Document:

Exhibit 10.1

 

Execution

 

SENIOR SECURED REVOLVING CREDIT AGREEMENT

 

dated as of

 

December 28, 2005

 

and amended and restated as
of

 

January 22, 2010

 

between

 

ARES CAPITAL CORPORATION

 

The LENDERS Party Hereto

 

and

 

JPMORGAN CHASE BANK, N.A.

as Administrative Agent

 

BANK OF AMERICA, N.A.

SUNTRUST BANK,

as Syndication Agents

 

$690,000,000

 

 

JPMORGAN SECURITIES INC.

BANC OF AMERICA SECURITIES LLC

SUNTRUST ROBINSON HUMPHREY, INC.

as Joint Bookrunners and Joint Lead Arrangers

 

i

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION 1.01.
  Defined Terms

  	
   

  	
  1

  
	
  SECTION 1.02.
  Classification of Loans and Borrowings

  	
   

  	
  30

  
	
  SECTION 1.03.
  Terms Generally

  	
   

  	
  30

  
	
  SECTION 1.04.
  Accounting Terms; GAAP

  	
   

  	
  30

  
	
  SECTION 1.06.
  Currencies; Currency Equivalents

  	
   

  	
  31

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  	
  32

  
	
   

  	
   

  	
   

  
	
  THE CREDITS

  	
   

  	
  32

  
	
   

  	
   

  	
   

  
	
  SECTION 2.01.
  The Commitments

  	
   

  	
  32

  
	
  SECTION 2.02.
  Loans and Borrowings

  	
   

  	
  33

  
	
  SECTION 2.03.
  Requests for Borrowings

  	
   

  	
  34

  
	
  SECTION 2.04.
  Letters of Credit

  	
   

  	
  35

  
	
  SECTION 2.05.
  Funding of Obligations

  	
   

  	
   

  
	
  SECTION 2.06.
  Interest Elections

  	
   

  	
  40

  
	
  SECTION 2.07.
  Termination, Reduction or Increase of the Commitments

  	
   

  	
  42

  
	
  SECTION 2.08.
  Repayment of Loans; Evidence of Debt

  	
   

  	
  45

  
	
  SECTION 2.09.
  Prepayment of Loans

  	
   

  	
  46

  
	
  SECTION 2.10.
  Fees

  	
   

  	
  48

  
	
  SECTION 2.11.
  Interest

  	
   

  	
  49

  
	
  SECTION 2.12.
  Alternate Rate of Interest

  	
   

  	
  50

  
	
  SECTION 2.13.
  Increased Costs

  	
   

  	
  51

  
	
  SECTION 2.14.
  Break Funding Payments

  	
   

  	
  52

  
	
  SECTION 2.15.
  Taxes

  	
   

  	
  53

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

  	
   

  	
  56

  
	
  SECTION 2.17.
  Defaulting Lenders

  	
   

  	
  58

  
	
  SECTION 2.18.
  Mitigation Obligations; Replacement of Lenders

  	
   

  	
  60

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  	
  61

  
	
   

  	
   

  	
   

  
	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  61

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01.
  Organization; Powers

  	
   

  	
  61

  
	
  SECTION 3.02.
  Authorization; Enforceability

  	
   

  	
  61

  
	
  SECTION 3.03.
  Governmental Approvals; No Conflicts

  	
   

  	
  61

  
	
  SECTION 3.04.
  Financial Condition; No Material Adverse Change

  	
   

  	
  62

  
	
  SECTION 3.05.
  Litigation

  	
   

  	
  63

  
	
  SECTION 3.06. Compliance
  with Laws and Agreements

  	
   

  	
  63

  

 

ii

 

	
  SECTION 3.07.
  Reserved

  	
   

  	
  63

  
	
  SECTION 3.08.
  Taxes

  	
   

  	
  63

  
	
  SECTION 3.09.
  ERISA

  	
   

  	
  63

  
	
  SECTION 3.10.
  Disclosure

  	
   

  	
  63

  
	
  SECTION 3.11.
  Investment Company Act; Margin Regulations

  	
   

  	
  64

  
	
  SECTION 3.12.
  Material Agreements and Liens

  	
   

  	
  64

  
	
  SECTION 3.13.
  Subsidiaries and Investments

  	
   

  	
  65

  
	
  SECTION 3.14.
  Properties

  	
   

  	
  65

  
	
  SECTION 3.15.
  Affiliate Agreements

  	
   

  	
  66

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  	
  66

  
	
   

  	
   

  	
   

  
	
  CONDITIONS 

  	
   

  	
  66 

  
	
   

  	
   

  	
   

  
	
  SECTION 4.01.
  Restatement Effective Date

  	
   

  	
  66

  
	
  SECTION 4.02.
  Each Credit Event

  	
   

  	
  68

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  	
  69

  
	
   

  	
   

  	
   

  
	
  AFFIRMATIVE COVENANTS

  	
   

  	
  69

  
	
   

  	
   

  	
   

  
	
  SECTION 5.01.
  Financial Statements and Other Information

  	
   

  	
  69

  
	
  SECTION 5.02.
  Notices of Material Events

  	
   

  	
  71

  
	
  SECTION 5.03.
  Existence; Conduct of Business

  	
   

  	
  71

  
	
  SECTION 5.04.
  Payment of Obligations

  	
   

  	
  71

  
	
  SECTION 5.05.
  Maintenance of Properties; Insurance

  	
   

  	
  71

  
	
  SECTION 5.06.
  Books and Records; Inspection and Audit Rights

  	
   

  	
  72

  
	
  SECTION 5.07.
  Compliance with Laws

  	
   

  	
  72

  
	
  SECTION 5.08.
  Certain Obligations Respecting Subsidiaries; Further Assurances

  	
   

  	
  73

  
	
  SECTION 5.09.
  Use of Proceeds

  	
   

  	
  75

  
	
  SECTION 5.10.
  Status of RIC and BDC

  	
   

  	
  75

  
	
  SECTION 5.11.
  Investment and Valuation Policies

  	
   

  	
  75

  
	
  SECTION 5.12.
  Portfolio Valuation and Diversification, Etc.

  	
   

  	
  75

  
	
  SECTION 5.13.
  Calculation of Borrowing Base

  	
   

  	
  78

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  	
  85

  
	
   

  	
   

  	
   

  
	
  NEGATIVE COVENANTS

  	
   

  	
  85

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01.
  Indebtedness

  	
   

  	
  85

  
	
  SECTION 6.02.
  Liens

  	
   

  	
  86

  
	
  SECTION 6.03.
  Fundamental Changes

  	
   

  	
  87

  
	
  SECTION 6.04.
  Investments

  	
   

  	
  88

  
	
  SECTION 6.05.
  Restricted Payments

  	
   

  	
  89

  
	
  SECTION 6.06.
  Certain Restrictions on Subsidiaries

  	
   

  	
  90

  
	
  SECTION 6.07.
  Certain Financial Covenants

  	
   

  	
  91

  
	
  SECTION 6.08. Transactions
  with Affiliates

  	
   

  	
  92

  

 

iii

 

	
  SECTION 6.09.
  Lines of Business

  	
   

  	
  92

  
	
  SECTION 6.10.
  No Further Negative Pledge

  	
   

  	
  92

  
	
  SECTION 6.11.
  Modifications of Certain Documents

  	
   

  	
  93

  
	
  SECTION 6.12.
  Permitted Indebtedness

  	
   

  	
  93

  
	
  SECTION 6.13.
  Specified Debt

  	
   

  	
  93

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  	
  94

  
	
   

  	
   

  	
   

  
	
  EVENTS OF DEFAULT

  	
   

  	
  94

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  	
  98

  
	
   

  	
   

  	
   

  
	
  THE ADMINISTRATIVE AGENT

  	
   

  	
  98

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX 

  	
   

  	
  101 

  
	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  	
   

  	
  101

  
	
   

  	
   

  	
   

  
	
  SECTION 9.01.
  Notices; Electronic Communications

  	
   

  	
  101

  
	
  SECTION 9.02.
  Waivers; Amendments

  	
   

  	
  102

  
	
  SECTION 9.03.
  Expenses; Indemnity; Damage Waiver

  	
   

  	
  105

  
	
  SECTION 9.04.
  Successors and Assigns

  	
   

  	
  106

  
	
  SECTION 9.05.
  Survival

  	
   

  	
  110

  
	
  SECTION 9.06.
  Counterparts; Integration; Effectiveness; Electronic Execution

  	
   

  	
  110

  
	
  SECTION 9.07.
  Severability

  	
   

  	
  111

  
	
  SECTION 9.08.
  Right of Setoff

  	
   

  	
  111

  
	
  SECTION 9.09.
  Governing Law; Jurisdiction; Etc.

  	
   

  	
  111

  
	
  SECTION 9.10.
  WAIVER OF JURY TRIAL

  	
   

  	
  112

  
	
  SECTION 9.11.
  Judgment Currency

  	
   

  	
  112

  
	
  SECTION 9.12.
  Headings

  	
   

  	
  113

  
	
  SECTION 9.13.
  Treatment of Certain Information; Confidentiality

  	
   

  	
  113

  
	
  SECTION 9.14.
  USA PATRIOT Act

  	
   

  	
  114

  
	
  SECTION 9.15.
  First Amendment

  	
   

  	
  114

  
	
  SECTION 9.16.
  Amendment to Security Agreement

  	
   

  	
  114

  
	
  SECTION 9.17. Amendment to
  Intercreditor Agreement

  	
   

  	
  114

  

 

iv

 

	
  SCHEDULE
  I

  	
  —

  	
  Commitments

  
	
  SCHEDULE
  II

  	
  —

  	
  Material
  Agreements and Liens

  
	
  SCHEDULE
  III

  	
  —

  	
  Litigation

  
	
  SCHEDULE
  IV

  	
  —

  	
  Subsidiaries
  and Investments

  
	
  SCHEDULE
  V

  	
  —

  	
  Transactions
  with Affiliates

  
	
  SCHEDULE
  VI

  	
  —

  	
  Moody’s
  Industry Classification Group List

  
	
  SCHEDULE
  VII

  	
  —

  	
  Approved
  Dealers and Approved Pricing Services

  
	
  SCHEDULE
  VIII

  	
  —

  	
  Mandatory
  Cost Schedule

  

 

	
  EXHIBIT
  A

  	
  -

  	
  Form of
  Assignment and Assumption

  
	
  EXHIBIT
  B

  	
  -

  	
  Form of
  Guarantee and Security Agreement Confirmation

  
	
  EXHIBIT
  C

  	
  -

  	
  Form of
  Opinion of Maryland Counsel to the Borrower

  
	
  EXHIBIT
  D

  	
  -

  	
  Form of
  Opinion of Counsel to JPMCB

  
	
  EXHIBIT
  E

  	
  -

  	
  Form of
  Borrowing Base Certificate

  
	
  EXHIBIT
  F

  	
  -

  	
  Form of
  Borrowing Request

  
	
  EXHIBIT
  G

  	
  -

  	
  Form of
  Interest Election Request

  
	
  EXHIBIT
  H

  	
  -

  	
  Form of
  First Amendment to Intercreditor Agreement

  

 

v

 

SENIOR
SECURED REVOLVING CREDIT AGREEMENT dated as of December 28, 2005 and
amended and restated as of January 22, 2010 (this “Agreement”),
between ARES CAPITAL CORPORATION, the LENDERS party hereto, and JPMORGAN CHASE
BANK, N.A. as Administrative Agent.

 

Ares Capital Corporation, the “Lenders” party
thereto (the “Existing Lenders”), and the Administrative
Agent, are parties to a Senior Secured Revolving Credit Agreement dated as of December 28,
2005 (as amended through the Restatement Effective Date, the “Original
Agreement”).

 

Each
of the Existing Lenders not a party hereto (each, a “Retiring Lender”)
will cease to be a “Lender” under the Original Agreement as of the Restatement
Effective Date.  Each (a) Existing
Lender party hereto (each, a “Continuing Lender”) and each (b) lender
party hereto (other than Continuing Lenders) (each, a “New Lender”)
shall become or continue as a “Lender” under the Original Agreement as amended
and restated by this Agreement.

 

The
Borrower has requested that the Continuing Lenders and the New Lenders provide
the credit facilities described herein under this Agreement which shall amend
and restate the Original Agreement on the terms specified herein to, inter
alia, extend credit to the Borrower in an initial aggregate principal or face
amount not exceeding $690,000,000 at any one time outstanding.  The Continuing Lenders and the New Lenders
are prepared to amend and restate the Original Agreement upon the terms and
conditions hereof, and, accordingly, the parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

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

 

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

 

“Acquisition”
means the acquisition by the Borrower of 100% of the outstanding capital stock
of Allied as announced on October 26, 2009.

 

“Additional
Debt Amount” means, as of any date, the greater of (a) $25,000,000 and
(b) an amount equal to 5% of Shareholder’s Equity less the outstanding
amount of Allied 2011/12 Notes as of such date.

 

1

 

“Adjusted
Borrowing Base” means: (a) the lesser of  the (i) Borrowing Base and (ii) Relevant
Available Funds minus (b) the aggregate amount of Cash and Cash
Equivalents included in the Portfolio Investments (provided that cash cover for
outstanding Letters of Credit shall not be treated as a portion of the
Portfolio Investments).

 

“Adjusted
Covered Debt Amount” means the Covered Debt Amount minus the aggregate
amount of Cash and Cash Equivalents included in the Portfolio Investments
(provided that cash cover for outstanding Letters of Credit shall not be
treated as a portion of the Portfolio Investments).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Agreed
Foreign Currency” means, at any time, any of Canadian Dollars, English
Pounds Sterling, Euros and, with the agreement of each Lender, any other
Foreign Currency, so long as, in respect of any such specified Foreign Currency
or other 

 

2

 

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

 

“Allied”
means Allied Capital Corporation, a Maryland corporation.

 

“Allied
2011/12 Notes” means, collectively (i) Allied’s $400,000,000 6.625%
Notes due July 15, 2011 issued pursuant to that Indenture, dated as of June 16,
2006, by and between Allied and The Bank of New York (the “Indenture”),
as amended by the First Supplemental Indenture, dated as of July 25, 2006
and (ii) Allied’s $250,000,000 6.00% Notes due April 1, 2012 issued
pursuant to the Indenture as amended by the Second Supplemental Indenture,
dated as of December 8, 2008 and, in each case, without giving effect to
any modification, amendment, increase, replacement or refinancing of such
Indebtedness after the Acquisition (other than any supplement entered into to
give effect to the assumption of such Indebtedness by the Borrower or its
Subsidiaries).

 

“Allied
2047 Notes” means Allied’s $200,000,000 6.875% Notes due April 15,
2047 issued pursuant to the Indenture as amended by the Third Supplemental
Indenture, dated as of March 28, 2007, without giving effect to any
modification, amendment, increase, replacement or refinancing of such
Indebtedness after the Acquisition (other than any supplement entered into to
give effect to the assumption of such Indebtedness by the Borrower or its
Subsidiaries), as reported on the Borrower’s balance sheet.

 

“Allied
Excepted Property” means any property of Allied or any of its subsidiaries
at the time of the Acquisition that secures the Allied Secured Indebtedness;
provided that, concurrently with (or prior to) the Acquisition, such property
is transferred to a Special Acquisition Subsidiary.

 

“Allied
Secured Indebtedness” means up to $250,000,000 of secured Indebtedness of
Allied or any of its subsidiaries and any replacement or refinancing thereof;
provided that, concurrently with (or prior to) the Acquisition, (a) such
Indebtedness is assumed by a Special Acquisition Subsidiary and (b) the
outstanding amount of such Indebtedness is not increased without the consent of
the Required Lenders.

 

“Alternate
Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Federal Funds Effective Rate 

 

3

 

for
such day plus 1/2 of 1% and (c) the rate per annum equal to 1% plus
the rate appearing on Reuters Screen LIBOR01 Page (or on any successor or
substitute page of such service, or any successor to or substitute for
such service, providing rate quotations comparable to those currently provided
on such page of such service, as determined by the Administrative Agent
from time to time for purposes of providing quotations of interest rates
applicable to Dollar deposits in the London interbank market) at approximately
11:00 a.m., London time, on such day (or if such day is not a Business
Day, the immediately preceding Business Day), for Dollar deposits with a term
of one month.  Any change in the
Alternate Base Rate due to a change in the Prime Rate, the Federal Funds
Effective Rate or the rate appearing on Reuters Screen LIBOR01 Page (or
successor or substitute therefor) as set forth above shall be effective from
and including the effective date of such change in the Prime Rate, the Federal
Funds Effective Rate or such rate appearing on Reuters Screen LIBOR01 Page (or
successor or substitute therefor), respectively.

 

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

 

“Applicable Margin” means, for any day, with respect to any ABR
Loan or Eurocurrency Loan, or with respect to the commitment fees payable under
Section 2.10 hereunder, as the case may be, the applicable rate per annum
set forth below under the caption “ABR”, “LIBOR” or “Commitment Fee”, as the
case may be, based upon the Borrower Rating of S&P Fitch, and Moody’s,
respectively, applicable on such date:

 

	
  Borrower
  Rating

  S&P/Fitch/Moody’s

  	
   

  	
  Applicable Margin

  	
   

  	
   

  	
   

  
	
  Category

  	
   

  	
  ABR

  	
   

  	
  LIBOR

  	
   

  	
  Commitment Fee

  	
   

  
	
  > BBB/BBB/Baa2

  	
   

  	
  1.50

  	
  %

  	
  2.50

  	
  %

  	
  0.50

  	
  %

  
	
  = BBB/BBB/Baa2

  	
   

  	
  2.00

  	
  %

  	
  3.00

  	
  %

  	
  0.50

  	
  %

  
	
  = BBB-/BBB-/Baa3

  	
   

  	
  2.50

  	
  %

  	
  3.50

  	
  %

  	
  0.625

  	
  %

  
	
  < BBB-/BBB-/Baa3

  	
   

  	
  3.00

  	
  %

  	
  4.00

  	
  %

  	
  0.75

  	
  %

  

 

For purposes of the foregoing, (i) if any of S&P, Fitch or
Moody’s shall not have in effect a Borrower Rating for the Borrower (other than
by reason of the circumstances referred to in the penultimate sentence of this
definition) or if the Borrower shall have voluntarily elected to terminate its
arrangement with any rating agency for the ongoing rating of itself, then such
rating agency shall be deemed to have 

 

4

 

established the lowest Borrower Rating; (ii) if the Borrower
Ratings established or deemed to have been established by S&P, Fitch and
Moody’s shall fall within different Categories, the Applicable Margin shall be
based on the lower of the two highest ratings unless, at such time, only two of
the applicable rating agencies shall have in effect a Borrower Rating for the
Borrower ((x) without giving effect to any deemed rating pursuant to
clause (i) and (y) other than by reason of the circumstances referred
to in the penultimate sentence of this definition) and one of the two ratings
is two or more Categories lower than the other, in which case the Applicable
Rate shall be determined by reference to the Category next above that of the
lower of the two Borrower Ratings; (iii) if the Borrower Ratings
established or deemed to have been established by S&P, Fitch and Moody’s
shall be changed (other than as a result of a change in the rating system of
S&P, Fitch or Moody’s), such change shall be effective as of the date on
which it is first announced by the applicable rating agency, irrespective of
when notice of such change shall have been furnished by the Borrower to the
Administrative Agent and the Lenders pursuant to Section 5.01 or otherwise
and (iv) during the continuance of any Event of Default, the rates
corresponding to the lowest Borrower Rating shall apply.  Each change in the Applicable Margin shall
apply during the period commencing on the effective date of such change and ending
on the date immediately preceding the effective date of the next such
change.  If the rating system of S&P,
Fitch or Moody’s shall change, or if any such rating agency shall cease to be
in the business of rating corporate debt obligations, the Borrower (1) may,
to the extent that only one of the rating agencies rating’s system has changed
or has ceased to be in the business of rating corporate debt obligations, or (2) shall,
to the extent that more than one of the rating agencies rating’s systems has changed
or has ceased to be in the business of rating corporate debt obligations,
negotiate with the Lenders in good faith to amend this definition to reflect
such changed rating system or the unavailability of ratings from such rating
agency and, pending the effectiveness of any such amendment, the Applicable
Margin shall be determined by reference to the rating most recently in effect
prior to such change or cessation; provided that if the Borrower shall not
elect to negotiate with the Lenders to amend this definition pursuant to clause
(1) of the foregoing, the affected rating agency shall be deemed to have
established the lowest Borrower Rating. 
If any Borrower Rating is on-watch, such on-watch status will be
disregarded for purposes of determining the Applicable Margin.

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

“Borrower
Rating” means, with respect to the Borrower, (a) in the case of
S&P, the Borrower’s long-term counterparty rating, (b) in the case of
Fitch, the Borrower’s long-term issuer default rating and (c) in the case
of Moody’s, the Borrower’s issuer rating.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

“Change
in Control” means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the
Securities and Exchange Commission thereunder as in effect on the Restatement
Effective Date), of shares representing more than 35% of the aggregate ordinary
voting power represented by the issued and outstanding capital stock of the
Borrower; (b) occupation of a majority of the seats (other than vacant
seats) on the board of directors of the Borrower by Persons who 

 

8

 

were
neither (i) nominated by the requisite members of the board of directors
of the Borrower nor (ii) appointed by a majority of the directors so
nominated; or (c) the acquisition of direct or indirect Control of the
Borrower by any Person or group other than Ares Capital Management.  For the avoidance of doubt, (1) the
Acquisition and the issuance of its Equity Interests by the Borrower in
connection therewith shall not constitute a “Change in Control” so long as
after giving effect thereto, none of the events or circumstances described in
the foregoing clauses (a) through (c) shall have occurred with
respect to the Borrower and (2) the shareholders taken as a whole of
Allied shall not constitute a “group” for purposes of clause (a) of the
foregoing so long as they would not otherwise constitute a “group” within the
meaning of the Securities Exchange Act of 1934 and the rules of the
Securities and Exchange Commission thereunder as in effect on the Restatement
Effective Date.

 

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

 

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

 

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

 

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

 

“Commitment”
means, with respect to each Lender, the aggregate of its Initial Commitment and
its Step-Up Date Commitment (if any), as such commitments may be (a) reduced
or increased from time to time pursuant to Section 2.07 and (b) reduced
or increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04.  The
initial aggregate amount of the Lenders’ Commitments as of the Restatement
Effective Date is $690,000,000.  Unless
otherwise expressly stated herein, references herein to “Commitments” shall
include the Step-Up Date Commitments.

 

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

 

9

 

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

 

“Commitment
Termination Date” means January 22, 2013.

 

“Continuing
Lenders” has the meaning set forth in the recitals.

 

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

 

“Controlled
Foreign Corporation” means any Subsidiary which is (i) a “controlled
foreign corporation” (within the meaning of Section 957 of the Code), (ii) a
subsidiary substantially all the assets of which consist of equity in
Subsidiaries described in clause (i) of this definition, or (iii) an
entity treated as disregarded for U.S. federal income tax purposes that owns
more than 65% of the voting stock of a Subsidiary described in clause (i) or
(ii) of this definition.

 

“Covered
Debt Amount” means, on any date, (a) all of the Revolving Credit
Exposures of all Lenders on such date plus (b) the aggregate amount
of outstanding Permitted Indebtedness on such date plus (c) the
aggregate amount of any Indebtedness incurred pursuant to Section 6.01(g) plus
(d) the aggregate amount of any outstanding Allied 2011/12 Notes minus (e) the
LC Exposures fully cash collateralized on such date pursuant to Section 2.04(k) and
the last paragraph of Section 2.08(a); provided that if the
Acquisition has been consummated, the aggregate amount of the Allied 2047 Notes
will be excluded from the calculation of the Covered Debt Amount solely for
purposes of (i) determining compliance with the Borrowing Base, including,
without limitation, for purposes of calculating compliance with clause (d) of
the definition of “Step-Up Date” and (ii) to the extent that the Borrowing
Base is less than Relevant Available Funds (after giving effect to the
exclusion of the Allied 2047 Notes from Relevant Available Funds) on any
relevant determination date, the Liquidity Tests set forth in clauses (i) and
(ii) of Section 6.07(c).

