Document:

Exhibit 10.3

 

EXECUTION COPY

 

AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT

 

among

 

ARES CAPITAL CP FUNDING HOLDINGS LLC,

 

as the Purchaser

 

and

 

ARES CAPITAL CORPORATION,

 

as the Seller

 

 

Dated as of January 22,
2010

 

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  I.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 1.1.

  	
  General

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 1.2.

  	
  Specific Terms

  	
  2

  
	
   

  	
   

  	
   

  
	
  Section 1.3.

  	
  Other Terms

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 1.4.

  	
  Computation of Time Periods

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 1.5.

  	
  Certain References

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II.

  	
  SALE
  AND PURCHASE OF THE ELIGIBLE LOAN ASSETS AND OTHER PORTFOLIO ASSETS

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 2.1.

  	
  Sale and Purchase of the Eligible Loan Assets and
  the Other Portfolio Assets

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 2.2.

  	
  Purchase Price

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 2.3.

  	
  Payment of Purchase Price

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 2.4.

  	
  Nature of the Sales

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III.

  	
  CONDITIONS
  OF SALE AND PURCHASE

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 3.1.

  	
  Conditions Precedent to Effectiveness

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 3.2.

  	
  Conditions Precedent to All Purchases

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV.

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 4.1.

  	
  Representations and Warranties of the Seller

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 4.2.

  	
  Representations and Warranties of the Seller
  Relating to the Agreement and the Sale Portfolio

  	
  22

  
	
   

  	
   

  	
   

  
	
  Section 4.3.

  	
  Representations and Warranties of the Purchaser

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  V.

  	
  COVENANTS
  OF THE SELLER

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 5.1.

  	
  Protection of Title of the Purchaser

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 5.2.

  	
  Affirmative Covenants of the Seller

  	
  28

  
	
   

  	
   

  	
   

  
	
  Section 5.3.

  	
  Negative Covenants of the Seller

  	
  33

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VI.

  	
  REPURCHASES
  AND SUBSTITUTION BY THE SELLER

  	
  35

  
	
   

  	
   

  	
   

  
	
  Section 6.1.

  	
  Repurchase of Loan Assets

  	
  35

  
	
   

  	
   

  	
   

  
	
  Section 6.2.

  	
  Substitution of Loan Assets

  	
  35

  
	
   

  	
   

  	
   

  
	
  Section 6.3.

  	
  Repurchase Limitations

  	
  37

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII.

  	
  ADDITIONAL RIGHTS AND
  OBLIGATIONS IN RESPECT OF THE SALE PORTFOLIO

  	
  37

  

 

i

 

TABLE OF
CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 7.1.

  	
  Rights of the Purchaser

  	
  37

  
	
   

  	
   

  	
   

  
	
  Section 7.2.

  	
  Rights With Respect to Loan Asset Files

  	
  38

  
	
   

  	
   

  	
   

  
	
  Section 7.3.

  	
  Notice to Trustee, Agent and Note Purchaser

  	
  38

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII.

  	
  SELLER
  TERMINATION EVENTS

  	
  38

  
	
   

  	
   

  	
   

  
	
  Section 8.1.

  	
  Seller Termination Events

  	
  38

  
	
   

  	
   

  	
   

  
	
  Section 8.2.

  	
  Remedies

  	
  40

  
	
   

  	
   

  	
   

  
	
  Section 8.3.

  	
  Survival of Certain Provisions

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IX.

  	
  INDEMNIFICATION

  	
  41

  
	
   

  	
   

  	
   

  
	
  Section 9.1.

  	
  Indemnification by the Seller

  	
  41

  
	
   

  	
   

  	
   

  
	
  Section 9.2.

  	
  Assignment of Indemnities

  	
  44

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  X.

  	
  MISCELLANEOUS

  	
  45

  
	
   

  	
   

  	
   

  
	
  Section 10.1.

  	
  Liability
  of the Seller

  	
  45

  
	
   

  	
   

  	
   

  
	
  Section 10.2.

  	
  Limitation
  on Liability

  	
  45

  
	
   

  	
   

  	
   

  
	
  Section 10.3.

  	
  Amendments;
  Limited Agency

  	
  45

  
	
   

  	
   

  	
   

  
	
  Section 10.4.

  	
  Waivers;
  Cumulative Remedies

  	
  45

  
	
   

  	
   

  	
   

  
	
  Section 10.5.

  	
  Notices

  	
  45

  
	
   

  	
   

  	
   

  
	
  Section 10.6.

  	
  Merger
  and Integration

  	
  46

  
	
   

  	
   

  	
   

  
	
  Section 10.7.

  	
  Severability
  of Provisions

  	
  47

  
	
   

  	
   

  	
   

  
	
  Section 10.8.

  	
  GOVERNING
  LAW; JURY WAIVER

  	
  47

  
	
   

  	
   

  	
   

  
	
  Section 10.9.

  	
  Consent
  to Jurisdiction; Service of Process

  	
  47

  
	
   

  	
   

  	
   

  
	
  Section 10.10.

  	
  Costs,
  Expenses and Taxes

  	
  47

  
	
   

  	
   

  	
   

  
	
  Section 10.11.

  	
  Counterparts

  	
  48

  
	
   

  	
   

  	
   

  
	
  Section 10.12.

  	
  Bankruptcy
  Non-Petition and Limited Recourse; Claims

  	
  48

  
	
   

  	
   

  	
   

  
	
  Section 10.13.

  	
  Binding
  Effect; Assignability

  	
  48

  
	
   

  	
   

  	
   

  
	
  Section 10.14.

  	
  Waiver
  of Setoff

  	
  49

  
	
   

  	
   

  	
   

  
	
  Section 10.15.

  	
  Headings
  and Exhibits

  	
  49

  
	
   

  	
   

  	
   

  
	
  Section 10.16.

  	
  Rights
  of Inspection

  	
  49

  
	
   

  	
   

  	
   

  
	
  Section 10.17.

  	
  Subordination

  	
  50

  
	
   

  	
   

  	
   

  
	
  Section 10.18.

  	
  Breaches
  of Representations, Warranties and Covenants

  	
  50

  
	
   

  	
   

  	
   

  
	
  Section 10.19.

  	
  Confidentiality

  	
  50

  

 

ii

 

TABLE OF
CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 10.20.

  	
  Assignments of Loan Assets

  	
  50

  
	
   

  	
   

  	
   

  
	
  Section 10.21.

  	
  Assignment of Original Purchase and Sale Agreement

  	
  51

  

 

SCHEDULES AND EXHIBITS

 

	
  Schedule
  I

  	
  -

  	
  Sale
  Portfolio List

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  -

  	
  Form of
  First Tier Loan Assignment

  
	
  Exhibit B

  	
  -

  	
  Form of
  Officer’s Purchase Date Certificate

  
	
  Exhibit C

  	
  -

  	
  Form of Power of
  Attorney for Seller

  

 

iii

 

AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT

 

THIS AMENDED AND RESTATED
PURCHASE AND SALE AGREEMENT, dated as of January 22, 2010, among ARES
CAPITAL CORPORATION, a Maryland corporation, as the seller (the “Seller”)
and ARES CAPITAL CP FUNDING HOLDINGS LLC, a Delaware limited liability company,
as the purchaser (the “Purchaser”).

 

W I T N E S S E T H:

 

WHEREAS, the Seller, as
seller, and Ares Capital CP Funding LLC, as buyer, were party to that certain
Purchase and Sale Agreement, dated as of November 3, 2004 (as amended,
restated, supplemented or modified to date, the “Original Purchase and Sale
Agreement”);

 

WHEREAS, pursuant to Section 10.21
herein, Ares Capital CP Funding LLC 
assigns all of its right, title and interest in the Original Purchase
and Sale Agreement to Ares Capital CP Funding Holdings LLC, as the Purchaser hereunder,
and the parties agree that Ares Capital CP Funding LLC shall no longer be party
to this agreement;

 

WHEREAS, the parties hereto
hereby amend and restate the Original Purchase and Sale Agreement;

 

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

 

WHEREAS, it is contemplated
that the Loan Assets and Portfolio Assets Purchased hereunder may be
transferred by the Purchaser to the Borrower pursuant to the terms and
conditions of the Second Tier Purchase and Sale Agreement and Pledged by the
Borrower pursuant to the Amended and Restated Sale and Servicing Agreement (as
defined herein) and the related Transaction Documents, to the Trustee, for the
benefit of the Secured Parties; and

 

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

 

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

 

ARTICLE I.

 

DEFINITIONS

 

Section 1.1.            General.  The specific terms defined in this Article include
the plural as well as the singular. 
Words herein importing a gender include the other gender. References 

 

 

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

 

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

 

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

 

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

 

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

 

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

 

“First Tier Loan
Assignment” means (i) with respect to the Loan Assets transferred
pursuant to the Original Purchase and Sale Agreement, each “Loan Assignment”
pertaining thereto, as such term is defined in the Original Agreement and (ii) with
respect to the Loan Assets transferred to the Purchaser on or after the
Restatement Date, a First Tier Loan Assignment executed by the Seller,
substantially in the form of Exhibit A attached hereto.

 

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

 

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

 

“JPM Lien” means the
lien on the membership interests of the Purchaser created pursuant to the terms
of that certain Senior Secured Revolving Credit Agreement dated as of 

 

2

 

December 28,
2005 between the Seller, the Lenders party thereto and JPMorgan Chase Bank,
N.A., as amended, modified, waived, supplemented or restated from time to time.

 

“Loan Asset” means
any loan listed on Schedule I hereto, which shall include any loan
transferred to Ares CP Funding LLC pursuant to the Original Purchase and Sale
Agreement, as the same may be amended, supplemented, restated or replaced from
time to time.

 

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

 

“Original Loan Assets”
means all Loan Assets transferred to the Borrower pursuant to the Original
Purchase and Sale Agreement.

 

“Original Portfolio”
means all Original Loan Assets and all Portfolio Assets related thereto.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

“Purchase Date”
means, (i) with respect to each Original Loan Asset, the “Purchase Date”
for such Loan Asset under the Original Purchase and Sale Agreement and (ii) with
respect to any Loan Asset transferred to the Purchaser on or after the
Restatement Date, the meaning specified in Section 2.1(b).

 

“Purchase Price”
means, (i) with respect to each Original Loan Asset, the “Purchase Price”
for such Loan Asset under the Original Purchase and Sale Agreement and (ii) with
respect to any Loan Asset transferred to the Purchaser on or after the
Restatement Date, the meaning specified in Section 2.2.

 

“Purchaser” has the
meaning specified in the Preamble.

 

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

 

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

 

“Repurchase Price”
means, with respect to a Loan Asset to be repurchased pursuant to Article VI
hereof, an amount equal to the Purchase Price less all Principal Collections
received in respect of such Loan Asset from the Purchase Date to the date of
repurchase hereunder.

 

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

 

“Sale Portfolio” means
all right, title, and interest (whether now owned or hereafter acquired or
arising, and wherever located) of the Seller in the property identified below
in clauses (i) through (iii) and all accounts, cash and
currency, chattel paper, tangible chattel paper, electronic chattel paper,
copyrights, copyright licenses, equipment, fixtures, contract rights, general
intangibles, instruments, certificates of deposit, certificated securities,
uncertificated securities, financial assets, securities entitlements, commercial
tort claims, deposit accounts, inventory, investment property, letter-of-credit
rights, software, supporting obligations, accessions, or other property
consisting of, arising out of, or related to any of the following (in each case
excluding the Retained Interest and the Excluded Amounts):

 

4

 

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

 

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

 

(iii)          all income and Proceeds of the foregoing.

 

“Schedule I” means
the schedule of all Original Loan Assets and the Sale Portfolio that is Sold by
the Seller to the Purchaser on a Purchase Date, as supplemented on any
subsequent Purchase Date by the “Schedule I” attached to the applicable First
Tier Loan Assignment, and incorporated herein by reference, as such schedule
may be supplemented and amended from time to time pursuant to the terms hereof,
which schedule shall, together with all supplements and amendments thereto, be
included in and made part of the Loan Asset Schedule attached to the Amended
and Restated Sale and Servicing Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 1.4.            Computation
of Time Periods. Unless otherwise stated in this Agreement, in the
computation of a period of time from a specified date to later specified date,
the word “from” means “from and including” and the words “to” and “until” each
mean “to but excluding”.

 

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

 

5

 

ARTICLE
II.

 

SALE AND PURCHASE OF THE
ELIGIBLE LOAN ASSETS

AND OTHER PORTFOLIO ASSETS

 

Section 2.1.            Sale
and Purchase of the Eligible Loan Assets and the Other Portfolio Assets.  On or after the Restatement Date:

 

(a)           Subject to the terms and conditions of
this Agreement, on and after the Restatement Date, the Seller hereby agrees to (i) sell,
transfer and otherwise convey (collectively, “Sell” and any such sale,
transfer and/or other conveyance, a “Sale”), from time to time, to the
Purchaser, without recourse (except to the extent specifically provided
herein), and the Purchaser hereby agrees to purchase, all right, title and
interest of the Seller (whether now owned or hereafter acquired or arising, and
wherever located) in and to certain Sale Portfolio designated by the Seller and
(ii) transfer, or cause the deposit into, the Collection Account of all
Available Collections received by the Seller on account of any Sale Portfolio
hereunder on and after the Purchase Date with respect to such Sale Portfolio, in
each case, within two Business Days of the receipt thereof.  The Seller hereby acknowledges that each Sale
to the Purchaser hereunder is absolute and irrevocable, without reservation or
retention of any interest whatsoever by the Seller.

 

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

 

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

 

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

 

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

 

(f)            Neither the Purchaser nor any
assignee of the Purchaser (including the Borrower and the Secured Parties)
shall have any obligation or liability to any Obligor or client 

 

6

 

of the Seller (including any
obligation to perform any obligation of the Seller, including with respect to
any other related agreements) in respect of the Sale Portfolio (other than with
respect to funding obligations to Obligors pursuant to the terms of the
applicable Loan Agreement for Revolving Loan Assets and Delayed Draw Loan
Assets, as applicable). No such obligation or liability is intended to be
assumed by the Purchaser or any assignee of the Purchaser (including the
Borrower and the Secured Parties) and any such assumption is expressly
disclaimed. Without limiting the generality of the foregoing, the Sale of the
Sale Portfolio by the Seller to the Purchaser pursuant to this Agreement does
not constitute and is not intended to result in a creation or assumption by the
Purchaser or any assignee of the Purchaser (including the Borrower and the
Secured Parties), of any obligation of the Seller, as lead agent, collateral
agent or paying agent under any Agented Note.

 

(g)           In connection with each Purchase of
Sale Portfolio hereunder, the Seller shall cause to be delivered to the
Collateral Custodian (with a copy to the Agent), no later than 2:00 p.m.
one Business Day prior to the related Purchase Date, a faxed or e-mailed copy
of the duly executed original promissory notes of the Loan Assets (and, in the
case of any Noteless Loan Asset, a fully executed assignment agreement) and if
any Loan Assets are closed in escrow, a certificate (in the form of Exhibit K
to the Amended and Restated Sale and Servicing Agreement) from the closing
attorneys of such Loan Assets certifying the possession of the Required Loan
Documents; provided that,
notwithstanding the foregoing, the Seller shall cause the Loan Asset Checklist
and the Required Loan Documents to be in the possession of the Collateral
Custodian within five Business Days after the related Purchase Date.

 

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

 

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

 

(j)            In connection with each Purchase of
Sale Portfolio hereunder, the Seller hereby grants to each of the Purchaser and
its assigns, the Agent, the Note Purchaser, the Trustee, the Collateral
Custodian and the Servicer an irrevocable, non—exclusive license to use,
without royalty or payment of any kind, all software used by the Seller to
account for the Sale Portfolio, to the extent necessary to administer the Sale
Portfolio, whether such software is owned by the Seller or is owned by others
and used by the Seller under license agreements with respect thereto; provided that, should the consent of any
licensor of such software be required for the grant of the license described
herein to be effective or for the Purchaser to assign such licenses to the
Servicer or any successor, the Seller hereby agrees that upon the request of
the Purchaser or its assignees, the Agent, the Note Purchaser, the Collateral
Custodian or the 

 

7

 

Trustee,
the Seller shall use its best efforts to obtain the consent of such third—party
licensor.  The license granted hereby
shall be irrevocable until the Collection Date and shall terminate on the date
this Agreement terminates in accordance with its terms.  The Seller (i) shall take such action
reasonably requested by the Purchaser or the Agent, from time to time
hereafter, that may be necessary or appropriate to ensure that the Purchaser
and its assigns under the Second Tier Purchase and Sale Agreement and the
Amended and Restated Sale and Servicing Agreement have an enforceable ownership
or security interest, as applicable, in the Sale Portfolio Purchased by the
Purchaser as contemplated by this Agreement, and (ii) shall use its
commercially reasonable efforts to ensure that each of the Purchaser (and its
assignees), the Agent, the Note Purchaser, the Trustee, the Collateral
Custodian and the Servicer (or any successor) has an enforceable right (whether
by license or sublicense or otherwise) to use all of the computer software used
to account for the Sale Portfolio and/or to recreate the related Loan Asset
Files.

 

(k)           In connection with the Purchase by
the Purchaser of Sale Portfolio as contemplated by this Agreement, the Seller
further agrees that it shall, at its own expense, indicate clearly and
unambiguously in its computer files on or prior to each Purchase Date, and its
financial statements, that such Sale Portfolio has been purchased by the
Purchaser in accordance with this Agreement.

 

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

 

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

 

(n)           The Seller and the Purchaser each
acknowledge with respect to itself that the representations and warranties of
the Seller in Sections 4.1 and 4.2 hereof and of the Purchaser in
Section 4.3 hereof, and the covenants of the Seller in Article V
hereof, will run to and be for the benefit of the Purchaser, the Borrower and
the Trustee (on behalf of the Secured Parties), and the Purchaser, the Borrower
or the Trustee (on behalf of the Secured Parties) may enforce directly (without
joinder of the Purchaser when enforcing against the Seller), the obligations of
the Seller or the Purchaser, as applicable, with respect to breaches of such
representations, warranties and covenants as set forth in the Second Tier
Purchase and Sale Agreement or in this Agreement.

 

8

 

Section 2.2.            Purchase
Price.

 

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

 

Section 2.3.            Payment
of Purchase Price.

 

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

 

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

 

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

 

(d)           Upon the payment of the Purchase
Price for any Purchase, title to the Sale Portfolio included in such Purchase
shall vest in the Purchaser, whether or not the conditions precedent to such
Purchase and the other covenants and agreements contained herein were in fact
satisfied; provided that the
Purchaser shall not be deemed to have waived any claim it may have under this
Agreement for the failure by the Seller in fact to satisfy any such condition
precedent, covenant or agreement.

 

Section 2.4.            Nature
of the Sales.

