
price equal to (a) the total number of shares issuable under this Warrant
prior to this adjustment being made under this Section 7(d) multiplied
by the Exercise Price then in effect, divided by (b) the number of shares
issuable upon exercise of this Warrant as adjusted under this Section 7(d)

 

The provisions of this
subsection (d) shall not apply under any of the circumstances for
which an adjustment is provided in subsections (a) or (b) of this Section 7.  No adjustment of the shares issuable upon
exercise of this Warrant shall be made under this subsection upon the
issuance of any Additional Shares which are issued pursuant to any Common Stock
Equivalent (defined below) if upon the issuance of such Common Stock Equivalent
any adjustment shall have been made pursuant to subsection (e) of
this Section 7.

 

5

 

(e)                                  If
the Company shall, at any time while this Warrant is outstanding, issue any
convertible security, warrant, option or other right to purchase Additional
Shares (“Common Stock Equivalents”) and the price per share for which
Additional Shares may be issuable shall be less than the Exercise Price then in
effect, then the shares issuable upon exercise of this Warrant shall be
adjusted upon each such issuance or amendment as provided in subsection (d) of
this Section 7 on the basis that (i) the maximum number of Additional
Shares issuable pursuant to all such Common Stock Equivalents shall be deemed
to have been issued (whether or not such Common Stock Equivalents are actually
then exercisable, convertible or exchangeable in whole or in part) as of the
earlier of (A) the date on which the Company shall enter into a firm
contract for the issuance of such Common Stock Equivalent, or (B) the date
of actual issuance of such Common Stock Equivalent, and (ii) the aggregate
consideration received for such maximum number of Additional Shares shall be
deemed to be consideration received by the Company for the issuance of such
Additional Shares pursuant to such Common Stock Equivalent.  Notwithstanding anything to the contrary set
forth in this subsection, no adjustment of the Shares issuable upon exercise of
this Warrant shall be made as a result of or in connection with any Exempt
Issuance as defined in that certain Preferred Stock Purchase Agreement of even
date herewith between the Company and the Warrant Holder.

 

(i)                                     The
consideration received by the Company upon an issuance of Additional Shares or
Common Stock Equivalents shall be deemed to be the following:  To the extent that any Additional Shares or
any Common Stock Equivalents shall be issued for a cash consideration, the
consideration received by the Company therefor, or, if such Additional Shares
or Common Stock Equivalents are offered by the Company for subscription, the
subscription price, or, if such Additional Shares or Common Stock Equivalents
are sold to underwriters or dealers for public offering without a subscription
offering, the initial public offering price, in any such case excluding any
amounts paid or receivable for accrued interest or accrued dividends and
without deduction of any compensation, discounts, commissions, or expenses paid
or incurred by the Company for or in connection with the underwriting thereof
or otherwise in connection with the issue thereof.  The consideration for any Additional Shares
issuable pursuant to any Common Stock Equivalents shall be the consideration
received by the Company for issuing such Common Stock Equivalents, plus the
additional consideration payable to the Company upon the exercise, conversion
or exchange of such Common Stock Equivalents. 
In case of the issuance at any time of any Additional Shares or Common
Stock Equivalents in payment or satisfaction of any dividend upon any class of
capital stock other than common stock, the Company shall be deemed to have
received for such Additional Shares or Common Stock Equivalents consideration
equal to the amount of such dividend so paid or satisfied.  In any case in which the consideration to be
received or paid shall be other than cash, the board of directors shall
determine in good faith the fair market value of such consideration and
promptly notify the Warrant Holder of its determination of the fair market
value of such consideration prior to payment or accepting receipt thereof.

 

(ii)                                  Upon
the expiration or termination of the right to convert, exchange or exercise any
Common Stock Equivalent, the issuance of which effected an adjustment pursuant
to this Section 7, if such Common Stock Equivalent shall not have been
converted, exercised or exchanged in its entirety, the number of shares of
common stock deemed to be issued and outstanding by reason of the fact that
they were issuable upon conversion, exchange or exercise of any such Common
Stock Equivalent shall no longer be computed as set 

 

6

 

forth above, and the Shares issuable upon exercise of
this Warrant shall forthwith be readjusted and thereafter be the number which
it would have been (but reflecting any other adjustments in the Shares issuable
upon exercise of this Warrant made pursuant to the provisions of this Section 7
after the issuance of such Common Stock Equivalent) had the adjustment of the
Shares issuable upon exercise of this Warrant been made in accordance with the
issuance or sale of the number of Additional Shares actually issued upon
conversion, exchange or issuance of such Common Stock Equivalent and thereupon
only the number of Additional Shares actually so issued and only the
consideration actually received by the Company (computed as in clause (i) of
this subsection) shall be deemed to have been received by the Company.

 

8.                                       Fractional Shares.  The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this
Warrant.  The number of full Warrant
Shares that shall be issuable upon the exercise of this Warrant shall be
computed on the basis of the aggregate number of Warrants Shares purchasable on
exercise of this Warrant so presented. 
If any fraction of a Warrant Share would, except for the provisions of
this Section 8, be issuable on the exercise of this Warrant, the Company
shall, at its option, (i) pay an amount in cash equal to the Exercise
Price multiplied by such fraction or (ii) round the number of Warrant
Shares issuable up or down, as applicable, to the next whole number.