 

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

 

“CP
Facility Documents” means, collectively, (a) the Purchase and Sale
Agreement dated as of November 3, 2004 by and between the Borrower and
Ares Capital CP, (b) the Sale and Servicing Agreement by and among the
Borrower, Ares Capital CP, the Conduit Purchasers and institutional purchasers
party thereto, the Purchaser Agents party thereto, Wachovia Capital Markets,
LLC, as Administrative Agent, U.S. Bank National Association, as Trustee, and
Lyon Financial Services, Inc., as Backup Servicer, and (c) the
Intercreditor and Concentration Account Administration Agreement dated as 

 

10

 

of
November 3, 2004 by and among U.S. Bank National Association, as
Concentration Account Bank, U.S. Bank National Association, as Account Custodian,
the Borrower, as Originator, Original Servicer and Concentration Account
Servicer, and the Security Interest Grantees from time to time party
thereto.  It is understood that the term “CP
Facility Documents” shall not include the exhibits and schedules thereto.

 

“Currency”
means Dollars or any Foreign Currency.

 

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

 

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

 

“Defaulting
Lender” means any Lender, as determined by the Administrative Agent, that
has (a) failed to fund any portion of its Loans or participations in
Letters of Credit within three Business Days of the date required to be funded
by it hereunder, unless, in the case of any Loans, such Lender’s failure is
based on such Lender’s reasonable determination that the conditions precedent
to funding such Loan under this Agreement have not been met, such conditions
have not otherwise been waived in accordance with the terms of this Agreement
and such Lender has advised the Administrative Agent in writing (with
reasonable detail of those conditions that have not been satisfied) prior to
the time at which such funding was to have been made, (b) notified the
Borrower, the Administrative Agent, the Issuing Bank or any Lender in writing
that it does not intend to comply with any of its funding obligations under
this Agreement or has made a public statement to the effect that it does not
intend to comply with its funding obligations under this Agreement or generally
under other agreements in which it commits to extend credit, (c) failed,
within three Business Days after request by the Administrative Agent, to
confirm that it will comply with the terms of this Agreement relating to its
obligations to fund prospective Loans and participations in then outstanding
Letters of Credit, (d) otherwise failed to pay over to the Administrative
Agent or any other Lender any other amount required to be paid by it hereunder
within three Business Days of the date when due, unless the subject of a good
faith dispute, or (e) (i) become or is insolvent or has a parent
company that has become or is insolvent or (ii) become the subject of a
bankruptcy or insolvency proceeding, or has had a receiver, conservator,
trustee, administrator, assignee for the benefit of creditors or similar Person
charged with reorganization or liquidation of its business or custodian,
appointed for it, or has taken any action in furtherance of, or indicating its
consent to, approval of or acquiescence in any such proceeding or appointment
or has a parent company that has become the subject of a bankruptcy or
insolvency proceeding, or has had a receiver, conservator, trustee,
administrator, assignee for the benefit of creditors or similar Person charged
with reorganization or liquidation of its business or custodian appointed for
it, or has taken any action in furtherance of, or indicating its consent to,
approval of or acquiescence in any such proceeding or appointment.

 

11

 

“Designated
Subsidiary” means:

 

(a)           a direct or indirect Subsidiary of
the Borrower designated by the Borrower as a “Designated Subsidiary” which
meets the following criteria:

 

(i)            to which any Obligor sells, conveys
or otherwise transfers (whether directly or indirectly) Portfolio Investments,
which engages in no material activities other than in connection with the
purchase or financing of such assets;

 

(ii)           no portion of the Indebtedness or any
other obligations (contingent or otherwise) of such Subsidiary (A) is
Guaranteed by any Obligor (other than Guarantees in respect of Standard
Securitization Undertakings), (B) is recourse to or obligates any Obligor
in any way other than pursuant to Standard Securitization Undertakings or (C) subjects
any property of any Obligor (other than property that has been contributed or
sold, purported to be sold or otherwise transferred to such Subsidiary),
directly or indirectly, contingently or otherwise, to the satisfaction thereof,
other than pursuant to Standard Securitization Undertakings or any Guarantee
thereof,

 

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

 

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

 

(b)           a direct or indirect Subsidiary of
the Borrower designated by the Borrower as a “Designated Subsidiary” and which
satisfies each of the foregoing criteria set forth in clauses (a)(ii), (iii) and
(iv).

 

Any
such designation by the Borrower shall be effected pursuant to a certificate of
a Financial Officer delivered to the Administrative Agent, which certificate
shall include a statement to the effect that, to the best of such officer’s
knowledge, such designation complied with the foregoing conditions set forth in
clauses (a) or (b).  For the
avoidance of doubt, in the case of clause (a), the Borrower shall be in
compliance with Section 6.03(d) after giving effect to any such
designation.  Each Subsidiary of a
Designated Subsidiary shall be deemed to be a Designated Subsidiary and shall
comply with the foregoing requirements of this definition.  The parties hereby agree that Ares Capital
CP, Ares Capital CP Holdings, Ares Capital CP II, Ares Capital CP Holdings II,
ARCC CLO 2006 LLC, ARCC Commercial Loan Trust 2006 and ARCC JTC, LLC shall each
constitute a Designated Subsidiary so long as they comply with the foregoing
requirements of this definition.

 

12

 

“Disclosed
Matters” means the actions, suits and proceedings disclosed or referenced
in Schedule III (provided that such matters to the extent relating to
Allied and its subsidiaries or the Acquisition may be updated on or prior to
the date of the Acquisition with the consent of the Required Lenders and each
Lender having a Step-Up Date Commitment).

 

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

 

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

 

“Domestic
Subsidiary” means any Subsidiary other than a Controlled Foreign
Corporation.

 

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

 

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

 

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

 

“ERISA
Event” means (a) any “reportable event”, as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) any
failure by any Plan to satisfy the minimum funding standard (within the meaning
of Section 412 of the Code or Section 302 of ERISA) applicable to
such Plan; (c) the filing pursuant to Section 412(c) of the Code
or Section 302(c) of ERISA of an application for a waiver of the
minimum funding standard with respect to any Plan; (d) the incurrence by
the Borrower or any of its ERISA Affiliates of any liability under Title IV of
ERISA with respect to the termination of any Plan; (e) the receipt by the
Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any
notice relating to an intention to terminate any Plan or Plans or to appoint a
trustee to administer any Plan; (f) the incurrence by the Borrower or any
of its ERISA Affiliates of any liability with respect to the withdrawal or
partial withdrawal from any Plan or Multiemployer Plan; or (g) the 

 

13

 

receipt
by the Borrower or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.

 

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

 

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

 

“Excluded
Taxes” means, with respect to the Administrative Agent, any Lender, the
Issuing Bank or any other recipient of any payment to be made by or on account
of any obligation of the Borrower hereunder, (a) income or franchise taxes
imposed on (or measured by) its net income by the United States of America, or
by the jurisdiction (or any political subdivision thereof) under the laws of
which such recipient is organized or in which its principal office is located
or, in the case of any Lender, in which its applicable lending office is
located, (b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction in which the
Borrower is located, (c) in the case of a Foreign Lender (other than an
assignee pursuant to a request by the Borrower under Section 2.18(b)), any
withholding tax that is imposed on amounts payable to such Foreign Lender at
the time such Foreign Lender becomes a party to this Agreement (or designates a
new lending office) or is attributable to such Foreign Lender’s failure or
inability (other than as a result of a Change in Law described in clause ( a)
or (b) of the definition of Change in Law) to comply with Section 2.15(e),
except to the extent, other than in a case of failure to comply with Section 2.15(e),
that such Foreign Lender’s (or its assignor, if any) was entitled, at the time
of designation of a new lending office (or assignment), to receive additional
amounts from the Borrower with respect to such withholding tax pursuant to Section 2.15(a),
(d) in the case of a Foreign Lender, any withholding tax that is imposed
on amounts payable to such Foreign Lender to the extent attributable to such
Foreign Lender’s failure to take any action (including entering into an agreement
with the Internal Revenue Service) or comply with any information gathering and
reporting requirements, in each case, that are required to obtain the maximum
available exemption from United States federal withholding taxes under Title I
of the Foreign Account Tax Compliance Act of 2009 (the “Proposed Act) or under
legislation that is substantially similar to Title I of the Proposed Act with
respect to payments received by or on behalf of such Foreign Lender and (e) in
the case of any Lender or Issuing Bank that is not a Foreign Lender, any
withholding tax that is imposed as a result of such Lender’s or Issuing Bank’s
failure or inability to comply with Section 2.15(f).

 

“Existing
Lenders” has the meaning set forth in the recitals.

 

14

 

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

 

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

 

“First
Amendment” means the First Amendment Agreement and Waiver to the Original
Agreement dated as of November 13, 2007.

 

“Fitch”
means Fitch Ratings or any successors thereto.

 

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

 

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

 

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

 

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

 

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

 

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

 

15

 

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

 

“Guarantee
and Security Agreement” means that certain Guarantee and Security Agreement
dated as of December 28, 2005 between the Borrower, the Administrative
Agent, each holder (or a representative or trustee therefor) from time to time
of any Other Secured Indebtedness, and the Collateral Agent.

 

“Guarantee
and Security Agreement Confirmation” means a Guarantee and Security
Agreement Confirmation between the parties to the Guarantee and Security
Agreement substantially in the form of Exhibit B.

 

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

 

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

 

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

 

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

 

16

 

Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person’s ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor.

 

“Indemnified
Taxes” means Taxes other than Excluded Taxes.

 

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

 

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

 

“Initial
Commitments” means, with respect to each Lender, the commitment (excluding
any Step-Up Date Commitment) of such Lender to make Loans and to acquire
participations in Letters of Credit hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender’s Revolving Credit
Exposure hereunder, as such commitment may be (a) reduced or increased
from time to time pursuant to Section 2.07 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04.  The
initial amount of each Lender’s Initial Commitment as of the Restatement
Effective Date is set forth on Schedule I, or in the Assignment and Assumption
pursuant to which such Lender shall have assumed its Initial Commitment, as
applicable.  The initial aggregate amount
of the Lenders’ Initial Commitments as of the Restatement Effective Date is
$615,000,000.

 

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

 

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

 

“Interest
Period” means, for any Eurocurrency Loan or Borrowing, the period
commencing on the date of such Loan or Borrowing and ending on the 

 

17

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

18

 

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

 

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

 

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

 

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

 

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

 

“LIBO
Rate” means, for the Interest Period for any Eurocurrency Borrowing
denominated in any Currency, the rate appearing on Reuters Screen LIBOR01 Page (or
on any successor or substitute page of such service, or any successor to
or substitute for such service, providing rate quotations comparable to those
currently provided on such page of such service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to deposits in such currency in the London or other
applicable interbank market) at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period, as LIBOR for
deposits denominated in such Currency with a maturity comparable to such
Interest Period.  In the event that such
rate is not available as described above for any reason, then the LIBO Rate for
such Interest Period shall be the rate at which deposits in such Currency in
the amount of $5,000,000 and for a maturity comparable to such Interest Period
are offered by the principal London office of the Administrative Agent in
immediately available funds in the London (or, in the case of English Pounds
Sterling, Paris) interbank market at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period.  Notwithstanding the foregoing, the LIBO Rate
for any Eurocurrency Loan denominated in English Pounds Sterling for any
Interest Period shall be the sum of (i) the rate referred to above plus
(ii) the MCR Cost.

 

19

 

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

 

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

 

“Liquidity
Tests” means, collectively, the tests set forth in Section 6.07(c).

 

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

 

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

 

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

 

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

 

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

 

“Material
Indebtedness” means (a) Indebtedness (other than the Loans, Letters of
Credit and Hedging Agreements), of any one or more of the Borrower and its
Subsidiaries in an aggregate principal amount exceeding $25,000,000 and (b) obligations
in respect of one or more Hedging Agreements under which the maximum aggregate
amount (giving effect to any netting agreements) that the Borrower and the
Subsidiaries would be required to pay if such Hedging Agreement(s) were
terminated at such time would exceed $25,000,000.

 

20

 

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

 

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

 

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

 

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

 

“New
Lenders” has the meaning set forth in the recitals.

 

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

 

“Other
Permitted Indebtedness” means (a) accrued expenses and current trade
accounts payable incurred in the ordinary course of any Obligor’s business
which are not overdue for a period of more than 90 days or which are being
contested in good faith by appropriate proceedings, (b) Indebtedness
(other than Indebtedness for borrowed money) arising in connection with
transactions in the ordinary course of any Obligor’s business in connection
with its purchasing of securities, derivatives transactions, reverse repurchase
agreements or dollar rolls to the extent such transactions are permitted under
the Investment Company Act and the Investment Policies, provided that
such Indebtedness does not arise in connection with the purchase of Portfolio
Investments other than Cash Equivalents and U.S. Government Securities and (c) Indebtedness
in respect of judgments or awards that have been in force for less than the
applicable period for taking an appeal so long as such judgments or awards do
not constitute an Event of Default under clause (l) of Article VII.

 

“Other
Secured Indebtedness” means, as at any date, Indebtedness (other than
Indebtedness hereunder) of an Obligor (which may be Guaranteed by one or more
other Obligors) that (a) has no amortization prior to, and a final
maturity date not earlier than, six months after the Commitment Termination
Date, (b) has terms substantially comparable to market terms for
substantially similar debt of other similarly situated borrowers as reasonably
determined by at least two Joint Lead Arrangers (identified on the cover of
this Agreement) and (c) is not secured by any assets of any Obligor other
than pursuant to the Security Documents and the holders of which have agreed,
in a manner satisfactory to the Administrative Agent and the Collateral Agent,
to be bound by the provisions of the Security Documents.

 

“Other
Taxes” means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any 

 

21

 

payment
made under any Loan Document or from the execution, delivery or enforcement of,
or otherwise with respect to, any Loan Document.

 

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

 

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

 

“Permitted
Allied Indebtedness” means collectively (a) the Allied 2011/12 Notes
and (b) the Allied 2047 Notes.

 

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

 

“Permitted
Liens” means (a) Liens imposed by any Governmental Authority for
taxes, assessments or charges not yet due or that are being contested in good
faith and by appropriate proceedings if adequate reserves with respect thereto
are maintained on the books of the Borrower in accordance with GAAP; (b) Liens
of clearing agencies, broker-dealers and similar Liens incurred in the ordinary
course of business, provided that such Liens (i) attach only to the
securities (or proceeds) being purchased or sold and (ii) secure only
obligations incurred in connection with such purchase or sale, and not any
obligation in connection with margin financing; (c) Liens imposed by law,
such as materialmen’s, mechanics’, carriers’, workmens’, storage and repairmen’s
Liens and other similar Liens arising in the ordinary course of business and
securing obligations (other than Indebtedness for borrowed money); (d) Liens
incurred or pledges or deposits made to secure obligations incurred in the
ordinary course of business under workers’ compensation laws, unemployment
insurance or other similar social security legislation (other than in respect
of employee benefit plans subject to ERISA) or to secure public or statutory
obligations; (e) Liens securing the performance of, or payment in respect
of, bids, insurance premiums, deductibles or co-insured amounts, tenders,
government or utility contracts (other than for the repayment of borrowed
money), surety, stay, customs and appeal bonds and other obligations of a
similar nature incurred in the ordinary course of business; (f) Liens
arising out of judgments or awards that have been in force for less than the
applicable period for taking an appeal so long as such judgments or awards do
not constitute an Event of Default under clause (l) of Article VII;
(g) customary rights of setoff and liens upon (i) deposits of cash in
favor of banks or other depository institutions in which such cash is
maintained in the ordinary course of business, (ii) cash and financial
assets held in securities accounts in favor of banks and other financial
institutions with which such accounts are maintained in the ordinary course of
business and (iii) assets held by a custodian in favor of such custodian
in the ordinary course of business securing payment of fees, indemnities and
other similar obligations; (h) Liens arising solely from precautionary
filings of financing statements under the Uniform Commercial Code of the
applicable jurisdictions in respect of operating leases entered 

 

22

 

into
by the Borrower or any of its Subsidiaries in the ordinary course of business;
and (i) precautionary Liens, and filings of financing statements under the
Uniform Commercial Code, covering assets sold or contributed to any Person not
prohibited hereunder.

 

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

 

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

 

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

 

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

 

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

 

“Quarterly
Dates” means the last Business Day of March, June, September and December in
each year, commencing on March 31, 2010.

 

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

 

23

 

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

 

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

 

“Relevant
Available Funds” means, as of any date of determination, without
duplication, the aggregate amount of (a) Indebtedness of the Obligors that
is not required to be repaid, prepaid or terminated on or prior to the date six
months after such date of determination, (b) Relevant Available
Commitments of the Obligors and (c) Relevant Available Commitments of
subsidiaries and portfolio companies Controlled by the Obligors to the extent
available to be utilized, directly or indirectly, to increase the liquidity
available to the Obligors, as determined in good faith by the Borrower.

 

“Relevant
Available Commitments” means, for any Person, as of any date of
determination, undrawn commitments to extend credit to or for the account of
such Person that have a final termination date not earlier than six months
after such date of determination, the conditions for the availability of which
have been satisfied other than with respect to the delivery of a borrowing
request or similar notice (which such Person is permitted to deliver).

 

“Relevant
Investment Commitments” will mean, for any Person, all commitments of such
Person to acquire, make or enter into, any Investments (other than Investments
constituting Cash Equivalents or, to the extent entered into for risk
reductions in the ordinary course of business, Hedging Agreements), in each
case as determined by reference to the value of such Investments as if the same
were actually consummated.  For purposes
of the foregoing, “commitments” shall only include binding commitments not
subject to unilateral veto or rejection by any Obligor.

 

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

 

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

 

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

 

24

 

 

“Retiring
Lenders” has the meaning set forth in the recitals.

 

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

 

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

 

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

 

“Security
Documents” means, collectively, the Guarantee and Security Agreement, all
Uniform Commercial Code financing statements filed with respect to the security
interests in personal property created pursuant to the Guarantee and Security
Agreement and all other assignments, pledge agreements, security agreements,
intercreditor agreements, control agreements and other instruments executed and
delivered at any time by any of the Obligors pursuant to the Guarantee and
Security Agreement or otherwise providing or relating to any collateral
security for any of the Secured Obligations under and as defined in the
Guarantee and Security Agreement.

 

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

 

“Special
Acquisition Subsidiary” means a wholly-owned Subsidiary of the Borrower
formed for the purpose of assuming or incurring the Allied Secured Indebtedness
and that will, following the earlier of the date on which it assumes or incurs
such Indebtedness and the date of the Acquisition, satisfy each of the
following conditions:

 

(i)                                     such Subsidiary engages in
no material activities other than in connection with the assumption or incurrence
of the Allied Secured Indebtedness (and, in that connection, shall apply all
payments of principal, interest, fees and other amounts received on its
investments to promptly prepay the Allied Secured Indebtedness or distribute
such amounts to the Borrower);

 

(ii)                                  no portion of the Allied
Secured Indebtedness or any other obligations (contingent or otherwise) of such
Special Acquisition Subsidiary (A) is Guaranteed by the Borrower or any
other Subsidiary, (B) shall be recourse to or obligate the Borrower or any
other Subsidiary in any way (other than pursuant to customary arms-length
servicing obligations (together with any related performance guarantees)), or (C) subject
any property of the Borrower or any other Subsidiary, directly or indirectly,
contingently or otherwise, to the 

 

25

 

satisfaction
thereof, other than pursuant to customary arms-length servicing obligations
(together with any related performance guarantees),

 

(iii)                               neither the Borrower nor any
Subsidiary has any material contract, agreement, arrangement or understanding
with such Special Acquisition Subsidiary other than on terms no less favorable
to the Borrower or such Subsidiary than those that might be obtained at the
time from Persons that are not Affiliates of the Borrower or any Subsidiary,
other than fees payable in the ordinary course of business in connection with
servicing receivables or financial assets,

 

(iv)                              neither the Borrower nor any
Subsidiary has any obligation to maintain or preserve such Special Acquisition
Subsidiary’s financial condition or cause such Special Acquisition Subsidiary
to achieve certain levels of operating results, excluding customary arms-length
servicing obligations (together with any related performance guarantees),

 

(v)                                 all the assets and
Investments of such Special Acquisition Subsidiary and the aggregate amount of
Investments in and to such Special Acquisition Subsidiary are excluded from the
Borrowing Base until such Allied Secured Indebtedness is paid in full.

 

“Specified
Debt” means any portion of unsecured Indebtedness of the Borrower (other
than any Permitted Allied Indebtedness or any Indebtedness incurred in
connection with the Acquisition) described in clauses (a) or (b) of
the definition of Indebtedness incurred or assumed from and after the
Restatement Effective Date that (i) matures or comes due more than six
months after the Commitment Termination Date, (ii) is not prepayable,
redeemable or purchasable by the Borrower or any of its Subsidiaries at any
time on or before the date six months after the Commitment Termination Date
(except for regularly scheduled payments, prepayments or redemptions of
principal and interest in respect thereof required pursuant to the instruments
evidencing such Indebtedness), (iii) cannot be accelerated in
circumstances that would not constitute an Event of Default, (iv) is
accounted for by the Borrower on a fair value basis pursuant to Financial
Accounting Standard No. 159 or by application of Financial Accounting
Standard No. 141(R), and (v) the Borrower elects to treat as
Specified Debt, provided that the Borrower shall not be permitted to revoke or
rescind any such election.

 

“Specified
Debt Payment” means (a) any purchase, redemption, retirement or other
acquisition for value of, (b) any setting apart of any money for a
sinking, defeasance or other analogous fund for the purchase, redemption,
retirement or other acquisition of, or (c) any voluntary payment or
prepayment of, in each case, the principal of or interest on, or any other
amount owing in respect of, Specified Debt.

 

“Special
Equity Interest” means any Equity Interest that is subject to a Lien in
favor of creditors of the issuer of such Equity Interest, provided that (a) such
Lien 

 

26

 

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

 

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

 

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

 

“Step-Up
Date” means the date on which each of the following conditions are
satisfied or waived by each Lender with a Step-Up Date Commitment (and the
Borrower shall have delivered a certification to such effect to the
Administrative Agent):

 

(a)                                  the Acquisition
shall have been consummated on or before June 30, 2010 (which date may be
extended until September 30, 2010 with the consent of greater than or
equal to 66 2/3 of the Lenders with Step-Up Date Commitments) in accordance
with the acquisition agreement dated October 26, 2009, and no provision
thereof shall have been waived, amended, supplemented or otherwise modified,
except as would not be expected to have a Material Adverse Effect;

 

27

 

(b)                                 the
Administrative Agent shall have received an updated Schedule IV to this
Agreement, adjusted to give effect to the consummation of the Acquisition (and
such updated Schedule IV shall be deemed to replace the prior Schedule IV);

 

(c)                                  the Lenders
shall have received a satisfactory pro forma consolidated balance sheet of the
Borrower, adjusted to give effect to the consummation of the Acquisition;

 

(d)                                 after giving
effect to the Acquisition, the ratio of the aggregate amount of Indebtedness of
the Borrower and its Subsidiaries to Shareholder’s Equity of the Borrower (in
each case, calculated in accordance with GAAP) shall not exceed 85%, and the
Covered Debt Amount shall not exceed 90% of the then applicable Borrowing Base;

 

(e)                                  no Default or
Event of Default shall have occurred and be continuing; and

 

(f)                                    the
representations and warranties contained in this Agreement shall be true and
correct in all material respects (or, in the case of the representations and warranties
in Sections 3.01 (first sentence with respect to the Obligors), 3.02, 3.04,
3.11 and 3.15 of this Agreement, and in Sections 2.01, 2.02 and 2.04 through
2.09 of the Guarantee and Security Agreement, true and correct in all respects)
on and as of the Step-Up Date as if made on and as of such date (or, if any
such representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date).

 

“Step-Up
Date Commitments” means, with respect to each Lender, the amount (if any)
by which such Lender has agreed to increase its Initial Commitment on the
Step-Up Date, as such additional commitments may be (a) reduced or
increased from time to time pursuant to Section 2.07 and (b) reduced
or increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04.  The
initial amount of each Lender’s Step-Up Date Commitment is set forth on
Schedule I, or in the Assignment and Assumption pursuant to which such Lender
shall have assumed its Step-Up Date Commitment, as applicable.  The initial aggregate amount of the Lenders’
Step-Up Date Commitments is $75,000,000.

 

“Subsidiary”
means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent’s consolidated financial statements if such financial statements
were prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing
more than 50% of the equity or more than 50% of the ordinary voting power or,
in the case of a partnership, more than 50% of the general 

 

28

 

partnership
interests are, as of such date, owned, controlled or held, or (b) that is,
as of such date, otherwise Controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.  Anything herein to the contrary
notwithstanding, the term “Subsidiary” shall not include any Person that
constitutes an Investment held by any Obligor in the ordinary course of
business and that is not, under GAAP, consolidated on the financial statements
of the Borrower and its Subsidiaries. 
Unless otherwise specified, “Subsidiary” means a Subsidiary of the
Borrower.