 

(a)           It is the express intent of the parties
hereto that the Sale of the Sale Portfolio by the Seller to the Purchaser
hereunder and the transfer of the Original Loan Assets and Portfolio Assets
related thereto from the Seller to the Borrower pursuant to the Original
Purchase and Sale Agreement be, and be treated for all purposes (other than tax
and accounting purposes) as an absolute sale by the Seller (free and clear of
any Lien, security interest, charge or encumbrance other than Permitted Liens)
of such Sale Portfolio. It is, further, not the intention of the parties that
such Sale be deemed a pledge of the Sale Portfolio by the Seller to 

 

9

 

the Purchaser (or the
Borrower under the Original Purchase and Sale Agreement) to secure a debt or
other obligation of the Seller.  However,
in the event that, notwithstanding the intent of the parties, the Sale
Portfolio is held to continue to be property of the Seller, then the parties
hereto agree that:  (i) this
Agreement shall also be deemed to be a “security agreement” within the meaning
of Article 9 of the UCC; (ii) the transfer of the Sale Portfolio
(other than the Original Portfolio) provided for in this Agreement shall be
deemed to be a grant by the Seller to the Purchaser of a first priority security
interest (subject only to Permitted Liens) in all of the Seller’s right, title
and interest in and to the Sale Portfolio and all amounts payable to the
holders of the Sale Portfolio in accordance with the terms thereof and all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including, without limitation,
all amounts from time to time held or invested in the Controlled Accounts,
whether in the form of cash, instruments, securities or other property, to
secure the prompt and complete payment of a loan deemed to have been made in an
amount equal to the aggregate Purchase Price of the Sale Portfolio together
with all of the other obligations of the Seller hereunder; (iii)  the transfer
of the Original Portfolio provided for in Original Purchase and Sale Agreement
shall be deemed to be a grant by the Seller to the Borrower of a first priority
security interest (subject only to Permitted Liens) in all of the Seller’s
right, title and interest in and to the Original Portfolio and all amounts
payable to the holders of the Original Portfolio in accordance with the terms
thereof and all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, instruments, securities or other property, including,
without limitation, all amounts from time to time held or invested in the
Controlled Accounts, whether in the form of cash, instruments, securities or
other property, to secure the prompt and complete payment of a loan deemed to
have been made in an amount equal to the aggregate Purchase Price of the
Original Portfolio together with all of the other obligations of the Seller
under the Original Purchase and Sale Agreement; (iv) the possession by the
Purchaser or the Borrower (or the Collateral Custodian on behalf of the
Trustee, for the benefit of the Secured Parties) of Sale Portfolio and such
other items of property as constitute instruments, money, negotiable documents
or chattel paper shall be, subject to clause (v), for purposes of
perfecting the security interest pursuant to the UCC; and (v) acknowledgements
from Persons holding such property shall be deemed acknowledgements from
custodians, bailees or agents (as applicable) of the Purchaser or the Borrower
for the purpose of perfecting such security interest under Applicable Law.  The parties further agree in such event that
any assignment of the interest of the Purchaser pursuant to any provision
hereof shall also be deemed to be an assignment of any security interest created
pursuant to the terms of this Agreement. 
The Purchaser shall, to the extent consistent with this Agreement and
the other Transaction Documents, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
Sale Portfolio, such security interest would be deemed to be a perfected
security interest of first priority (subject only to Permitted Liens) under
Applicable Law and will be maintained as such throughout the term of this
Agreement. The Purchaser shall have, in addition to the rights and remedies
which it may have under this Agreement, all other rights and remedies provided
to a secured creditor under the UCC and other Applicable Law, which rights and
remedies shall be cumulative.

 

(b)           It is the intention of each of the
parties hereto that the Sale Portfolio Sold by the Seller to the Purchaser
pursuant to this Agreement or transferred by the Seller to the Borrower
pursuant to the Original Purchase and Sale Agreement shall constitute assets owned
by the Purchaser (or the Borrower, as applicable) and shall not be part of the
Seller’s estate in 

 

10

 

the event of the filing of a
bankruptcy petition by or against the Seller under any bankruptcy or similar
law.

 

(c)           If any such Sale of the Sale
Portfolio is deemed to be a pledge to secure a debt or other obligation of the
Seller, the Purchaser may, to secure the Purchaser’s own borrowing under the
Second Tier Purchase and Sale Agreement (to the extent that the transfer of the
Sale Portfolio thereunder is deemed to be a pledge to secure a debt or other
obligation of the Purchaser), repledge and reassign (i) all or a portion
of the Sale Portfolio pledged to the Purchaser by the Seller and with respect
to which the Purchaser has not released its security interest at the time of
such pledge and assignment, and (ii) all proceeds thereof.  Such repledge and reassignment may be made by
the Purchaser with or without a repledge and reassignment by the Purchaser of
its rights under any agreement with the Seller, and without further notice to
or acknowledgment from the Seller.

 

(d)           The Purchaser agrees to treat, and
shall cause the Seller to treat, for all purposes (other than tax and
accounting purposes), the transactions effected by this Agreement as sales of
assets to the Purchaser (or the Borrower, as applicable). The Seller agrees to
reflect in the Seller’s financial records and to include a note in the publicly
filed annual and quarterly financial statements of Ares Capital Corporation
indicating that: (i) assets related to transactions (including
transactions pursuant to the Transaction Documents) that do not meet SFAS 140
requirements for accounting sale treatment are reflected in the consolidated
balance sheet of Ares Capital Corporation as finance receivables pledged and
non-recourse, secured borrowings and (ii) those assets are owned by a
special purpose entity that is consolidated in the financial statements of Ares
Capital Corporation, and the creditors of that special purpose entity have
received ownership and/or security interests in such assets and such assets are
not intended to be available to the creditors of sellers (or any affiliate of
the sellers) of such assets to that special purpose entity.

 

ARTICLE III.

 

CONDITIONS OF SALE AND PURCHASE

 

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

 

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

 

(ii)           a certificate of the Secretary or
Assistant Secretary of the Seller, dated the Restatement Date, certifying (A) the
names and true signatures of the incumbent officers of the Seller authorized to
sign on behalf of the Seller this Agreement, the First Tier Loan Assignments
and all other documents to be executed by the Seller hereunder or in connection
herewith (on which certificate the Purchaser and its assignees may conclusively
rely until such time as the Purchaser and such assignees shall receive from the
Seller, a revised certificate meeting the requirements of this Section 3.1(ii)),
(B) 

 

11

 

that the copy of the
articles of incorporation of the Seller is a complete and correct copy and that
such articles of incorporation have not been amended, modified or supplemented
and are in full force and effect, (C) that the copy of the by-laws of the
Seller are a complete and correct copy, and that such by-laws have not been
amended, modified or supplemented and are in full force and effect, and (D) the
resolutions of the board of directors of the Seller approving and authorizing
the execution, delivery and performance by the Seller of this Agreement, the
First Tier Loan Assignments and all other documents to be executed by the
Seller hereunder or in connection herewith;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

Section 3.2.            Conditions
Precedent to All Purchases.  Each
Purchase to take place on a Purchase Date on or after the Restatement Date
hereunder shall be subject to the further conditions precedent that:

 

(a)           The following
statements shall be true:

 

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

 

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

 

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

 

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

 

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

 

(b)           The Purchaser shall have received a
duly executed and completed First Tier Loan Assignment along with a Schedule
I that is true, accurate and complete in all respects as of the related
Cut-Off Date.

 

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

 

(d)           The Seller shall have taken all steps
necessary under all Applicable Law in order to Sell to the Purchaser the Sale
Portfolio being Purchased on such Purchase Date and, upon the Sale of such Sale
Portfolio from the Seller to the Purchaser pursuant to the terms hereof, the
Purchaser will have acquired good and marketable title to (subject to Section 10.20)
and a valid and perfected ownership interest in such Sale Portfolio, free and
clear of any Lien, security interest, charge or encumbrance (other than
Permitted Liens); provided that if
such item of Sale Portfolio contains a restriction of transferability, the
applicable Loan Agreement provides that any consents necessary for future
assignments shall not be unreasonably withheld 

 

13

 

by
the applicable Obligor and/or agent, and the rights to enforce rights and
remedies in respect of the same under the applicable Loan Agreement inure to
the benefit of the holder of such Loan Asset (subject to the rights of any
applicable agent or other lenders).

 

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

 

ARTICLE IV.

 

REPRESENTATIONS AND WARRANTIES

 

Section 4.1.            Representations
and Warranties of the Seller.  The
Seller makes the following representations and warranties, on which the Purchaser
relies in acquiring the Sale Portfolio Purchased hereunder, the Borrower relies
in acquiring the Sale Portfolio under the Second Tier Purchase and Sale
Agreement and each of the Secured Parties relies upon in entering into the
Amended and Restated Sale and Servicing Agreement. As of each Purchase Date on
or after the Restatement Date, the Seller represents and warrants to the
Purchaser for the benefit of the Purchaser and each of its successors and
assigns that:

 

(a)           Organization and Good Standing.  The Seller has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of Maryland (subject to Section 5.1(f)), with all requisite
corporate power and authority to own or lease its properties and to conduct its
business as such business is presently conducted, and had at all relevant times
and now has all necessary power, authority and legal right to acquire and own
the Sale Portfolio and to Sell such Sale Portfolio to the Purchaser hereunder.

 

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

 

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

 

14

 

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

 

(e)           No Violation.  The execution, delivery and performance of
this Agreement, each First Tier Loan Assignment and all other agreements and
instruments executed and delivered or to be executed and delivered by the
Seller pursuant hereto or thereto in connection with the Sale of the Sale
Portfolio will not (i) conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse of time
or both) a default under, the Seller’s articles of incorporation or by-laws or
any contractual obligation of the Seller, (ii) result in the creation or
imposition of any Lien (other than Permitted Liens) upon any of the Seller’s
properties pursuant to the terms of any such contractual obligation, other than
this Agreement, or (iii) violate any Applicable Law.

 

(f)            No Proceedings.  There is no litigation, proceeding or
investigation pending or, to the knowledge of the Seller, threatened against
the Seller, before any Governmental Authority (i) asserting the invalidity
of this Agreement, any First Tier Loan Assignment or any other Transaction
Document to which the Seller is a party, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement, any
First Tier Loan Assignment or any other Transaction Document to which the
Seller is a party or (iii) other than the Disclosed Matters, seeking any
determination or ruling that could reasonably be expected to have Material
Adverse Effect. Since the Restatement Date, there has been no change in the
status of the Disclosed Matters (after giving effect to any update of the
Disclosed Matters in accordance with the definition thereof) that, individually
or in the aggregate, has resulted in, or materially increased the likelihood
of, a Material Adverse Effect.

 

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

 

(h)           State of Organization, Etc.  Except as permitted hereunder, the Seller’s
legal name is as set forth in this Agreement. Except as permitted hereunder,
the Seller has not changed its name since its formation; does not have
tradenames, fictitious names, assumed names or “doing business as” names (other
than names acquired in connection with the Acquisition). The chief executive
office of the Seller (and the location of the Seller’s records regarding the
Sale Portfolio (other than those delivered to the Collateral Custodian)) is at
the address of the Seller set forth in Section 10.5 hereto.  The Seller’s only jurisdiction of formation 

 

15

 

is
Maryland, and, except as permitted hereunder, the Seller has not changed its
jurisdiction of formation.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(p)           No Liens, Etc.  The Sale Portfolio to be acquired by
Purchaser hereunder is owned by the Seller free and clear of any Lien, security
interest, charge or encumbrance (subject only to Permitted Liens), and the
Seller has the full right, corporate power and lawful authority to Sell the
same and interests therein and, upon the Sale thereof hereunder, the Purchaser
will have acquired good and marketable title to (subject to Section 10.20)  and a valid and perfected ownership interest
in such Sale Portfolio, free and clear of any Lien, security 

 

16

 

interest,
charge or encumbrance (subject only to Permitted Liens); provided that if such item of Sale
Portfolio contains a restriction of transferability, the applicable Loan
Agreement provides that any consents necessary for future assignments shall not
be unreasonably withheld by the applicable Obligor and/or agent, and the rights
to enforce rights and remedies in respect of the same under the applicable Loan
Agreement inure to the benefit of the holder of such Loan Asset (subject to the
rights of any applicable agent or other lenders). No effective financing
statement reflecting the Seller or the Seller’s predecessor in interest, as a “Debtor”,
or other instrument similar in effect covering all or any part of any Sale
Portfolio Purchased hereunder is on file in any recording office, except such
as may have been filed in favor of the Trustee as “Secured Party” or “Assignee”,
in each case, for the benefit of the Secured Parties pursuant to the Amended
and Restated Sale and Servicing Agreement.

 

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

 

(r)            ERISA Compliance.  The present value of all benefits vested
under all Pension Plans does not exceed the value of the assets of the Pension
Plan allocable to such vested benefits (based on the value of such assets as of
the last annual valuation date).  No
prohibited transactions, failure to meet the minimum funding standard set forth
in Section 302(a) of ERISA and Section 412(a) of the Code
with respect to any Benefit Plan other than a Multiemployer Plan, withdrawals
or reportable events have occurred with respect to any Pension Plans that, in
the aggregate, could subject the Seller to any material tax, penalty or other
liability.  No notice of intent to
terminate a Pension Plan has been filed, nor has any Pension Plan been
terminated under Section 4041(f) of ERISA, nor has the Pension
Benefit Guaranty Corporation instituted proceedings to terminate, or appoint a
trustee to administer, a Pension Plan and no event has occurred or condition
exists that might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension
Plan.

 

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

 

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

 

17

 

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

 

(v)           Accounting.  Other than for tax and consolidated
accounting purposes, the Seller will not account for or treat (whether in
financial statements or otherwise) the transactions contemplated hereby in any
manner other than as a sale of the Sale Portfolio by the Seller to the
Purchaser (or the Borrower, as applicable).

 

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

 

(x)            Special Purpose Entity.  The Purchaser is an entity with assets and
liabilities separate and distinct from those of the Seller and any Affiliates
thereof, and the Seller hereby acknowledges that the Agent, the Note Purchaser,
the Borrower, the Trustee and the other Secured Parties are entering into the
transactions contemplated by the Amended and Restated Sale and Servicing
Agreement in reliance upon the Purchaser’s identity as a legal entity that is
separate from the Seller and from each other Affiliate of the Seller.  Therefore, from and after the date of
execution and delivery of this Agreement, the Seller shall take all reasonable
steps, including, without limitation, all steps that the Agent, the Note
Purchaser, the Borrower and the Trustee may from time to time reasonably
request, to maintain the Purchaser’s identity as a separate legal entity and to
make it manifest to third parties that the Purchaser is an entity with assets
and liabilities distinct from those of the Seller and each other Affiliate
thereof and not just a division of the Seller or any such other Affiliate
(other than for tax purposes). Without limiting the generality of the foregoing
and in addition to the other covenants set forth herein, the Seller shall take
all reasonable steps to ensure that the Purchaser has not and will not take,
refrain from taking, or fail to take (as applicable) any action described in Section 9(j) of
its operating agreement.

 

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

 

(z)            Security Interest.

 

(i)            This Agreement creates a valid and
continuing security interest (as defined in the applicable UCC) in the Sale
Portfolio in favor of the Purchaser, which security interest is prior to all
other Liens (except for Permitted Liens), and is enforceable as such against
creditors of and purchasers from the Seller;

 

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

 

18

 

(iii)          the Seller owns and has good and
marketable title to the Sale Portfolio (subject to Section 10.20)
Sold by it to the Purchaser hereunder on such Purchase Date, free and clear of
any Lien (other than Permitted Liens) of any Person;

 

(iv)          the Seller has received all consents
and approvals required by the terms of any Loan Asset, to the Sale thereof and
the granting of a security interest in the Loan Assets hereunder to the
Purchaser;

 

(v)           the Seller has caused the filing of all
appropriate financing statements in the proper filing office in the appropriate
jurisdictions under Applicable Law in order to perfect the security interest in
that portion of the Sale Portfolio in which a security interest may be
perfected by filing granted hereunder to the Purchaser;  provided
that filings in respect of real property shall not be required;

 

(vi)          other than (i) as expressly
permitted by the terms of this Agreement and the Amended and Restated Sale and
Servicing Agreement and (ii) the security interest granted to the
Purchaser, the Seller has not pledged, assigned, sold, granted a security
interest in or otherwise conveyed any of the Sale Portfolio.  The Seller has not authorized the filing of
and is not aware of any financing statements against the Seller that include a
description of collateral covering the Sale Portfolio other than any financing
statement (A) relating to the security interest granted to the Purchaser
under this Agreement, (B) relating to the closing of a Permitted Securitization
contemplated by Section 2.07(c) of the Amended and Restated Sale and
Servicing Agreement or (C) that has been terminated and/or fully and
validly assigned to the Trustee on or prior to the date hereof.  The Seller is not aware of the filing of any
judgment or tax lien filings against the Seller;

 

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

 

(viii)        other than in the case of Noteless Loan
Assets, the Seller has received, or subject to the delivery requirements herein
will receive, a written acknowledgment from the Collateral Custodian that the
Collateral Custodian, as the bailee of the Trustee, is holding the underlying
promissory notes that constitute or evidence the Loan Assets solely on behalf
of and for the Trustee, for the benefit of the Secured Parties; provided that the acknowledgement of the
Collateral Custodian set forth in Section 13.11 of the Amended and
Restated Sale and Servicing Agreement may serve as such acknowledgement;

 

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

 

19

 

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

 

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

 

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

 

(bb)         Notice to Agents and Obligors.  The Seller has directed any agent,
administrative agent or Obligor for any Loan Asset to remit all payments and
collections with respect to such Loan Asset directly to (i) the
Concentration Account (solely prior to the Account Transition Deadline) or (ii) the
Collection Account.

 

(cc)         Collections.  Prior to the Account Transition Deadline, the
Concentration Account and the Collection Account are the only accounts to which
Obligors have been instructed to send Interest Collections and Principal
Collections on the Sale Portfolio.  After
the Account Transition Deadline, the Collection Account is the only account to
which Obligors have been instructed to send Interest Collections and Principal
Collections on the Sale Portfolio. Except as contemplated by the Intercreditor
Agreement, the Seller has not granted any Person other than the Agent and the
Trustee an interest in the Concentration Account. The Seller acknowledges that
all Interest Collections and Principal Collections received by it or its
Affiliates with respect to the Sale Portfolio Purchased by the Purchaser as
contemplated by this Agreement are held and shall be held in trust for the
benefit of the Purchaser (or its assignees) until deposited into the Collection
Account as required by the Amended and Restated Sale and Servicing Agreement.

 

(dd)         Set—Off, Etc.  No Sale Portfolio has been compromised,
adjusted, extended, satisfied, subordinated, rescinded, set—off or modified by
the Seller or the Obligor thereof, and no Sale Portfolio is subject to
compromise, adjustment, extension, satisfaction, subordination, rescission, set—off,
counterclaim, defense, abatement, suspension, deferment, deduction, reduction,
termination or modification, whether arising out of transactions concerning the
Sale Portfolio or otherwise, by the Seller or the Obligor with respect thereto,
except for amendments, extensions or modifications to such Sale Portfolio
otherwise permitted under Section 6.04(a) of the Amended and Restated
Sale and Servicing Agreement and in accordance with the Credit Policy and the
Servicing Standard.