 

9.                                       Sale or Merger of the Company.  Upon a Change in Control, the restriction
contained in Section 6 shall immediately be released and the Warrant
Holder will have the right to exercise this Warrant concurrently with such
Change in Control event.  For purposes of
this Warrant, the term “Change in Control” shall mean a consolidation or merger
of the Company with or into another company or entity in which the Company is
not the surviving entity or the sale of all or substantially all of the assets
of the Company to another company or entity not controlled by the then existing
stockholders of the Company in a transaction or series of transactions.

 

10.                                 Notice of Intent to Sell or Merge the Company.  The Company will give Warrant Holder ten (10) business
days notice before the event of a sale of all or substantially all of the
assets of the Company or the merger or consolidation of the Company in a
transaction in which the Company is not the surviving entity.

 

11.                                 Issuance of Substitute Warrant.  In the event of a merger, consolidation,
recapitalization or reorganization of the Company or a reclassification of
Company shares of stock, which results in an adjustment to the number of shares
subject to this Warrant and/or the Exercise Price hereunder, the Company agrees
to issue to the Warrant Holder a substitute Warrant reflecting the adjusted
number of shares and/or Exercise Price upon the surrender of this Warrant to
the Company.

 

12.                                 Notice.  All notices and other communications
hereunder shall be in writing and shall be deemed to have been given (i) on
the date they are delivered if delivered in person; (ii) on the date
initially received if delivered by facsimile transmission followed by
registered or certified mail confirmation; (iii) on the date delivered by
an overnight courier service; or (iv) on the third business day after it
is mailed by registered or certified mail, return receipt requested with
postage and other fees prepaid as follows:

 

7

 

If to the Company:

 

Corgenix Medical Corporation

12061 Tejon Street

Westminster, Colorado 80234

Attention: Chief Financial Officer

Facsimile: (303) 453-8958

 

If to the Warrant Holder:

 

Barron Partners LP

Barron Capital Advisors
LLC,

Managing Partner

Attn: Andrew Barron
Worden

730 Fifth Avenue, 9th
Floor

New York NY 10019

Tel: 212-659-7790

 

13.                                 Miscellaneous.

 

(a)                                  This
Warrant shall be binding on and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.  This Warrant may be amended only by a writing
signed by the Company and the Warrant Holder; provided that the Company shall
not sign an amendment to this Warrant that has not been approved by the Board
of Directors of the Company and the holders of a majority of the shares of
Common Stock voting on such amendment, exclusive of shares held by officers and
directors of the Company and by the Warrant Holder.

 

(b)                                 Nothing
in this Warrant shall be construed to give to any person or corporation other
than the Company and the Warrant Holder any legal or equitable right, remedy or
cause of action under this Warrant; this Warrant shall be for the sole and
exclusive benefit of the Company and the Warrant Holder.

 

(c)                                  This
Warrant shall be governed by, construed and enforced in accordance with the internal
laws of the State of New York without regard to the principles of conflicts of
law thereof.

 

(d)                                 The
headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions
hereof.

 

(e)                                  In
case any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonably
substitute therefore, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.

 

8

 

(f)                                    The
Warrant Holder shall not, by virtue hereof, be entitled to any voting or other
rights of a shareholder of the Company, either at law or equity, and the rights
of the Warrant Holder are limited to those expressed in this Warrant.

 

[SIGNATURES
ON FOLLOWING PAGE]

 

9

 

IN WITNESS WHEREOF, the
Company has caused this Warrant to be duly executed by the authorized officer
as of the date first above stated.

 

CORGENIX MEDICAL CORPORATION, a Nevada corporation

 

 

	
  By: 

  	
  /s/ Douglass T. Simpson

  	
   

  
	
  Name: Douglass T. Simpson

  
	
  Its: Chief Executive Officer

  

 

10

 

FORM OF
ELECTION TO PURCHASE

 

(To be executed by the
Warrant Holder to exercise the right to purchase shares of Common Stock under
the foregoing Warrant)

 

To:  Corgenix Medical
Corporation:

 

In accordance with the
Warrant enclosed with this Form of Election to Purchase, the undersigned
hereby irrevocably elects to purchase                             
shares of Common Stock (“Common Stock”), $.001 par value, of Corgenix Medical
Corporation and encloses the warrant and $        
for each Warrant Share being purchased or an aggregate of $                                
in cash or certified or official bank check or checks, which sum represents the
aggregate Exercise Price (as defined in the Warrant) together with any
applicable taxes payable by the undersigned pursuant to the Warrant.

 

The undersigned requests
that certificates for the shares of Common Stock issuable upon this exercise be
issued in the name of:

 

	
   

  
	
   

  
	
   

  

(Please print name and address)

 

	
   

  

(Please insert Social
Security or Tax Identification Number)

 

If the number of shares
of Common Stock issuable upon this exercise shall not be all of the shares of
Common Stock which the undersigned is entitled to purchase in accordance with
the enclosed Warrant, the undersigned requests that a New Warrant (as defined
in the Warrant) evidencing the right to purchase the shares of Common Stock not
issuable pursuant to the exercise evidenced hereby be issued in the name of and
delivered to:

 

	
   

  
	
   

  
	
   

  

(Please print name and
address)

 

	
  Dated:

  	
   

  	
  Name of Warrant Holder:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Print)

  	
   

  
	
   

  	
   

  	
  (By:)

  	
   

  
	
   

  	
   

  	
  (Name:)

  	
   

  
	
   

  	
   

  	
  (Title:)

  	
   

  
	
   

  	
   

  	
  Signature must conform in all respects to name of
  Warrant Holder as specified on the face of the Warrant

  
							

 

11

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