 

“Subsidiary
Guarantor” means any Subsidiary of the Borrower (including, following the
Acquisition, Subsidiaries of Allied) that is a Guarantor under the Guarantee
and Security Agreement.  It is understood
and agreed that (w) Designated Subsidiaries, (x) Excluded Entities, (y) so
long as the terms of the Allied Secured Indebtedness would prohibit it from
becoming a Subsidiary Guarantor hereunder, a Special Acquisition Subsidiary,
and (z) following consummation of the Acquisition, Allied Asset Holdings,
LLC (provided that so long as Allied Asset Holdings, LLC is not a “Subsidiary
Guarantor” or a “Designated Subsidiary”, 
all the assets and Investments of Allied Asset Holdings, LLC and the
aggregate amount of Investments in and to Allied Asset Holdings, LLC shall be
excluded from the Borrowing Base), shall not be required to be Subsidiary Guarantors.

 

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

 

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

 

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

 

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

 

“Unsecured
Indebtedness” means any Indebtedness of an Obligor (which may be Guaranteed
by one or more other Obligors) that (a) has no amortization prior to, and
a final maturity date not earlier than, six months after the Commitment
Termination Date, (b) has terms substantially comparable to market terms
for substantially similar debt of other similarly situated borrowers as
reasonably determined by at least two Joint Lead Arrangers and (c) is not
secured by any assets of any Obligor.

 

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

 

29

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

30

 

such
provision shall be interpreted on the basis of GAAP as in effect and applied
immediately before such change shall have become effective until such notice
shall have been withdrawn or such provision amended in accordance
herewith.  The Borrower covenants and agrees with the Lenders that whether or not
the Borrower may at any time adopt Financial Accounting Standard No. 159
(or successor standard solely as it relates to fair valuing liabilities) or
accounts for liabilities acquired in an acquisition on a fair value basis
pursuant to Financial Accounting Standard No. 141(R) (or successor
standard solely as it relates to fair valuing liabilities), all determinations
of compliance with the terms and conditions of this Agreement shall be made on
the basis that the Borrower has not adopted Financial Accounting Standard No. 159
(or such successor standard solely as it relates to fair valuing liabilities) or,
in the case of liabilities acquired in an acquisition, Financial Accounting
Standard No. 141(R) (or such successor standard solely as it relates
to fair valuing liabilities); provided that, if the Borrower shall at any time
adopt Financial Accounting Standard No. 159, or if Financial Accounting
Standard No. 141(R) shall apply with respect to any acquired assets
or liabilities, for purposes of calculating compliance with Section 6.07(a) and
Section 6.07(b) after such adoption, or for any period ending after
such adoption, Specified Debt shall be valued as it is valued under Financial
Accounting Standard No. 159 or Financial Accounting Standard No. 141(R),
as applicable.

 

SECTION 1.06.  Currencies; Currency Equivalents.

 

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

 

31

 

Equivalent
of such Dollar amount (rounded to the nearest 1,000 units of such Foreign
Currency).

 

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

 

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

 

ARTICLE
II

 

THE CREDITS

 

SECTION 2.01.  The Commitments.  Subject to the terms and conditions set forth
herein, each Lender agrees to make Loans in Dollars or in any Agreed Foreign
Currency to the Borrower from time to time during the Availability Period in an
aggregate principal amount that will not result in (a) prior to the
Step-Up Date, such Lender’s Revolving Credit Exposure exceeding such Lender’s
Initial Commitment and on or after the Step-Up Date, such Lender’s Revolving
Credit Exposure exceeding such Lender’s Commitment, (b) prior to the
Step-Up Date, the aggregate Revolving Credit Exposure of all of the Lenders
exceeding the aggregate Initial Commitments and on or

 

32

 

after
the Step-Up Date, the aggregate Revolving Credit Exposure of all of the Lenders
exceeding the Commitments, or (c) the total Covered Debt Amount exceeding
the Borrowing Base then in effect. 
Within the foregoing limits and subject to the terms and conditions set
forth herein, the Borrower may borrow, prepay and reborrow Loans.

 

SECTION 2.02.  Loans and Borrowings.

 

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

 

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

 

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

 

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

 

(e)                                  Restatement
Effective Date Adjustments.  On the Restatement Effective Date the
Borrower will borrow from each of the Lenders, and the Lenders will make Loans
to the Borrower (in the case of Eurocurrency Loans, with Interest Period(s) ending
on the date(s) of any then outstanding Interest Period(s) under the
Original Agreement, provided that for any outstanding Interest Period of less
than 1-month, the LIBO Rate will be equal to 1-month LIBOR), and
(notwithstanding the provisions in this Agreement requiring that borrowings and
prepayments be made ratably in accordance with the principal amounts of the
Loans held by the Lenders) the Borrower shall prepay

 

33

 

all
of the Loans held by the Retiring Lenders and prepay the Loans held by the
Lenders in such amounts as may be necessary, together with any amounts payable
under Section 2.14, so that after giving effect to such Loans and
prepayments, the Loans (and Interest Period(s) of Eurocurrency Loan(s))
shall be held by the Lenders pro rata in accordance with the respective amounts
of their Initial Commitments. 
Concurrently therewith, the Lenders shall be deemed to have adjusted
their participation interests in any outstanding Letters of Credit so that such
interests are held ratably in accordance with their Initial Commitments as so
modified.

 

SECTION 2.03.  Requests for Borrowings.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(c)                                  Notice by the
Administrative Agent to the Lenders.  Promptly following receipt of a Borrowing
Request in accordance with this Section, the Administrative Agent shall advise
each Lender of the details thereof and of the amounts of such Lender’s Loan to
be made as part of the requested Borrowing.

 

34

 

 

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

 

SECTION 2.04.  Letters of Credit.

 

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

 

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

 

35

 

(c)           Limitations on Amounts.  A Letter of Credit shall be issued, amended,
renewed or extended only if (and upon issuance, amendment, renewal or extension
of each Letter of Credit the Borrower shall be deemed to represent and warrant
that), after giving effect to such issuance, amendment, renewal or extension (i) the
aggregate LC Exposure of the Issuing Bank (determined for these purposes
without giving effect to the participations therein of the Lenders pursuant to
paragraph (e) of this Section) shall not exceed $50,000,000, (ii) the
total Revolving Credit Exposures shall not exceed the aggregate Commitments and
(iii) the total Covered Debt Amount shall not exceed the Borrowing Base
then in effect.

 

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

 

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

 

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

 

36

 

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

 

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

 

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

 

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

 

Neither
the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their
Related Parties, shall have any liability or responsibility by reason of or in

 

37

 

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

 

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

 

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

 

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

 

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

 

(i)            Interim Interest.  If the Issuing Bank shall make any
LC Disbursement, then, unless the Borrower shall reimburse such
LC Disbursement in full on the date such LC Disbursement is made, the
unpaid amount thereof shall bear interest, for each day from and including the
date such LC Disbursement is made to but

 

38

 

excluding
the date that the Borrower reimburses such LC Disbursement, at the rate
per annum then applicable to ABR Loans; provided that, if the
Borrower fails to reimburse such LC Disbursement within two Business Days
following the date when due pursuant to paragraph (f) of this
Section, then the provisions of Section 2.11(c) shall apply.  Interest accrued pursuant to this paragraph
shall be for account of the Issuing Bank, except that interest accrued on and
after the date of payment by any Lender pursuant to paragraph (f) of
this Section to reimburse the Issuing Bank shall be for account of such
Lender to the extent of such payment.

 

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

 

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

 

SECTION 2.05.  Funding of Borrowings.

 

(a)           Funding by Lenders.  Each Lender shall make each Loan to be made
by it hereunder on the proposed date thereof by wire transfer of immediately
available funds by 1:00 p.m., Local Time, to the account of the
Administrative Agent

 

39

 

most
recently designated by it for such purpose by notice to the Lenders.  The Administrative Agent will make such Loans
available to the Borrower by promptly crediting the amounts so received, in
like funds, to an account of the Borrower designated by the Borrower in the
applicable Borrowing Request; provided that ABR Borrowings made to
finance the reimbursement of an LC Disbursement as provided in Section 2.04(f) shall
be remitted by the Administrative Agent to the Issuing Bank.

 

(b)           Presumption by the Administrative
Agent.  Unless the Administrative
Agent shall have received notice from a Lender prior to the proposed date of
any Borrowing that such Lender will not make available to the Administrative
Agent such Lender’s share of such Borrowing, the Administrative Agent may
assume that such Lender has made such share available on such date in
accordance with paragraph (a) of this Section and may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount.  In such event, if a Lender has
not in fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and the Borrower severally
agree to pay to the Administrative Agent forthwith on demand such corresponding
amount with interest thereon, for each day from and including the date such
amount is made available to the Borrower to but excluding the date of payment
to the Administrative Agent, at (i) in the case of such Lender, the
Federal Funds Effective Rate or (ii) in the case of the Borrower, the
interest rate applicable to ABR Loans. 
If such Lender pays such amount to the Administrative Agent, then such
amount shall constitute such Lender’s Loan included in such Borrowing.  Nothing in this paragraph shall relieve any
Lender of its obligation to fulfill its commitments hereunder, and shall be
without prejudice to any claim the Borrower may have against a Lender that
shall have failed to make such payment to the Administrative Agent.

 

SECTION 2.06.  Interest Elections.

 

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

 

40

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(e)           Failure to Elect; Events of
Default.  If the Borrower fails to
deliver a timely and complete Interest Election Request with respect to a
Eurocurrency Borrowing prior to the end of the Interest Period therefor, then,
unless such Borrowing is repaid as provided herein, (i) if such Borrowing
is denominated in Dollars, at the end of such Interest Period such Borrowing
shall be converted to a Eurocurrency Borrowing having an Interest Period of one
month, and (ii) if such Borrowing is denominated in a Foreign Currency,
the Borrower shall be deemed to have selected an Interest Period of one month’s
duration.  Notwithstanding any contrary
provision hereof, if an Event of

 

41

 

Default
has occurred and is continuing and the Administrative Agent, at the request of
the Required Lenders, so notifies the Borrower, then, so long as an Event of Default
is continuing no outstanding Eurocurrency Borrowing may have an Interest Period
of more than one month’s duration.

 

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

 

(a)           Scheduled Termination.  Unless previously terminated, the Commitments
shall terminate on the Commitment Termination Date.  Unless previously terminated, the Step-Up
Date Commitments shall terminate on June 30, 2010 if the Step-Up Date has
not occurred prior to such date (or, if such date has been extended to September 30,
2010 in accordance with clause (a) of the definition of Step-Up Date, September 30,
2010 if the Step-Up Date shall not have occurred by such date).

 

(b)           Voluntary Termination or Reduction.  The Borrower may at any time terminate, or
from time to time reduce, the Commitments; provided that (i) each
reduction of the Commitments shall be in an amount that is $25,000,000 (or, if
less, the entire remaining amount of the Commitments) or a larger multiple of
$5,000,000 in excess thereof and (ii) the Borrower shall not terminate or
reduce the Commitments if, after giving effect to any concurrent prepayment of
the Loans in accordance with Section 2.09, the total Revolving Credit
Exposures would exceed the total Commitments.

 

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

 

(d)           Effect of Termination or Reduction.  Any termination or reduction of the
Commitments shall be permanent.  Each
reduction of the Commitments shall be made ratably among the Lenders in
accordance with their respective Commitments; provided that, prior to the
Step-Up Date, any reduction in Commitments shall be applied first, to reduce
the Step-Up Date Commitments until the Step-Up Date Commitments are reduced to
zero and, thereafter pro rata to the remaining Commitments.

 

(e)           Increase of the Commitments.

 

(i)            Requests for
Increase by Borrower.  The Borrower
may at any time propose that the Commitments hereunder be increased (each such
proposed

 

42

 

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

 

(A)          each
increase shall be in a minimum amount of at least $25,000,000 or a larger
multiple of $5,000,000 in excess thereof (or such lesser amount as shall be
determined in the discretion of the Administrative Agent);

 

(B)           the
aggregate amount of all Commitment Increases shall not exceed $360,000,000;
provided that, prior to the Step-Up Date, the aggregate amount of any
Commitment Increases shall not exceed $282,500,000.

 

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

 

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

 

(E)           the
representations and warranties contained in this Agreement shall be true and
correct in all material respects (or, in the case of the representations and
warranties in Sections 3.01 (first sentence with respect to the Obligors),
3.02, 3.04, 3.11 and 3.15 of this Agreement, and in Sections 2.01, 2.02 and
2.04 through 2.09 of the Guarantee and Security Agreement, true and correct in
all respects) on and as of the Commitment Increase Date as if made on and as of
such date (or, if any such representation or warranty is expressly stated to
have been made as of a specific date, as of such specific date).

 

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

 

(x)            the
Administrative Agent shall have received on or prior to 11:00 a.m., New
York City time, on such Commitment Increase Date a certificate of a duly
authorized officer of the Borrower stating that each of the applicable
conditions to such

 

43

 

Commitment
Increase set forth in the foregoing paragraph (i) has been satisfied;
and

 

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

 

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

 

(iv)          Adjustments of Borrowings upon
Effectiveness of Increase and Step-Up Date. 
In the event that the Administrative Agent shall have received notice
from the Borrower as to any agreement with respect to a Commitment Increase
prior to the relevant Commitment Increase Date and the actions provided for in
clauses (ii)(x) and (ii)(y) above shall have occurred by 9:00 a.m.,
New York City time, on such Commitment Increase Date or shall have received
notice at least 4 Business Days prior to the proposed Step-Up Date provided
that the conditions to the Step-Up Date have been satisfied by 12:00 p.m.
New York City time as of the Business Day immediately preceding such proposed
Step-Up Date, the Administrative Agent shall notify the Lenders (including any
Assuming Lenders) of the occurrence of such Commitment Increase Date or Step-Up
Date, as applicable, promptly on such date by facsimile transmission or
electronic messaging system.  If on the
Commitment Increase Date or Step-Up Date, as applicable, any Loans shall be
outstanding, the Borrower will borrow from each of the Increasing Lenders or
Lenders with Step-Up Date Commitments, as applicable, and the Increasing
Lenders or Lenders with Step-Up Date Commitments, as applicable, will make
Loans to the Borrower (in the case of Eurocurrency Loans, with Interest Period(s) ending
on the date(s) of any then outstanding Interest Period(s) provided
that for any outstanding Interest Period of less than 1-month, the LIBO Rate
will be equal to 1-month LIBOR), and (notwithstanding the provisions in this
Agreement requiring that borrowings and prepayments be made ratably in accordance
with the principal amounts of the Loans held by the Lenders) the Borrower shall
prepay the Loans held by the other Lenders (other than the Increasing Lenders
or Lenders with Step-Up Date Commitments) in such amounts as may be necessary,
together with any amounts payable under Section 2.14 as a result of such
prepayment, so that after giving effect to

 

44

 

such
Loans and prepayments, the Loans (and Interest Period(s) of Eurocurrency
Loan(s)) shall be held by the Lenders pro rata in accordance with the
respective amounts of their Initial Commitments or Commitments, as applicable
(as modified hereby).  Concurrently
therewith, the Lenders shall be deemed to have adjusted their participation
interests in any outstanding Letters of Credit so that such interests are held
ratably in accordance with their Initial Commitments or Commitments, as
applicable, as so increased.

 

SECTION 2.08.  Repayment of Loans; Evidence of Debt.

 

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

 

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

 

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

 

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

 

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

 

45

 

amount
and Currency of any sum received by the Administrative Agent hereunder for
account of the Lenders and each Lender’s share thereof.

 

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

 

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

 

SECTION 2.09.  Prepayment of Loans.

 

(a)           Optional Prepayments.  The Borrower shall have the right at any time
and from time to time to prepay any Borrowing in whole or in part, without
premium or penalty except for payments under Section 2.14, subject to the
requirements of this Section.

 

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

 

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

 

(ii)           Prepayment.  If, on the date of such determination the
aggregate Revolving Credit Exposure exceeds 105% of the aggregate amount of the
Commitments as then in effect, the Borrower shall prepay the Loans (and/or

 

46

 

provide
cover for LC Exposure as specified in Section 2.04(k)) within 15
Business Days following such date of determination in such amounts as shall be
necessary so that after giving effect thereto the aggregate Revolving Credit
Exposure does not exceed the Commitments.

 

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

 

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

 

(c)           Mandatory
Prepayments due to Borrowing Base Deficiency.  In the event that at any time any Borrowing
Base Deficiency shall exist, the Borrower shall prepay the Loans (or provide cover
for Letters of Credit as contemplated by Section 2.04(k)), or reduce
Permitted Indebtedness or Indebtedness incurred pursuant to Section 6.01(g),
in such amounts as shall be necessary so that such Borrowing Base Deficiency is
immediately cured, provided that (i) the aggregate amount of such
prepayment of Loans (and cover for Letters of Credit) shall be at least equal
to the Revolving Credit Exposure’s ratable share of the aggregate prepayment
and reduction of Permitted Indebtedness and of Indebtedness incurred pursuant
to Section 6.01(g) and (ii) if, within five Business Days after
delivery of a Borrowing Base Certificate demonstrating such Borrowing Base
Deficiency (and/or at such other times as the Borrower has knowledge of such
Borrowing Base Deficiency), the Borrower shall present the Administrative Agent
with a reasonably feasible plan to enable such Borrowing Base Deficiency to be
cured within 30 Business Days (which 30-Business Day period shall include the
five Business Days permitted for delivery of such plan), then such prepayment
or reduction shall not be required to be effected immediately but may be
effected in accordance with such plan (with such modifications as the Borrower
may reasonably determine), so long as such Borrowing Base Deficiency is cured
within such 30-Business Day period.

 

(d)           Notices, Etc.  The Borrower shall notify the Administrative
Agent by telephone (confirmed by telecopy) of any prepayment hereunder (i) in
the case of prepayment of a Eurocurrency Borrowing, not later than 11:00 a.m.,
New York City time (or, in the case of a Borrowing denominated in a Foreign
Currency, 11:00 a.m., London time), three Business Days before the date of
prepayment or (ii) in the case of prepayment of an ABR Borrowing, not
later than 11:00 a.m., New York City time, on the date of prepayment.  Each such notice shall be irrevocable and
shall specify the prepayment date, the principal amount of each Borrowing or
portion thereof to be prepaid and, in the case of a mandatory prepayment, a
reasonably detailed calculation of the amount of such prepayment; provided
that, if a notice of prepayment is given in connection with a conditional
notice of termination of the Commitments as contemplated

 

47

 

by
Section 2.07, then such notice of prepayment may be revoked if such notice
of termination is revoked in accordance with Section 2.07.  Promptly following receipt of any such notice
relating to a Borrowing, the Administrative Agent shall advise the Lenders of
the contents thereof.  Each partial
prepayment of any Borrowing shall be in an amount that would be permitted in
the case of a Borrowing of the same Type as provided in Section 2.02,
except as necessary to apply fully the required amount of a mandatory prepayment.  Each prepayment of a Borrowing shall be
applied ratably to the Loans included in the prepaid Borrowing.  Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.11 and shall be made in the
manner specified in Section 2.08(b).

 

SECTION 2.10.  Fees.

 

(a)           Commitment Fee.  The Borrower agrees to pay to the
Administrative Agent for account of each Lender a commitment fee, which shall
accrue at the Applicable Margin on the average daily unused amount of the
Commitment of such Lender during the period from and including the Restatement
Effective Date to but excluding the earlier of the date such Commitment
terminates and the Commitment Termination Date. 
Accrued commitment fees shall be payable within one Business Day after each
Quarterly Date and on the earlier of the date the Commitments terminate and the
Commitment Termination Date, commencing on the first such date to occur after
the Restatement Effective Date.  All
commitment fees shall be computed on the basis of a year of 360 days and shall
be payable for the actual number of days elapsed (including the first day but
excluding the last day).  For purposes of
computing commitment fees, the Commitment of a Lender shall be deemed to be
used to the extent of the outstanding Loans and LC Exposure of such
Lender.

 

(b)           Letter of Credit Fees.  The Borrower agrees to pay (i) to the
Administrative Agent for account of each Lender a participation fee with
respect to its participations in Letters of Credit, which shall accrue at a rate
per annum equal to the Applicable Margin applicable to interest on Eurocurrency
Loans on the average daily amount of such Lender’s LC Exposure (excluding
any portion thereof attributable to unreimbursed LC Disbursements) during
the period from and including the Restatement Effective Date to but excluding
the later of the date on which such Lender’s Commitment terminates and the date
on which such Lender ceases to have any LC Exposure, and (ii) to the
Issuing Bank a fronting fee, which shall accrue at the rate of 0.25% per annum
on the average daily amount of the LC Exposure (excluding any portion
thereof attributable to unreimbursed LC Disbursements) during the period
from and including the Restatement Effective Date to but excluding the later of
the date of termination of the Commitments and the date on which there ceases
to be any LC Exposure, as well as the Issuing Bank’s standard fees with
respect to the issuance, amendment, renewal or extension of any Letter of
Credit or processing of drawings thereunder. 
Participation fees and fronting fees accrued through and including each
Quarterly Date shall be payable on the third Business Day following such
Quarterly Date, commencing on the first such date to occur after the
Restatement Effective Date; provided that, on the date on which the

 

48

 

Commitments
terminate (the “termination date”) the Borrower shall pay any such fees
that have accrued and that are unpaid on the termination date and, in the event
any Letters of Credit shall be outstanding that have expiration dates after the
termination date, the Borrower shall prepay on the termination date the full
amount of the participation and fronting fees that will accrue on such Letters
of Credit subsequent to the termination date through but not including the date
such outstanding Letters of Credit are scheduled to expire (and in that
connection, the Lenders agree not later than the date two Business Days after
the date upon which the last such Letter of Credit shall expire or be
terminated to rebate to the Borrower the excess, if any, of the aggregate
participation and fronting fees that have been prepaid by the Borrower over the
amount of such fees that ultimately accrue through the date of such expiration
or termination).  Any other fees payable
to the Issuing Bank pursuant to this paragraph shall be payable within 10 days
after demand.  All participation fees and
fronting fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).

 

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

 

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

 

SECTION 2.11.  Interest.

 

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

 

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

 

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

 

49

 

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

 

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

 

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

 

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

 

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

 

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

 

50

 

Borrowing
shall be made as an ABR Borrowing and (iii) if the Affected Currency
is a Foreign Currency, any Borrowing Request that requests a Eurocurrency
Borrowing denominated in the Affected Currency shall be ineffective.

 

SECTION 2.13.  Increased Costs.

 

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

 

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

 

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

 

and
the result of any of the foregoing shall be to increase the cost to such
Lenders of making or maintaining any Eurocurrency Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit
or to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, in
Dollars, such additional amount or amounts as will compensate such Lender or
the Issuing Bank, as the case may be, for such additional costs incurred or
reduction suffered.

 

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

 

(c)           Certificates from  Lenders. 
A certificate of a Lender or the Issuing Bank setting forth the amount
or amounts, in Dollars, necessary to compensate such Lender or the Issuing Bank
or its holding company, as the case may be, as specified in

 

51

 

paragraph (a) or (b) of
this Section shall be promptly delivered to the Borrower and shall be
conclusive absent manifest error.  The
Borrower shall pay such Lender or the Issuing Bank, as the case may be, the
amount shown as due on any such certificate within 10 days after receipt
thereof.

 

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

 

SECTION 2.14.  Break Funding Payments.  In the event of (a) the payment of any
principal of any Eurocurrency Loan other than on the last day of an Interest
Period therefor (including as a result of the occurrence of the Step-Up Date,
any Commitment Increase Date or an Event of Default), (b) the conversion
of any Eurocurrency Loan other than on the last day of an Interest Period
therefor, (c) the failure to borrow, convert, continue or prepay any Loan
on the date specified in any notice delivered pursuant hereto (including, in
connection with the Step-Up Date or any Commitment Increase Date, and
regardless of whether such notice is permitted to be revocable under Section 2.09(d) and
is revoked in accordance herewith), or (d) the assignment as a result of a
request by the Borrower pursuant to Section 2.18(b) of any
Eurocurrency Loan other than on the last day of an Interest Period therefor,
then, in any such event, the Borrower shall compensate each Lender for the
loss, cost and expense attributable to such event.  In the case of a Eurocurrency Loan, the loss
to any Lender attributable to any such event shall be deemed to include an
amount determined by such Lender to be equal to the excess, if any, of

 

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

 

(ii)           the amount of
interest that such Lender would earn on such principal amount for such period
if such Lender were to invest such principal amount for such period at the
interest rate that would be bid by such Lender (or an

 

52

 

affiliate
of such Lender) for deposits denominated in such Currency from other banks in
the eurocurrency market at the commencement of such period.