 

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

 

20

 

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

 

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

 

(hh)         Environmental. With respect to
each item of Underlying Collateral as of the Cut-Off Date for the Loan Asset
related to such Underlying Collateral, to the actual knowledge of a Responsible
Officer of the Seller (a) the related Obligor’s operations comply in all
material respects with all applicable Environmental Laws; (b) none of the
related Obligor’s operations is the subject of a Federal or state investigation
evaluating whether any remedial action, involving expenditures, is needed to
respond to a release of any Hazardous Materials into the environment; and (c) the
related Obligor does not have any material contingent liability in connection
with any release of any Hazardous Materials into the environment. As of the
Cut-Off Date for the Loan Asset related to such Underlying Collateral, the
Seller has not received any written or verbal notice of, or inquiry from any
Governmental Authority regarding, any violation, alleged violation,
non-compliance, liability or potential liability regarding environmental
matters or compliance with Environmental Laws with regard to any of the
Underlying Collateral, nor does the Seller have knowledge or reason to believe
that any such notice will be received or is being threatened.

 

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

 

(jj)           Seller Termination Event.  No event has occurred which constitutes a
Seller Termination Event and no event has occurred and is continuing which,
with the passage of time or the giving of notice, or both would constitute a
Seller Termination Event (other than as previously disclosed to the Agent as
such).

 

(kk)         Opinion.  The statements of fact in the section heading
“Assumptions” in the non-consolidation and true sale opinion (the “Non-Consolidation/True
Sale Opinion”) of Latham & Watkins LLP, dated as of the
Restatement Date are true and correct in all material respects.

 

21

 

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

 

(mm)       Representations and Warranties for
Benefit of the Purchaser’s Assignees. The Seller hereby makes each
representation and warranty contained in this Agreement and the other
Transaction Documents to which it is a party and that have been executed and
delivered on or prior to such Purchase Date to, and for the benefit of the
Purchaser (and its assignees), the Agent, the Note Purchaser and the Trustee as
if the same were set forth in full herein.

 

(nn)         Reaffirmation of Representations and
Warranties under Original Purchase and Sale Agreement. The Seller hereby
reaffirms each representation and warranty made pursuant to the Original
Purchase and Sale Agreement and represents and warrants that each such
representation and warranty was, as of its date, true and correct in all
material respects and that, immediately prior to this amendment and restatement
of this Agreement, there existed no breach of any covenant or agreement under
the Original Purchase and Sale Agreement. For the avoidance of doubt, the
Seller hereby agrees that any breach of any such representation, warranty,
covenant or agreement under the Original Purchase and Sale Agreement prior to
the Restatement Date shall be treated as a breach of a representation or
warranty under this Section 4.1.

 

It is understood and agreed
that the representations and warranties provided in this Section 4.1
shall survive (x) the Sale of the Sale Portfolio to the Purchaser and (y) any
subsequent transfer of the Sale Portfolio by the Purchaser (including a
transfer under the Second Tier Purchase and Sale Agreement and grant of a first
priority perfected security interest in, to and under the Sale Portfolio
pursuant to the Amended and Restated Sale and Servicing Agreement by the
Borrower). Upon discovery by the Seller or the Purchaser of a breach of any of
the foregoing representations and warranties, the party discovering such breach
shall give prompt written notice thereof to the other and to the Agent
immediately upon obtaining knowledge of such breach.

 

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

 

(a)           Binding Obligation, Valid Transfer
and Security Interest.  This
Agreement, together with the First Tier Loan Assignments, constitutes a valid
transfer to the Purchaser of all right, title and interest in, to and under all
Sale Portfolio, free and clear of any Lien of any Person claiming through or
under the Seller or its Affiliates, except for Permitted Liens.  If the conveyances contemplated by this
Agreement are determined to be a transfer for security, then this Agreement
constitutes a grant of a security interest in all Sale Portfolio to the 

 

22

 

Purchaser which upon the
delivery of the Required Loan Documents and the filing of the financing
statements shall be a first priority perfected security interest in all Sale
Portfolio, subject only to Permitted Liens. 
Neither the Seller nor any Person claiming through or under the Seller
shall have any claim to or interest in the Controlled Accounts; provided, if this Agreement constitutes
only a grant of a security interest in such property, then  the Seller shall have the rights in such
property as a debtor for purposes of the UCC.

 

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

 

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

 

(d)           Reaffirmation of Representations
and Warranties under Original Purchase and Sale Agreement. The Seller
hereby reaffirms each representation and warranty made pursuant to Section 4.2
of the Original Purchase and Sale Agreement and represents and warrants that
each such representation and warranty was, as of its date, true and correct in
all material respects. The Seller further represents and warrants that each
condition precedent necessary to be satisfied for the transfer of Loan Assets
pursuant to the Original Purchase and Sale Agreement were satisfied in all
material respects as of the Purchase Date for each such Loan Asset. For the
avoidance of doubt, the Seller hereby agrees that any breach of any
representation or warranty under Section 4.2 of the Original Purchase and
Sale Agreement prior to the Restatement Date shall be treated as a breach of a
representation or warranty under this Section 4.2, including,
without limitation, for purposes of the Seller’s obligation to repurchase Loan
Assets in the event of a Seller Purchase Event pursuant to Section 6.1.

 

It is understood and agreed
that the representations and warranties provided in this Section 4.2
shall survive (x) the Sale of the Sale Portfolio to the Purchaser, (y) any
subsequent transfer of the Sale Portfolio by the Purchaser (including a
transfer under the Second Tier Purchase and Sale Agreement and grant of a first
priority perfected security interest in, to and under the Sale Portfolio
pursuant to the Amended and Restated Sale and Servicing Agreement by the
Borrower) and (z) the termination of this Agreement, the Second Tier
Purchase and Sale Agreement and the Amended and Restated Sale and Servicing
Agreement.  Upon discovery by the Seller
or the Purchaser of a breach of any of the foregoing representations and
warranties, the party discovering such breach shall give prompt written notice
thereof to the other and to the Agent immediately upon obtaining knowledge of
such breach.

 

23

 

Section 4.3.            Representations
and Warranties of the Purchaser.  The
Purchaser makes the following representations and warranties, on which the
Seller relies in selling Sale Portfolio to the Purchaser hereunder.  Such representations are made as of the
execution and delivery of this Agreement, but shall survive until the
Collection Date, the Sale of Sale Portfolio hereunder, the sale of the Sale
Portfolio to the Borrower under the Second Tier Purchase and Sale Agreement,
and the grant of a security interest in such Sale Portfolio by the Borrower to
the Trustee, on behalf of the Secured Parties, under the Amended and Restated
Sale and Servicing Agreement.

 

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

 

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

 

(c)           Power and Authority; Due
Authorization; Execution and Delivery. The Purchaser has all necessary
power, authority and legal right to execute and deliver this Agreement and to
carry out the terms hereof and to acquire the Sale Portfolio; and the
execution, delivery and performance of this Agreement and all of the documents
required pursuant hereto have been duly authorized by the Purchaser by all
necessary limited liability company action.

 

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

 

(e)           Binding Obligation.  This Agreement constitutes a legal, valid and
binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms, subject, as to enforceability, to applicable
Bankruptcy Laws and general principles of equity.

 

(f)            No Violation.  The consummation of the transactions
contemplated by this Agreement, each First Tier Loan Assignment and the other
Transaction Documents to which it is a party and the fulfillment of the terms
hereof and thereof will not (i) conflict with, result in any breach of any
of the terms and provisions of, or constitute (with or without notice or lapse
of time or both) a default under, the Purchaser’s certificate of formation,
operating agreement or any contractual obligation of the Purchaser, (ii) result
in the creation or imposition 

 

24

 

of any Lien (other than
Permitted Liens) upon any of the Purchaser’s properties pursuant to the terms
of any such contractual obligation, other than this Agreement, or (iii) violate
any Applicable Law.

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE V.

COVENANTS OF THE SELLER

 

Section 5.1.            Protection
of Title of the Purchaser.

 

(a)           On or prior to the Restatement Date,
the Seller shall have filed or caused to be filed UCC-1 financing statements
(or, if applicable, amendments thereto), naming the Seller as “Debtor/Seller”,
naming the Purchaser as “Secured Party/Buyer”, and naming the Trustee, for the
benefit of the Secured Parties, as “Total Assignee”, and describing the Sale
Portfolio to be acquired by the Purchaser, with the office of the Secretary of
State of the state of the jurisdiction of organization of the Seller.  From time to time thereafter, the Seller
shall file such financing statements and cause to be filed such continuation
statements, all in such manner and in such places as may be required by law (or
deemed desirable by the Purchaser or any assignee thereof) to fully perfect,
preserve, maintain and protect the ownership interest of the 

 

25

 

Purchaser under this
Agreement, the ownership interest of the Borrower in the Loan Assets acquired
under the Original Purchase and Sale Agreement (and Portfolio Assets relating
thereto), the ownership interest of the Borrower under the Second Tier Purchase
and Sale Agreement, and the security interest of the Trustee for the benefit of
the Secured Parties under the Amended and Restated Sale and Servicing
Agreement, in the Sale Portfolio, as the case may be, and in the proceeds
thereof.  The Seller shall deliver (or
cause to be delivered) to the Purchaser, the Trustee, the Collateral Custodian,
the Servicer, the Note Purchaser and the Agent file-stamped copies of, or
filing receipts for, any document filed as provided above, as soon as available
following such filing. The Seller agrees that it will from time to time, at its
expense, take all actions, that the Purchaser, the Trustee or the Agent may
reasonably request in order to perfect, protect or more fully evidence the
Purchases hereunder (including the transfers by the Seller to the Borrower effected
pursuant to the Original Purchase and Sale Agreement) and the security and/or
interest granted in the Sale Portfolio, or to enable the Purchaser, the
Trustee, the Agent or the Secured Parties to exercise and enforce their rights
and remedies hereunder or under any Transaction Document.

 

(b)           On or prior to each Purchase Date
hereunder, the Seller shall take all steps necessary under all Applicable Law
in order to Sell to the Purchaser the Sale Portfolio being acquired by the
Purchaser on such Purchase Date to the Purchaser so that, upon the Sale of such
Sale Portfolio from the Seller to the Purchaser pursuant to the terms hereof on
such Purchase Date, the Purchaser will have acquired good and marketable title
to (subject to Section 10.20) and a valid and perfected ownership
interest in such Sale Portfolio, free and clear of any Lien, security interest,
charge or encumbrance or restrictions on transferability (subject only to
Permitted Liens).  On or prior to each
Purchase Date hereunder, the Seller shall take all steps required under
Applicable Law in order for the Borrower to grant to the Trustee, for the
benefit of the Secured Parties, a first priority perfected security interest
(subject only to Permitted Liens) in the Sale Portfolio being Purchased by the
Purchaser on such Purchase Date and, from time to time thereafter, the Seller
shall take all such actions as may be required by Applicable Law to fully
preserve, maintain and protect the Purchaser’s ownership interest (or the
Borrower’s ownership interest, as applicable) in, and the Trustee’s first
priority perfected security interest in (subject only to Permitted Liens), the
Sale Portfolio which have been acquired by the Purchaser hereunder or
transferred to the Borrower under the Original Purchase and Sale Agreement.

 

(c)           The Seller shall direct any agent or
administrative agent for any Sale Portfolio originated or acquired by the
Seller to remit all payments and collections with respect to such Sale
Portfolio and direct the Obligor with respect to such Sale Portfolio to remit
all such payments and collections directly to (i) solely prior to the
Account Transition Deadline, the Concentration Account or (ii) the
Collection Account. The Seller will not make any change, or permit the Servicer
to make any change, in its instructions to Obligors regarding payments to be
made to the Seller or the Servicer or payments to be made to the Concentration
Account (other than instructions to remit payments to the Collection Account),
unless the Purchaser and the Agent have consented to such change.  At all times prior to the Account Termination
Deadline, the Seller shall cause the Concentration Account to be subject to the
Intercreditor Agreement that is in full force and effect as of the date
hereof.  The Seller shall direct or cause
only funds constituting payments and collections relating to the Sale Portfolio
to be deposited into the Collection Account. In the event any payments relating
to any Sale Portfolio are remitted 

 

26

 

directly to the Seller or
any Affiliate of the Seller, the Seller will remit (or will cause all such
payments to be remitted) directly to the Collection Account within two Business
Days following receipt thereof, and, at all times prior to such remittance, the
Seller will itself hold or, if applicable, will cause such payments to be held
in trust for the exclusive benefit of the Purchaser and its assignees.  Until so deposited, all such Interest
Collections and Principal Collections shall be held in trust for the Purchaser
or its assignees by the Seller.

 

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

 

(e)           The Seller shall, not earlier than
six months and not later than three months prior to the fifth anniversary of
the date of filing of the financing statement referred to in Section 3.1
or any other financing statement filed pursuant to this Agreement or in
connection with any Purchase hereunder, unless the Collection Date shall have
occurred:

 

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

 

(ii)           deliver or cause to be delivered to
the Purchaser, the Trustee and the Agent an opinion of the counsel for Seller,
in form and substance reasonably satisfactory to the Purchaser, the Trustee and
the Agent, confirming and updating the opinion delivered pursuant to Section 3.1
with respect to perfection and otherwise to the effect that the security
interest hereunder continues to be an enforceable and perfected security
interest, subject to no other Liens of record except as specified therein, provided
herein or otherwise permitted hereunder, which opinion may contain usual and
customary assumptions, limitations and exceptions.

 

(f)            The Seller shall not (x) change
its name, move the location of its principal place of business and chief
executive office, change the offices where it keeps records concerning the Sale
Portfolio from the address set forth under its name in Section 10.5
hereto, or change the jurisdiction of its formation, or (y) move, or
consent to the Collateral Custodian moving, the Required Loan Documents and
Loan Asset Files from the location required under the Transaction Documents,
unless the Seller has given at least 30 days’ written notice to the Purchaser
and the Agent and has taken all actions required under the UCC of each relevant
jurisdiction in order to continue the first priority perfected security
interest of the Purchaser in the Sale Portfolio, together with such Opinions of
Counsel and other documents and instruments as the Agent may request in
connection therewith.

 

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

 

(h)           The Seller shall mark its master data
processing records so that, from and after the time of Sale under this
Agreement of Sale Portfolio to the Purchaser, the sale of Sale 

 

27

 

Portfolio to the Borrower
under the Second Tier Purchase and Sale Agreement (or the transfer of the
Original Portfolio from the Seller to the Borrower pursuant to the Original
Purchase and Sale Agreement, as applicable) and the grant of a security
interest in such Sale Portfolio by the Borrower to the Trustee for the benefit
of the Secured Parties under the Amended and Restated Sale and Servicing
Agreement, the Seller’s master data processing records (including archives)
that refer to such Sale Portfolio shall indicate clearly that such Sale
Portfolio has been Purchased by the Purchaser hereunder, transferred to the
Borrower under the Second Tier Purchase and Sale Agreement (or transferred from
the Seller to the Borrower pursuant to the Original Purchase and Sale
Agreement, as applicable) and Pledged by the Borrower to the Trustee, on behalf
of the Secured Parties, under the Amended and Restated Sale and Servicing
Agreement.  Indication of the Trustee’s
security interest for the benefit of the Secured Parties in the Sale Portfolio
shall be deleted from or modified on the Seller’s computer systems when, and
only when, such Sale Portfolio shall be (i) paid off by the related
Obligor, (ii) purchased or substituted by the Seller in accordance with Section 6.1
or 6.2 hereof or (iii) released by the Trustee pursuant to Section 2.16
of the Amended and Restated Sale and Servicing Agreement.

 

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

 

Section 5.2.            Affirmative
Covenants of the Seller.

 

From
the Closing Date until the Collection Date:

 

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

 

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

 

28

 

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

 

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

 

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

 

(i)            the Seller will take all other actions
necessary on its part to ensure that the Purchaser is at all times in
compliance with the criteria and the restrictions set forth in Section 9(j) of
the limited liability company operating agreement of the Purchaser;

 

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

 

(iii)          the annual financial statements of the
Seller shall disclose the effects of the Seller’s transactions in accordance
with GAAP and the annual financial statements of the Seller shall not reflect
in any way that the assets of the Purchaser, including, without limitation, the
Sale Portfolio, could be available to pay creditors of the Seller or any other
Affiliate of the Seller;

 

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

 

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

 

29

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(i)            Income Tax Liability.  Telephonic or facsimile notice within 10
Business Days (confirmed in writing within five Business Days thereafter) of
the receipt of revenue agent reports or other written proposals, determinations
or assessments of the Internal Revenue Service or any other taxing authority
which propose, determine or otherwise set forth positive adjustments (i) to
the Tax liability of the Seller or any “affiliated group” (within the meaning
of Section 1504(a)(l) of the Code) of which the Seller is a member in
an amount equal to or greater than $25,000,000 in the aggregate, or (ii) to
the Tax liability of the Borrower in an amount equal to or greater than
$1,000,000 in the aggregate.  Any such notice shall specify the nature of
the items giving rise to such adjustments and the amounts thereof;

 

30

 

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

 

(iii)          Representations and Covenants.  The Seller shall promptly, upon receipt of
notice or discovery thereof, notify the Purchaser, the Trustee, the Agent and
the Note Purchaser (i) if any representation or warranty set forth in Section 4.1
or Section 4.2 was incorrect at the time it was given or deemed to
have been given or (ii) of the breach of any covenant under Section 5.1,
Section 5.2 or Section 5.3 and at the same time deliver
to the Purchaser, the Trustee, the Agent and the Note Purchaser a written
notice setting forth in reasonable detail the nature of such facts and
circumstances. In particular, but without limiting the foregoing, the Seller
shall notify the Purchaser, the Trustee, the Agent and the Note Purchaser in
the manner set forth in the preceding sentence before any Purchase Date of any
facts or circumstances within the knowledge of the Seller which would render
any of the said representations and warranties untrue at the date when such
representations and warranties were made or deemed to have been made;

 

(iv)          ERISA.  Promptly after receiving notice of any “reportable
event” (as defined in Title IV of ERISA, other than an event for which the
reporting requirements have been waived by regulations) with respect to the
Seller (or any Affiliate thereof), a copy of such notice;

 

(v)           Proceedings. As soon as
possible and in any event within three Business Days, after the Seller receives
notice or obtains knowledge thereof, the Seller will provide the Purchaser and
the Agent with notice of any settlement of, material judgment (including a
material judgment with respect to the liability phase of a bifurcated trial) in
or commencement of any material labor controversy, material litigation,
material action, material suit or material proceeding before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting the Sale Portfolio, the Transaction Documents,
the Trustee’s, for the benefit of the Secured Parties, interest in the Sale
Portfolio, or the Borrower, the Seller, the Purchaser or any of their
Affiliates. For purposes of this Section 5.2(j), (i) any
settlement, judgment, labor controversy, litigation, action, suit or proceeding
affecting the Sale Portfolio, the Transaction Documents, the Trustee’s, for the
benefit of the Secured Parties, interest in the Sale Portfolio, or the Borrower
or the Purchaser in excess of $1,000,000 shall be deemed to be material and (ii) any
settlement, judgment, labor controversy, litigation, action, suit or proceeding
affecting the Seller or any of its Affiliates (other than the Borrower or the
Purchaser) in excess of $25,000,000 shall be deemed to be material;

 

(vi)          Material Events.  Promptly upon becoming aware thereof, of any
event or other circumstance that is reasonably likely to have a Material
Adverse Effect;

 

(vii)         Events of Default.  The Seller will provide the Purchaser, the
Agent, the Trustee and the Note Purchaser with immediate written notice of the
occurrence of each Event of Default and each Unmatured Event of Default of
which the Seller has knowledge or has received notice.  In addition, no later than two Business Days
following the Seller’s knowledge or notice of the occurrence of any Event of
Default or Unmatured Event of Default, the Seller will provide to the
Purchaser, the 

 

31

 

Trustee, the Agent and the
Note Purchaser a written statement of a Responsible Officer of the Seller
setting forth the details of such event and the action that the Seller proposes
to take with respect thereto; and

 

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

 

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

 

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

 

(m)          Annual Certificates.  On each anniversary of the Restatement Date,
the Seller shall deliver an Officer’s Certificate, in form and substance
acceptable to the Purchaser and the Agent, providing (i) a certification,
based upon a review and summary of UCC search results reasonably satisfactory
to the Purchaser and the Agent, that there is no other interest in the Sale
Portfolio perfected by filing of a UCC financing statement other than in favor
of the Purchaser and the Trustee pursuant to the terms of the Transaction
Documents and (ii) a certification, based upon a review and summary of tax
and judgment lien searches satisfactory to the Purchaser and the Agent, that
there is no other interest in the Sale Portfolio based on any tax or judgment
lien.

 

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

 

(o)           Copies of Other Information.  The Seller will deliver to the Purchaser, the
Trustee, the Agent and the Note Purchaser:

 

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

 

(ii)           promptly, from time to time, such
other information, documents, records or reports respecting the Sale Portfolio
or the conditions or operations, financial or otherwise, of the Seller
(including, without limitation, reports and notices relating to the Seller’s
actions under and compliance with ERISA and the 1940 Act) as the Purchaser, the
Agent or the Note Purchaser may from time to time request in order to 

 

32

 

perform their obligations
hereunder or under any other Transaction Document or to protect the interests
of the Purchaser under or as contemplated by this Agreement and the other
Transaction Documents.

 

Section 5.3.            Negative
Covenants of the Seller.

 

From
the Closing Date until the Collection Date:

 

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

 

(b)           Security Interests.  Except as otherwise permitted herein and in
the Amended and Restated Sale and Servicing Agreement, the Seller will not
sell, pledge, assign or transfer to any other Person, or grant, create, incur,
assume or suffer to exist any Lien on any Sale Portfolio, whether now existing
or hereafter transferred hereunder, or any interest, therein, and the Seller
will not sell, pledge, assign or suffer to exist any Lien (except for Permitted
Liens) on its interest in the Sale Portfolio. 
The Seller will promptly notify the Purchaser, the Trustee, the Note
Purchaser and the Agent of the existence of any Lien on any Sale Portfolio and
the Seller shall defend the right, title and interest of the Purchaser and the
Trustee, on behalf of the Secured Parties, in, to and under the Sale Portfolio
against all claims of third parties; provided,
that nothing in this Section 5.3(b) shall prevent or be deemed
to prohibit the Seller from suffering to exist Permitted Liens upon any of the
Sale Portfolio.

 

(c)           Mergers, Acquisitions, Sales, Etc.  The Seller will not be a party to any merger
or consolidation, or purchase or otherwise acquire any of the assets or any
stock of any class of, or any partnership or joint venture interest in, any other
Person, or sell, transfer, convey or lease substantially all of its assets, or
sell or assign with or without recourse any Sale Portfolio or any interest
therein (other than in the ordinary course of business or as permitted pursuant
to this Agreement or the Transaction Documents).

 

(d)           Transfer of Purchaser Membership
Interests.  Seller shall not
transfer, pledge, participate or otherwise encumber its membership interests in
the Purchaser without the prior written consent of the Agent and the delivery
of an acceptable (in the Agent’s reasonable discretion) non-consolidation
opinion (other than with respect to the JPM Lien).

 

(e)           Restricted Payments.  The Seller shall permit the Purchaser to make
Purchaser Restricted Junior Payments, provided
that after the occurrence of an Event of Default, the Purchaser may not make
any Purchaser Restricted Junior Payment with respect to proceeds received by
the Purchaser from the Seller with respect to claims hereunder, including, but
not limited to indemnification claims pursuant to Article IX or
repurchases pursuant to Section 6.1.

 

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

 

33

 

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

 

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

 

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

 

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

 

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

 

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

 

(m)          Deposits to Special Accounts.  Except as otherwise contemplated by the
Intercreditor Agreement, the Seller will not deposit or otherwise credit, or
cause to be so deposited or credited, to the Concentration Account cash or cash
proceeds other than Principal Collections and Interest Collections in respect
of the Sale Portfolio.

 

(n)           Changes in Payment Instructions to
Obligors.  The Seller will not add or
terminate any bank as a Concentration Account Bank or the Concentration Account
(as defined herein) or make any change, or permit the Purchaser to make any
change, in its instructions to Obligors regarding payments to be made with
respect to the Sale Portfolio to the Concentration Account Bank (other than
instructions to the Obligors to remit payments to the Collection 

 

34

 

Account), unless the Agent
has consented to such addition, termination or change (which consent shall not
be unreasonably withheld or delayed) and has received duly executed copies of
the Intercreditor Agreement (incorporating appropriate amendments), with each
new Concentration Account Bank being a party thereto.

 

ARTICLE VI.

REPURCHASES AND SUBSTITUTION BY THE SELLER

 

Section 6.1.            Repurchase
of Loan Assets.  In the event of the
occurrence of a Seller Purchase Event, the Seller will within 10 Business Days
of the discovery by or notice (from any Person) to the Seller of the Seller
Purchase Event, (i) purchase each Loan Asset hereunder which is affected
by or related to such Seller Purchase Event from the Purchaser (or the
Borrower, to the extent such Seller Purchase Event pertains to the Original
Portfolio), and the Seller shall pay to the Purchaser or directly to the
Borrower, as applicable, (by means of a deposit to the Collection Account, provided that the excess if any of the
Repurchase Price of such Loan Asset over the amount equal to the Advance Date
Assigned Value of such Loan Asset multiplied by the principal balance of such
Loan Asset (exclusive of Accreted Interest) as of the date of repurchase shall
be paid to the Purchaser as otherwise directed by the Purchaser) the Repurchase
Price of such Loan Asset as of the date of the purchase thereof from the
Purchaser or the Borrower, as applicable, or (ii) subject to the
satisfaction of the conditions in Section 6.2, substitute for such
Loan Asset, a Substitute Eligible Loan Asset. 
It is understood and agreed that the obligation of the Seller to
purchase the Loan Assets or substitute a Substitute Eligible Loan Asset for the
Loan Assets which are affected by or related to such Seller Purchase Event is
not intended to, and shall not, constitute a guaranty of the collectability or
payment of any Loan Asset which is not collected, not paid or uncollectible on
account of the insolvency, bankruptcy or financial inability to pay of the
related Obligor. Upon deposit in the Collection Account of the Repurchase Price
for any Loan Asset purchased by the Seller, the Purchaser shall (and shall
request the Trustee to), at the sole expense of the Seller,  take such steps as may be reasonably
requested by the Seller in order to Sell to the Seller all of the Purchaser’s
and the Trustee’s right, title and interest in and to such Loan Asset, without
recourse, representation or warranty of any kind, except as to the absence of
Liens, charges or encumbrances created by or arising solely as a result of
actions of the Purchaser or the Trustee. 
Such Sale shall be a sale outright, and not for security.

 

Section 6.2.            Substitution
of Loan Assets.

 

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

 

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

 

35

 

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

 

(ii)           no event has occurred, or would
result from such Substitution, which constitutes an Event of Default and no
event has occurred and is continuing, or would result from such Substitution,
which constitutes an Unmatured Event of Default or a Borrowing Base Deficiency;
provided that the Seller may
effect a Substitution as necessary to facilitate a cure of a Borrowing Base
Deficiency (and any Unmatured Event of Default arising therefrom) so long as
the Agent shall approve of such sale and immediately after giving effect to
such Substitution and any other sale or transfer substantially contemporaneous
therewith, such Borrowing Base Deficiency shall be cured or closer to being
cured;

 

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

 

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

 

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

 

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

 

(vii)         the Outstanding Balance of all Loan
Assets subject to clauses (ii), (iv) or (vi) of the definition of “Value
Adjustment Event” which were dividended from the Purchaser to the Seller in
accordance with Section 2.07(d) of the Amended and Restated Sale and
Servicing Agreement or substituted pursuant to this Section 6.2, in
each case during the 12-month period immediately preceding the proposed date of
such Substitution does not exceed 10% of the highest aggregate Outstanding
Balance of any month during such 12-month period (or such lesser number of
months as shall have elapsed as of such date);

 

(viii)        the Outstanding Balance of all Loan
Assets (other than Warranty Loan Assets), sold pursuant to Section 2.07(b) of
the Amended and Restated Sale and Servicing Agreement, sold without the consent
of the Agent in accordance with Section 2.07(c) of the Amended and
Restated Sale and Servicing Agreement (in each case, other than Loan Assets
subject to clauses (ii), (iv) or (vi) of the definition of “Value
Adjustment Event”), substituted pursuant to this Section 6.2 or
dividended from the Purchaser to the Seller in accordance with Section 2.07(d) of
the Amended and Restated 

 

36

 

Sale and Servicing Agreement
during the 12-month period immediately preceding the proposed date of
Substitution does not exceed 20% of the highest aggregate Outstanding Balance
of any month during such 12-month period (or such lesser number of months as
shall have elapsed as of such date);

 

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

 

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

 

Section 6.3.            Repurchase
Limitations.  The Seller and the
Purchaser agree that the Seller and any Affiliate of the Seller may repurchase
any Sale Portfolio only from the Purchaser in the case of a repurchase or
Substitution of any Sale Portfolio pursuant to Sections 6.1 or 6.2.

 

ARTICLE VII.

ADDITIONAL RIGHTS AND OBLIGATIONS IN

RESPECT OF THE SALE PORTFOLIO

 

Section 7.1.            Rights
of the Purchaser.

 

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

 

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

 

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

 

37

 

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

 

Section 7.2.            Rights
With Respect to Loan Asset Files.

 

At any time when a Servicer
other than Ares Capital Corporation has been designated pursuant to Section 6.01
of the Amended and Restated Sale and Servicing Agreement, the Seller shall, at
the Purchaser’s, the Trustee’s, the Collateral Custodian’s,  the Agent’s or the Note Purchaser’s request,
assemble all of the Loan Asset Files which evidence the Sale Portfolio
originated by the Seller, or which are otherwise necessary or desirable to
collect such Sale Portfolio, and make the same available to the Purchaser, the
Trustee, the Collateral Custodian, the Agent or the Note Purchaser at a place
selected by the Purchaser, the Trustee, the Collateral Custodian, the Agent,
the Note Purchaser or their designee.

 

Section 7.3.            Notice
to Trustee, Agent and Note Purchaser.

 

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

 

ARTICLE VIII.

SELLER TERMINATION EVENTS

 

Section 8.1.            Seller
Termination Events.

 

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

 

(i)            the Seller shall fail to pay (A) any
amount due pursuant to Section 6.1 in accordance with the
provisions thereof and such failure shall continue unremedied for a period of
five Business Days from the earlier of (1) the date any Responsible
Officer of the Seller obtains knowledge of such failure and (2) the date
the Seller receives notice of such failure from the Purchaser, the Servicer,
the Trustee or the Agent or (B) any other amount required to be paid by
the Seller hereunder within two Business Days of the date when due; or

 

(ii)           the Seller shall fail to observe or
perform in any material respect any covenant or agreement applicable to it
contained herein (other than as specified in paragraph (i) of this Section 8.1);
provided that no such failure
shall constitute a Seller Termination Event under this paragraph (ii) unless
such failure shall continue unremedied for a period of 30 days (if such failure
can be remedied) after the earlier to occur of (i) the date on which
written notice of such failure requiring the same to be remedied shall have been
given to the Seller by the Agent, the Servicer, the Trustee or the Purchaser
and (ii) the date on which the Seller acquires knowledge thereof; or

 

38

 

(iii)                               any
representation, warranty or certification made by the Seller in this Agreement
or in any statement, record, certificate, financial statement or other document
delivered pursuant to this Agreement shall prove to have been incorrect when
made, which has a Material Adverse Effect on the Purchaser (or the Borrower, to
the extent pertaining to any of the Original Portfolio) and continues to be
unremedied for a period of 30 days after the earlier to occur of (i) the
date on which written notice of such incorrectness requiring the same to be
remedied shall have been given to the Seller by the Agent, the Trustee or the
Purchaser and (ii) the date on which a Responsible Officer of the Seller
acquires knowledge thereof; provided
that a Seller Termination Event shall not be deemed to have occurred under this
paragraph (iii) based upon a Seller Purchase Event if the Seller
shall have complied with the provisions of Section 6.1 in respect
thereof; or

 

(iv)                              (A) a
court having jurisdiction in the premises shall enter a decree or order for
relief in respect of the Seller in an involuntary case under the Bankruptcy
Code or any other Bankruptcy Laws, which decree or order is not stayed or any
other similar relief shall be granted under any applicable federal or state law
now or hereafter in effect and shall not be stayed; (B) (1) any
involuntary case is commenced against the Seller under any Bankruptcy Law now
or hereafter in effect, a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over the Seller, or over all
or a substantial part of the property of the Seller, shall have been entered,
an interim receiver, trustee or other custodian of the Seller for all or a
substantial part of the property of the Seller is involuntarily appointed, a
warrant of attachment, execution or similar process is issued against any
substantial part of the property of the Seller, and (2) any event referred
to in clause (B)(1) above continues for 60 days unless dismissed,
bonded or disclosed; (C) the Seller shall at its request have a decree or
an order for relief entered with respect to it or commence a voluntary case
under any Bankruptcy Law now or hereafter in effect, or shall consent to the
entry of a decree or an order for relief in an involuntary case, or to the
conversion of an involuntary case to a voluntary case, under any such
Bankruptcy Law, consent to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its property; (D) the
making by the Seller of any general assignment for the benefit of creditors; (E) the
inability or failure of the Seller generally to pay its debts as such debts
become due; or (F) the board of directors of the Seller authorizes action
to approve any of the foregoing; or

 

(v)                                 the occurrence
of (A) an Event of Default set forth in Section 7.01 of the Amended
and Restated Sale and Servicing Agreement or (B) the Facility Maturity
Date; or

 

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

 

(vii)                           a notice of
Lien shall have been filed by the Pension Benefit Guaranty Corporation against
the Seller under Section 430(k) of the Code or Section 303(k) of
ERISA for a failure to make a required installment or other payment to a plan 

 

39

 

to which Section 430(k) of
the Code or Section 303(k) of ERISA applies unless there shall have
been delivered to the Agent proof of release of such Lien; or

 

(viii)                        any Lien in an
amount equal to or greater than $25,000,000 has been asserted against or
imposed on, any real or personal property of the Seller pursuant to the
Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. § 9607(1), or any equivalent or comparable state law, relating to or
arising from the costs of, response to, or investigation, remediation or
monitoring of, any environmental contamination resulting from the current or
past operations of the Seller; or

 

(ix)                                a Federal tax
notice of Lien, in an amount equal to or greater than $25,000,000, shall have
been filed against the Seller unless there shall have been delivered to the
Agent proof of release of such Lien;

 

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

 

Section 8.2.                                   Remedies.

 

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

 

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

 

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

 

40

 

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

 

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

 

Section 8.3.                                   Survival of
Certain Provisions.

 

Notwithstanding any
provision contained herein to the contrary, the Seller’s and the Purchaser’s
representations, covenants and obligations set forth in Articles IV, V,
VI, and VII, as applicable, create and constitute the continuing
obligation of the parties hereto in accordance with its terms, and shall remain
in full force and effect until the Collection Date; provided, that the rights and remedies with respect to any
breach of any representation and warranty made or deemed made by the Seller pursuant
to Articles III and IV and the provisions of Sections 6.1
and 6.2, the rights and obligations under Article VII, the
indemnification provisions of Article IX and the provisions of Sections
5.1, 10.2, 10.8, 10.9, 10.10, 10.12, 10.13,
10.14 and 10.17 shall be continuing and shall survive any
termination of this Agreement. For the avoidance of doubt, in the event that a
Seller Termination Event has occurred but has been waived unconditionally and
in its entirety in accordance with the terms hereof, such Seller Termination
Event shall be deemed to have not “occurred” and references to “after the
occurrence of a Seller Termination Event” shall be inapplicable for all
purposes in this Agreement or any of the Transaction Documents, except to the
extent otherwise provided for in the relevant waiver; provided that any waiver which by its
terms becomes effective upon certain conditions precedent being met will not be
considered a conditional waiver solely due to the existence of such conditions
precedent if all such conditions precedent to effectiveness have been
satisfied.

 

ARTICLE
IX.

INDEMNIFICATION.

 

Section 9.1.                                   Indemnification by the
Seller.

 

(a)                                  Without
limiting any other rights which the Purchaser, any assignee of the Purchaser or
any such Persons’ respective shareholders, officers, employees, agents, or 

 

41

 

Affiliates (each an “Indemnified
Party”) may have hereunder or under Applicable Law, the Seller hereby
agrees to indemnify any Indemnified Party from and against any and all costs,
expenses, losses, damages, claims, and liabilities, including attorneys’ fees
and disbursements (all of the foregoing, being collectively referred to as, “Indemnified
Amounts”), awarded against or incurred by such Indemnified Party or other
non-monetary damages of any such Indemnified Party or any of them arising out
of or as a result of this Agreement excluding, however, (a) any such
amounts resulting solely from any gross negligence, bad faith or willful
misconduct on the part of the applicable Indemnified Party or (b) Loan
Assets that are uncollectible due to the Obligor’s financial inability to pay.
Without limiting the foregoing, the Seller shall indemnify each Indemnified
Party for Indemnified Amounts relating to or resulting from any of the
following (to the extent not resulting from the conditions set forth in (a) or
(b) above):

 

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

 

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

 

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

 

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

 

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

 

42

 

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

 

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

 

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

 

(ix)                                the failure by
the Seller to comply with any term, provision or covenant contained in this
Agreement or any agreement executed in connection with this Agreement, any
Transaction Document or with any Applicable Law;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

43

 

(xvii)                      except with
respect to funds held in the Concentration Account, the commingling of Interest
Collections and Principal Collections on the Sale Portfolio at any time with
other funds of the Seller;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 9.2.                                   Assignment of Indemnities.