 

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

 

SECTION 2.15.  Taxes.

 

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

 

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

 

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

 

(d)           Evidence of Payments.  As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority,
the Borrower shall deliver to the Administrative Agent the original or a
certified copy of a

 

53

 

receipt
issued by such Governmental Authority evidencing such payment, a copy of the
return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

 

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

 

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

 

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

 

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

 

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

 

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

 

54

 

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

 

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

 

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

 

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

 

55

 

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

 

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

 

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

 

56

 

such
parties, and (ii) second, to pay principal and unreimbursed
LC Disbursements then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of principal and unreimbursed
LC Disbursements then due to such parties.

 

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

 

(d)           Sharing of Payments by Lenders.  If any Lender shall, by exercising any right
of set-off or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any of its Loans or participations in
LC Disbursements resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Loans and participations in
LC Disbursements and accrued interest thereon then due than the proportion
received by any other Lender, then the Lender receiving such greater proportion
shall purchase (for cash at face value) participations in the Loans and
participations in LC Disbursements of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans and participations in
LC Disbursements; provided that (i) if any such participations
are purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment
made by the Borrower pursuant to and in accordance with the express terms of
this Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to the
Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of
this paragraph shall apply).

 

57

 

The
Borrower consents to the foregoing and agrees, to the extent it may effectively
do so under applicable law, that any Lender acquiring a participation pursuant
to the foregoing arrangements may exercise against the Borrower rights of
set-off and counterclaim with respect to such participation as fully as if such
Lender were a direct creditor of the Borrower in the amount of such
participation.

 

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

 

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

 

SECTION 2.17.  Defaulting
Lenders.

 

Notwithstanding
any provision of this Agreement to the contrary, if any Lender becomes a
Defaulting Lender, then the following provisions shall apply for so long as
such Lender is a Defaulting Lender:

 

(a)           commitment fees pursuant to Section 2.10(a) shall
cease to accrue on the unfunded portion of the Commitment of such Defaulting
Lender;

 

(b)           the Commitment and Revolving Credit
Exposure of such Defaulting Lender shall not be included in determining whether
all Lenders or the Required Lenders have taken or may take any action hereunder
(including any consent to any amendment or waiver pursuant to Section 9.02),
provided that any waiver, amendment or modification requiring the consent of
all Lenders or each affected Lender which affects such Defaulting Lender
differently than other affected Lenders shall require the consent of such
Defaulting Lender;

 

(c)           if any LC Exposure exists at the time
a Lender becomes a Defaulting Lender then:

 

58

 

(i)            all or any part of
such LC Exposure shall be reallocated among the non-Defaulting Lenders in
accordance with their respective Applicable Percentages but only to the extent (x) the
sum of all non-Defaulting Lenders’ Revolving Credit Exposures plus such
Defaulting Lender’s LC Exposure does not exceed the total of all non-Defaulting
Lenders’ Commitments, (y) no non-Defaulting Lender’s Revolving Credit
Exposure will exceed such Lender’s Initial Commitment or Commitment, as
applicable, and (z) the conditions set forth in Section 4.02 are
satisfied at such time;

 

(ii)           if the reallocation
described in clause (i) above cannot, or can only partially, be effected,
the Borrower shall, without prejudice to any right or remedy available to it
hereunder or under law, within three Business Days following notice by the
Administrative Agent cash collateralize such Defaulting Lender’s LC Exposure
(after giving effect to any partial reallocation pursuant to clause (i) above)
in accordance with the procedures set forth in Section 2.04(k) for so
long as such LC Exposure is outstanding;

 

(iii)          if the Borrower
cash collateralizes any portion of such Defaulting Lender’s LC Exposure
pursuant to clause (ii) above, the Borrower shall not be required to pay
any fees to such Defaulting Lender pursuant to Section 2.10(b) with
respect to such Defaulting Lender’s LC Exposure during the period such
Defaulting Lender’s LC Exposure is cash collateralized;

 

(iv)          if the LC Exposure
of the non-Defaulting Lenders is reallocated pursuant to clause (i) above,
then the fees payable to the Lenders pursuant to Section 2.10(a) and Section 2.10(b) shall
be adjusted in accordance with such non-Defaulting Lenders’ Applicable
Percentages; and

 

(v)           if any Defaulting
Lender’s LC Exposure is neither cash collateralized nor reallocated pursuant to
this Section 2.17(c), then, without prejudice to any rights or remedies of
the Issuing Bank or any Lender hereunder, all facility fees that otherwise
would have been payable to such Defaulting Lender (solely with respect to the
portion of such Defaulting Lender’s Commitment that was utilized by such LC
Exposure) and letter of credit fees payable under Section 2.10(b) with
respect to such Defaulting Lender’s LC Exposure shall be payable to the Issuing
Bank until such LC Exposure is cash collateralized and/or reallocated; and

 

(d)           so long as any Lender is a Defaulting
Lender, the Issuing Bank shall not be required to issue, amend or increase any
Letter of Credit, unless it is satisfied that the related exposure will be 100%
covered by the Commitments of the non-Defaulting Lenders and/or cash collateral
will be provided by the Borrower in accordance with Section 2.17(c), and
participating interests in any such newly issued or increased

 

59

 

Letter
of Credit shall be allocated among non-Defaulting Lenders in a manner
consistent with Section 2.17(c)(i) (and Defaulting Lenders shall not
participate therein).

 

In
the event that the Administrative Agent, the Borrower and the Issuing Bank each
agrees that a Defaulting Lender has adequately remedied all matters that caused
such Lender to be a Defaulting Lender, then the LC Exposure of the Lenders
shall be readjusted to reflect the inclusion of such Lender’s Commitment and on
such date such Lender shall purchase at par such of the Loans of the other
Lenders as the Administrative shall determine may be necessary in order for
such Lender to hold such Loans in accordance with its Applicable Percentage.

 

SECTION 2.18.  Mitigation
Obligations; Replacement of Lenders.

 

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

 

(b)           Replacement of Lenders.  If any Lender requests compensation under Section 2.13,
or if the Borrower is required to pay any additional amount to any Lender or
any Governmental Authority for account of any Lender pursuant to Section 2.15,
or if any Lender becomes a Defaulting Lender or is a non-consenting Lender (as
provided in Section 9.02(d)), then the Borrower may, at its sole expense
and effort, upon notice to such Lender and the Administrative Agent, require
such Lender to assign and delegate, without recourse (in accordance with and
subject to the restrictions contained in Section 9.04), all its interests,
rights and obligations under this Agreement to an assignee that shall assume
such obligations (which assignee may be another Lender, if a Lender accepts
such assignment); provided that (i) the Borrower shall have
received the prior written consent of the Administrative Agent (and, if a
Commitment is being assigned, the Issuing Bank), which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of
an amount equal to the outstanding principal of its Loans and participations in
LC Disbursements, accrued interest thereon, accrued fees and all other
amounts payable to it hereunder, from the assignee (to the extent of such
outstanding principal and accrued interest and fees) or the Borrower (in the
case of all other amounts), and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.13 or payments
required to be made pursuant to Section 2.15, such assignment will result
in a reduction in such compensation or

 

60

 

payments.  A Lender shall not be required to make any
such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.

 

(c)           Defaulting Lender.  If any Lender shall fail to make any payment
required to be made by it pursuant to Section 2.04(e), 2.05 or 9.03(c),
then the Administrative Agent may, in its discretion and notwithstanding any
contrary provision hereof, (i) apply any amounts thereafter received by
the Administrative Agent for the account of such Lender for the benefit of the
Administrative Agent or the Issuing Bank to satisfy such Lender’s obligations
under such Sections until all such unsatisfied obligations are fully paid,
and/or (ii) hold any such amounts in a segregated account as cash
collateral for, and application to, any future funding obligations of such
Lender under such Sections; in the case of each of (i) and (ii) above,
in any order as determined by the Administrative Agent in its discretion.

 

ARTICLE III

 

REPRESENTATIONS
AND WARRANTIES

 

The Borrower represents and warrants to the Lenders
that:

 

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

 

SECTION 3.02.  Authorization; Enforceability.  The Transactions are within the Borrower’s
corporate powers and have been duly authorized by all necessary corporate and,
if required, by all necessary shareholder action.  This Agreement has been duly executed and
delivered by the Borrower and constitutes, and each of the other Loan Documents
when executed and delivered will constitute, a legal, valid and binding
obligation of the Borrower, enforceable in accordance with its terms, except as
such enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or similar laws of general applicability affecting
the enforcement of creditors’ rights and (b) the application of general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law).

 

SECTION 3.03.  Governmental Approvals; No Conflicts.  The Transactions (a) do not require any
consent or approval of, registration or filing with, or any other action by,
any Governmental Authority, except for (i) such as have been or will be
obtained or made and are in full force and effect and (ii) filings and
recordings in respect of the Liens created pursuant to the Security Documents, (b) will
not violate any applicable law or regulation or the charter, by-laws or other
organizational documents of

 

61

 

the
Borrower or any of its Subsidiaries or any order of any Governmental Authority,
(c) will not violate or result in a default in any material respect under
any indenture, agreement or other instrument binding upon the Borrower or any
of its Subsidiaries or assets, or give rise to a right thereunder to require
any payment to be made by any such Person, and (d) except for the Liens
created pursuant to the Security Documents, will not result in the creation or
imposition of any Lien on any asset of the Borrower or any of its Subsidiaries.

 

SECTION 3.04.  Financial
Condition; No Material Adverse Change.

 

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

 

(i)            the audited
consolidated balance sheet and statements of operations, stockholders’ equity
and cash flows of the Borrower and its Subsidiaries as of and for the fiscal
year ended December 31, 2008, reported on by KPMG LLP, independent public
accountants; and

 

(ii)           the unaudited interim
consolidated balance sheet and statements of operations, stockholders’ equity
and cash flows of the Borrower and its Subsidiaries as of and for the three,
six and nine-month periods ended, respectively, March 31, 2009, June 30,
2009 and September 30, 2009, in each case certified by a Financial Officer
of the Borrower.

 

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

 

(b)           No Material Adverse Change.  Since December 31, 2008, there has not
been any event, development or circumstance that has had or could reasonably be
expected to have a material adverse effect on (i) the business, Portfolio
Investments and other assets, liabilities and financial condition of the
Borrower taken as a whole (excluding in any case a decline in the net asset
value of the Borrower or a change in general market conditions or values of the
Borrower’s Portfolio Investments), or (ii) the validity or enforceability
of any of the Loan Documents or the rights or remedies of the Administrative
Agent and the Lenders thereunder.

 

62

 

SECTION 3.05.  Litigation.

 

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

 

(b)           Disclosed Matters.  Since the Restatement Effective 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.

 

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

 

SECTION 3.07.  [Reserved].

 

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

 

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

 

SECTION 3.10.  Disclosure.  The Borrower has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which it or any
of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.  None of the
reports, financial statements, certificates or other information furnished by
or on

 

63

 

behalf
of the Borrower to the Lenders in connection with the negotiation of this
Agreement and the other Loan Documents or delivered hereunder or thereunder (as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that, with respect to projected
financial information, the Borrower represents only that such information was
prepared in good faith based upon assumptions believed to be reasonable at the
time.

 

SECTION 3.11.  Investment Company Act; Margin Regulations.

 

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

 

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

 

(c)           Investment Policies.  The Borrower is in compliance with all
investment objectives, policies, restrictions and limitations for the Borrower
delivered to the Lenders prior to the Restatement Effective Date (the “Investment
Policies”), except to the extent that the failure to so comply could not
reasonably be expected to result in a Material Adverse Effect.

 

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

 

SECTION 3.12.  Material Agreements and Liens.

 

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

 

64

 

become,
outstanding under each such arrangement is correctly described in Part A
of Schedule II.

 

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

 

SECTION 3.13.  Subsidiaries and Investments.

 

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

 

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

 

SECTION 3.14.  Properties.

 

(a)           Title Generally.  Each of the Borrower and its Subsidiaries has
good title to, or valid leasehold interests in, all its real and personal
property material to its business, except for minor defects in title that do
not interfere with its ability to conduct its business as currently conducted
or to utilize such properties for their intended purposes.

 

65

 

 

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

 

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

 

ARTICLE IV

 

CONDITIONS

 

SECTION 4.01. 
Restatement Effective Date. 
This Agreement (and the amendment and restatement of the Original
Agreement to be effected hereby) shall become effective on the date on which
the Administrative Agent shall have received each of the following documents,
each of which shall be satisfactory to the Administrative Agent (and to the
extent specified below, to each Lender) in form and substance (or such
condition shall have been waived in accordance with Section 9.02):

 

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

 

(b)           Fees and Expenses.  The Administrative Agent shall have received
evidence of the payment by the Borrower of all fees payable to the Lenders on
the Restatement Effective Date that the Borrower has agreed to pay in
connection with this Agreement.  The
Borrower shall have paid all reasonable expenses (including the legal fees of
Milbank, Tweed, Hadley & McCloy LLP) for which invoices have been
presented that the Borrower has agreed to pay in connection with this
Agreement.

 

(c)           Opinion of
Counsel to the Borrower.  A favorable
written opinion (addressed to the Administrative Agent and the Lenders and
dated the Restatement Effective Date) of Latham & Watkins LLP, New
York counsel for the Borrower, in form and substance reasonably satisfactory to
the Administrative Agent and of Venable LLP, Maryland counsel for the Borrower,
in substantially the form of Exhibit C, and in each case covering such
other matters relating to the

 

66

 

Borrower,
this Agreement or the Transactions as the Required Lenders shall reasonably
request (and the Borrower hereby instructs such counsel to deliver such opinion
to the Lenders and the Administrative Agent).

 

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

 

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

 

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

 

(g)           Liens.  Results of a recent lien search in each
relevant jurisdiction with respect to the Borrower and such search shall reveal
no liens on any of the assets of the Obligors except for liens permitted under Section 6.02.

 

(h)           Guarantee and
Security Agreement Confirmation.  The
Guarantee and Security Agreement Confirmation, duly executed and delivered by
each of the parties to the Guarantee and Security Agreement.

 

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

 

(j)            Retiring Lenders.  Evidence that each Retiring Lender shall
have, as of the Restatement Effective Date, received repayment in full of its
outstanding Loans and all accrued and unpaid interest, facility fees, LC
participation fees, and any other amounts owing to such Retiring Lender under
the Original Agreement.

 

(k)           Restatement
Effective Date Adjustments.  Evidence
that each Continuing Lender shall have, as of the Restatement Effective Date,
received payment in full of all accrued and unpaid interest, facility fees and
LC participation fees owing to such Lender under the Original Agreement and the
Borrowings and other adjustments to the Loans described in Section 2.02(e) shall
have occurred.

 

67

 

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

 

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

 

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

 

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

 

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

 

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

 

68

 

ARTICLE V

 

AFFIRMATIVE
COVENANTS

 

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

 

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

 

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

 

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

 

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

 

69

 

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

 

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

 

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

 

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

 

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

 

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

 

(i)            promptly after
Moody’s or S&P or Fitch shall have announced a change in the Borrower
Rating, written notice of such rating change.

 

70

 

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

 

(a)           the occurrence of any Default;

 

(b)           the filing or
commencement of any action, suit or proceeding by or before any arbitrator or
Governmental Authority against or affecting the Borrower or any of its
Affiliates that, if adversely determined, could reasonably be expected to
result in a Material Adverse Effect;

 

(c)           the occurrence of
any ERISA Event that, alone or together with any other ERISA Events that have
occurred, could reasonably be expected to result in liability of the Borrower
and its Subsidiaries in an aggregate amount exceeding $10,000,000; and

 

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

 

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

 

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

 

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

 

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

 

71

 

maintained
by companies engaged in the same or similar businesses operating in the same or
similar locations.

 

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

 

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

 

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

 

SECTION 5.07.  Compliance with Laws.  The Borrower will, and will cause each of its
Subsidiaries to, comply with all laws, rules, regulations, including the
Investment Company Act, any applicable rules, regulations or orders issued by
the Securities and Exchange Commission thereunder and orders of any other
Governmental Authority applicable to it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.

 

72

 

SECTION 5.08.  Certain Obligations Respecting
Subsidiaries; Further Assurances.

 

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

 

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

 

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

 

(i)            to create, in favor
of the Collateral Agent for the benefit of the Lenders (and any affiliate
thereof that is a party to any Hedging Agreement entered into with the
Borrower) and the holders of any Other Secured Indebtedness, perfected security
interests and Liens in the Collateral; provided that any such security
interest or Lien shall be subject to the relevant requirements of the Security
Documents; provided further, that in the case of any Collateral consisting of
voting stock of any Controlled Foreign Corporation, such security interest
shall be limited to 65% of the issued and outstanding voting stock of such
Controlled Foreign Corporation,

 

(ii)           to cause any bank
or securities intermediary (within the meaning of the Uniform Commercial Code)
to enter into such arrangements with the Collateral Agent as shall be
appropriate in order that the Collateral Agent has “control” over each bank
account or securities account of the Obligors (other than any thereof that are
maintained by the Obligors in their capacity as “servicer” for Ares Capital CP
or any other Designated Subsidiary, or which hold solely money or financial
assets of Ares Capital CP or any other Designated Subsidiary), and in that
connection, the Borrower agrees to cause all cash and other proceeds of

 

73

 

Portfolio
Investments received by any Obligor to be promptly deposited into such an
account (or otherwise delivered to, or registered in the name of, the
Collateral Agent) and, until such deposit, delivery or registration such cash
and other proceeds shall be held in trust by the Borrower for and as the
property of the Collateral Agent and shall not be commingled with any other
funds or property of such Obligor or of any Designated Subsidiary or other
Person (including with any money or financial assets of any Obligor in its
capacity as “servicer” for Ares Capital CP or any other Designated Subsidiary,
or any money or financial assets of any Designated Subsidiary).

 

(iii)          to cause its
Designated Subsidiaries, and any custodians or account banks and securities
intermediaries acting on their behalf, or trustee or representative acting for
any Person extending credit to any Designated Subsidiary, to execute and
deliver such intercreditor and other agreements, in form and substance
reasonably satisfactory to the Administrative Agent, as it shall determine are
necessary to confirm that none of such Designated Subsidiaries or custodians
claims any interest or Lien upon any property of any Obligor and that any
custodian that holds documentation on behalf of both the Obligors and any
Designated Subsidiary will provide access to such documentation consistent with
the provisions of Section 5.06,

 

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

 

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

 

(vi)          cause all loan and
other documents relating to any Portfolio Investment to be held by (x) the
Collateral Agent or (y) the Custodian pursuant to the terms of the
Custodian Agreement (or another custodian reasonably satisfactory to the
Administrative Agent), or pursuant to an appropriate intercreditor agreement,
so long as the Custodian (or custodian) has agreed to

 

74

 

grant
access to such loan and other documents to the Administrative Agent and the
Lenders pursuant to an access or similar agreement between the Borrower and
such Custodian (or custodian) in form and substance reasonably satisfactory to
the Administrative Agent.

 

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

 

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

 

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

 

SECTION 5.12.  Portfolio Valuation and Diversification,
Etc.

 

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

 

(b)           Portfolio
Valuation Etc.

 

(i)            Settlement Date
Basis.  For purposes of this
Agreement, all determinations of whether an investment is to be included as a
Portfolio Investment shall be determined on a settlement-date basis (meaning
that any investment that has been purchased will not be treated as a Portfolio
Investment until such purchase has settled, and any Portfolio Investment which
has been sold will not be excluded as a Portfolio Investment until such sale
has settled),

 

75

 

provided that no such
investment shall be included as a Portfolio Investment to the extent it has not
been paid for in full.

 

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

 

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

 

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

 

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

 

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

 

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

 

(B)           Unquoted
Investments- External Review.  With
respect to Portfolio Investments for which market quotations are not readily
available (other than SSLF), the Borrower shall value such Portfolio
Investments quarterly in a manner consistent with its “Net Asset Valuation
Policy” delivered to the Lenders prior to the Restatement Effective Date (the “Valuation
Policy”).

 

(C)           Investments
in Designated Subsidiaries.  In
addition to the valuation obtained in accordance with sub-clause (B) above,
with respect to any Portfolio Investment consisting of Equity Interests in a
Designated Subsidiary, the Borrower shall determine a value for such Portfolio
Investment, which at any time shall equal the value of the underlying financial
assets held by such Designated Subsidiary as most recently determined by the
Borrower in accordance with its Valuation Policy less the aggregate face amount
of all liabilities of such Designated Subsidiary (provided such value shall be
proportionately adjusted to reflect any

 

76

 

investment
in any Designated Subsidiary that is less than wholly-owned or in which the
Collateral Agent’s security interest therein is limited to 65% of the voting
stock thereof because such Designated Subsidiary is a Controlled Foreign
Corporation).

 

(D)          Investment
in SSLF.  With respect to Borrower’s
investment in the SSLF, the Borrower shall value such Portfolio Investment
quarterly with the assistance of a third-party service provider consistent with
the Valuation Policy.

 

(E)           Internal
Review.  The Borrower shall conduct
an internal review of the aggregate value of the Portfolio Investments, and of
the Borrowing Base, at least once each calendar week which shall take into
account any events of which the Borrower has knowledge that materially affects
the aggregate value of the Portfolio Investments or the Borrowing Base,
including, as applicable, in the case of any Portfolio Investment consisting of
Equity Interests in a Designated Subsidiary or non-consolidated subsidiary, any
modifications to any relevant debt agreements, the occurrence of any “default”
or similar event thereunder or any other adverse actions taken by any creditor
of such Designated Subsidiary or non-consolidated subsidiary.  If, based upon such weekly internal review,
the Borrower determines that a Borrowing Base Deficiency exists, then the Borrower
shall, within five Business Days as provided in Section 5.01(c), deliver a
Borrowing Base Certificate reflecting the new amount of the Borrowing Base and
shall take the actions, and make the payments and prepayments (and provide
cover for Letters of Credit), all as more specifically set forth in Section 2.09(c).

 

(F)           Quarterly
Valuations.  Without limiting the
requirements of sub-clauses (A) through (E) above, the Borrower shall
value at least 60% in aggregate value of its Non-Core Investments that are
included in the 25% of the Borrowing Base referenced in Section 5.13(e) below
no less frequently than quarterly in the manner set forth in sub-clause (A) or
(B), as applicable.

 

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

 

provided
that, in no event shall any Portfolio Investment be valued pursuant to the
foregoing requirements less frequently than annually.

 

77

 

 

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

 

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

 

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

 

(b)                                 the Advance Rate applicable
to that portion of the aggregate Value of the Portfolio Investments of all
issuers in a consolidated group of corporations or other entities in accordance
with GAAP (other than SSLF) exceeding 20% of Shareholders’ Equity of the
Borrower (which, for purposes of the calculation of Shareholder’s Equity of the
Borrower, shall exclude the aggregate amount of investments in, and advances
to, Designated Subsidiaries and Excluded Entities) shall be 0%.

 

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

 

(d)                                 the Advance Rate applicable
to that portion of the aggregate Value of the Borrower’s investment in SSLF
shall be zero to the extent necessary so that no more than 15% of the Borrowing
Base is attributable to such investment.

 

78

 

(e)                                  the Advance Rate applicable
to that portion of the aggregate Value of the Borrower’s investments in Non-Core
Investments shall be zero to the extent necessary so that no more than 25% of
the Borrowing Base is attributable to such investments.

 

(f)                                    the Advance Rate applicable
to that portion of the aggregate Value of the Borrower’s investments in
Non-Core Investments and SSLF shall be zero to the extent necessary so that no
more than 35% of the Borrowing Base is attributable to such investments.