 

The
Seller acknowledges that, pursuant to the Second Tier Purchase and Sale
Agreement, the Purchaser shall assign its rights of indemnity hereunder to the
Borrower, and pursuant to the Amended and Restated Sale and Servicing
Agreement, the Borrower shall assign its rights of indemnity granted hereunder
to the Trustee, on behalf of the Secured Parties.  Upon such assignment, (a) the Trustee,
on behalf of the Secured Parties, shall have all rights of the Purchaser
hereunder and may in turn assign such rights, and (b) the obligations of
the Seller under this Section 9.2 shall inure to the Trustee, on
behalf of the Secured Parties.  The
Seller 

 

44

 

agrees that, upon such assignment, the Trustee, on behalf of the
Secured Parties, may enforce directly, without joinder of the Purchaser or the
Borrower, the indemnities set forth in this Article IX.

 

ARTICLE X.

MISCELLANEOUS

 

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

 

Section 10.2.                             Limitation on
Liability.  Except with
respect to any claim arising solely out of the willful misconduct or gross
negligence of the Note Purchaser, the Trustee, the Agent or any other Secured
Party, no claim may be made by the Seller or any other Person against the Note
Purchaser, the Trustee, the Agent or any other Secured Party or their respective
Affiliates, directors, officers, employees, attorneys or agents for any
special, indirect, consequential or punitive damages in respect of any claim
for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this Agreement, or any act,
omission or event occurring in connection therewith; and the Seller hereby
waives, releases and agrees not to sue upon any claim for any such damages,
whether or not accrued and whether or not known or suspected to exist in its
favor.

 

Section 10.3.                             Amendments;
Limited Agency.  Except as
provided in this Section 10.3, no amendment, waiver or other
modification of any provision of this Agreement shall be effective unless
signed by the Purchaser and the Seller and consented to in writing by the Agent
and the Trustee. The Purchaser shall provide not less than ten Business Days’
prior written notice of any such amendment to the Agent, the Trustee and the
Note Purchaser.

 

Section 10.4.                             Waivers;
Cumulative Remedies.  No failure
or delay on the part of the Purchaser (or any assignee thereof) or the Seller,
in exercising any power, right or remedy under this Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise of any such power,
right or remedy preclude any other or future exercise thereof or the exercise
of any other power, right or remedy. The powers, rights and remedies herein
provided are cumulative and not exhaustive of any powers, rights and remedies
provided by law. Any waiver of this Agreement shall be effective only in the
specific instance and for the specific purpose for which it is given.

 

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

 

If
to the Purchaser:

 

Ares
Capital CP Funding Holdings LLC

2000 Avenue of the Stars, 12th Floor

45

 

Los
Angeles, California 90067

Attention:  General Counsel and Chief
Financial Officer

Facsimile No.:  (310) 201-4197

Confirmation No.:  (310) 201-4205

 

and

 

Ares
Capital CP Funding Holdings LLC

280 Park Avenue, 22nd Floor East

New York, New York 10017

Attention:  General Counsel and Chief
Financial Officer

Facsimile No.:  (212) 750-1777

Confirmation No.:  (212) 750-7300

 

If to the Seller:

 

Ares Capital Corporation

c/o Ares Management LLC

2000 Avenue of the Stars, 12th Floor

Los Angeles, California 90067

Attention:General Counsel and Chief

Financial Officer

Facsimile No.:  (310) 201-4197; (310)
201-4189

Confirmation No.:  (310) 201-4205; (310)
201-4204

 

and

 

Ares Capital Corporation

280 Park Avenue, 22nd Floor East

New York, New York 100017

Attention:Michael J. Arougheti and Raymond 

Wright

Facsimile No:  (212) 750-1777

Confirmation No.:  (212) 750-7300

 

Notices
and communications by facsimile and e-mail shall be effective when sent (and
shall be followed by hard copy sent by regular mail), and notices and
communications sent by other means shall be effective when received.

 

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

 

46

 

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

 

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

 

Section 10.9.                             Consent to
Jurisdiction; Service of Process.

 

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

 

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

 

Section 10.10.                       Costs, Expenses
and Taxes.

 

(a)                                  In addition to
the rights of indemnification granted to the Purchaser and its Affiliates and
officers, directors, employees and agents thereof under Section 9.1
hereof, the Seller agrees to pay on demand all reasonable out-of-pocket costs
and expenses of the Purchaser or its assignees incurred in connection with the
preparation, execution, delivery, enforcement, administration (including
periodic auditing), renewal, amendment or modification of, or any waiver or
consent issued in connection with, this Agreement and the other documents to be
delivered hereunder or in connection herewith, including, without limitation,
the reasonable fees and out—of—pocket expenses of counsel with respect thereto
and with respect to advising the Purchaser or its assignees as to its rights
and remedies under this Agreement and the other documents to be delivered
hereunder or in connection herewith, and all out-of-pocket costs and expenses,
if any (including reasonable counsel fees and expenses), incurred by the 

 

47

 

Purchaser or its assignees
in connection with the enforcement of this Agreement and the other documents to
be delivered hereunder or in connection herewith.

 

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

 

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

 

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

 

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

 

Section 10.12.                       Bankruptcy
Non-Petition and Limited Recourse; Claims. The Seller hereby agrees
that it will not institute against, or join any other Person in instituting
against, the Purchaser or the Borrower any Bankruptcy Proceeding so long as
there shall not have elapsed one year and one day (or such longer preference
period as shall then be in effect) since the Collection Date. The Seller hereby
acknowledges that (i) the Purchaser has no assets other than the Sale
Portfolio and the membership interests of the Borrower and the proceeds of such
membership interests, (ii) the Purchaser shall, immediately upon Purchase
hereunder, transfer the Sale Portfolio to the Borrower pursuant to the Second
Tier Purchase and Sale Agreement, and (iii) Available Collections
generated by the Sale Portfolio will be applied to payment of the Borrower’s
obligations under the Amended and Restated Sale and Servicing Agreement. In
addition, the Seller shall have no recourse for any amounts payable or any
other obligations arising under this Agreement against any officer, member,
director, employee, partner, Affiliate or security holder of the Purchaser or
any of its successors or assigns.

 

Section 10.13.                       Binding Effect;
Assignability.

 

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

 

(b)                                 Notwithstanding
anything to the contrary contained herein, this Agreement may not be assigned
by the Purchaser or the Seller except as permitted by this Section 10.13,
the Second Tier Purchase and Sale Agreement or the Amended and Restated Sale
and Servicing Agreement.  Simultaneously
with the execution and delivery of this 

 

48

 

Agreement, the Purchaser
will transfer the Sale Portfolio purchased on and after the Restatement Date
and all of its right, title and interest under this Agreement (including, for
the avoidance of doubt, all rights pertaining to the Original Loan Assets
transferred pursuant to the Original Purchase and Sale Agreement and the
Portfolio Assets relating thereto) to the Borrower pursuant to the Second Tier
Purchase and Sale Agreement, and the Borrower, pursuant to the Amended and
Restated Sale and Servicing Agreement, will assign all of its right, title and
interest in this Agreement to the Trustee, for the benefit of the Secured
Parties, to which assignment the Seller hereby expressly consents.  Upon assignment, the Seller agrees to perform
its obligations hereunder for the benefit of the Trustee, for the benefit of
the Secured Parties, under the Amended and Restated Sale and Servicing
Agreement and the Trustee, in such capacity, shall be a third party beneficiary
hereof.  The Trustee, for the benefit of
the Secured Parties, under the Amended and Restated Sale and Servicing
Agreement upon such assignment may enforce the provisions of this Agreement,
exercise the rights of the Purchaser and enforce the obligations of the Seller
hereunder without joinder of the Purchaser or the Borrower.

 

Section 10.14.                       Waiver of
Setoff.

 

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

 

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

 

Section 10.15.                       Headings and
Exhibits.  The
headings herein are for purposes of references only and shall not otherwise
affect the meaning or interpretation of any provision hereof. The schedules and
exhibits attached hereto and referred to herein shall constitute a part of this
Agreement and are incorporated into this Agreement for all purposes.

 

Section 10.16.                       Rights of
Inspection.  The
Purchaser and its representatives and assigns may conduct at any reasonable
time, with reasonable notice, and from time to time, and the Seller will fully
cooperate with, a reasonable number of field examinations and audits of the
inventory, the Loan Assets and business affairs of the Seller each calendar
year.  Each such inspection shall be at
the sole expense of the Seller.  The
Purchaser and its representatives and successors and assigns acknowledge that
in exercising the rights and privileges conferred in this Section 10.16,
it or its representatives or assigns may, from time to time, obtain knowledge
of information, practices, books, correspondence and records of a confidential
nature and in which the Seller has a proprietary interest.  The Purchaser and its representatives and
successors and assigns agree that (i) they shall retain in strict
confidence and shall use their best efforts to ensure that their
representatives retain in strict confidence and will not disclose without the
prior written consent of the Seller any or all of such information, practices,
books, correspondence and records furnished to them and (ii) that they
will not, and will use their best efforts to ensure that their 

 

49

 

representatives
and assigns will not, make any use whatsoever (other than for the purposes
contemplated by this Agreement) of any of such information, practices, books,
correspondence and records without the prior written consent of the Seller,
unless such information is generally available to the public or is required by
law to be disclosed.

 

Section 10.17.                       Subordination. After giving
effect to any payment relating to any indebtedness, obligation or claim the
Seller may from time to time hold or otherwise have against the Borrower or any
assets or properties of the Borrower, whether arising hereunder or otherwise
existing, the Borrowing Base at such time must exceed the Obligations owed by
the Borrower to the Secured Parties under the Amended and Restated Sale and Servicing
Agreement.  The Seller hereby agrees that
at any time during which the condition set forth in the preceding sentence
shall not be satisfied, the Seller shall be subordinate in right of payment to
the prior payment of any indebtedness or obligation of the Borrower owing to
the Note Purchaser, the Trustee, the Collateral Custodian, the Agent or any
other Secured Party under the Amended and Restated Sale and Servicing
Agreement.

 

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

 

Section 10.19.                       Confidentiality. Each of the
parties hereto hereby agrees with the confidentiality provisions set forth in
Sections 11.13 and 11.14 of the Amended and Restated Sale and Servicing
Agreement.

 

Section 10.20.                       Assignments of
Loan Assets.

 

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

 

(b)                                 Nothing in this
Section 10.20 shall limit any requirement that all Loan Assets
treated as or represented to be Eligible Loan Assets hereunder or in any
Transaction Document be purchased by Borrower from the Purchaser pursuant to
the Second Tier Purchase and Sale Agreement and by the Purchaser from the
Seller pursuant to this Agreement (as evidenced by the Assignments applicable
to each Purchase and Sale Agreement) or any 

 

50

 

representations or
warranties with respect to Loan Assets so purchased or the liabilities or
recourse of the Seller or Purchaser, as applicable, pertaining to such sales.

 

Section 10.21.                       Assignment of
Original Purchase and Sale Agreement.  Ares CP Funding LLC hereby assigns all of its
right, title and interest as the buyer in the Original Purchase and Sale
Agreement to Ares CP Funding Holdings LLC, which shall be the “Purchaser”
hereunder. The parties hereto acknowledge such assignment and agree that (i) Ares
CP Funding LLC shall no longer be a party hereto, (ii) the Sale Portfolio
shall include the Original Portfolio, (iii) the Purchaser may enforce any
rights of the Purchaser hereunder pertaining to the Original Portfolio
(including, without limitation, any rights of the Purchaser pertaining to the
Original Portfolio which would arise in the event the sale hereunder is
re-characterized as a secured financing) and (iv) the Trustee, for the
benefit of the Secured Parties, as an assignee of the Purchase hereunder, shall
have all the rights and benefits that it would have with respect to the
Original Portfolio had the Original Portfolio been sold from the Purchaser to
the Seller hereunder and the Seller to the Borrower under the Second Tier
Purchase and Sale Agreement on each Purchase Date with respect thereto, and the
parties hereto agree to take such actions necessary to effectuate the foregoing
clauses (i) through (iv).

 

[Signature pages to follow.]

 

51

 

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

 

	
   

  	
  ARES CAPITAL CP FUNDING HOLDINGS 

  
	
   

  	
       LLC, as the
  Purchaser

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Richard S. Davis

  
	
   

  	
   

  	
  Name:
  Richard S. Davis

  
	
   

  	
   

  	
  Title:
  Chief Financial Officer

  

 

Ares
CP I Restated Facility

First
Tier Purchase and Sale Agreement

 

 

	
   

  	
  ARES CAPITAL CORPORATION,

  
	
   

  	
       as the Seller

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Richard S. Davis

  
	
   

  	
   

  	
  Name:
  Richard S. Davis

  
	
   

  	
   

  	
  Title:
  Chief Financial Officer

  

 

Ares
CP I Restated Facility

First
Tier Purchase and Sale Agreement

 

 

	
   

  	
  ACKNOWLEDGED AND AGREED:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ARES CAPITAL CP FUNDING LLC, as the Buyer
  under the Original Purchase and Sale Agreement

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Richard S. Davis

  
	
   

  	
   

  	
  Name:
  Richard S. Davis

  
	
   

  	
   

  	
  Title:
  Chief Financial Officer

  

 

Ares CP I Restated Facility

First
Tier Purchase and Sale AgreementExhibit 10.4

 

EXECUTION COPY

 

SECOND TIER PURCHASE AND SALE AGREEMENT

 

among

 

ARES CAPITAL CP FUNDING LLC,

 

as the Purchaser

 

and

 

ARES CAPITAL CP FUNDING HOLDINGS LLC,

 

as the Seller

 

 

Dated as of January 22, 2010

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  I.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 1.1.

  	
  General

  	
  1

  
	
  Section 1.2.

  	
  Specific Terms

  	
  2

  
	
  Section 1.3.

  	
  Other Terms

  	
  5

  
	
  Section 1.4.

  	
  Computation of Time Periods

  	
  5

  
	
  Section 1.5.

  	
  Certain References

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II.

  	
  SALE
  AND PURCHASE OF THE ELIGIBLE LOAN ASSETS AND OTHER PORTFOLIO ASSETS

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 2.1.

  	
  Sale and Purchase of the Eligible Loan Assets and
  the Other Portfolio Assets

  	
  5

  
	
  Section 2.2.

  	
  Purchase Price

  	
  8

  
	
  Section 2.3.

  	
  Payment of Purchase Price

  	
  8

  
	
  Section 2.4.

  	
  Nature of the Sales

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III.

  	
  CONDITIONS
  OF SALE AND PURCHASE

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 3.1.

  	
  Conditions Precedent to Effectiveness

  	
  10

  
	
  Section 3.2.

  	
  Conditions Precedent to All Purchases

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV.

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section 4.1.

  	
  Representations and Warranties of the Seller

  	
  12

  
	
  Section 4.2.

  	
  Representations and Warranties of the Seller
  Relating to the Agreement and the Sale Portfolio

  	
  20

  
	
  Section 4.3.

  	
  Representations and Warranties of the Purchaser

  	
  21

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  V.

  	
  COVENANTS
  OF THE SELLER

  	
  23

  
	
   

  	
   

  	
   

  
	
  Section 5.1.

  	
  Protection of Title of the Purchaser

  	
  23

  
	
  Section 5.2.

  	
  Affirmative Covenants of the Seller

  	
  26

  
	
  Section 5.3.

  	
  Negative Covenants of the Seller

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VI.

  	
  REPURCHASES
  AND SUBSTITUTION BY THE SELLER

  	
  32

  
	
   

  	
   

  	
   

  
	
  Section 6.1.

  	
  Repurchase of Loan Assets

  	
  32

  
	
  Section 6.2.

  	
  Substitution of Loan Assets

  	
  32

  
	
  Section 6.3.

  	
  Repurchase Limitations

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VII.

  	
  ADDITIONAL
  RIGHTS AND OBLIGATIONS IN RESPECT OF THE SALE PORTFOLIO

  	
  34

  
	
   

  	
   

  	
   

  
	
  Section 7.1.

  	
  Rights of the Purchaser

  	
  34

  
	
  Section 7.2.

  	
  Notice to Trustee, Agent and Note Purchaser

  	
  35

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII.

  	
  SELLER
  TERMINATION EVENTS

  	
  35

  

 

i

 

TABLE OF CONTENTS

(cont’d)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 8.1.

  	
  Seller Termination Events

  	
  35

  
	
  Section 8.2.

  	
  Remedies

  	
  37

  
	
  Section 8.3.

  	
  Survival of Certain Provisions

  	
  38

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IX.

  	
  INDEMNIFICATION

  	
  38

  
	
   

  	
   

  	
   

  
	
  Section 9.1.

  	
  Indemnification by the Seller

  	
  38

  
	
  Section 9.2.

  	
  Assignment of Indemnities

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  X.

  	
  MISCELLANEOUS

  	
  41

  
	
   

  	
   

  	
   

  
	
  Section 10.1.

  	
  Liability of the Seller

  	
  41

  
	
  Section 10.2.

  	
  Limitation on Liability

  	
  41

  
	
  Section 10.3.

  	
  Amendments; Limited Agency

  	
  42

  
	
  Section 10.4.

  	
  Waivers; Cumulative Remedies

  	
  42

  
	
  Section 10.5.

  	
  Notices

  	
  42

  
	
  Section 10.6.

  	
  Merger and Integration

  	
  43

  
	
  Section 10.7.

  	
  Severability of Provisions

  	
  43

  
	
  Section 10.8.

  	
  GOVERNING LAW; JURY WAIVER

  	
  43

  
	
  Section 10.9.

  	
  Consent to Jurisdiction; Service of Process

  	
  43

  
	
  Section 10.10.

  	
  Costs, Expenses and Taxes

  	
  44

  
	
  Section 10.11.

  	
  Counterparts

  	
  44

  
	
  Section 10.12.

  	
  Bankruptcy Non-Petition and Limited Recourse;
  Claims

  	
  45

  
	
  Section 10.13.

  	
  Binding Effect; Assignability

  	
  45

  
	
  Section 10.14.

  	
  Waiver of Setoff

  	
  45

  
	
  Section 10.15.

  	
  Headings and Exhibits

  	
  46

  
	
  Section 10.16.

  	
  Rights of Inspection

  	
  46

  
	
  Section 10.17.

  	
  Subordination

  	
  46

  
	
  Section 10.18.

  	
  Breaches of Representations, Warranties and
  Covenants

  	
  46

  
	
  Section 10.19.

  	
  Confidentiality

  	
  46

  
	
  Section 10.20.

  	
  Assignments of Loan Assets

  	
  47

  

 

SCHEDULES AND EXHIBITS

 

	
  Schedule
  I

  	
  -

  	
  Sale
  Portfolio List

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  -

  	
  Form of
  Second Tier Loan Assignment

  
	
  Exhibit B

  	
  -

  	
  Form of
  Officer’s Purchase Date Certificate

  
	
  Exhibit C

  	
  -

  	
  Form of
  Power of Attorney for Seller

  

 

ii

 

SECOND TIER PURCHASE AND SALE AGREEMENT

 

THIS SECOND TIER PURCHASE
AND SALE AGREEMENT, dated as of January 22, 2010, among ARES CAPITAL CP
FUNDING HOLDINGS LLC, a Delaware limited liability company, as the seller (the “Seller”)
and ARES CAPITAL CP FUNDING LLC, a Delaware limited liability company, as the
purchaser (the “Purchaser”).

 

W I T N E S S E T H:

 

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

 

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

 

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

 

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

 

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

 

ARTICLE I.

 

DEFINITIONS

 

Section 1.1.            General.  The specific terms defined in this Article include
the plural as well as the singular. 
Words herein importing a gender include the other gender.  References herein to “writing” include
printing, typing, lithography and other means of reproducing words in visible
form.  References to agreements and other
contractual instruments include all subsequent amendments thereto or changes
therein entered into in accordance with their respective terms and not
prohibited by this Agreement or the Amended and Restated Sale and Servicing
Agreement (as hereinafter defined). 
References herein to Persons include their successors and assigns
permitted hereunder or under the Amended and Restated Sale and Servicing
Agreement.  The terms “include” or “including”
mean “include without limitation” or 

 

 

“including
without limitation”.  The words “herein”,
“hereof” and “hereunder” and other words of similar import refer to this
Agreement as a whole and not to any particular Article, Section or other
subdivision, and Article, Section, Schedule and Exhibit references, unless
otherwise specified, refer to Articles and Sections of and Schedules and
Exhibits to this Agreement.  Capitalized
terms used herein but not defined herein shall have the respective meanings
assigned to such terms in the Amended and Restated Sale and Servicing
Agreement, provided that, if,
within such definition in the Amended and Restated Sale and Servicing Agreement
a further term is used which is defined herein, then such further term shall
have the meaning given to such further term herein.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Purchaser” has the
meaning specified in the Preamble.

 

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

 

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

 

“Repurchase Price”
means, with respect to a Loan Asset to be repurchased pursuant to Article VI
hereof, an amount equal to the Purchase Price less all Principal Collections
received in respect of such Loan Asset from the Purchase Date to the date of
repurchase hereunder.

 

3

 

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

 

“Sale Portfolio”
means all right, title, and interest (whether now owned or hereafter acquired
or arising, and wherever located) of the Seller in the property identified
below in clauses (i) through (iv) and all accounts,
cash and currency, chattel paper, tangible chattel paper, electronic chattel
paper, copyrights, copyright licenses, equipment, fixtures, contract rights,
general intangibles, instruments, certificates of deposit, certificated
securities, uncertificated securities, financial assets, securities
entitlements, commercial tort claims, deposit accounts, inventory, investment
property, letter-of-credit rights, software, supporting obligations,
accessions, or other property consisting of, arising out of, or related to any
of the following (in each case excluding the Retained Interest and the Excluded
Amounts):

 

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

 

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

 

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

 

(iv)          all income and Proceeds of
the foregoing.

 

“Schedule I” means
the schedule of all Sale Portfolio that is Sold by the Seller to the Purchaser
on a Purchase Date, as supplemented on any subsequent Purchase Date by the “Schedule
I” attached to the applicable Second Tier Loan Assignment, and incorporated
herein by reference, as such schedule may be supplemented and amended from time
to time pursuant to the terms hereof, which schedule shall, together with all
supplements and amendments thereto, be included in and made part of the Loan
Asset Schedule attached to the Amended and Restated Sale and Servicing
Agreement.

 

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

 

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

 

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

 

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

 

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

 

“Transfer Taxes”
means any tax, fee or governmental charge payable by the Purchaser, the Seller
or any other Person to any federal, state or local government arising from or
otherwise related to the Sale of any Loan Asset, the related Underlying
Collateral (if any) and/or 

 

4

 

any
other related Portfolio Assets from the Seller to the Purchaser under this
Agreement (excluding taxes measured by net income).

 

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

 

Section 1.4.            Computation of
Time Periods.  Unless
otherwise stated in this Agreement, in the computation of a period of time from
a specified date to later specified date, the word “from” means “from and
including” and the words “to” and “until” each mean “to but excluding”.

 

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

 

ARTICLE II.

 

SALE AND PURCHASE OF THE
ELIGIBLE LOAN ASSETS

AND OTHER PORTFOLIO ASSETS

 

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

 

(a)           Subject to the
terms and conditions of this Agreement, on and after the Restatement Date, the
Seller hereby agrees to (i) sell, transfer and otherwise convey
(collectively, “Sell” and any such sale, transfer and/or other conveyance,
a “Sale”), from time to time, to the Purchaser, without recourse (except
to the extent specifically provided herein), and the Purchaser hereby agrees to
purchase, all right, title and interest of the Seller (whether now owned or
hereafter acquired or arising, and wherever located) in and to certain Sale
Portfolio designated by the Seller and (ii) transfer, or cause the deposit
into, the Collection Account of all Available Collections received by the
Seller on account of any Sale Portfolio hereunder on and after the Purchase
Date with respect to such Sale Portfolio, in each case, within two Business
Days of the receipt thereof.  The Seller
hereby acknowledges that each Sale to the Purchaser hereunder is absolute and
irrevocable, without reservation or retention of any interest whatsoever by the
Seller.

 

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

 

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

 

5

 

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

 

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

 

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

 

(g)           In connection
with each Purchase of Sale Portfolio hereunder, the Seller shall cause to be
delivered to the Collateral Custodian (with a copy to the Agent), no later than
2:00 p.m. one Business Day prior to the related Purchase Date, a faxed or
e-mailed copy of the duly executed original promissory notes of the Loan Assets
(and, in the case of any Noteless Loan Asset, a fully executed assignment
agreement) and if any Loan Assets are closed in escrow, a certificate (in the
form of Exhibit K to the Amended and Restated Sale and Servicing
Agreement) from the closing attorneys of such Loan Assets certifying the
possession of the Required Loan Documents; provided
that, notwithstanding the foregoing, the Seller shall cause the Loan Asset
Checklist and the Required Loan Documents to be in the possession of the
Collateral Custodian within five Business Days after the related Purchase Date.

 

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

 

(i)            The Seller
shall provide all information, and any other reasonable assistance, to the
Servicer, the Collateral Custodian and the Trustee necessary for the Servicer,
the Collateral Custodian and the Trustee, as applicable, to conduct the
management, 

 

6

 

administration
and collection of the Sale Portfolio Purchased hereunder in accordance with the
terms of the Amended and Restated Sale and Servicing Agreement.

 

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

 

(k)           In connection
with the Purchase by the Purchaser of Sale Portfolio as contemplated by this
Agreement, the Seller further agrees that it shall, at its own expense,
indicate clearly and unambiguously in its computer files on or prior to each
Purchase Date, and its financial statements, that such Sale Portfolio has been purchased
by the Purchaser in accordance with this Agreement.

 

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

 

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

 

7

 

(n)           The Seller and
the Purchaser each acknowledge with respect to itself that the representations
and warranties of the Seller in Sections 4.1 and 4.2 hereof and
of the Purchaser in Section 4.3 hereof, and the covenants of the
Seller in Article V hereof, will run to and be for the benefit of
the Purchaser and the Trustee (on behalf of the Secured Parties) and the
Trustee (on behalf of the Secured Parties) may enforce directly (without
joinder of the Purchaser when enforcing against the Seller), the obligations of
the Seller or the Purchaser, as applicable, with respect to breaches of such
representations, warranties and covenants as set forth in this Agreement.

 

Section 2.2.            Purchase Price.

 

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

 

Section 2.3.            Payment of
Purchase Price.

 

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

 

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

 

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

 

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

 

8

 

under
this Agreement for the failure by the Seller in fact to satisfy any such
condition precedent, covenant or agreement.

 

Section 2.4.            Nature of the
Sales.

 

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

 

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

 

9

 

ARTICLE III.

 

CONDITIONS OF SALE AND PURCHASE

 

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

 

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

 

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

 

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

 

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

 

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

 

(vi)          copies of tax and judgment
lien searches in all jurisdictions reasonably requested by the Purchaser or its
assignees and requests for information (or a 

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)           The following
statements shall be true:

 

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

 

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

 

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

 

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

 

(v)           No Applicable Law shall
prohibit or enjoin, and no order, judgment or decree of any federal, state or
local court or governmental body, agency or 

 

11

 

instrumentality shall
prohibit or enjoin, the making of any such Purchase by the Purchaser in
accordance with the provisions hereof.

 

(b)           The Purchaser
shall have received a duly executed and completed Second Tier Loan Assignment
along with a Schedule I that is true, accurate and complete in all
respects as of the related Cut-Off Date.

 

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

 

(d)           The Seller
shall have taken all steps necessary under all Applicable Law in order to Sell
to the Purchaser the Sale Portfolio being Purchased on such Purchase Date and,
upon the Sale of such Sale Portfolio from the Seller to the Purchaser pursuant
to the terms hereof, the Purchaser will have acquired good and marketable title
to (subject to Section 10.20) and a valid and perfected ownership
interest in such Sale Portfolio, free and clear of any Lien, security interest,
charge or encumbrance (other than Permitted Liens); provided that if such item of Sale Portfolio contains a
restriction of transferability, the applicable Loan Agreement provides that any
consents necessary for future assignments shall not be unreasonably withheld by
the applicable Obligor and/or agent, and the rights to enforce rights and
remedies in respect of the same under the applicable Loan Agreement inure to
the benefit of the holder of such Loan Asset (subject to the rights of any
applicable agent or other lenders).

 

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

 

ARTICLE IV.

 

REPRESENTATIONS AND WARRANTIES

 

Section 4.1.            Representations
and Warranties of the Seller.  The Seller makes the following
representations and warranties, on which the Purchaser relies in acquiring the
Sale Portfolio Purchased hereunder and each of the Secured Parties relies upon
in entering into the Amended and Restated Sale and Servicing Agreement.  As of each Purchase Date, the Seller
represents and warrants to the Purchaser for the benefit of the Purchaser and
each of its successors and assigns that:

 

(a)           Organization
and Good Standing.  The Seller
has been duly organized and is validly existing as a limited liability company
in good standing under the laws of the State of Delaware (subject to Section 5.1(f)),
with all requisite limited liability company power and authority to own or
lease its properties and to conduct its business as such business is presently
conducted, and had at all relevant times and now has all necessary power,
authority and legal 

 

12

 

right
to acquire and own the Sale Portfolio and to Sell such Sale Portfolio to the
Purchaser hereunder.

 

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

 

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

 

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

 

(e)           No Violation.  The execution, delivery and performance of
this Agreement, each Second Tier Loan Assignment and all other agreements and
instruments executed and delivered or to be executed and delivered by the
Seller pursuant hereto or thereto in connection with the Sale of the Sale
Portfolio will not (i) conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse of time
or both) a default under, the Seller’s certificate of formation or limited
liability company agreement or any contractual obligation of the Seller, (ii) result
in the creation or imposition of any Lien (other than Permitted Liens) upon any
of the Seller’s properties pursuant to the terms of any such contractual
obligation, other than this Agreement, or (iii) violate any Applicable
Law.

 

(f)            No Proceedings.  There is no litigation, proceeding or
investigation pending or, to the knowledge of the Seller, threatened against
the Seller, before any Governmental Authority (i) asserting the invalidity
of this Agreement, any Second Tier Loan Assignment or any other Transaction
Document to which the Seller is a party, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement, any 

 

13

 

Second
Tier Loan Assignment or any other Transaction Document to which the Seller is a
party or (iii) seeking any determination or ruling that could reasonably
be expected to have a Material Adverse Effect.

 

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

 

(h)           State of
Organization, Etc.  Except as
permitted hereunder, the Seller’s legal name is as set forth in this
Agreement.  Except as permitted
hereunder, the Seller has not changed its name since its formation; does not
have tradenames, fictitious names, assumed names or “doing business as”
names.  The chief executive office of the
Seller (and the location of the Seller’s records regarding the Sale Portfolio
(other than those delivered to the Collateral Custodian)) is at the address of
the Seller set forth in Section 10.5 hereto.  The Seller’s only jurisdiction of formation
is Delaware, and, except as permitted hereunder, Seller has not changed its
jurisdiction of formation.

 

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

 

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

 

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

 

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

 

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

 

(n)           Exchange Act
Compliance; Regulations T, U and X.  None of the transactions contemplated herein
or in the other Transaction Documents (including, without 

 

14

 

limitation,
the use of the proceeds from the Sale of the Sale Portfolio) will violate or
result in a violation of Section 7 of the Exchange Act, or any regulations
issued pursuant thereto, including, without limitation, Regulations T, U and X
of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter
II.  The Seller does not own or intend to
carry or purchase, and no proceeds from the Sale of the Sale Portfolio will be
used to carry or purchase, any Margin Stock or to extend “purpose credit”
within the meaning of Regulation U.

 

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

 

(p)           No Liens, Etc.  The Sale Portfolio to be acquired by
Purchaser hereunder is owned by the Seller free and clear of any Lien, security
interest, charge or encumbrance (subject only to Permitted Liens), and the
Seller has the full right, limited liability company power and lawful authority
to Sell the same and interests therein and, upon the Sale thereof hereunder,
the Purchaser will have acquired good and marketable title to (subject to Section 10.20)
and a valid and perfected ownership interest in such Sale Portfolio, free and
clear of any Lien, security interest, charge or encumbrance (subject only to
Permitted Liens); provided that
if such item of Sale Portfolio contains a restriction of transferability, the
applicable Loan Agreement provides that any consents necessary for future
assignments shall not be unreasonably withheld by the applicable Obligor and/or
agent, and the rights to enforce rights and remedies in respect of the same
under the applicable Loan Agreement inure to the benefit of the holder of such
Loan Asset (subject to the rights of any applicable agent or other
lenders).  No effective financing
statement reflecting the Seller or the Seller’s predecessor in interest, as a “Debtor”,
or other instrument similar in effect covering all or any part of any Sale
Portfolio Purchased hereunder is on file in any recording office, except such
as may have been filed in favor of the Trustee as “Secured Party” or “Assignee”,
in each case, for the benefit of the Secured Parties pursuant to the Amended
and Restated Sale and Servicing Agreement.

 

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

 

(r)            ERISA
Compliance.  The present
value of all benefits vested under all Pension Plans does not exceed the value
of the assets of the Pension Plan allocable to such vested benefits (based on
the value of such assets as of the last annual valuation date).  No prohibited transactions, failure to meet
the minimum funding standard set forth in Section 302(a) of ERISA and
Section 412(a) of the Code with respect to any Benefit Plan other
than a Multiemployer Plan, withdrawals or reportable events have occurred with
respect to any Pension Plans that, in the aggregate, could subject the Seller
to any material tax, penalty or other liability.  No notice of intent to terminate a Pension
Plan has been filed, nor has any Pension Plan been 

 

15

 

terminated
under Section 4041(f) of ERISA, nor has the Pension Benefit Guaranty Corporation
instituted proceedings to terminate, or appoint a trustee to administer, a
Pension Plan and no event has occurred or condition exists that might
constitute grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan.

 

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

 

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

 

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

 

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

 

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

 

(x)            Special Purpose
Entity.  The Purchaser is an entity
with assets and liabilities separate and distinct from those of the Seller and
any Affiliates thereof, and the Seller hereby acknowledges that the Agent, the
Note Purchaser, the Trustee and the other Secured Parties are entering into the
transactions contemplated by the Amended and Restated Sale and Servicing
Agreement in reliance upon the Purchaser’s identity as a legal entity that is
separate from the Seller and from each other Affiliate of the Seller.  Therefore, from and after the date of
execution and delivery of this Agreement, the Seller shall take all reasonable
steps, including, without limitation, all steps that the Agent, the Note
Purchaser and the Trustee may from time to time reasonably request, to maintain
the Purchaser’s identity as a separate legal entity and to make it manifest to
third parties that the Purchaser is an entity with assets and liabilities
distinct from those of the Seller and each other Affiliate thereof and not just
a division of the Seller or any such other Affiliate (other than for tax
purposes).  Without limiting the
generality of the foregoing and in addition to the other covenants set forth
herein, the Seller shall take all reasonable steps to ensure that the Purchaser
has not and will not take, refrain from taking, or fail to take (as applicable)
any action described in Section 9(j) of its operating agreement and
Sections 5.01(a), 5.01(b), 5.02(a) and 5.02(b) of the Amended and
Restated Sale and Servicing Agreement.

 

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

 

16

 

(z)            Security
Interest.

 

(i)            This Agreement creates a
valid and continuing security interest (as defined in the applicable UCC) in
the Sale Portfolio in favor of the Purchaser, which security interest is prior
to all other Liens (except for Permitted Liens), and is enforceable as such
against creditors of and purchasers from the Seller;

 

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

 

(iii)          the Seller owns and has good
and marketable title to the Sale Portfolio (subject to Section 10.20)
Sold by it to the Purchaser hereunder on such Purchase Date, free and clear of
any Lien (other than Permitted Liens) of any Person;

 

(iv)          the Seller has received all
consents and approvals required by the terms of any Loan Asset, to the Sale
thereof and the granting of a security interest in the Loan Assets hereunder to
the Purchaser;

 

(v)           the Seller has caused the
filing of all appropriate financing statements in the proper filing office in
the appropriate jurisdictions under Applicable Law in order to perfect the
security interest in that portion of the Sale Portfolio in which a security
interest may be perfected by filing granted hereunder to the Purchaser;  provided
that filings in respect of real property shall not be required;

 

(vi)          other than (i) as
expressly permitted by the terms of this Agreement and the Amended and Restated
Sale and Servicing Agreement and (ii) the security interest granted to the
Purchaser, the Seller has not pledged, assigned, sold, granted a security
interest in or otherwise conveyed any of the Sale Portfolio.  The Seller has not authorized the filing of
and is not aware of any financing statements against the Seller that include a
description of collateral covering the Sale Portfolio other than any financing
statement (A) relating to the security interest granted to the Purchaser
under this Agreement, (B) relating to the closing of a Permitted
Securitization contemplated by Section 2.07(c) of the Amended and
Restated Sale and Servicing Agreement or (C) that has been terminated
and/or fully and validly assigned to the Trustee on or prior to the date
hereof.  The Seller is not aware of the
filing of any judgment or tax lien filings against the Seller;

 

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

 

(viii)        other than in the case of
Noteless Loan Assets, the Seller has received, or subject to the delivery
requirements herein will receive, a written acknowledgment from the Collateral
Custodian that the Collateral Custodian, as the 

 

17

 

bailee of the Trustee, is
holding the underlying promissory notes that constitute or evidence the Loan
Assets solely on behalf of and for the Trustee, for the benefit of the Secured
Parties; provided that the
acknowledgement of the Collateral Custodian set forth in Section 13.11 of
the Amended and Restated Sale and Servicing Agreement may serve as such
acknowledgement;

 

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

 

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

 

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

 

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

 

(bb)         Notice to
Agents and Obligors.  The Seller
has directed any agent, administrative agent or Obligor for any Loan Asset to
remit all payments and collections with respect to such Loan Asset directly to (i) the
Concentration Account (solely prior to the Account Transition Deadline) or (ii) the
Collection Account.