 

For
the purposes of the issuer concentration limits in clauses (a) and (b) above,
(i) all Designated Subsidiaries and non-consolidated subsidiaries
(excluding Ares Capital CP, Ares Capital CP II, Ares Capital CP Holdings, Ares
Capital CP Holdings II, SSLF, ARCC Commercial Loan Trust 2006 LLC and ARCC CLO
2006 LLC, in each case, so long as such entities maintain capital structures
substantially the same as their existing capital structures on the Restatement
Effective Date, and any other Subsidiaries with the consent of the Required
Lenders) will be treated as a single issuer and (ii) Ares Capital CP, Ares
Capital CP II, Ares Capital CP Holdings and Ares Capital CP Holdings II (and
any successor entity replacing Ares Capital CP, Ares Capital CP II, Ares
Capital CP Holdings and Ares Capital CP Holdings II), so long as their combined
capital structure is substantially as described to the Administrative Agent
prior to the Restatement Effective Date, will be treated as a combined single
issuer.

 

No
Portfolio Investment (including, for the avoidance of doubt, any Restricted
Acquisition Asset) may be included in the Borrowing Base until such time as
such Portfolio Investment has been Delivered (as defined in the Guarantee and
Security Agreement) to the Collateral Agent, and then only for so long as such
Portfolio Investment continues to be Delivered as contemplated therein; provided
that in the case of any Portfolio Investment in which the Collateral Agent has
a first-priority perfected security interest pursuant to a valid UCC filing
(and for which no other method of perfection with a higher priority is
possible), such Portfolio Investment may be included in the Borrowing Base so
long as all remaining actions to complete “Delivery” are satisfied within 7
days of such inclusion.  Voting stock of
any Controlled Foreign Corporation in excess of 65% of the issued and
outstanding voting stock of such Controlled Foreign Corporation shall not be
included as a Portfolio Investment for purposes of calculating the Borrowing
Base.

 

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

 

79

 

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

 

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

 

	
  Portfolio
  Investment

  	
   

  	
  Quoted

  	
   

  	
  Unquoted

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  100

  	
  %

  	
  n.a.

  	
   

  
	
  Long-Term U.S. Government Securities

  	
   

  	
  95

  	
  %

  	
  n.a.

  	
   

  
	
  Performing First Lien Bank Loans

  	
   

  	
  85

  	
  %

  	
  75

  	
  %

  
	
  Performing Second Lien Bank Loans

  	
   

  	
  75

  	
  %

  	
  65

  	
  %

  
	
  Performing Cash Pay High Yield Securities

  	
   

  	
  70

  	
  %

  	
  60

  	
  %

  
	
  Investment Grade CDO Securities

  	
   

  	
  65

  	
  %

  	
  55

  	
  %

  
	
  Performing Cash Pay Mezzanine Investments

  	
   

  	
  65

  	
  %

  	
  55

  	
  %

  
	
  Performing Non-Cash Pay High Yield Securities

  	
   

  	
  60

  	
  %

  	
  50

  	
  %

  
	
  Non-Investment Grade CDO Securities

  	
   

  	
  55

  	
  %

  	
  45

  	
  %

  
	
  Performing Non-Cash Pay Mezzanine Investments

  	
   

  	
  55

  	
  %

  	
  45

  	
  %

  
	
  Non-Performing First Lien Bank Loans

  	
   

  	
  50

  	
  %

  	
  50

  	
  %

  
	
  Non-Performing Second Lien Bank Loans

  	
   

  	
  40

  	
  %

  	
  40

  	
  %

  
	
  Non-Performing High Yield Securities

  	
   

  	
  35

  	
  %

  	
  35

  	
  %

  
	
  Non-Performing Mezzanine Investments

  	
   

  	
  35

  	
  %

  	
  35

  	
  %

  
	
  Performing Common Equity

  	
   

  	
  40

  	
  %

  	
  40

  	
  %

  
	
  Other Category CDO Securities*

  	
   

  	
  25

  	
  %

  	
  25

  	
  %

  
	
  Non-Performing Common Equity

  	
   

  	
  0

  	
  %

  	
  0

  	
  %

  

 

* For purposes of determining the Advance Rate, “Other Category CDO
Securities” shall include any Obligor’s investment in (i) SSLF, (ii) any
subsidiary that is not consolidated with the Borrower in its consolidated
financial statements and (iii) any Designated Subsidiary.

 

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

 

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

 

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

 

80

 

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

 

“Cash
Pay Bank Loans” means First Lien Bank Loans and Second Lien Bank Loans as
to which, at the time of determination, all of the interest on which is payable
not less frequently than quarterly and for which not less than 2/3rds of the
interest (including accretions and “pay-in-kind” interest) for the current
monthly or quarterly period (as applicable) is payable in cash.

 

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

 

“Excluded
Entities” means ARCC LVCG Holdings LLC, ARCC CLPB Corp., ARCC IGS Corp.,
ARCC PAH Corp., ARCC TTL Corp., ARCC VTH Corp., ARCC WMA Corp, ARCC Odyssey
Corp. and, after the Step-Up Date, to the extent such entity is a Subsidiary,
Allied Capital REIT, Inc., and, in each case, their respective
subsidiaries (provided that in the case of ARCC Odyssey Corp., it shall have no
material assets or liabilities and its sole purpose shall be to consummate the
Acquisition, provided further, in no event shall Allied be deemed an “Excluded
Entity”).

 

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

 

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

 

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

 

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

 

81

 

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

 

“Non-Core
Investments” means, collectively, Portfolio Investments in common equity,
warrants, Non-Performing Bank Loans, Non-Performing High Yield Securities,
Non-Performing Mezzanine Investments, Other Category CDO Securities and any
Obligor’s investment in any subsidiary that is not consolidated with the
Borrower in its consolidated financial statements and any Obligor’s investment
in a Designated Subsidiary (but not, in any event, including the Borrower’s
investment in SSLF).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

82

 

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

 

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

 

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

 

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

 

“Performing
First Lien Bank Loans” means First Lien Bank Loans which are Cash Pay Bank
Loans and are Performing.

 

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

 

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

 

“Performing
Second Lien Bank Loans” means Second Lien Bank Loans which are Cash Pay
Bank Loans and are Performing.

 

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

 

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

 

83

 

“Restricted Acquisition Asset” means, any Portfolio Investment (a) that
was owned by Allied or any of its subsidiaries and acquired by an Obligor and (b) the
underlying governing agreements for which (i) prohibit the grant of a Lien
thereon or (ii) require the satisfaction of certain conditions for the
grant of a Lien thereon.  Any such
Portfolio Investment shall no longer constitute a “Restricted Acquisition Asset”
to the extent that a waiver of, or consent under, any restriction on a pledge
to the Collateral Agent contained in the underlying governing agreements for
such Restricted Acquisition Asset has been obtained or the applicable
conditions required thereunder for a pledge have been satisfied, in each case,
to permit the grant of a Lien on such Restricted Acquisition Asset in favor of
the Collateral Agent pursuant to the Security Documents.

 

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

 

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

 

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

 

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

 

“SSLF”
means the Senior Secured Loan Fund LLC (fka Unitranche Fund LLC).

 

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

 

“Value”
means:

 

(i)                                     with respect to
any Portfolio Investment (other than a Portfolio Investment consisting of Equity
Interests in a Designated Subsidiary), the lower of:

 

(1)                                  the most recent internal
fair market value as determined pursuant to Section 5.12(b)(ii)(E); and

 

84

 

(2)                                  the most recent external
fair market value as determined pursuant to Section 5.12(b)(ii)(A), (B) or
(D); and

 

(ii)                                  with respect to
any Portfolio Investment consisting of Equity Interests in a Designated
Subsidiary, the lowest of:

 

(1)                                  the most recent internal
fair market value as determined pursuant to Section 5.12(b)(ii)(E);

 

(2)                                  the most recent external
fair market value as determined pursuant to Section 5.12(b)(ii)(B); and

 

(3)                                  the most recent value as
determined pursuant to Section 5.12(b)(ii)(C).

 

ARTICLE VI

 

NEGATIVE COVENANTS

 

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

 

SECTION 6.01.  Indebtedness.  Subject to the last sentence of this Section 6.01,
the Borrower will not, nor will it permit any other Obligor to, create, incur,
assume or permit to exist any Indebtedness, except:

 

(a)                                  Indebtedness created
hereunder or under any other Loan Document;

 

(b)                                 Permitted Indebtedness in an
aggregate amount that, taken together with Indebtedness permitted under
clauses (a) and (g) of this Section 6.01 plus the
outstanding Allied 2011/12 Notes, does not exceed the lesser of (i) the
Borrowing Base and (ii) the amount required to comply with the provisions
of Section 6.07(b);

 

(c)                                  Other Permitted
Indebtedness;

 

(d)                                 Indebtedness of the Borrower
to or from any other Obligor or Indebtedness of an Obligor to or from another
Obligor;

 

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

 

85

 

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

 

(g)                                 other Indebtedness in an
aggregate amount not exceeding the Additional Debt Amount at any one time
outstanding and that, taken together with Indebtedness permitted under
clauses (a) and (b) of this Section 6.01 plus the
outstanding Allied 2011/12 Notes, does not exceed the lesser of (i) the
Borrowing Base and (ii) the amount required to comply with the provisions
of Section 6.07(b);

 

(h)                                 obligations (including
Guarantees) in respect of Standard Securitization Undertakings; and

 

(i)                                     Permitted Allied
Indebtedness.

 

In
addition, the Borrower will not, and will not permit any other Subsidiary to,
create, incur, assume or permit to exist any secured Indebtedness of Allied or
Allied’s subsidiaries, except for Allied Secured Indebtedness that is assumed
or incurred on or prior to the date of the Acquisition by a Special Acquisition
Subsidiary or that would be permitted under this Section 6.01(g) above.  For the avoidance of doubt, the foregoing
sentence does not require the Borrower or any Subsidiary to control any actions
or inactions of Allied or any of Allied’s subsidiaries prior to the
Acquisition.

 

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

 

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

 

(b)                                 Liens created pursuant to
the Security Documents;

 

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

 

(d)                                 Liens securing Indebtedness
or other obligations in an aggregate principal amount not exceeding $25,000,000
at any one time outstanding (which 

 

86

 

may
cover Portfolio Investments, but only to the extent released from the Lien in
favor of the Collateral Agent in accordance with the requirements of Section 10.03
of the Guarantee and Security Agreement), so long as at the time thereof the
aggregate amount of Indebtedness permitted under clauses (a), (b) and
(g) of Section 6.01 plus the outstanding Allied 2011/12 Notes, does
not exceed the lesser of (i) the Borrowing Base and (ii) the amount
required to comply with the provisions of Section 6.07(b); and

 

(e)                                  Permitted Liens.

 

In
addition, the Borrower will not, and will not permit any other Subsidiary to,
create, incur, assume or permit to exist any Lien on its property or assets
securing any Indebtedness of Allied or Allied’s subsidiaries, except for Liens
on Allied Excepted Property or Liens in respect of other secured Indebtedness
of Allied and its subsidiaries that would be permitted under this Section 6.02(d) above,
provided that, notwithstanding the other provisions of this Section 6.02,
in no event shall any Lien securing the Allied Secured Indebtedness extend to
any other property of the Borrower or any Subsidiary. For the avoidance of
doubt, the foregoing sentence does not require the Borrower or any Subsidiary
to control any actions or inactions of Allied or any of Allied’s subsidiaries
prior to the Acquisition.

 

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

 

Notwithstanding
the foregoing provisions of this Section:

 

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

 

87

 

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

 

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

 

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

 

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

 

(f)                                    the Borrower and the other
Obligors may sell, lease, transfer or otherwise dispose of equipment or other
property or assets that do not consist of Portfolio Investments so long as the
aggregate amount of all such sales, leases, transfer and dispositions does not
exceed $10,000,000 in any fiscal year; and

 

(g)                                 the Obligors may transfer
Restricted Acquisition Assets to a Special Acquisition Subsidiary to the extent
required by the terms of the Allied Secured Indebtedness.

 

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

 

(a)                                  operating deposit accounts
with banks;

 

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

 

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

 

88

 

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

 

(e)                                  Investments in Designated
Subsidiaries; and

 

(f)                                    additional Investments up to
but not exceeding $50,000,000 in the aggregate.

 

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

 

SECTION 6.05.  Restricted Payments.  The Borrower will not, nor will it permit any
other Obligor to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, except that the Borrower may declare and
pay:

 

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

 

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

 

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

 

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

 

(ii)                                  the aggregate amount of
Restricted Payments made during any taxable year of the Borrower after the
Restatement Effective Date 

 

89

 

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

 

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

 

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

 

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

 

For
the avoidance of doubt, the Borrower shall not declare any dividend to the
extent such declaration violates the provisions of the Investment Company Act
applicable to it.

 

SECTION 6.06.  Certain Restrictions on Subsidiaries.  The Borrower will not permit any of its
Subsidiaries (other than Designated Subsidiaries and, following consummation of
the Acquisition, for so long as the Allied Secured Indebtedness is 

 

90

 

outstanding,
any Special Acquisition Subsidiary) to enter into or suffer to exist any
indenture, agreement, instrument or other arrangement (other than the Loan
Documents) that prohibits or restrains, in each case in any material respect,
or imposes materially adverse conditions upon, the incurrence or payment of
Indebtedness, the granting of Liens, the declaration or payment of dividends, the
making of loans, advances, guarantees or Investments or the sale, assignment,
transfer or other disposition of property (except for restrictions imposed by
the underlying governing agreements of any Restricted Acquisition Asset and
applicable only to such Restricted Acquisition Asset).

 

SECTION 6.07.  Certain Financial Covenants.

 

(a)                                  Minimum
Shareholders’ Equity.  The
Borrower will not permit Shareholders’ Equity at the last day of any fiscal
quarter of the Borrower to be less than the greater of (i) 40% of the
total assets of the Borrower and its Subsidiaries as at the last day of such
fiscal quarter (determined on a consolidated basis, without duplication, in
accordance with GAAP) and (ii) $750,000,000 plus 25% of the net
proceeds of the sale of Equity Interests by the Borrower and its Subsidiaries
after the Restatement Effective Date plus, at any time after the
consummation of the Acquisition, 50% of the value of Equity Interests in the
Borrower issued in connection therewith.

 

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

 

(c)                                  Liquidity Tests.

 

(i)                                     The Borrower will not permit
the aggregate Value of the Portfolio Investments that are Cash (excluding cash
cover for outstanding Letters of Credit) 
or that can be converted to Cash in fewer than 10 Business Days without
more than a 5% change in price to be less than 7.5% of the Covered Debt Amount
for more than 30 consecutive Business Days during any period when the Adjusted
Covered Debt Amount is greater than 85% of the Adjusted Borrowing Base as
determined in good faith by the Borrower.

 

(ii)                                  The Borrower will not permit
the aggregate Value of the Portfolio Investments that are Cash (excluding cash
cover for outstanding Letters of Credit) 
or that can be converted to Cash in fewer than 30 Business Days without
more than a 10% change in price to be less than 15% of the Covered Debt Amount
for more than 30 consecutive Business Days during any period when the Adjusted
Covered Debt Amount is greater than 85% of the Adjusted Borrowing Base, as
determined in good faith by the Borrower.

 

(iii)                               The Borrower will not
create, incur or assume any Indebtedness under Section 6.01(a), (b) or
(g) unless after giving effect thereto the sum of Shareholder’s Equity and
Relevant Available Funds shall be greater than:

 

91

 

(A)  the sum of (1) the aggregate Value of
Portfolio Investments plus (2) the aggregate amount of Relevant Investment
Commitments of the Obligors; minus

 

(B)  the sum of (1) aggregate Value of
Portfolio Investments that can be converted to Cash in fewer than 10 Business
Days without more than a 5% change in price plus (2) the aggregate amount
of Relevant Investment Commitments of the Obligors that can be converted into
Cash in fewer than 10 Business Days without more than a 5% change in price plus
(3) without duplication, the aggregate Value of Portfolio Investments
maturing on a date not later than six months after the relevant date of determination.

 

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

 

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

 

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

 

92

 

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

 

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

 

SECTION 6.12.  Permitted Indebtedness.  The Borrower will not, nor will it permit any
other Obligor to, purchase, redeem, retire or otherwise acquire for value, or
set apart any money for a sinking, defeasance or other analogous fund for the
purchase, redemption, retirement or other acquisition of, or make any voluntary
payment or prepayment of the principal of or interest on, or any other amount
owing in respect of, any Permitted Indebtedness (other than the refinancing of
such Indebtedness with Indebtedness permitted under Section 6.01), except
for (a) regularly scheduled payments, prepayments or redemptions of
principal and interest in respect thereof required pursuant to the instruments
evidencing such Permitted Indebtedness, (b) payments and prepayments
thereof required to comply with requirements of Section 2.09(c), and (c) Specified
Debt Payments permitted to be made under Section 6.13.

 

SECTION 6.13.  Specified Debt.  The Borrower will not, nor will it permit any
of its Subsidiaries to:

 

(a)                                  make any
Specified Debt Payment at any time, provided that the Borrower may make
a Specified Debt Payment described in clause (a) of the definition of
Specified Debt Payment if (i) such Specified Debt Payment does not exceed
the then fair value (which fair value shall include reasonable fees and
premiums payable in connection therewith) as reasonably determined by the
Borrower of the Specified Debt purchased, redeemed, retired or otherwise
acquired thereby, (ii) at the time of and immediately after giving effect
to such Specified Debt Payment, no Default shall have occurred and be
continuing and (iii) if such Specified Debt Payment were treated as a “Restricted
Payment” for the purposes of determining compliance with Section 6.05,
such Specified Debt Payment would be permitted to be made under Section 6.05;
and

 

(b)                                 notwithstanding
anything to the contrary in Section 6.02, create, incur, assume or permit
to exist any Lien securing any Specified Debt at any time.

 

93

 

ARTICLE VII

 

EVENTS OF DEFAULT

 

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

 

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

 

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

 

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

 

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

 

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

 

94

 

delivery
of such plan), so long as such Borrowing Base Deficiency is cured within such
30-Business Day period;

 

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

 

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

 

(h)                                 any event or condition
occurs that results in any Material Indebtedness becoming due prior to its
scheduled maturity or that shall continue unremedied for any applicable period
of time sufficient to enable or permit the holder or holders of any Material
Indebtedness or any trustee or agent on its or their behalf to cause any
Material Indebtedness to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, prior to its scheduled maturity; provided
that this clause (h) shall not apply to secured Indebtedness that
becomes due as a result of the voluntary sale or transfer of the property or
assets securing such Indebtedness;

 

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

 

(j)                                     the Borrower or any of its
Subsidiaries shall (i) voluntarily commence any proceeding or file any
petition seeking liquidation, reorganization or other relief under any Federal,
state or foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition
described in clause (i) of this Article, (iii) apply for or
consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any of its Subsidiaries or
for a substantial part of its 

 

95

 

assets,
(iv) file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for the
benefit of creditors or (vi) take any action for the purpose of effecting
any of the foregoing;

 

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

 

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

 

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

 

(n)                                 a Change in Control shall
occur;

 

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

 

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

 

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

 

(r)                                    the Obligors shall at any time,
without the consent of the Required Lenders, (i) modify, supplement or
waive in any material respect the Investment Policies (other than any
modification, supplement or waiver required by any applicable law, rule or
regulation), provided that it shall not be deemed a modification in any
material respect of the Investment Policies if the permitted investment size of
the Portfolio Investments proportionately increases as the size of the Borrower’s
capital base changes; (ii) modify, supplement or waive in any 

 

96

 

material
respect the Valuation Policy (other than any modification, supplement or waiver
required under GAAP or required by any applicable law, rule or
regulation), (iii) fail to comply with the Valuation Policy in any
material respect, or (iv) fail to comply with the Investment Policies if
the same could reasonably be expected to result in a Material Adverse Effect,
and in the case of sub-clauses (iii) and (iv) of this clause (r),
such failure shall continue unremedied for a period of 30 or more days after
the earlier of notice thereof by the Administrative Agent (given at the request
of any Lender) to the Borrower or knowledge thereof by a Financial Officer.

 

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

 

then,
and in every such event (other than an event with respect to the Borrower
described in clause (i) or (j) of this Article), and at any
time thereafter during the continuance of such event, the Administrative Agent
may, and at the request of the Required Lenders shall, by notice to the
Borrower, take either or both of the following actions, at the same or
different times: (i) terminate the Commitments, and thereupon the
Commitments shall terminate immediately, and (ii) declare the Loans then
outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to
be due and payable), and thereupon the principal of the Loans so declared to be
due and payable, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; and in case of any event with
respect to the Borrower described in clause (i) or (j) of
this Article, the Commitments shall automatically terminate and the principal
of the Loans then outstanding, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower.

 

In
the event that the Loans shall be declared, or shall become, due and payable
pursuant to the immediately preceding paragraph then, upon notice from the 

 

97

 

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

 

ARTICLE VIII

 

THE ADMINISTRATIVE AGENT

 

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

 

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

 

The
Administrative Agent shall not have any duties or obligations except those
expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to
take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated hereby or by the other
Loan Documents that the Administrative Agent is required to exercise in writing
by the Required Lenders, and (c) except as expressly set forth herein and
in the other Loan Documents, the Administrative Agent shall not have any duty
to disclose, and shall not be liable for the failure to disclose, any
information relating to the Borrower or any of its Subsidiaries that is
communicated to or obtained by the bank serving as Administrative Agent or any
of its Affiliates in any capacity.  The
Administrative Agent shall not be liable for any action taken or not taken by
it with the consent or at the request of the Required Lenders or in the absence
of its own gross negligence or willful misconduct.  The Administrative Agent shall be deemed not
to have knowledge of any Default unless and until written notice thereof is
given to the Administrative Agent by the Borrower or a Lender, and the
Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made in or
in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered 

 

98

 

hereunder
or thereunder or in connection herewith or therewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein or therein, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Loan Document or any
other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Article IV or elsewhere herein or therein, other
than to confirm receipt of items expressly required to be delivered to the Administrative
Agent.

 

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

 

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

 

The
Administrative Agent may resign at any time by notifying the Lenders, the
Issuing Bank and the Borrower.  Upon any
such resignation, the Required Lenders shall have the right, with the consent
of the Borrower not to be unreasonably withheld (or, if an Event of Default has
occurred and is continuing in consultation with the Borrower), to appoint a
successor.  If no successor shall have
been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent’s resignation shall
nonetheless become effective and (1) the retiring Administrative Agent
shall be discharged from its duties and obligations hereunder and (2) the
Required Lenders shall perform the duties of the Administrative Agent (and all
payments and communications provided to be made by, to or through the
Administrative Agent shall instead be made by or to each Lender directly) until
such time as the Required Lenders appoint a successor agent as provided for
above in this paragraph.  Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring (or retired) Administrative Agent and the

 

99

 

retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder (if not already discharged therefrom as provided above in this
paragraph).  The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor.  After the Administrative
Agent’s resignation hereunder, the provisions of this Article and Section 9.03
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Administrative Agent.

 

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

 

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

 

100

 

ARTICLE IX

 

MISCELLANEOUS

 

SECTION 9.01. 
Notices; Electronic Communications

 

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

 

(i)            if to the Borrower,
to it at 280 Park Avenue, 22nd Floor East, New York, NY 10017,
Attention of Michael J. Arougheti, President (Telecopy No. (212) 750-1777;
Telephone No. (212) 750-7300); with a copy to Ares Management LLC, at 2000
Avenue of the Stars, 12th Floor, Los Angeles, CA, 90067 Attention of
Rick Davis (Telephone No. (310) 201-4111);

 

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

 

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

 

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

 

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

 

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

 

101

 

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

 

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

 

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

 

SECTION 9.02.  Waivers;
Amendments.

 

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

 

(b)           Amendments
to this Agreement.  Neither this
Agreement nor any provision hereof may be waived, amended or modified except
pursuant to an agreement

 

102

 

or agreements in writing entered into by the Borrower and the Required
Lenders or by the Borrower and the Administrative Agent with the consent of the
Required Lenders; provided that no such agreement shall

 

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

 

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

 

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

 

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

 

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

 

provided  further
that (x) no such agreement shall amend, modify or otherwise affect the
rights or duties of the Administrative Agent, the Issuing Bank hereunder
without the prior written consent of the Administrative Agent, the Issuing Bank,
as the case may be and (y) the consent of Lenders holding not less than
two-thirds of the Revolving Credit Exposure and unused Commitments will be
required (A) for any adverse change affecting the provisions of this
Agreement relating to the calculation of the Borrowing Base (including the
definitions set forth in Section 5.13) or the provisions of Section 5.12(c)(ii) unless
otherwise expressly provided herein and (B) for any release of Collateral
other than for fair value or as otherwise permitted hereunder or under the
other Loan Documents.

 

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

 

103

 

whether
or not it becomes effective as to any other Lender, so long as the Required
Lenders consent to such waiver, amendment or modification as provided above.

 

(c)           Amendments to Security Documents.  No Security Document nor any provision
thereof may be waived, amended or modified, nor may the Liens thereof be spread
to secure any additional obligations (excluding any increase in the Loans and
Letters of Credit hereunder pursuant to a Commitment Increase under Section 2.07(e))
except pursuant to an agreement or agreements in writing entered into by the
Borrower, and by the Administrative Agent with the consent of the Required
Lenders; provided that, (i) without the written consent of each
Lender, no such agreement shall release all or substantially all of the
Obligors from their respective obligations under the Security Documents and (ii) without
the written consent of each Lender, no such agreement shall release all or
substantially all of the collateral security or otherwise terminate all or
substantially all of the Liens under the Security Documents, alter the relative
priorities of the obligations entitled to the Liens created under the Security
Documents (except in connection with securing additional obligations equally
and ratably with the Loans and other obligations hereunder) with respect to all
or substantially all of the collateral security provided thereby, or release
all or substantially all of the guarantors under the Guarantee and Security
Agreement from their guarantee obligations thereunder, except that no such
consent shall be required, and the Administrative Agent is hereby authorized
(and so agrees with the Borrower) to direct the Collateral Agent under the
Guarantee and Security Agreement to, and in addition to the rights of such
parties under the Guarantee and Security Agreement, the Administrative Agent
and the Collateral Agent under the Guarantee and Security Agreement may, (1) release
any Lien covering property (and to release any such guarantor) that is the
subject of either a disposition of property permitted hereunder or a
disposition to which the Required Lenders have consented and (2) release
from the Guarantee and Security Agreement any “Subsidiary Guarantor” (and any
property of such Subsidiary Guarantor) that is designated as a “Designated
Subsidiary” in accordance with this Agreement or which ceases to be
consolidated on the Borrower’s financial statements and is no longer required
to be a “Subsidiary Guarantor”, so long as (A) after giving effect to any
such release under this clause (2) (and any concurrent acquisitions of
Portfolio Investments or payment of outstanding Loans) the Covered Debt Amount
does not exceed the Borrowing Base and the Borrower delivers a certificate of a
Financial Officer to such effect to the Administrative Agent and (B) either
(I) the amount of any excess availability under the Borrowing Base
immediately prior to such release is not diminished as a result of such release
or (II) the Borrowing Base immediately after giving effect to such release
is at least 110% of the Covered Debt Amount.

 

(d)           Replacement of Non-Consenting
Lender.  If, in connection with any
proposed change, waiver, discharge or termination to any of the provisions of
this Agreement as contemplated by this Section 9.02, the consent of one or
more Lenders whose consent is required for such proposed change, waiver,
discharge or termination is not obtained, then (so long as no Event of Default
has occurred and is continuing) the Borrower shall have the right, at its sole
cost and expense, to replace each such non- consenting Lender or Lenders with
one or more replacement Lenders pursuant to Section 

 

104

 

2.18(b) so
long as at the time of such replacement, each such replacement Lender consents
to the proposed change, waiver, discharge or termination.

 

SECTION 9.03.  Expenses;
Indemnity; Damage Waiver.

 

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

 

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

 

105

 

that
such losses, claims, damages, liabilities or related expenses are determined by
a court of competent jurisdiction by final and nonappealable judgment to have
resulted from (i) the fraud, willful misconduct or gross negligence of
such Indemnitee or (ii) a claim brought against such Indemnitee for breach
in bad faith of such Indemnitee’s obligations under this Agreement or the other
Loan Documents, if there has been a final and nonappealable judgment against
such Indemnitee on such claim as determined by a court of competent
jurisdiction.

 

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

 

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

 

(d)           Waiver of Consequential Damages,
Etc.  To the extent permitted by
applicable law, the Borrower shall not assert, and hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Transactions, any Loan or
Letter of Credit or the use of the proceeds thereof.

 

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

 

SECTION 9.04.  Successors
and Assigns.

 

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

 

106

 

their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent,
the Issuing Banks and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.

 

(b)           Assignments
by Lenders.

 

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

 

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

 

(B)           the Administrative
Agent and the Issuing Bank.

 

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

 

(A)          except in the case of
an assignment to a Lender or an Affiliate of a Lender or an assignment of the
entire remaining amount of the assigning Lender’s Commitment or Loans and LC
Exposure, the amount of the Commitment or Loans and LC Exposure of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the
Administrative Agent) shall not be less than U.S. $5,000,000 unless each
of the Borrower and the Administrative Agent otherwise consent, provided that
no such consent of the Borrower shall be required if an Event of Default has
occurred and is continuing;

 

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

 

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

 

107

 

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

 

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

 

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

 

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

 

(e)           Participations.  Any Lender may, with the consent of the
Borrower (such consent not to be unreasonably withheld or delayed), sell
participations to one or 

 

108

 

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

 

(f)            Limitations on Rights of
Participants.  A Participant shall
not be entitled to receive any greater payment under Section 2.13, 2.14
or 2.15 than the applicable Lender would have been entitled to receive
with respect to the participation sold to such Participant, unless the sale of
the participation to such Participant is made with the Borrower’s prior written
consent.  A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.15
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.15
as though it were a Lender and in the case of a Participant claiming exemption
for portfolio interest under Section 871(h) or 881(c) of the
Code, the applicable Lender shall provide the Borrower with satisfactory
evidence that the participation is in registered form and shall permit the
Borrower to review such register as reasonably needed for the Borrower to
comply with its obligations under applicable laws and regulations.

 

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

 

109

 

 

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

 

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

 

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

 

(a)                                  Counterparts;
Integration; Effectiveness.  This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract.  This
Agreement and any separate letter agreements with respect to fees payable to
the Administrative Agent constitute the entire contract between and among the
parties relating to the subject matter hereof and supersede any and all
previous agreements and understandings, oral or written, relating to the
subject matter hereof.  Except as
provided in Section 4.01, this Agreement shall become effective when it
shall have been executed by the Administrative Agent and when the
Administrative Agent shall have received counterparts hereof which, when taken
together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. 
Delivery of an executed counterpart of a signature page to this
Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.

 

(b)                                 Electronic
Execution of Assignments.  The
words “execution,” “signed,” “signature,” and words of like import in any
Assignment and Assumption shall be deemed to include electronic signatures or
the keeping of records in electronic form, each of which shall be of the same
legal effect, validity or enforceability as a manually executed signature or
the use of a paper-based recordkeeping system, as the case may be, 

 

110

 

to
the extent and as provided for in any applicable law, including the Federal
Electronic Signatures in Global and National Commerce Act, the New York State
Electronic Signatures and Records Act, or any other similar state laws based on
the Uniform Electronic Transactions Act.

 

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

 

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

 

SECTION 9.09.  Governing Law; Jurisdiction; Etc.

 

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

 

(b)                                 Submission to
Jurisdiction.  The
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of the Supreme Court of the State of
New York sitting in New York County and of the United States District Court of
the Southern District of New York, and any appellate court from any thereof, in
any action or proceeding arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State
or, to the extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.  Nothing in this
Agreement shall affect any right that the Administrative Agent, the Issuing
Bank or any Lender may otherwise have to bring any action or proceeding relating
to this Agreement against the Borrower or its properties in the courts of any
jurisdiction.

 

111

 

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

 

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

 

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

 

SECTION 9.11.  Judgment Currency.  This is an international loan transaction in
which the specification of Dollars or any Foreign Currency, as the case may be
(the “Specified Currency”), and payment in New York City or the country
of the Specified Currency, as the case may be (the “Specified Place”),
is of the essence, and the Specified Currency shall be the currency of account
in all events relating to Loans denominated in the Specified Currency.  The payment obligations of the Borrower under
this Agreement shall not be discharged or satisfied by an amount paid in
another currency or in another place, whether pursuant to a judgment or
otherwise, to the extent that the amount so paid on conversion to the Specified
Currency and transfer to the Specified Place under normal banking procedures
does not yield the amount of the Specified Currency at the Specified Place due
hereunder.  If for the purpose of
obtaining judgment in any court it is necessary to convert a sum due hereunder
in the Specified Currency into another currency (the “Second Currency”),
the rate of exchange that shall be applied shall be the rate at which in
accordance with normal banking procedures the Administrative Agent could
purchase the Specified Currency with the Second Currency on the Business Day
next preceding the day on which such judgment is rendered.  The obligation of the Borrower in respect of
any such sum due from it to the Administrative Agent or any Lender hereunder or
under any other Loan Document (in this Section called an “Entitled 

 

112

 

Person”) shall,
notwithstanding the rate of exchange actually applied in rendering such
judgment, be discharged only to the extent that on the Business Day following
receipt by such Entitled Person of any sum adjudged to be due hereunder in the
Second Currency such Entitled Person may in accordance with normal banking
procedures purchase and transfer to the Specified Place the Specified Currency
with the amount of the Second Currency so adjudged to be due; and the Borrower
hereby, as a separate obligation and notwithstanding any such judgment, agrees
to indemnify such Entitled Person against, and to pay such Entitled Person on
demand, in the Specified Currency, the amount (if any) by which the sum
originally due to such Entitled Person in the Specified Currency hereunder
exceeds the amount of the Specified Currency so purchased and transferred.

 

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

 

SECTION 9.13.  Treatment of Certain Information;
Confidentiality.

 

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

 

(b)                                 Confidentiality.  Each of the Administrative Agent, the Lenders
and the Issuing Bank agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (i) to its
Affiliates and to its and its Affiliates’ respective partners, directors,
officers, employees, agents, advisors and other representatives (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (ii) to the extent requested by any regulatory
authority purporting to have jurisdiction over it or its Affiliates (including
any self-regulatory authority), (iii) to the extent required by applicable
laws or regulations or by any subpoena or similar legal process, (iv) to
any other party hereto, (v) in connection with the exercise of any remedies
hereunder or under any other Loan Document or any action or proceeding relating
to this Agreement or any other Loan Document or the enforcement of rights
hereunder or thereunder, (vi) subject to an agreement containing
provisions substantially the same as those of this Section, to (x) any
assignee of or Participant in, or 

 

113

 

any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (y) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the Borrower and
its obligations, (vii) with the consent of the Borrower or (viii) to
the extent such Information (x) becomes publicly available other than as a
result of a breach of this Section or (y) becomes available to the
Administrative Agent, any Lender, the Issuing Bank or any of their respective
Affiliates on a nonconfidential basis from a source other than the Borrower.

 

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

 

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

 

SECTION 9.15.  First Amendment.  The waiver set forth in Section 3 of the
First Amendment shall apply, mutatis
mutandis, to the Excluded Entities and this Agreement as if more
fully set forth herein.

 

SECTION 9.16.  Amendment to Security Agreement.  The definition of “Secured Party” as set
forth in Section 1.02 of the Guarantee and Security Agreement is hereby
amended in its entirety as follows:

 

“Secured Party” means, collectively, the Lenders, the
Administrative Agent, each Designated Indebtedness Holder, each Financing
Agent, each holder of any Hedging Agreement Obligations and the Collateral
Agent.

 

SECTION 9.17.  Amendment to Intercreditor Agreement.  By its signature below, each Lender
authorizes and instructs the Collateral Agent to enter into the First Amendment
to Intercreditor Agreement in substantially the form attached hereto as Exhibit H.

 

114

 

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

 

 

	
   

  	
  ARES
  CAPITAL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Richard S. Davis

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Financial Officer

  

 

115

 

	
   

  	
  LENDERS

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A.,

  individually,
  as Issuing Bank and as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jeanne O’Connell Horn

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  

 

116

 

	
   

  	
  BANK
  OF AMERICA, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Christopher Choi

  
	
   

  	
   

  	
  Title:   Vice
  President

  

 

117

 

	
   

  	
  SUNTRUST BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  William Christensen

  
	
   

  	
   

  	
  Title:   Director

  

 

118

 

	
   

  	
  BANK OF MONTREAL, Chicago Branch

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Catherine Grycz

  
	
   

  	
   

  	
  Title:   Vice President

  

 

119

 

	
   

  	
  UBS LOAN FINANCE LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Marie Haddad

  
	
   

  	
   

  	
  Title:   Associate Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Mary E. Evans

  
	
   

  	
   

  	
  Title:   Associate Director

  

 

120

 

	
   

  	
  DEUTSCHE BANK AG NEW YORK BRANCH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Robert Chesley

  
	
   

  	
   

  	
  Title:   Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Michael Campites

  
	
   

  	
   

  	
  Title:  Vice President

  

 

121

 

	
   

  	
  MORGAN STANLEY BANK, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Ryan Vetsch

  
	
   

  	
   

  	
  Title:   Authorized Signatory

  

 

122

 

	
   

  	
  CITY NATIONAL BANK, NA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Brandon L. Feitelson

  
	
   

  	
   

  	
  Title:   Vice President

  

 

123

 

	
   

  	
  BRANCH BANKING AND TRUST COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Gregory Drabik

  
	
   

  	
   

  	
  Title:   Vice President

  

 

124Exhibit 10.2

 

EXECUTION COPY

 

 

U.S. $400,000,000

 

AMENDED AND RESTATED SALE AND SERVICING AGREEMENT

 

Dated as of January 22, 2010

 

Among

 

ARES CAPITAL CP FUNDING LLC, 

as the Borrower

 

and

 

ARES CAPITAL CORPORATION, 

as the Servicer and the Transferor

 

and

 

WACHOVIA BANK, NATIONAL ASSOCIATION, 

as the Note Purchaser

 

and

 

WELLS FARGO SECURITIES, LLC,

as the Agent

 

and

 

U.S. BANK NATIONAL ASSOCIATION, 

as the Collateral Custodian, Trustee and the Bank

 

 

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  I.

  	
  DEFINITIONS

  	
  2

  
	
   

  	
   

  	
   

  
	
  Section 1.01

  	
   

  	
  Certain Defined Terms

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.02

  	
   

  	
  Other Terms

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.03

  	
   

  	
  Computation of Time Periods

  	
  40

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II.

  	
  THE
  FACILITY

  	
  40

  
	
   

  	
   

  	
   

  
	
  Section 2.01

  	
   

  	
  Variable Funding Note and Advances

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.02

  	
   

  	
  Procedure for Advances

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.03

  	
   

  	
  [Reserved]

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.04

  	
   

  	
  Remittance Procedures

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.05

  	
   

  	
  Instructions to the Trustee and the Bank

  	
  45

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.06

  	
   

  	
  Borrowing Base Deficiency Payments

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.07

  	
   

  	
  Substitution and Sale of Loan Assets; Affiliate
  Transactions

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.08

  	
   

  	
  Payments and Computations, Etc.

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.09

  	
   

  	
  Fees

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.10

  	
   

  	
  Increased Costs; Capital Adequacy

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.11

  	
   

  	
  Taxes

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.12

  	
   

  	
  Collateral Assignment of Agreements

  	
  55

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.13

  	
   

  	
  Grant of a Security Interest

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.14

  	
   

  	
  Evidence of Debt

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.15

  	
   

  	
  Survival of Representations and Warranties

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.16

  	
   

  	
  Release of Loan Assets

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.17

  	
   

  	
  Treatment of Amounts Paid by the Borrower

  	
  57

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.18

  	
   

  	
  Prepayment; Termination

  	
  57

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.19

  	
   

  	
  Extension of Stated Maturity Date

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.20

  	
   

  	
  Collections and Allocations

  	
  59

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.21

  	
   

  	
  Reinvestment of Principal Collections

  	
  60

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III.

  	
  CONDITIONS
  PRECEDENT

  	
  61

  
	
   

  	
   

  	
   

  
	
  Section 3.01

  	
   

  	
  Conditions Precedent to Effectiveness

  	
  61

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.02

  	
   

  	
  Conditions Precedent to All Advances

  	
  61

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.03

  	
   

  	
  Advances Do Not Constitute
  a Waiver

  	
  63

  
					

 

i

 

TABLE OF
CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 3.04

  	
   

  	
  Conditions to Pledges of Loan Assets

  	
  63

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV.

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
  65

  
	
   

  	
   

  	
   

  
	
  Section 4.01

  	
   

  	
  Representations and Warranties of the Borrower

  	
  65

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.02

  	
   

  	
  Representations
  and Warranties of the Borrower Relating to the Agreement and the Collateral
  Portfolio

  	
  73

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.03

  	
   

  	
  Representations and Warranties of the Servicer

  	
  74

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.04

  	
   

  	
  Representations and Warranties of the Trustee

  	
  78

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.05

  	
   

  	
  Representations and Warranties of the Note
  Purchaser

  	
  79

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.06

  	
   

  	
  Representations and Warranties of the Collateral
  Custodian

  	
  79

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  V.

  	
  GENERAL
  COVENANTS

  	
  80

  
	
   

  	
   

  	
   

  
	
  Section 5.01

  	
   

  	
  Affirmative
  Covenants of the Borrower

  	
  80

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.02

  	
   

  	
  Negative
  Covenants of the Borrower

  	
  86

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.03

  	
   

  	
  Affirmative
  Covenants of the Servicer

  	
  89

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.04

  	
   

  	
  Negative
  Covenants of the Servicer

  	
  94

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.05

  	
   

  	
  Affirmative
  Covenants of the Trustee

  	
  95

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.06

  	
   

  	
  Negative
  Covenants of the Trustee

  	
  96

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.07

  	
   

  	
  Affirmative
  Covenants of the Collateral Custodian

  	
  96

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.08

  	
   

  	
  Negative
  Covenants of the Collateral Custodian

  	
  96

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VI.

  	
  ADMINISTRATION
  AND SERVICING OF CONTRACTS

  	
  97

  
	
   

  	
   

  	
   

  
	
  Section 6.01

  	
   

  	
  Appointment
  and Designation of the Servicer

  	
  97

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.02

  	
   

  	
  Duties
  of the Servicer

  	
  99

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.03

  	
   

  	
  Authorization
  of the Servicer

  	
  101

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.04

  	
   

  	
  Collection
  of Payments; Accounts

  	
  102

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.05

  	
   

  	
  Realization
  Upon Loan Assets

  	
  103

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.06

  	
   

  	
  Servicing
  Compensation

  	
  104

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.07

  	
   

  	
  Payment
  of Certain Expenses by Servicer

  	
  104

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.08

  	
   

  	
  Reports
  to the Agent; Account Statements; Servicing Information

  	
  104

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.09

  	
   

  	
  Annual
  Statement as to Compliance

  	
  106

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.10

  	
   

  	
  Annual
  Independent Public Accountant’s Servicing Reports

  	
  106

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.11

  	
   

  	
  The
  Servicer Not to Resign

  	
  107

  
					

 

ii

 

TABLE OF
CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII.

  	
  EVENTS
  OF DEFAULT

  	
  107

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 7.01

  	
  Events of Default

  	
  107

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 7.02

  	
  Additional Remedies of the Agent

  	
  110

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII.

  	
  INDEMNIFICATION

  	
  114

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 8.01

  	
  Indemnities by the Borrower

  	
  114

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 8.02

  	
  Indemnities by Servicer

  	
  117

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 8.03

  	
  Legal Proceedings

  	
  118

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 8.04

  	
  After-Tax Basis

  	
  119

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX.

  	
  THE
  AGENT

  	
  119

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 9.01

  	
  The Agent

  	
  119

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X.

  	
  TRUSTEE

  	
  122

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 10.01

  	
  Designation of Trustee

  	
  122

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 10.02

  	
  Duties of Trustee

  	
  122

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 10.03

  	
  Merger or Consolidation

  	
  124

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 10.04

  	
  Trustee Compensation

  	
  124

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 10.05

  	
  Trustee Removal

  	
  125

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 10.06

  	
  Limitation on Liability

  	
  125

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 10.07

  	
  Trustee Resignation

  	
  126

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI.

  	
  MISCELLANEOUS

  	
  126

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 11.01

  	
  Amendments and Waivers

  	
  126

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 11.02

  	
  Notices, Etc.

  	
  127

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 11.03

  	
  No Waiver; Remedies

  	
  130

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 11.04

  	
  Binding Effect; Assignability; Multiple Note
  Purchasers

  	
  130

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 11.05

  	
  Term of This Agreement

  	
  130

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 11.06

  	
  GOVERNING LAW; JURY WAIVER

  	
  131

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 11.07

  	
  Costs, Expenses and Taxes

  	
  131

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 11.08

  	
  No Proceedings

  	
  132

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 11.09

  	
  Recourse Against Certain Parties

  	
  132

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 11.10

  	
  Execution in Counterparts; Severability;
  Integration

  	
  133

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 11.11

  	
  Consent to Jurisdiction; Service of Process

  	
  133

  
					

 

iii

 

TABLE OF
CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 11.1

  	
  2

  	
  Characterization of Conveyances Pursuant to the
  Purchase and Sale Agreements

  	
  134

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.1

  	
  3

  	
  Confidentiality

  	
  135

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.1

  	
  4

  	
  Non-Confidentiality of Tax Treatment

  	
  137

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.1

  	
  5

  	
  Waiver of Set Off

  	
  137

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.1

  	
  6

  	
  Headings and Exhibits

  	
  137

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.1

  	
  7

  	
  Breaches of Representations, Warranties and
  Covenants

  	
  137

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.1

  	
  8

  	
  Assignments of Loan Assets

  	
  137

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.1

  	
  9

  	
  Affirmation

  	
  138

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.2

  	
  0

  	
  Back-Up Servicer Removal

  	
  138

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XII.

  	
  COLLATERAL
  CUSTODIAN

  	
  138

  
	
   

  	
   

  	
   

  
	
  Section 12.0

  	
  1

  	
  Designation of Collateral Custodian

  	
  138

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.0

  	
  2

  	
  Duties of Collateral Custodian

  	
  139

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.0

  	
  3

  	
  Merger or Consolidation

  	
  141

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.0

  	
  4

  	
  Collateral Custodian Compensation

  	
  141

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.0

  	
  5

  	
  Collateral Custodian Removal

  	
  142

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.0

  	
  6

  	
  Limitation on Liability

  	
  142

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.0

  	
  7

  	
  Collateral Custodian Resignation

  	
  143

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.0

  	
  8

  	
  Release of Documents

  	
  143

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.0

  	
  9

  	
  Return of Required Loan Documents

  	
  144

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.1

  	
  0

  	
  Access to Certain Documentation and Information Regarding the
  Collateral Portfolio; Audits of Servicer

  	
  144

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.1

  	
  1

  	
  Custodian as Agent of
  Trustee

  	
  145

  
					

 

iv

 

LIST OF SCHEDULES AND EXHIBITS

 

	
  SCHEDULES

  	
   

  
	
   

  	
   

  
	
  SCHEDULE
  I

  	
  Conditions
  Precedent Documents

  
	
  SCHEDULE
  II

  	
  Prior
  Names, Tradenames, Fictitious Names and “Doing Business As” Names

  
	
  SCHEDULE
  III

  	
  Eligibility
  Criteria

  
	
  SCHEDULE
  IV

  	
  Agreed-Upon
  Procedures For Independent Public Accountants

  
	
  SCHEDULE
  V

  	
  Loan
  Asset Schedule

  
	
  SCHEDULE
  VI

  	
  Original
  Loan Assets

  
	
  SCHEDULE
  VII

  	
  Disclosed
  Matters

  
	
   

  	
   

  
	
  EXHIBITS

  	
   

  
	
   

  	
   

  
	
  EXHIBIT
  A

  	
  Form of
  Approval Notice

  
	
  EXHIBIT
  B

  	
  Form of
  Assignment of Mortgage

  
	
  EXHIBIT
  C

  	
  Form of
  Borrowing Base Certificate

  
	
  EXHIBIT
  D

  	
  Form of
  Disbursement Request

  
	
  EXHIBIT
  E

  	
  Form of
  Joinder Supplement

  
	
  EXHIBIT
  F

  	
  Form of
  Notice of Borrowing

  
	
  EXHIBIT
  G

  	
  Form of
  Notice of Reduction (Reduction of Advances Outstanding)

  
	
  EXHIBIT
  H

  	
  Form of
  Notice of Reduction (Reduction of Maximum Facility Amount)

  
	
  EXHIBIT
  I

  	
  Form of
  Variable Funding Note

  
	
  EXHIBIT
  J

  	
  Form of
  Notice and Request for Consent

  
	
  EXHIBIT
  K

  	
  Form of
  Certificate of Closing Attorneys

  
	
  EXHIBIT
  L

  	
  Form of
  Servicing Report

  
	
  EXHIBIT
  M

  	
  Form of
  Servicer’s Certificate (Servicing Report)

  
	
  EXHIBIT
  N

  	
  Form of
  Release of Required Loan Documents

  
	
  EXHIBIT
  O

  	
  Form of
  Transferee Letter

  
	
  EXHIBIT
  P

  	
  Form of
  Power of Attorney for Servicer

  
	
  EXHIBIT
  Q

  	
  Form of
  Power of Attorney for Borrower

  
	
  EXHIBIT
  R

  	
  Form of
  Servicer’s Certificate (Loan Asset Register)

  

 

i

 

This AMENDED AND RESTATED
SALE AND SERVICING AGREEMENT is made as of January 22, 2010, among:

 

(1)           ARES CAPITAL CP
FUNDING LLC, a Delaware limited liability company (together with its successors
and assigns in such capacity, the “Borrower”);

 

(2)           ARES CAPITAL
CORPORATION, a Maryland corporation, as the Servicer (as defined herein) and
the Transferor (as defined herein);

 

(3)           WACHOVIA BANK,
NATIONAL ASSOCIATION, as the Note Purchaser (as defined herein);

 

(4)           WELLS FARGO
SECURITIES, LLC, as agent for the Note Purchaser (“Agent”); and

 

(5)           U.S. BANK
NATIONAL ASSOCIATION (“U.S. Bank”), as the Trustee (together with its
successors and assigns in such capacity, the “Trustee”), the Bank (as
defined herein) and the Collateral Custodian (together with its successors and
assigns in such capacity, the “Collateral Custodian”).