 

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

 

(dd)         Set—Off, Etc.  No Sale Portfolio has been compromised,
adjusted, extended, satisfied, subordinated, rescinded, set—off or modified by
the Seller or the Obligor thereof, and no Sale Portfolio is subject to
compromise, adjustment, extension, satisfaction, subordination, rescission, set—off,
counterclaim, defense, abatement, suspension, deferment, 

 

18

 

deduction,
reduction, termination or modification, whether arising out of transactions
concerning the Sale Portfolio or otherwise, by the Seller or the Obligor with
respect thereto, except for amendments, extensions or modifications to such
Sale Portfolio otherwise permitted under Section 6.04(a) of the
Amended and Restated Sale and Servicing Agreement and in accordance with the
Credit Policy and the Servicing Standard.

 

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

 

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

 

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

 

(hh)         Environmental.  With respect to each item of Underlying
Collateral as of the Cut-Off Date for the Loan Asset related to such Underlying
Collateral, to the actual knowledge of a Responsible Officer of the Seller (a) the
related Obligor’s operations comply in all material respects with all
applicable Environmental Laws; (b) none of the related Obligor’s
operations is the subject of a Federal or state investigation evaluating
whether any remedial action, involving expenditures, is needed to respond to a
release of any Hazardous Materials into the environment; and (c) the
related Obligor does not have any material contingent liability in connection
with any release of any Hazardous Materials into the environment.  As of the Cut-Off Date for the Loan Asset
related to such Underlying Collateral, the Seller has not received any written
or verbal notice of, or inquiry from any Governmental Authority regarding, any
violation, alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with regard
to any of the Underlying Collateral, nor does the Seller have knowledge or
reason to believe that any such notice will be received or is being threatened.

 

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

 

19

 

(jj)           Seller
Termination Event.  No event
has occurred which constitutes a Seller Termination Event and no event has
occurred and is continuing which, with the passage of time or the giving of
notice, or both would constitute a Seller Termination Event (other than as
previously disclosed to the Agent as such).

 

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

 

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

 

(mm)       Representations
and Warranties for Benefit of the Purchaser’s Assignees.  The Seller hereby makes each representation
and warranty contained in this Agreement and the other Transaction Documents to
which it is a party and that have been executed and delivered on or prior to
such Purchase Date to, and for the benefit of the Purchaser (and its
assignees), the Agent, the Note Purchaser and the Trustee as if the same were
set forth in full herein.

 

It is understood and agreed
that the representations and warranties provided in this Section 4.1
shall survive (x) the Sale of the Sale Portfolio to the Purchaser and (y) the
grant of a first priority perfected security interest in, to and under the Sale
Portfolio pursuant to the Amended and Restated Sale and Servicing Agreement by
the Purchaser.  Upon discovery by the
Seller or the Purchaser of a breach of any of the foregoing representations and
warranties, the party discovering such breach shall give prompt written notice
thereof to the other and to the Agent immediately upon obtaining knowledge of
such breach.

 

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

 

(a)           Binding
Obligation, Valid Transfer and Security Interest.  This Agreement, together with the Second Tier
Loan Assignments, constitutes a valid transfer to the Purchaser of all right,
title and interest in, to and under all Sale Portfolio, free and clear of any
Lien of any Person claiming through or under the Seller or its Affiliates, except
for Permitted Liens.  If the conveyances
contemplated by this Agreement are determined to be a transfer for security,
then this Agreement constitutes a grant of a security interest in all Sale
Portfolio to the Purchaser which upon the delivery of the Required Loan
Documents and the filing of the financing statements shall be a first priority
perfected security interest in all Sale Portfolio, subject only to Permitted
Liens.  Neither the Seller nor any Person
claiming through or under the Seller shall have any claim to or interest in the
Controlled Accounts; provided if this Agreement constitutes only a grant of a
security interest in such property, then 
the Seller shall have the rights in such property as a debtor for
purposes of the UCC.

 

20

 

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

 

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

 

It is understood and agreed
that the representations and warranties provided in this Section 4.2
shall survive (x) the Sale of the Sale Portfolio to the Purchaser, (y) the
grant of a first priority perfected security interest in, to and under the Sale
Portfolio pursuant to the Amended and Restated Sale and Servicing Agreement by
the Purchaser and (z) the termination of this Agreement, the First Tier
Purchase and Sale Agreement and the Amended and Restated Sale and Servicing
Agreement.  Upon discovery by the Seller
or the Purchaser of a breach of any of the foregoing representations and
warranties, the party discovering such breach shall give prompt written notice thereof
to the other and to the Agent immediately upon obtaining knowledge of such
breach.

 

Section 4.3.            Representations
and Warranties of the Purchaser.  The Purchaser makes the following
representations and warranties, on which the Seller relies in selling Sale
Portfolio to the Purchaser hereunder. 
Such representations are made as of the execution and delivery of this
Agreement, but shall survive until the Collection Date, the Sale of Sale
Portfolio hereunder, and the grant of a security interest in such Sale
Portfolio by the Purchaser to the Trustee, on behalf of the Secured Parties,
under the Amended and Restated Sale and Servicing Agreement.

 

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

 

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

 

(c)           Power and
Authority; Due Authorization; Execution and Delivery.  The Purchaser has all necessary power,
authority and legal right to execute and deliver this 

 

21

 

Agreement
and to carry out the terms hereof and to acquire the Sale Portfolio; and the
execution, delivery and performance of this Agreement and all of the documents
required pursuant hereto have been duly authorized by the Purchaser by all
necessary limited liability company action.

 

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

 

(e)           Binding
Obligation.  This
Agreement constitutes a legal, valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, subject, as to
enforceability, to applicable Bankruptcy Laws and general principles of equity.

 

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

 

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

 

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

 

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

 

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

 

22

 

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

 

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

 

ARTICLE V.

 

COVENANTS OF THE SELLER

 

Section 5.1.           Protection of
Title of the Purchaser.

 

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

 

(b)           On or prior to
each Purchase Date hereunder, the Seller shall take all steps necessary under
all Applicable Law in order to Sell to the Purchaser the Sale Portfolio being
acquired by the Purchaser on such Purchase Date to the Purchaser so that, upon
the Sale of such Sale Portfolio from the Seller to the Purchaser pursuant to
the terms hereof on such Purchase Date, the Purchaser will have acquired good
and marketable title to (subject to Section 10.20) and a valid and
perfected ownership interest in such Sale Portfolio, free and clear of any
Lien, security interest, charge or encumbrance or restrictions on
transferability (subject only to Permitted Liens).  On or prior to each Purchase Date hereunder,
the Seller shall take all steps required under Applicable Law in order for the
Purchaser to grant to the Trustee, for the benefit of the Secured Parties, a
first priority perfected security interest (subject only to Permitted Liens) in
the Sale Portfolio being Purchased by the Purchaser on such Purchase Date and,
from time to time thereafter, the Seller shall take all such actions as may be
required by Applicable Law to fully preserve, maintain and protect the
Purchaser’s ownership interest in, and the Trustee’s first 

 

23

 

priority
perfected security interest in (subject only to Permitted Liens), the Sale
Portfolio which have been acquired by the Purchaser hereunder.

 

(c)           The Seller
shall direct any agent or administrative agent for any Sale Portfolio
originated or acquired by the Seller to remit all payments and collections with
respect to such Sale Portfolio and direct the Obligor with respect to such Sale
Portfolio to remit all such payments and collections directly to (i) solely
prior to the Account Transition Deadline, the Concentration Account or (ii) the
Collection Account.  The Seller will not
make any change, or permit the Servicer to make any change, in its instructions
to Obligors regarding payments to be made to the Seller or the Servicer or
payments to be made to the Concentration Account (other than instructions to
remit payments to the Collection Account), unless the Purchaser and the Agent
have consented to such change.  At all
times prior to the Account Termination Deadline, the Seller shall cause the
Concentration Account to be subject to the Intercreditor Agreement that is in
full force and effect as of the date hereof. 
The Seller shall direct or cause only funds constituting payments and
collections relating to the Sale Portfolio to be deposited into the Collection
Account.  In the event any payments
relating to any Sale Portfolio are remitted directly to the Seller or any
Affiliate of the Seller, the Seller will remit (or will cause all such payments
to be remitted) directly to the Collection Account within two Business Days
following receipt thereof, and, at all times prior to such remittance, the
Seller will itself hold or, if applicable, will cause such payments to be held
in trust for the exclusive benefit of the Purchaser and its assignees.  Until so deposited, all such Interest Collections
and Principal Collections shall be held in trust for the Purchaser or its
assignees by the Seller.

 

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

 

(e)           The Seller
shall, not earlier than six months and not later than three months prior to the
fifth anniversary of the date of filing of the financing statement referred to
in Section 3.1 or any other financing statement filed pursuant to
this Agreement or in connection with any Purchase hereunder, unless the
Collection Date shall have occurred:

 

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

 

(ii)           deliver or cause to be
delivered to the Purchaser, the Trustee and the Agent an opinion of the counsel
for Seller, in form and substance reasonably satisfactory to the Purchaser, the
Trustee and the Agent, confirming and updating the opinion delivered pursuant
to Section 3.1 with respect to perfection and otherwise to the
effect that the security interest hereunder continues to be an enforceable and
perfected security interest, subject to no other Liens of record except as
specified therein, provided herein or otherwise permitted hereunder, which
opinion may contain usual and customary assumptions, limitations and
exceptions.

 

24

 

(f)            The Seller
shall not change the jurisdiction of its formation, make any change to its
corporate name or use any tradenames, fictitious names, assumed names, “doing
business as” names or other names unless, prior to the effective date of any
such change in the jurisdiction of its formation, name change or use, the
Seller receives prior written consent from the Agent of such change and
delivers to the Purchaser and the Agent such financing statements as the Agent
may request to reflect such name change or use, together with such Opinions of
Counsel and other documents and instruments as the Agent may request in
connection therewith.  The Seller will
not change the location of its chief executive office unless prior to the
effective date of any such change of location, the Seller notifies the
Purchaser and the Agent of such change of location in writing.  The Seller will not move, or consent to the
Collateral Custodian or the Servicer moving, the Required Loan Documents and
Loan Asset Files from the location required under the Transaction Documents,
unless 30 days prior to the effective date of any such move, the Seller
notifies the Purchaser and the Agent of such move in writing.

 

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

 

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

 

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

 

25

 

Section 5.2.            Affirmative
Covenants of the Seller.

 

From
the date hereof until the Collection Date:

 

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

 

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

 

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

 

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

 

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

 

(i)            the Seller will take all
other actions necessary on its part to ensure that the Purchaser is at all
times in compliance with the criteria and the restrictions set forth in Section 9(j) of
the limited liability company operating agreement of the Purchaser and Sections
5.01(a), 5.01(b), 5.02(a) and 5.02(b)  of the Amended and Restated
Sale and Servicing Agreement;

 

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

 

26

 

(iii)          the annual financial
statements of the Seller shall disclose the effects of the Seller’s
transactions in accordance with GAAP and the annual financial statements of the
Seller shall not reflect in any way that the assets of the Purchaser,
including, without limitation, the Sale Portfolio, could be available to pay
creditors of the Seller or any other Affiliate of the Seller;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

27

 

(i)            Income Tax Liability.  Telephonic or facsimile notice within 10
Business Days (confirmed in writing within five Business Days thereafter) of
the receipt of revenue agent reports or other written proposals, determinations
or assessments of the Internal Revenue Service or any other taxing authority
which propose, determine or otherwise set forth positive adjustments (i) to
the Tax liability of Ares or any “affiliated group” (within the meaning of Section 1504(a)(l) of
the Code) of which Ares is a member in an amount equal to or greater than
$25,000,000 in the aggregate, or (ii) to the Tax liability of the
Purchaser in an amount equal to or greater than $1,000,000 in the
aggregate.  Any such notice shall specify the nature of the items giving
rise to such adjustments and the amounts thereof;

 

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

 

(iii)          Representations and
Covenants.  The Seller
shall promptly, upon receipt of notice or discovery thereof, notify the
Purchaser, the Trustee, the Agent and the Note Purchaser (i) if any
representation or warranty set forth in Section 4.1 or Section 4.2
was incorrect at the time it was given or deemed to have been given or (ii) of
the breach of any covenant under Section 5.1, Section 5.2 or Section 5.3
and at the same time deliver to the Purchaser, the Trustee, the Agent and the
Note Purchaser a written notice setting forth in reasonable detail the nature
of such facts and circumstances.  In
particular, but without limiting the foregoing, the Seller shall notify the
Purchaser, the Trustee, the Agent and the Note Purchaser in the manner set
forth in the preceding sentence before any Purchase Date of any facts or circumstances
within the knowledge of the Seller which would render any of the said
representations and warranties untrue at the date when such representations and
warranties were made or deemed to have been made;

 

(iv)          ERISA.  Promptly after receiving notice of any “reportable
event” (as defined in Title IV of ERISA, other than an event for which the
reporting requirements have been waived by regulations) with respect to the
Seller (or any Affiliate thereof), a copy of such notice;

 

(v)           Proceedings.  As soon as possible and in any event within
three Business Days, after the Seller receives notice or obtains knowledge
thereof, the Seller will provide the Purchaser and the Agent with notice of any
settlement of, material judgment (including a material judgment with respect to
the liability phase of a bifurcated trial) in or commencement of any material
labor controversy, material litigation, material action, material suit or
material proceeding before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, affecting the
Sale Portfolio, the Transaction Documents, the Trustee’s, for the benefit of
the Secured Parties, interest in the Sale Portfolio, or the Purchaser, the
Servicer, the Seller or the Transferor or any of their Affiliates.  For purposes of this Section 5.2(j), (i) any
settlement, judgment, labor controversy, litigation, action, suit or proceeding
affecting the Sale Portfolio, the Transaction Documents, the Trustee’s, for the
benefit of the Secured Parties, interest in the Sale Portfolio, or the
Purchaser or the Seller in excess of $1,000,000 shall be deemed to be material
and (ii) any settlement, judgment, labor controversy, litigation, action,
suit or proceeding affecting the Servicer or the Transferor 

 

28

 

or any of their Affiliates
(other than the Purchaser or the Seller) in excess of $25,000,000 shall be
deemed to be material;

 

(vi)          Material Events.  Promptly upon becoming aware thereof, of any
event or other circumstance that is reasonably likely to have a Material
Adverse Effect;

 

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

 

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

 

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

 

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

 

(m)          Annual
Certificates.  On each
anniversary of the Restatement Date, the Seller shall deliver an Officer’s
Certificate, in form and substance acceptable to the Purchaser and the Agent,
providing (i) a certification, based upon a review and summary of UCC
search results reasonably satisfactory to the Purchaser and the Agent, that
there is no other interest in the Sale Portfolio perfected by filing of a UCC
financing statement other than in favor of the Purchaser and the Trustee
pursuant to the terms of the Transaction Documents and (ii) a
certification, based upon a review and summary of tax and judgment lien
searches satisfactory to the Purchaser and the Agent, that there is no other
interest in the Sale Portfolio based on any tax or judgment lien.

 

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

 

29

 

Section 5.3.            Negative
Covenants of the Seller.

 

From the date hereof until
the Collection Date:

 

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

 

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

 

(c)           Security
Interests.  Except as
otherwise permitted herein and in the Amended and Restated Sale and Servicing
Agreement, the Seller will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any Lien on any Sale
Portfolio Sold by the Seller to the Purchaser hereunder, whether now existing
or hereafter transferred hereunder, or any interest, therein, and the Seller
will not sell, pledge, assign or suffer to exist any Lien (except for Permitted
Liens) on its interest in the Sale Portfolio Sold by the Seller to the
Purchaser hereunder.  The Seller will
promptly notify the Purchaser, the Trustee, the Note Purchaser and the Agent of
the existence of any Lien on any Sale Portfolio and the Seller shall defend the
right, title and interest of the Purchaser and the Trustee, on behalf of the
Secured Parties, in, to and under the Sale Portfolio against all claims of
third parties; provided, that
nothing in this Section 5.3(c) shall prevent or be deemed to prohibit
the Seller from suffering to exist Permitted Liens upon any of the Sale
Portfolio.

 

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

 

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

 

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

 

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

 

30

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(o)           Deposits to
Special Accounts.  Except as
otherwise contemplated by the Intercreditor Agreement, the Seller will not
deposit or otherwise credit, or cause to be so deposited or credited, to the
Concentration Account cash or cash proceeds other than Principal Collections
and Interest Collections in respect of the Sale Portfolio.

 

(p)           Changes in
Payment Instructions to Obligors.  The Seller will not add or terminate any bank
as a Concentration Account Bank or the Concentration Account (as defined 

 

31

 

herein)
or make any change, or permit the Purchaser to make any change, in its
instructions to Obligors regarding payments to be made with respect to the Sale
Portfolio to the Concentration Account Bank (other than instructions to
Obligors to remit payments to the Collection Account), unless the Agent has
consented to such addition, termination or change (which consent shall not be
unreasonably withheld or delayed) and has received duly executed copies of the
Intercreditor Agreement (incorporating appropriate amendments), with each new
Concentration Account Bank being a party thereto.

 

ARTICLE VI.

REPURCHASES AND SUBSTITUTION BY THE SELLER

 

Section 6.1.            Repurchase of
Loan Assets.  In the
event of the occurrence of a Seller Purchase Event, the Seller will within 10
Business Days of the discovery by or notice (from any Person) to the Seller of
the Seller Purchase Event, (i) purchase each Loan Asset hereunder which is
affected by or related to such Seller Purchase Event from the Purchaser, and
the Seller shall pay to the Purchaser (by means of a deposit to the Collection
Account, provided that the excess
if any of the Repurchase Price of such Loan Asset over the amount equal to the
Advance Date Assigned Value of such Loan Asset multiplied by the principal
balance of such Loan Asset (exclusive of Accreted Interest) as of the date of
repurchase shall be paid to the Purchaser as otherwise directed by the
Purchaser) the Repurchase Price of such Loan Asset as of the date of the
purchase thereof from the Purchaser or (ii) subject to the satisfaction of
the conditions in Section 6.2, substitute for such Loan Asset, a
Substitute Eligible Loan Asset.  It is
understood and agreed that the obligation of the Seller to purchase the Loan
Assets or substitute a Substitute Eligible Loan Asset for the Loan Assets which
are affected by or related to such Seller Purchase Event is not intended to,
and shall not, constitute a guaranty of the collectability or payment of any
Loan Asset which is not collected, not paid or uncollectible on account of the
insolvency, bankruptcy or financial inability to pay of the related
Obligor.  Upon deposit in the Collection
Account of the Repurchase Price for any Loan Asset purchased by the Seller, the
Purchaser shall (and shall request the Trustee to), at the sole expense of the
Seller,  take such steps as may be
reasonably requested by the Seller in order to Sell to the Seller all of the
Purchaser’s and the Trustee’s right, title and interest in and to such Loan
Asset, without recourse, representation or warranty of any kind, except as to
the absence of Liens, charges or encumbrances created by or arising solely as a
result of actions of the Purchaser or the Trustee.  Such Sale shall be a sale outright, and not
for security.