 

PRELIMINARY STATEMENT

 

WHEREAS, certain parties
hereto were party to a Sale and Servicing Agreement, dated as of November 3,
2004, by and among the Servicer, as the servicer, the Transferor, as the
originator, the Borrower, as the borrower, Ares CP Funding II LLC, as the
guarantor, Variable Funding Capital Company LLC (“VFCC”), as a conduit
purchaser, the Note Purchaser, as an institutional purchaser, Wells Fargo
Securities, LLC (f/k/a Wachovia Capital Markets, LLC) (together with its
successors and assigns, “WFS”), as the administrative agent and as the
purchaser agent for VFCC, Ares Capital CP Funding II, as the guarantor (the “Guarantor”)
the Trustee, as the trustee, and Lyon Financial Services, Inc. d/b/a U.S. Bank
Portfolio Services (“Lyon”), as the backup servicer (as amended,
restated, supplemented or modified prior to the date hereof, the “Original
Agreement”);

 

WHEREAS, the parties hereto
no longer desire to maintain a backup servicer, 
and, pursuant to Section 11.20, the parties hereto hereby
agree that Lyon is released from and shall have no further rights or
obligations under this Agreement;

 

WHEREAS, VFCC, as a conduit
purchaser under the Original Agreement, acknowledges that it has been paid in
full all amounts previously owed to it and the parties hereto acknowledge and
agree that VFCC is hereby released from and shall have no further rights or
obligations under this Agreement;

 

WHEREAS, the Guarantor and
the parties hereto hereby agree that the Guarantor is released from and shall
have no further rights or obligations under this Agreement;

 

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

 

 

WHEREAS, the Note Purchaser
has agreed, on the terms and conditions set forth herein, to provide a secured
revolving credit facility which shall provide for Advances under the Variable
Funding Note from time to time in an aggregate principal amount not to exceed
the Borrowing Base;

 

WHEREAS, the proceeds of the
Advances will be used to finance the Borrower’s purchase, on a “true sale”
basis, of Eligible Loan Assets from the Equityholder and the Equityholder’s
purchase, on a “true sale” basis, of Eligible Loan Assets from the Transferor,
approved by the Agent, pursuant to the Second Tier Purchase and Sale Agreement
between the Borrower and the Equityholder and the First Tier Purchase and Sale
Agreement between the Equityholder and the Transferor, respectively.

 

NOW THEREFORE, based upon
the foregoing Preliminary Statement, the parties agree as follows:

 

ARTICLE I.

DEFINITIONS

 

SECTION 1.01                       Certain Defined
Terms.

 

(a)           Certain capitalized terms
used throughout this Agreement are defined above or in this Section 1.01.

 

(b)           As used in this Agreement
and the exhibits and schedules thereto (each of which is hereby incorporated
herein and made a part hereof), the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and
plural forms of the terms defined):

 

“1940 Act” means the
Investment Company Act of 1940, as amended, and the rules and regulations
promulgated thereunder.

 

“Account Transition
Deadline” means 90 days after the Restatement Date.

 

“Accreted Interest”
means interest accrued on a Loan Asset that is added to the principal amount of
such Loan Asset instead of being paid as interest as it accrues.

 

“Acquisition” means
the outstanding acquisition by Ares Capital Corporation of 100% of the
outstanding capital stock of Allied Capital Corporation announced on October 26,
2009.

 

“Action” has the
meaning assigned to that term in Section 8.03.

 

“Additional Amount”
has the meaning assigned to that term in Section 2.11(a).

 

“Adjusted Borrowing Value”
means for any Loan Asset, for any date of determination, an amount equal to the
lowest of: (i) the Outstanding Balance of such Loan Asset at such time, (ii) the
Advance Date Assigned Value of such Loan Asset multiplied by the 

 

2

 

principal
balance of such Loan Asset (exclusive of Accreted Interest), and (iii) the
Assigned Value of such Loan Asset at such time multiplied by the principal
balance of such Loan Asset (exclusive of Accreted Interest); provided that the parties hereby agree
that the Adjusted Borrowing Value of any Loan Asset that is no longer an
Eligible Loan Asset shall be zero.

 

“Advance” means each loan
advanced by the Note Purchaser to the Borrower on an Advance Date pursuant to Article II.

 

“Advance Date” means, with
respect to any Advance, the date on which such Advance is made.

 

“Advance Date Assigned Value”
means, (a) with respect to any Loan Asset acquired by the Borrower on or
after the Restatement Date, the value (expressed as a percentage of the
principal balance of such Loan Asset (exclusive of Accreted Interest)) equal to
the lower of (i) the amount paid by the Equityholder to acquire such Loan
Asset from the Transferor and by the Borrower to acquire such Loan Asset from
the Equityholder (in each case, expressed exclusive of accrued interest) or (ii) the
value determined by the Agent, in its sole reasonable discretion and (b) with
respect to any Original Loan Asset, the “Advance Date Assigned Value” for such
Original Loan Asset set forth on Schedule VI hereto.

 

“Advances Outstanding”
means, at any time, the sum of the principal amounts of Advances loaned to the
Borrower for the initial and any subsequent borrowings pursuant to Sections
2.01 and 2.02 as of such time, reduced by the aggregate Available
Collections received and distributed as repayment of principal amounts of
Advances outstanding pursuant to Section 2.04 at or prior to such
time and any other amounts received by the Note Purchaser to repay the
principal amounts of Advances outstanding pursuant to Section 2.18
or otherwise at or prior to such time; provided
that the principal amounts of Advances outstanding shall not be reduced by any
Available Collections or other amounts if at any time such Available
Collections or other amounts are rescinded or must be returned for any reason.

 

“Affected Party” has the
meaning assigned to that term in Section 2.10.

 

“Affiliate” when used with
respect to a Person, means any other Person controlling, controlled by or under
common control with such Person. For the purposes of this definition, “control,”
when used with respect to any specified Person, means the power to vote 20% or
more of the voting securities of such Person or to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms “controlling” and
“controlled” have meanings correlative to the foregoing; provided that for purposes of determining
whether any Loan Asset is an Eligible Loan Asset or for purposes of Section 5.01(b)(xix),
the term Affiliate shall not include any Affiliate relationship which may exist
solely as a result of direct or indirect ownership of, or control by, a common
Financial Sponsor.

 

“Agent” means WFS, in its
capacity as agent for the Note Purchaser, together with its successors and
assigns, including any successor appointed pursuant to Article IX.

 

“Agented Note” means
any Loan Asset (i) originated as a part of a syndicated loan transaction
that has been closed (without regard to any contemporaneous or subsequent 

 

3

 

syndication
of such Loan Asset) prior to such Loan Asset becoming part of the Collateral
Portfolio and (ii) with respect to which, upon an assignment of the note
under the Purchase and Sale Agreements to the Borrower, the Borrower, as assignee
of the note, will have all of the rights but none of the obligations of the
Transferor with respect to such note and the Underlying Collateral.

 

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

 

“Applicable Law”
means for any Person all existing and future laws, rules, regulations
(including proposed, temporary and final income tax regulations), statutes,
treaties, codes, ordinances, permits, certificates, orders, licenses of and
interpretations by any Governmental Authority which are applicable to such
Person (including, without limitation, predatory lending laws, usury laws, the
Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices
Act, the Federal Trade Commission Act, the Magnuson-Moss Warranty Act, the
Federal Reserve Board’s Regulations “B” and “Z”, the Servicemembers Civil
Relief Act of 2003 and state adaptations of the National Consumer Act and of
the Uniform Consumer Credit Code and all other consumer credit laws and equal
credit opportunity and disclosure laws) and applicable judgments, decrees,
injunctions, writs, awards or orders of any court, arbitrator or other
administrative, judicial, or quasi-judicial tribunal or agency of competent
jurisdiction.

 

“Applicable Percentage”
means (a) with respect to any First Lien Loan Asset, 65%, (b) with
respect to any First Lien Last Out Loan Asset, 55%, (c) with respect to
any Second Lien Loan Asset, 35%, (d) with respect to any Subordinated Loan
Asset, 30%.

 

“Applicable Spread” means,
for any date of determination, the percentage set forth in the table below
corresponding to the Ares Rating then in effect on such date. In the event that
the Yield Rate is calculated utilizing the Base Rate, the percent corresponding
to the Base Rate column shall apply, and in the event that the Yield Rate is
calculated utilizing LIBOR, the percent corresponding to the LIBOR column shall
apply.

 

Ares Rating

(S&P/ Fitch/Moody’s)

 

	
  Category

  	
   

  	
  Base Rate

  	
   

  	
  LIBOR

  	
   

  
	
  Greater than BBB/BBB/Baa2

  	
   

  	
  1.25

  	
  %

  	
  2.25

  	
  %

  
	
  Equal to BBB/BBB/Baa2

  	
   

  	
  1.75

  	
  %

  	
  2.75

  	
  %

  
	
  Equal to BBB-/BBB-/Baa3

  	
   

  	
  2.25

  	
  %

  	
  3.25

  	
  %

  
	
  Less than BBB-/BBB-/Baa3

  	
   

  	
  2.75

  	
  %

  	
  3.75

  	
  %

  

 

4

 

For purposes of the
foregoing, (i) if any of S&P, Fitch or Moody’s shall not have in
effect an Ares Rating for Ares (other than by reason of the circumstances
referred to in the penultimate sentence of this definition) or if Ares shall
have voluntarily elected to terminate its arrangement with any rating agency
for the ongoing rating of itself, then such rating agency shall be deemed to
have established the lowest Ares Rating; (ii) if the Ares Ratings
established or deemed to have been established by S&P, Fitch and Moody’s
shall fall within different Categories (such term, as used in this definition,
shall have the meaning set forth in the above chart), the Applicable Spread
shall be based on the lower of the two highest ratings unless, at such time,
only two of the applicable rating agencies shall have in effect an Ares Rating
for Ares ((x) without giving effect to any deemed rating pursuant to clause
(i) and (y) other than by reason of the circumstances referred to
in the penultimate sentence of this definition) and one of the two ratings is
two or more Categories lower than the other, in which case the Applicable
Spread shall be determined by reference to the Category next above that of the
lower of the two Ares Ratings; and (iii) if the Ares Ratings established
or deemed to have been established by S&P, Fitch and Moody’s shall be
changed (other than as a result of a change in the rating system of S&P,
Fitch or Moody’s), such change shall be effective as of the date on which it is
first announced by the applicable rating agency.  Each change in the Applicable Spread shall
apply during the period commencing on the effective date of such change and
ending on the date immediately preceding the effective date of the next such
change.  If the rating system of S&P,
Fitch or Moody’s shall change, or if any such rating agency shall cease to be
in the business of rating corporate debt obligations, Ares (1) may, to the
extent that only one of the rating agencies rating’s system has changed or has
ceased to be in the business of rating corporate debt obligations, or (2) shall,
to the extent that more than one of the rating agency’s rating’s systems has
changed or has ceased to be in the business of rating corporate debt
obligations, negotiate with the Agent in good faith to amend this definition to
reflect such changed rating system or the unavailability of ratings from such
rating agency and, pending the effectiveness of any such amendment, the
Applicable Spread shall be determined by reference to the rating most recently
in effect prior to such change or cessation; provided
that if Ares shall not elect to negotiate with the Agent to amend this
definition pursuant to clause (1) of the foregoing, the affected
rating agency shall be deemed to have established the lowest Ares Rating.  If any Ares Rating is on-watch, such on-watch
status will be disregarded for purposes of determining the Applicable Spread.

 

“Approval Notice” means,
with respect to any Eligible Loan Asset, the written notice, in substantially
the form attached hereto as Exhibit A, evidencing the approval by
the Agent, in its sole discretion, of the conveyance of such Eligible Loan
Asset by the Transferor to the Equityholder pursuant to the terms of the First
Tier Purchase and Sale Agreement and by the Equityholder to the Borrower
pursuant to the terms of the Second Tier Purchase and Sale Agreement and the
Assignments by which the Transferor effects such conveyance.

 

“Approved Valuation Firm”
shall mean each of (i) Houlihan Lokey Howard & Zukin, (ii) Lincoln
International LLC (f/k/a Lincoln Partners LLC), (iii) Duff &
Phelps Corp. and (iv) Valuation Research Corporation, and any other
nationally recognized valuation firm approved by the Agent in its sole
reasonable discretion.

 

“Ares” means Ares
Capital Corporation.

 

5

 

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

 

“Ares Prime Rate”
means, with respect to any Loan Asset, the definition of “Prime Rate” or any
comparable definition in the Loan Agreement for each such Loan Asset, and in
any case that “Prime Rate” or such comparable definition is not defined in such
Loan Agreement, the rate designated by certain reference lenders in the
applicable Loan Agreement from time to time as its prime rate in the United
States, such rate to change as and when the designated rate changes; provided that the Ares Prime Rate is not
intended to be lowest rate of interest charged by Ares in connection with
extensions of credit to debtors.

 

“Ares Rating” means,
with respect to Ares, (a) in the case of S&P, Ares’s long term
counterparty rating, (b) in the case of Fitch, Ares’s long-term issuer
default rating and (c) in the case of Moody’s, Ares’s issuer rating.

 

“Asset Coverage Ratio”
means the ratio, determined on a consolidated basis, without duplication, in
accordance with GAAP, of (a) the fair market value of the total assets of
Ares and its Subsidiaries as required by, and in accordance with, the 1940 Act
and any orders of the Securities and Exchange Commission issued to Ares, to be
determined by the Board of Directors of Ares and reviewed by its auditors, less
all liabilities (other than Indebtedness, including Indebtedness hereunder) of
Ares and its Subsidiaries, to (b) the aggregate amount of Indebtedness of
Ares and its Subsidiaries.

 

“Assigned Documents” has
the meaning assigned to that term in Section 2.12.

 

“Assigned Value” means,
with respect to each Loan Asset, as of any date of determination and expressed
as a percentage of the principal balance of such Loan Asset (exclusive of
Accreted Interest), the Advance Date Assigned Value of such Loan Asset, subject
to the following terms (it being understood that, as of the Restatement Date,
the “Assigned Value” of each of the Original Loan Assets shall be the value set
forth as the “Current Assigned Value” for such Original Loan Asset in Schedule
VI hereto):

 

(a)           If a Value Adjustment Event of the type described in clauses
(ii), (iv) or (vi) of the definition thereof with
respect to such Loan Asset occurs, the Assigned Value of such Loan Asset will
be zero.

 

6

 

(b)           If a Value Adjustment Event of the type described in clauses
(i), (iii) or (v) of the definition thereof with
respect to such Loan Asset occurs, “Assigned Value” may be amended by the
Agent, in its sole reasonable discretion; provided
that (a) the Assigned Value of any Priced Loan Asset shall not be less
than the price quoted therefor (if any) by such pricing service as selected by
the Agent and (b) the Assigned Value shall not be based upon the practices
set forth in FASB Statement No. 157 or any pronouncement, statement, rule or
amendment with respect to GAAP-mandated mark-to-market requirements, but rather
shall be based on the amortized cost adjusted for any credit impairment of such
Loan Asset.  In the event the Borrower
disagrees with the Agent’s determination of the Assigned Value of a Loan Asset,
the Borrower may (at its expense) retain any Approved Valuation Firm to value
such Loan Asset and if the value determined by such firm is greater than the
Agent’s determination of the Assigned Value, such firm’s valuation shall become
the Assigned Value of such Loan Asset; provided
that the Assigned Value of such Loan Asset shall be the value assigned by the
Agent until such firm has determined its value. 
The value determined by such firm shall be based on the amortized cost
adjusted for any credit impairment of such Loan Asset.  The Assigned Value of any Loan Asset may be
increased at the sole reasonable discretion of the Agent upon improvement in the
Net Leverage Ratio or the Interest Coverage Ratio of such Loan Asset, as the
case may be, as part of a Value Adjustment Event; provided that such Assigned Value may not increase above the
Advance Date Assigned Value. The Agent shall promptly notify the Servicer of
any change effected by the Agent of the Assigned Value of any Loan Asset.

 

“Assignment of Mortgage”
means an assignment of the Mortgage, notice of transfer or equivalent
instrument in recordable form sufficient under the laws of the jurisdiction
wherein the related mortgaged property is located to effect the assignment of
the Mortgage to the Trustee, which assignment, notice of transfer or equivalent
instrument may be in the form of one or more blanket assignments covering the
Loan Assets secured by mortgaged properties located in the same jurisdiction,
if permitted by Applicable Law, substantially in the form of Exhibit B.

 

“Assignments” means
the First Tier Loan Assignment and the Second Tier Loan Assignment.

 

“Attached Equity”
means, with respect to any Loan Asset, any stock, partnership or membership
interest, beneficial interest or other equity security, warrant, option, or any
right, including, without limitation, any registration right, with respect to
the foregoing received by the Transferor in connection with the origination or
acquisition of such Loan Asset.

 

“Available Collections”
means, with respect to any Loan Asset, all Principal Collections, all Interest
Collections, all proceeds of any sale or disposition with respect to such Loan
Asset, cash proceeds or other funds received by the Borrower or the Servicer
with respect to any Underlying Collateral (including from any guarantors), all
other amounts on deposit in the Collection Account from time to time, and all
proceeds of Permitted Investments with respect to the Controlled Accounts; provided that, for the avoidance of doubt,
“Available Collections” shall not include amounts on deposit in the Unfunded
Exposure Account which do not represent proceeds of Permitted Investments.

 

“Average Life” means,
for any Loan Asset, as of any date of determination, the number determined by
multiplying the amount of each Scheduled Payment of principal to be 

 

7

 

paid
after such date of determination by the number of years (rounded to the nearest
hundredth) from such date of determination until such Scheduled Payment of
principal is due.

 

“Bank” means U.S. Bank, in
its capacity as the “Bank” pursuant to each of the Collection Account Agreement
and the Unfunded Exposure Account Agreement.

 

“Bankruptcy Code” means
Title 11, United States Code, 11 U.S.C. §§ 101 et seq., as
amended from time to time.

 

“Bankruptcy Event” shall be
deemed to have occurred with respect to a Person if either:

 

(i)            a case or other proceeding shall be commenced, without
the application or consent of such Person, in any court, seeking the
liquidation, reorganization, debt arrangement, dissolution, winding up, or
composition or readjustment of debts of such Person, the appointment of a
trustee, receiver, custodian, liquidator, assignee, sequestrator or the like
for such Person or all or substantially all of its assets under any Bankruptcy
Laws, or any similar action with respect to such Person, in each case, under
any law relating to bankruptcy, insolvency, reorganization, winding up or
composition or adjustment of debts, and such case or proceeding shall continue
undismissed, or unstayed and in effect, for a period of 60 consecutive days; or
an order for relief in respect of such Person shall be entered in an
involuntary case under the federal bankruptcy laws or other similar laws now or
hereafter in effect; or

 

(ii)           such Person shall commence a voluntary case or other
proceeding under any Bankruptcy Laws now or hereafter in effect, or shall
consent to the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official) for such
Person or all or substantially all of its assets under any Bankruptcy Laws, or
shall make any general assignment for the benefit of creditors, or shall fail
to, or admit in writing its inability to, pay its debts generally as they
become due, or, if a corporation or similar entity, its board of directors or
members shall vote to implement any of the foregoing.

 

“Bankruptcy Laws” means the Bankruptcy Code
and all other applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization, suspension of
payments, or similar debtor relief laws from time to time in effect affecting
the rights of creditors generally.

 

“Bankruptcy Proceeding” means any case,
action or proceeding before any court or other Governmental Authority relating
to any Bankruptcy Event.

 

“Base Rate” means, on any
date, a fluctuating per annum
interest rate equal to the higher of (a) the Prime Rate or (b) the
Federal Funds Rate plus 0.5%.

 

“Benefit Plan” means
any “employee pension benefit plan” as defined in Section 3(2) of
ERISA in respect of which the Borrower or any ERISA Affiliate of the Borrower
is, or at any time during the preceding six years was, an “employer” as defined
in Section 3(5) of ERISA.

 

“Borrower” has the meaning
assigned to that term in the preamble hereto.

 

8

 

“Borrowing Base” means, as
of any date of determination, an amount equal to the lesser of:

 

(a)           the aggregate sum of (i) for each Eligible Loan Asset
as of such date, the aggregate sum of the products of (A) the Applicable
Percentage for each such Eligible Loan Asset as of such date and (B) the
aggregate Adjusted Borrowing Value of each such Eligible Loan Asset as of such
date, plus (ii) the amount on deposit
in the Principal Collection Account as of such date minus (iii) the
Unfunded Exposure Equity Shortfall; or

 

(b)           (i) the aggregate Adjusted Borrowing Value of all
Eligible Loan Assets as of such date minus (ii) the Large Obligor
Exposure Amount, plus (iii) the amount
on deposit in the Principal Collection Account as of such date minus (iv) the
Unfunded Exposure Equity Shortfall; or

 

(c)           the Maximum Facility Amount minus the Unfunded Exposure
Amount;

 

provided that, for the avoidance of
doubt, any Loan Asset which at any time is no longer an Eligible Loan Asset
shall not be included in the calculation of “Borrowing Base.”

 

“Borrowing Base Certificate”
means a certificate setting forth the calculation of the Borrowing Base as of
the applicable date of determination substantially in the form of Exhibit C
hereto, prepared by the Servicer.

 

“Borrowing Base Deficiency”
means, as of any date of determination, the extent to which the aggregate
Advances Outstanding on such date exceeds the Borrowing Base.

 

“Breakage Fee” means, for
Advances which are repaid (in whole or in part) on any date other than a
Payment Date, the breakage costs, if any, related to such repayment, it hereby
being understood that the amount of any loss, costs or expense payable by the
Borrower to the Note Purchaser as Breakage Fee shall be determined in the Note
Purchaser’s reasonable discretion based upon the assumption that the Note Purchaser
funded its loan commitment in the London Interbank Eurodollar market and using
any reasonable attribution or averaging methods which the Note Purchaser deems
appropriate and practical.

 

“Business Day” means a day
of the year other than (i) Saturday or a Sunday or (ii) any other day
on which commercial banks in New York, New York or the city in which the
offices of the Trustee are authorized or required by applicable law, regulation
or executive order to close; provided,
that, if any determination of a Business Day shall relate to an Advance bearing
interest at LIBOR, the term “Business Day” shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
market.  For avoidance of doubt, if the
offices of the Trustee are authorized by applicable law, regulation or
executive order to close but remain open, such day shall not be a “Business Day”.

 

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

 

9

 

GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.

 

“Change of Control”
shall be deemed to have occurred if any of the following occur:

 

(a)           the Management Agreement shall fail to be in full force
and effect;

 

(b)           the creation or imposition of any Lien on any limited
liability company membership interest in the Borrower (other than pursuant to
the Pledge Agreement);

 

(c)           the failure by the Transferor to own 100% of the limited
liability company membership interests in the Equityholder;

 

(d)           the failure by the Equityholder to own 100% of the limited
liability company membership interests in the Borrower; or

 

(e)           the dissolution, termination or liquidation in whole or in
part, transfer or other disposition, in each case, of all or substantially all
of the assets of, Ares.