 

Section 6.2.            Substitution of
Loan Assets.

 

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

 

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

 

32

 

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

 

(ii)           no event has occurred, or
would result from such Substitution, which constitutes an Event of Default and
no event has occurred and is continuing, or would result from such
Substitution, which constitutes an Unmatured Event of Default or a Borrowing
Base Deficiency; provided that
the Seller may effect a Substitution as necessary to facilitate a cure of a
Borrowing Base Deficiency (and any Unmatured Event of Default arising
therefrom) so long as the Agent shall approve of such sale and immediately
after giving effect to such Substitution and any other sale or transfer
substantially contemporaneous therewith, such Borrowing Base Deficiency shall
be cured or closer to being cured;

 

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

 

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

 

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

 

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

 

(vii)         the Outstanding Balance of
all Loan Assets subject to clauses (ii), (iv) or (vi) of
the definition of “Value Adjustment Event” which were dividended from the
Purchaser to the Seller in accordance with Section 2.07(d) of the
Amended and Restated Sale and Servicing Agreement or substituted pursuant to
this Section 6.2, in each case during the 12-month period
immediately preceding the proposed date of such Substitution does not exceed
10% of the highest aggregate Outstanding Balance of any month during such
12-month period (or such lesser number of months as shall have elapsed as of
such date);

 

(viii)        the Outstanding Balance of
all Loan Assets (other than Warranty Loan Assets), sold pursuant to Section 2.07(b) of
the Amended and Restated Sale and Servicing Agreement, sold without the consent
of the Agent in accordance with Section 2.07(c) of the Amended and
Restated Sale and Servicing Agreement (in each case, other than Loan Assets
subject to clauses (ii), (iv) or (vi) of the
definition of “Value Adjustment Event”), substituted pursuant to this Section 6.2
or dividended from the Purchaser to the Seller in accordance with Section 2.07(d) of
the Amended and Restated 

 

33

 

Sale and Servicing Agreement
during the 12-month period immediately preceding the proposed date of
Substitution does not exceed 20% of the highest aggregate Outstanding Balance
of any month during such 12-month period (or such lesser number of months as
shall have elapsed as of such date);

 

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

 

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

 

Section 6.3.            Repurchase
Limitations.  The Seller
and the Purchaser agree that the Seller and any Affiliate of the Seller may
repurchase any Sale Portfolio only from the Purchaser in the case of a
repurchase or Substitution of any Sale Portfolio pursuant to Sections 6.1
or 6.2.

 

ARTICLE VII.

ADDITIONAL RIGHTS AND OBLIGATIONS IN

RESPECT OF THE SALE PORTFOLIO

 

Section 7.1.           Rights of the
Purchaser.

 

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

 

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

 

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

 

34

 

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

 

Section 7.2.            Notice to
Trustee, Agent and Note Purchaser.

 

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

 

ARTICLE VIII.

SELLER TERMINATION EVENTS

 

Section 8.1.           Seller
Termination Events.

 

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

 

(i)            the Seller shall fail to pay
(A) any amount due pursuant to Section 6.1 in accordance with
the provisions thereof and such failure shall continue unremedied for a period
of five Business Days from the earlier of (1) the date any Responsible
Officer of the Seller obtains knowledge of such failure and (2) the date
the Seller receives notice of such failure from the Purchaser, the Servicer,
the Trustee or the Agent or (B) any other amount required to be paid by
the Seller hereunder within two Business Days of the date when due; or

 

(ii)           the Seller shall fail to
observe or perform in any material respect any covenant or agreement applicable
to it contained herein (other than as specified in paragraph (i) of this Section 8.1);
provided that no such failure
shall constitute a Seller Termination Event under this paragraph (ii) unless
such failure shall continue unremedied for a period of 30 days (if such failure
can be remedied) after the earlier to occur of (i) the date on which
written notice of such failure requiring the same to be remedied shall have
been given to the Seller by the Agent, the Trustee or the Purchaser and (ii) the
date on which the Seller acquires knowledge thereof; or

 

(iii)          any representation, warranty
or certification made by the Seller in this Agreement or in any statement,
record, certificate, financial statement or other document delivered pursuant
to this Agreement shall prove to have been incorrect when made, which has a
Material Adverse Effect on the Purchaser and continues to be unremedied for a
period of 30 days after the earlier to occur of (i) the date on which
written notice of such incorrectness requiring the same to be remedied shall
have been given to the Seller by the Agent, the Servicer, the Trustee or the
Purchaser and (ii) the date on which a Responsible Officer of the Seller
acquires knowledge thereof; provided
that a Seller Termination Event shall not be deemed to have occurred under this
paragraph (iii) based upon a Seller Purchase Event if the Seller shall
have complied with the provisions of Section 6.1 in respect
thereof; or

 

35

 

(iv)          (A) a court having
jurisdiction in the premises shall enter a decree or order for relief in
respect of the Seller in an involuntary case under the Bankruptcy Code or any
other Bankruptcy Laws, which decree or order is not stayed or any other similar
relief shall be granted under any applicable federal or state law now or
hereafter in effect and shall not be stayed; (B) (1) any involuntary
case is commenced against the Seller under any Bankruptcy Law now or hereafter
in effect, a decree or order of a court having jurisdiction in the premises for
the appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over the Seller, or over all or a
substantial part of the property of the Seller, shall have been entered, an
interim receiver, trustee or other custodian of the Seller for all or a
substantial part of the property of the Seller is involuntarily appointed, a
warrant of attachment, execution or similar process is issued against any
substantial part of the property of the Seller, and (2) any event referred
to in clause (B)(1) above continues for 60 days unless dismissed,
bonded or disclosed; (C) the Seller shall at its request have a decree or
an order for relief entered with respect to it or commence a voluntary case
under any Bankruptcy Law now or hereafter in effect, or shall consent to the
entry of a decree or an order for relief in an involuntary case, or to the
conversion of an involuntary case to a voluntary case, under any such
Bankruptcy Law, consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial part of its
property; (D) the making by the Seller of any general assignment for the
benefit of creditors; (E) the inability or failure of the Seller generally
to pay its debts as such debts become due; or (F) the board of directors
of the Seller authorizes action to approve any of the foregoing; or

 

(v)           the occurrence of (A) an
Event of Default set forth in Section 7.01 of the Amended and Restated
Sale and Servicing Agreement or (B) the Facility Maturity Date; or

 

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

 

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

 

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

 

then,
(A) in the case of any Seller Termination Event described in paragraph
(iv), (v)(A), (vi), (vii) or (viii) above,
the obligation of the Purchaser to Purchase Sale Portfolio from the Seller 

 

36

 

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

 

Section 8.2.           Remedies.

 

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

 

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

 

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

 

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

 

37

 

Section 8.3.           Survival of
Certain Provisions.

 

Notwithstanding any
provision contained herein to the contrary, the Seller’s and the Purchaser’s
representations, covenants and obligations set forth in Articles IV, V,
VI, and VII, as applicable, create and constitute the continuing
obligation of the parties hereto in accordance with its terms, and shall remain
in full force and effect until the Collection Date; provided, that the rights and remedies with respect to any
breach of any representation and warranty made or deemed made by the Seller
pursuant to Articles III and IV and the provisions of Sections
6.1 and 6.2, the rights and obligations under Article VII,
the indemnification provisions of Article IX and the provisions of Sections
5.1, 10.2, 10.8, 10.9, 10.10, 10.12, 10.13,
10.14 and 10.17 shall be continuing and shall survive any
termination of this Agreement.  For the
avoidance of doubt, in the event that a Seller Termination Event has occurred
but has been waived unconditionally and in its entirety in accordance with the
terms hereof, such Seller Termination Event shall be deemed to have not “occurred”
and references to “after the occurrence of a Seller Termination Event” shall be
inapplicable for all purposes in this Agreement or any of the Transaction
Documents, except to the extent otherwise provided for in the relevant waiver; provided that any waiver which by its
terms becomes effective upon certain conditions precedent being met will not be
considered a conditional waiver solely due to the existence of such conditions
precedent if all such conditions precedent to effectiveness have been
satisfied.

 

ARTICLE IX.

INDEMNIFICATION

 

Section 9.1.           Indemnification
by the Seller.

 

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

 

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

 

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

 

38

 

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

 

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

 

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

 

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

 

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

 

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

 

(ix)           the failure by the Seller to comply
with any term, provision or covenant contained in this Agreement or any
agreement executed in connection with this Agreement, any Transaction Document
or with any Applicable Law;

 

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

 

(xi)           the failure to vest and maintain
vested in the Purchaser an undivided ownership interest in the Sale Portfolio,
together with all Interest Collections 

 

39

 

and Principal Collections,
free and clear of any Lien (other than Permitted Liens) whether existing at the
time of any Purchase or at any time thereafter;

 

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

 

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

 

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

 

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

 

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

 

(xvii)       except with respect to funds held in the
Concentration Account, the commingling of Interest Collections and Principal
Collections on the Sale Portfolio at any time with other funds of the Seller;

 

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

 

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

 

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

 

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

 

40

 

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

 

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

 

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

 

Section 9.2.            Assignment
of Indemnities.

 

The Seller acknowledges
that, pursuant to the Amended and Restated Sale and Servicing Agreement, the
Purchaser shall assign its rights of indemnity hereunder to the Trustee, on
behalf of the Secured Parties.  Upon such
assignment, (a) the Trustee, on behalf of the Secured Parties, shall have
all rights of the Purchaser hereunder and may in turn assign such rights, and (b) the
obligations of the Seller under this Section 9.2 shall inure to the
Trustee, on behalf of the Secured Parties. 
The Seller agrees that, upon such assignment, the Trustee, on behalf of
the Secured Parties, may enforce directly, without joinder of the Purchaser,
the indemnities set forth in this Article IX.

 

ARTICLE X.

 

MISCELLANEOUS

 

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

 

Section 10.2.          Limitation
on Liability.  Except with respect to
any claim arising solely out of the willful misconduct or gross negligence of
the Note Purchaser, the Trustee, the Agent or any other Secured Party, no claim
may be made by the Seller or any other Person against the Note Purchaser, the
Trustee, the Agent or any other Secured Party or their respective Affiliates,
directors, officers, employees, attorneys or agents for any special, indirect,
consequential or punitive damages in respect of any claim for breach of
contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement, or any act, omission or event
occurring in connection therewith; and the Seller hereby waives, releases and
agrees not to sue upon any claim for any such damages, whether or not accrued
and whether or not known or suspected to exist in its favor.

 

41

 

Section 10.3.          Amendments;
Limited Agency.  Except as provided
in this Section 10.3, no amendment, waiver or other modification of
any provision of this Agreement shall be effective unless signed by the
Purchaser and the Seller and consented to in writing by the Agent and the
Trustee.  The Purchaser shall provide not
less than ten Business Days’ prior written notice of any such amendment to the
Agent, the Trustee and the Note Purchaser.

 

Section 10.4.          Waivers;
Cumulative Remedies.  No failure or
delay on the part of the Purchaser (or any assignee thereof) or the Seller, in
exercising any power, right or remedy under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or remedy preclude any other or future exercise thereof or the exercise
of any other power, right or remedy.  The
powers, rights and remedies herein provided are cumulative and not exhaustive
of any powers, rights and remedies provided by law.  Any waiver of this Agreement shall be
effective only in the specific instance and for the specific purpose for which
it is given.

 

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

 

If to Purchaser:

 

Ares
Capital CP Funding LLC

2000 Avenue of the Stars, 12th Floor

Los Angeles, California 90067

Attention:  General Counsel and Chief
Financial Officer

Facsimile No.:  (310) 201-4197

Confirmation No.:  (310) 201-4205

 

and

 

Ares
Capital CP Funding LLC

280 Park Avenue, 22nd Floor East

New York, New York 10017

Attention:  General Counsel and Chief
Financial Officer

Facsimile No.:  (212) 750-1777

Confirmation No.:  (212) 750-7300

 

If
to Seller:

 

Ares Capital CP Funding
Holdings LLC

2000 Avenue of the Stars, 12th Floor

Los Angeles, California 90067

Attention:  General Counsel and Chief
Financial Officer

 

42

 

Facsimile
No.:  (310) 201-4197

Confirmation No.:  (310) 201-4205

 

and

 

Ares
Capital CP Funding Holdings LLC

280 Park Avenue, 22nd Floor East

New York, New York 10017

Attention:  General Counsel and Chief
Financial Officer

Facsimile No.:  (212) 750-1777

Confirmation No.:  (212) 750-7300

 

Notices
and communications by facsimile and e-mail shall be effective when sent (and
shall be followed by hard copy sent by regular mail), and notices and communications
sent by other means shall be effective when received.

 

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

 

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

 

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

 

Section 10.9.          Consent
to Jurisdiction; Service of Process.

 

(a)           Each party hereto
hereby irrevocably submits to the non-exclusive jurisdiction of any New York
State or Federal court sitting in New York City in any action or proceeding
arising out of or relating to this Agreement, and each party hereto hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such New York State court or, to the extent
permitted by law, in such Federal court. 
The parties hereto hereby irrevocably waive, to the fullest extent they
may effectively do so, the defense of 

 

43

 

an
inconvenient forum to the maintenance of such action or proceeding.  The parties hereto agree that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.

 

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

 

Section 10.10.        Costs,
Expenses and Taxes.

 

(a)           In addition to the
rights of indemnification granted to the Purchaser and its Affiliates and
officers, directors, employees and agents thereof under Section 9.1
hereof, the Seller agrees to pay on demand all reasonable out-of-pocket costs
and expenses of the Purchaser or its assignees incurred in connection with the
preparation, execution, delivery, enforcement, administration (including
periodic auditing), renewal, amendment or modification of, or any waiver or
consent issued in connection with, this Agreement and the other documents to be
delivered hereunder or in connection herewith, including, without limitation,
the reasonable fees and out—of—pocket expenses of counsel with respect thereto
and with respect to advising the Purchaser or its assignees as to its rights
and remedies under this Agreement and the other documents to be delivered
hereunder or in connection herewith, and all out-of-pocket costs and expenses,
if any (including reasonable counsel fees and expenses), incurred by the
Purchaser or its assignees in connection with the enforcement of this Agreement
and the other documents to be delivered hereunder or in connection herewith.

 

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

 

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

 

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

 

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

 

44

 

Section 10.12.        Bankruptcy
Non-Petition and Limited Recourse; Claims. 
The Seller hereby agrees that it will not institute against, or join any
other Person in instituting against, the Purchaser any Bankruptcy Proceeding so
long as there shall not have elapsed one year and one day (or such longer
preference period as shall then be in effect) since the Collection Date.  The Seller hereby acknowledges that (i) the
Purchaser has no assets other than the Sale Portfolio, (ii) the Purchaser
shall, immediately upon Purchase hereunder, grant a security interest in the
Sale Portfolio to the Trustee, on behalf of the Secured Parties, pursuant to
the Amended and Restated Sale and Servicing Agreement, and (iii) Available
Collections generated by the Sale Portfolio will be applied to payment of the
Purchaser’s obligations under the Amended and Restated Sale and Servicing
Agreement.  In addition, the Seller shall
have no recourse for any amounts payable or any other obligations arising under
this Agreement against any officer, member, director, employee, partner,
Affiliate or security holder of the Purchaser or any of its successors or
assigns.

 

Section 10.13.        Binding
Effect; Assignability.

 

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

 

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

 

Section 10.14.        Waiver
of Setoff.

 

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

 

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

 

45

 

Section 10.15.        Headings
and Exhibits.  The headings herein
are for purposes of references only and shall not otherwise affect the meaning
or interpretation of any provision hereof. 
The schedules and exhibits attached hereto and referred to herein shall
constitute a part of this Agreement and are incorporated into this Agreement
for all purposes.

 

Section 10.16.        Rights
of Inspection.  The Purchaser and its
representatives and assigns may conduct at any reasonable time, with reasonable
notice, and from time to time, and the Seller will fully cooperate with, a
reasonable number of field examinations and audits of the inventory, the Loan
Assets and business affairs of the Seller each calendar year.  Each such inspection shall be at the sole
expense of the Seller.  The Purchaser and
its representatives and successors and assigns acknowledge that in exercising
the rights and privileges conferred in this Section 10.16, it or
its representatives or assigns may, from time to time, obtain knowledge of
information, practices, books, correspondence and records of a confidential
nature and in which the Seller has a proprietary interest.  The Purchaser and its representatives and
successors and assigns agree that (i) they shall retain in strict
confidence and shall use their best efforts to ensure that their
representatives retain in strict confidence and will not disclose without the
prior written consent of the Seller any or all of such information, practices,
books, correspondence and records furnished to them and (ii) that they
will not, and will use their best efforts to ensure that their representatives
and assigns will not, make any use whatsoever (other than for the purposes
contemplated by this Agreement) of any of such information, practices, books,
correspondence and records without the prior written consent of the Seller,
unless such information is generally available to the public or is required by
law to be disclosed.

 

Section 10.17.        Subordination.  After giving effect to any payment relating
to any indebtedness, obligation or claim the Seller may from time to time hold
or otherwise have against the Purchaser or any assets or properties of the
Purchaser, whether arising hereunder or otherwise existing, the Borrowing Base
at such time must exceed the Obligations owed by the Purchaser to the Secured
Parties under the Amended and Restated Sale and Servicing Agreement.  The Seller hereby agrees that at any time
during which the condition set forth in the preceding sentence shall not be
satisfied, the Seller shall be subordinate in right of payment to the prior
payment of any indebtedness or obligation of the Purchaser owing to the Note
Purchaser, the Trustee, the Collateral Custodian, the Agent or any other
Secured Party under the Amended and Restated Sale and Servicing Agreement.

 

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

 

Section 10.19.        Confidentiality.  Each of the parties hereto hereby agrees with
the confidentiality provisions set forth in Sections 11.13 and 11.14 of the
Amended and Restated Sale and Servicing Agreement.

 

46

 

Section 10.20.        Assignments
of Loan Assets.

 

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

 

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

 

[Signature pages to follow.]

 

47

 

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

 

	
   

  	
  ARES CAPITAL CP FUNDING

  
	
   

  	
   LLC, as the
  Purchaser

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard S. Davis

  
	
   

  	
   

  	
  Name:
  Richard S. Davis

  
	
   

  	
   

  	
  Title:
  Chief Financial Officer

  

 

 

	
   

  	
  ARES CAPITAL CP FUNDING HOLDINGS LLC, as the
  Seller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard S. Davis

  
	
   

  	
   

  	
  Name:
  Richard S. Davis

  
	
   

  	
   

  	
  Title:
  Chief Financial Officer

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