 

“Clearing Agency”
means an organization registered as a “clearing agency” pursuant to Section 17A
of the Exchange
Act.

 

“Closing Date” means November 3,
2004.

 

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

 

“Collateral Custodian”
means U.S. Bank, not in its individual capacity, but solely as collateral
custodian pursuant to the terms of this Agreement.

 

“Collateral Custodian
Expenses” means the custodial expenses set forth in the Trustee and
Collateral Custodian Fee Letter and any other accrued and unpaid fees, expenses
(including reasonable attorneys’ fees, costs and expenses) and indemnity
amounts payable by the Borrower or the Servicer to the Collateral Custodian
under the Transaction Documents.

 

“Collateral Custodian
Fees” means the custodial fees set forth in the Trustee and Collateral
Custodian Fee Letter, as such fee letter may be amended, restated, supplemented
and/or otherwise modified from time to time.

 

“Collateral Custodian
Termination Notice” has the meaning assigned to that term in Section 12.05.

 

“Collateral Portfolio”
means all right, title, and interest (whether now owned or hereafter acquired
or arising, and wherever located) of the Borrower 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 

 

10

 

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)          the Controlled Accounts and all Permitted Investments
purchased with funds on deposit in the Controlled Accounts; and

 

(iv)          all income and Proceeds of the foregoing.

 

“Collection Account” means
a trust account (account number 787456-200 at the Bank) in the name of the
Borrower for the benefit of and under the sole dominion and control of the
Trustee for the benefit of the Secured Parties; provided, that the funds deposited therein (including any
interest and earnings thereon) from time to time shall constitute the property
and assets of the Borrower, and the Borrower shall be solely liable for any
Taxes payable with respect to the Collection Account.

 

“Collection Account Agreement”
means that certain Amended and Restated Securities Account Control Agreement,
dated the Closing Date and amended and restated as of the Restatement Date,
among the Borrower, the Servicer, the Bank, the Agent and the Trustee, which
agreement relates to the Collection Account, as such agreement may from time to
time be amended, supplemented or otherwise modified in accordance with the
terms thereof.

 

“Collection Date” means the
date on which the aggregate outstanding principal amount of the Advances have
been repaid in full and all Yield and Fees and all other Obligations have been
paid in full, and the Borrower shall have no further right to request any
additional Advances.

 

“Commitment Percentage” has
the meaning assigned to that term in Section 11.04(b).

 

“Concentration Account”:  means the account maintained at the
Concentration Account Bank, subject to the Intercreditor Agreement, named “Ares
Capital CP Funding LLC Concentration Account”, with the account number
787456-700.

 

“Concentration Account
Bank”: means U.S. Bank National Association, a national banking
association.

 

“Controlled Accounts” means
the Collection Account and the Unfunded Exposure Account.

 

11

 

“Credit Policy” means
the written credit policies and procedures manual of the Transferor provided to
the Agent on the Closing Date, as such credit policies and procedures manual
may be as amended or supplemented from time to time in accordance with this
Agreement.

 

“Cut-Off Date” means,
with respect to each Loan Asset, the date such Loan Asset is Pledged hereunder.
For the avoidance of doubt, the Cut-Off Date any Loan Assets held by the
Borrower prior to the Restatement Date shall be the “Cut-Off Date” as defined
in the Original Agreement.

 

“Default Funding Rate”
means a floating interest rate per annum equal to 5.0% plus LIBOR; provided
that (i) if the Note Purchaser shall have notified the Agent that a
Eurodollar Disruption Event has occurred, the Default Funding Rate shall be
equal to the Base Rate plus 5.0% until the Note Purchaser shall have
notified the Agent that such Eurodollar Disruption Event has ceased, at which
time the Default Funding Rate shall again be equal to LIBOR for such date plus
5.0%.

 

“Delayed Draw Loan Asset”
means a Loan Asset that is fully committed on the initial funding date of such
Loan Asset and is required to be fully funded in one or more installments on
draw dates to occur within one year of the initial funding of such Loan Asset
but which, once all such installments have been made, has the characteristics
of a Term Loan Asset.

 

“Determination Date” means
the last day of each calendar month.

 

“Disbursement Request”
means a disbursement request from the Borrower to the Agent and the Trustee in
the form attached hereto as Exhibit D in connection with a
disbursement request from the Unfunded Exposure Account in accordance with Section 2.04(d) or
a disbursement request from the Principal Collection Account in accordance with
Section 2.21, as applicable.

 

“Disclosed Matters”
means the actions, suits and proceedings disclosed or referenced in Schedule
VII; provided that such
matters to the extent relating to Allied Capital Corporation and its
Subsidiaries or the Acquisition (set forth on the “pro forma schedule” to Schedule
VII) may be updated on or prior to the date of the Acquisition with the
written consent of the Agent.

 

“EBITDA” means, with
respect to any period and any Loan Asset, the meaning of “EBITDA”, “Adjusted
EBITDA” or any comparable definition in the Loan Agreement for each such Loan
Asset, and in any case that “EBITDA”, “Adjusted EBITDA” or such comparable
definition is not defined in such Loan Agreement, an amount, for the principal
obligor on such Loan Asset and any of its parents or Subsidiaries that are obligated
pursuant to the Loan Agreement for such Loan Asset (determined on a
consolidated basis without duplication in accordance with GAAP) equal to
earnings from continuing operations for such period plus interest expense, income taxes and unallocated depreciation and
amortization for such period (to the extent deducted in determining earnings
from continuing operations for such period), and any other item the Borrower
and the Agent mutually deem to be appropriate.

 

12

 

“Eligible Bid” means
a bid made in good faith (and acceptable as a valid bid in the Agent’s
reasonable discretion) by a bidder for all or any portion of the Collateral
Portfolio in connection with a sale of the Collateral Portfolio in whole or in
part pursuant to Section 7.02(i).

 

“Eligible Loan Asset”
means, at any time, a Loan Asset in respect of which each of the
representations and warranties contained in Section 4.02 and Schedule
III hereto is true and correct.

 

“Eligible
Repurchase Obligations” means repurchase obligations with respect to any
security that is a direct obligation of, or fully guaranteed by, the United
States or any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States, in either case
entered into with a depository institution or trust company (acting as
principal) described in clause (iii)(b) of the definition of
Permitted Investments.

 

“Environmental Laws”
means any and all foreign, federal, state and local laws, statutes, ordinances,
rules, regulations, permits, licenses, approvals, interpretations (with the
force of law) and orders of courts or Governmental Authorities, relating to the
protection of human health or the environment, including, but not limited to,
requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of Hazardous Materials.  Environmental Laws include, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous Material
Transportation Act (49 U.S.C. § 331 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. § 6901 et seq.), the Federal Water Pollution
Control Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. §
7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et
seq.), the Safe Drinking Water Act (42 U.S.C. § 300, et seq.), the
Environmental Protection Agency’s regulations relating to underground storage
tanks (40 C.F.R. Parts 280 and 281), and the Occupational Safety and Health Act
(29 U.S.C. § 651 et seq.), and the rules and regulations
thereunder, each as amended or supplemented from time to time.

 

“Equity Security”
means (i) any equity security or any other security that is not eligible
for purchase by the Borrower as a Loan Asset, (ii) any security purchased
as part of a “unit” with a Loan Asset and that itself is not eligible for
purchase by the Borrower as a Loan Asset, and (iii) any obligation that,
at the time of commitment to acquire such obligation, was eligible for purchase
by the Borrower as a Loan Asset but that, as of any subsequent date of
determination, no longer is eligible for purchase by the Borrower as a Loan
Asset, for so long as such obligation fails to satisfy such requirements.

 

“Equityholder” means Ares
Capital CP Funding Holdings LLC, a Delaware limited liability company, which
owns 100% of the equity interests in the Borrower.

 

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

 

“ERISA Affiliate”
means (a) any corporation that is a member of the same controlled group of
corporations (within the meaning of Section 414(b) of the Code) as
the Borrower, (b) a trade or business (whether or not incorporated) under
common control (within 

 

13

 

the
meaning of Section 414(c) of the Code) with the Borrower, or (c) a
member of the same affiliated service group (within the meaning of Section 414(m) of
the Code) as the Borrower, any corporation described in clause (a) above
or any trade or business described in clause (b) above.

 

“Eurodollar Disruption Event”
means the occurrence of any of the following: (a) the Note Purchaser shall
have notified the Agent of a determination by the Note Purchaser or any of its
assignees or participants that it would be contrary to law or to the directive
of any central bank or other Governmental Authority (whether or not having the
force of law) to obtain United States dollars in the London interbank market to
fund any Advance, (b) the Note Purchaser shall have notified the Agent of
the inability, for any reason, of the Note Purchaser or any of its assignees or
participants to determine LIBOR, (c) the Note Purchaser shall have
notified the Agent of a determination by the Note Purchaser or any of its
assignees or participants that the rate at which deposits of United States
dollars are being offered to the Note Purchaser or any of its assignees or
participants in the London interbank market does not accurately reflect the
cost to the Note Purchaser or such assignee or such participant of making,
funding or maintaining any Advance or (d) the Note Purchaser shall have
notified the Agent of the inability of the Note Purchaser or any of its
assignees or participants to obtain United States dollars in the London
interbank market to make, fund or maintain any Advance.

 

“Event of Default” has the
meaning assigned to that term in Section 7.01.

 

“Excepted Persons”
has the meaning assigned to that term in Section 11.13(a).

 

“Exchange Act” means
the United States Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.

 

“Excluded Amounts”
means (a) any amount received in the Collection Account with respect to
any Loan Asset included as part of the Collateral Portfolio, which amount is
attributable to the payment of any Tax, fee or other charge imposed by any
Governmental Authority on such Loan Asset or on any Underlying Collateral and (b) any
amount received in the Collection Account or other Controlled Account
representing (i) any amount representing a reimbursement of insurance
premiums, (ii) any escrows relating to Taxes, insurance and other amounts
in connection with Loan Assets which are held in an escrow account for the
benefit of the Obligor and the secured party pursuant to escrow arrangements
under a Loan Agreement, (iii) any amount received in the Collection
Account with respect to any Loan Asset retransferred or substituted for upon
the occurrence of a Warranty Event or that is otherwise replaced by a
Substitute Eligible Loan Asset, or that is otherwise sold or transferred by the
Borrower pursuant to Section 2.07, to the extent such amount is
attributable to a time after the effective date of such replacement or sale and
(iv) any amounts paid in respect of Attached Equity.

 

“Excluded Taxes” has
the meaning assigned to that term in Section 2.11(a).

 

“Exposure Amount”
means, as of any date of determination, with respect to any Delayed Draw Loan
Asset or Revolving Loan Asset, the excess, if any, of (i) the maximum
commitment of the Borrower under the terms of the applicable Loan Agreement to
make advances (and, for the avoidance of doubt, the Borrower’s commitment in
respect of a Loan Asset as to which the commitment to make additional advances
has been terminated shall be 

 

14

 

zero)
over (ii) the outstanding principal balance of such Loan Asset on
such date of determination.

 

“Exposure Amount
Shortfall” has the meaning assigned to that term in Section 2.02(f).

 

“Facility Maturity Date”
means the earliest to occur of (i) the Stated Maturity Date, (ii) the
date of the declaration, or automatic occurrence, of the Facility Maturity Date
pursuant to Section 7.01, (iii) the Collection Date and (iv) the
occurrence of the termination of this Agreement pursuant to Section 2.18
hereof.

 

“FDIC” means the
Federal Deposit Insurance Corporation, and any successor thereto.

 

“Federal Funds Rate”
means, for any period, a fluctuating interest per
annum rate equal, for each day during such period, to the weighted
average of the overnight federal funds rates as in Federal Reserve Board
Statistical Release H.15(519) or any successor or substitute publication
selected by the Agent (or, if such day is not a Business Day, for the next
preceding Business Day), or, if for any reason such rate is not available on
any day, the rate determined, in the sole discretion of the Agent, to be the
rate at which overnight federal funds are being offered in the national federal
funds market at 9:00 a.m. on such day.

 

“Fee Letter” has the
meaning assigned to that term in Section 2.09.

 

“Fees” has the meaning
assigned to that term in Section 2.09.

 

“Financial Asset” has
the meaning specified in Section 8-102(a)(9) of the UCC.

 

“Financial Sponsor”
means any Person, including any Subsidiary of such Person, whose principal
business activity is acquiring, holding, and selling investments (including
controlling interests) in otherwise unrelated companies that each are distinct
legal entities with separate management, books and records and bank accounts,
whose operations are not integrated with one another and whose financial condition
and creditworthiness are independent of the other companies so owned by such
Person.

 

“First Lien Last Out Loan
Asset” means any Loan Asset that (i) is secured by a valid and
perfected first priority Lien on all of the Obligor’s assets constituting Underlying
Collateral for the Loan Asset, subject to any “permitted liens” as defined in
the applicable Loan Agreement for such Loan Asset or such comparable definition
if “permitted liens” is not defined therein, so long as such definition is
reasonable and customary, (ii) has a Loan-to-Value Ratio not greater than
65%, and (iii) is not by its terms (and is not expressly permitted by its
terms to become) subordinate in right of payment to any other obligation for
borrowed money of the Obligor of such Loan Asset, other than with respect to
the liquidation of such Obligor or such Underlying Collateral.

 

“First Lien Loan Asset”
means any Loan Asset that (i) is secured by a valid and perfected first
priority Lien on all of the Obligor’s assets constituting Underlying Collateral
for the Loan Asset, subject to any “permitted liens” as defined in the
applicable Loan Agreement for 

 

15

 

such
Loan Asset or such comparable definition if “permitted liens” is not defined therein,
so long as such definition is reasonable and customary, (ii) has a
Loan-to-Value Ratio not greater than 60%, and (iii) provides that the
payment obligation of the Obligor on such Loan Asset is either senior to, or
pari passu with, all other Indebtedness of such Obligor.

 

“First Tier Loan Assignment”
has the meaning set forth in the First Tier Purchase and Sale Agreement.

 

“First Tier Purchase and
Sale Agreement” means that certain Amended and Restated Purchase and Sale
Agreement, dated as of the Closing Date and amended and restated as of the
Restatement Date, between the Transferor, as the seller, and the Equityholder,
as the purchaser, as amended, modified, waived, supplemented, restated or
replaced from time to time.

 

“Fitch” means Fitch, Inc.
or any successor thereto.

 

“Fixed Rate Loan Asset”
means a Loan Asset other than a Floating Rate Loan Asset.

 

“Floating Rate Loan Asset”
means a Loan Asset under which the interest rate payable by the Obligor thereof
is based on the Ares Prime Rate or Ares LIBOR Rate, plus some specified
interest percentage in addition thereto, and which provides that such interest
rate will reset immediately upon any change in the related Ares Prime Rate or
Ares LIBOR Rate.

 

“GAAP” means generally
accepted accounting principles as in effect from time to time in the United
States.

 

“Governmental Authority”
means, with respect to any Person, any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any body or entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any court or arbitrator having jurisdiction over such Person.

 

“Hazardous Materials”
means all materials subject to any Environmental Law, including, without
limitation, materials listed in 49 C.F.R. § 172.010, materials defined as
hazardous pursuant to § 101(14) of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, flammable,
explosive or radioactive materials, hazardous or toxic wastes or substances,
lead-based materials, petroleum or petroleum distillates or asbestos or
material containing asbestos, polychlorinated biphenyls, radon gas, urea
formaldehyde and any substances classified as being “in inventory”, “usable
work in process” or similar classification that would, if classified as
unusable, be included in the foregoing definition.

 

“Highest Required
Investment Category” means (i)  with respect to ratings assigned by
Moody’s, “Aa2” or “P-1” for one month instruments, “Aa2” and “P-1” for three
month instruments, “Aa3” and “P-1” for six month instruments and “Aa2” and “P-1”
for instruments with a term in excess of six months, (ii) with respect to
rating assigned by S&P, “A-1” for short-term instruments and “A” for
long-term instruments, and (iii) with respect to rating assigned by Fitch
(if such investment is rated by Fitch), “F-1+” for short-term instruments and “AAA”
for long-term instruments.

 

16

 

“Indebtedness” means:

 

(i)                                     with respect to
any Obligor under any Loan Asset, for the purposes of the definition of the
Interest Coverage Ratio and the Net Leverage Ratio, the meaning of “Indebtedness”
or any comparable definition in the Loan Agreement for each such Loan Asset,
and in any case that “Indebtedness” or such comparable definition is not
defined in such Loan Agreement, without duplication, (a) all obligations
of such entity for borrowed money or with respect to deposits or advances of
any kind, (b) all obligations of such entity evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such
entity under conditional sale or other title retention agreements relating to
property acquired by such entity, (d) all obligations of such entity in
respect of the deferred purchase price of property or services (excluding
current accounts payable incurred in the ordinary course of business), (e) all
indebtedness of others secured by (or for which the holder of such indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such entity, whether or not the indebtedness
secured thereby has been assumed, (f) all guarantees by such entity of
indebtedness of others, (g) all Capital Lease Obligations of such entity, (h) all
obligations, contingent or otherwise, of such entity as an account party in
respect of letters of credit and letters of guaranty and (i) all
obligations, contingent or otherwise, of such entity in respect of bankers’
acceptances; and

 

(ii)                                  for all other
purposes, with respect to any Person at any date, (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of property
or services (other than current liabilities incurred in the ordinary course of
business and payable in accordance with customary trade practices) or that is
evidenced by a note, bond, debenture or similar instrument or other evidence of
indebtedness customary for indebtedness of that type, (b) all obligations
of such Person under leases that have been or should be, in accordance with
GAAP, recorded as capital leases, (c) all obligations of such Person in
respect of acceptances issued or created for the account of such Person, (d) all
liabilities secured by any Lien on any property owned by such Person even
though such Person has not assumed or otherwise become liable for the payment
thereof, (e) all indebtedness, obligations or liabilities of that Person
in respect of derivatives, and (f) all obligations under direct or
indirect guaranties in respect of obligations (contingent or otherwise) to
purchase or otherwise acquire, or to otherwise assure a creditor against loss
in respect of, indebtedness or obligations of others of the kind referred to in
clauses (a) through (e) of this clause (ii).

 

“Indemnified Amounts” has
the meaning assigned to that term in Section 8.01.

 

“Indemnified Party”
has the meaning assigned to that term in Section 8.01.

 

“Indemnifying Party”
has the meaning assigned to that term in Section 8.03.

 

“Independent Director”
means a natural person who, (A) for the five-year period prior to his or
her appointment as Independent Director, has not been, and during the
continuation of his or her service as Independent Director is not: (i) an
employee, director, stockholder, member, manager, partner or officer of the
Borrower, the Equityholder or any of their respective Affiliates (other than
his or her service as an Independent Director of the Borrower or other
Affiliates that are structured to be “bankruptcy remote”); (ii) a customer
or 

 

17

 

supplier
of the Borrower, the Equityholder or any of their Affiliates (other than his or
her service as an Independent Director of the Borrower); or (iii) any
member of the immediate family of a person described in (i) or (ii), and (B) has,
(i) prior experience as an Independent Director for a corporation or
limited liability company whose charter documents required the unanimous
consent of all Independent Directors thereof before such corporation or limited
liability company could consent to the institution of bankruptcy or insolvency
proceedings against it or could file a petition seeking relief under any
applicable federal or state law relating to bankruptcy and (ii) at least
three years of employment experience with one or more entities that provide, in
the ordinary course of their respective businesses, advisory, management or
placement services to issuers of securitization or structured finance
instruments, agreements or securities.

 

“Indorsement” has the
meaning specified in Section 8-102(a)(11) of the UCC, and “Indorsed”
has a corresponding meaning.

 

“Initial Advance” means the
first Advance made pursuant to Article II.

 

“Initial Extension” has the
meaning assigned to that term in Section 2.19.

 

“Initial Payment Date”
means the 15th day of April 2010 (or if such day is not
a Business Day, the next succeeding Business Day).

 

“Instrument” has the
meaning specified in Section 9-102(a)(47) of the UCC.

 

“Insurance Policy”
means, with respect to any Loan Asset, an insurance policy covering liability
and physical damage to, or loss of, the Underlying Collateral.

 

“Insurance Proceeds”
means any amounts received on or with respect to a Loan Asset under any
Insurance Policy or with respect to any condemnation proceeding or award in
lieu of condemnation which is neither required to be used to restore, improve
or repair the related real estate nor required to be paid to the Obligor under
the Loan Agreement.

 

“Intercreditor Agreement”
means that certain Amended and Restated Intercreditor and Concentration Account
Agreement, dated as of December 28, 2005, by and among the Servicer, the
Trustee, the Concentration Account Bank, JPMorgan, the Note Purchaser and each
securitization agent that from time to time executes a joinder thereto, as
amended, modified, waived, supplemented or restated from time to time.

 

“Interest” means, with
respect to any period and any Loan Asset, for the Obligor on such Loan Asset
and any of its parents or Subsidiaries that are obligated under the Loan
Agreement for such Loan Asset (determined on a consolidated basis without
duplication in accordance with GAAP), the meaning of “Interest” or any
comparable definition in the Loan Agreement for each such Loan Asset and in any
case that “Interest” or such comparable definition is not defined in such Loan
Agreement, all interest in respect of Indebtedness (including the interest
component of any payments in respect of Capital Lease Obligations) accrued or
capitalized during such period (whether or not actually paid during such
period).

 

“Interest Collection
Account” means a sub-account (account number 787456-201 at the Bank) of the
Collection Account into which Interest Collections shall be segregated.

 

18

 

“Interest Collections”
means, (i) with respect to any Loan Asset, all payments and collections
attributable to interest on such Loan Asset, including, without limitation, all
scheduled payments of interest and payments of interest relating to principal
prepayments, all guaranty payments attributable to interest and proceeds of any
liquidations, sales, dispositions or securitizations attributable to interest
on such Loan Asset and (ii) amendment fees, late fees, waiver fees or
other amounts received in respect of Loan Assets.

 

“Interest Coverage Ratio”
means, with respect to any Loan Asset for any Relevant Test Period, the meaning
of “Interest Coverage Ratio” or any comparable definition in the Loan Agreement
for each such Loan Asset, and in any case that “Interest Coverage Ratio” or
such comparable definition is not defined in such Loan Agreement, the ratio of (a) EBITDA
to (b) Interest.

 

“Joinder Supplement”
means an agreement among the Borrower, a Note Purchaser and the Agent in the
form of Exhibit E to this Agreement (appropriately completed)
delivered in connection with a Person becoming a Note Purchaser hereunder after
the Restatement Date.

 

“JPMorgan” has the
meaning specified in the definition of “JPMorgan Loan Documents”.

 

“JPMorgan Loan Documents”
means (i) that certain Amended and Restated Senior Secured Revolving
Credit Agreement dated as of January 22, 2010 between Ares, the lenders
party thereto and JPMorgan Chase Bank, N.A. (“JPMorgan”), (ii) that
certain Guarantee and Security Agreement, dated as of December 28, 2005,
between Ares and JPMorgan and (iii) that certain Guarantee and Security
Agreement Confirmation, dated as of January 22, 2010, between Ares and
JPMorgan, each as amended, modified, waived, supplemented or restated from time
to time.

 

“Large Obligor Exposure
Amount” means, as of any date of determination, an amount equal to the sum
of the Adjusted Borrowing Values of all Eligible Loan Assets attributable to
the three (3) Obligors having the largest Obligor concentration; such
Obligor concentrations to be determined by summing, for each Obligor, the
Adjusted Borrowing Values for all Eligible Loan Assets of such Obligor on such
date of determination.

 

“LIBOR” means, for any day
during the Remittance Period, with respect to any Advance (or portion thereof) (a) the
rate per annum appearing on Reuters Screen LIBOR01 Page (or any successor
or substitute page) as the London interbank offered rate for deposits in
dollars at approximately 11:00 a.m., London time, for such day, provided,
if such day is not a Business Day, the immediately preceding Business Day, for
a one-month maturity; and (b) if no rate specified in clause (a) of
this definition so appears on Reuters Screen LIBOR01 Page (or any
successor or substitute page), the interest rate per annum at which dollar
deposits of $5,000,000 and for a one-month maturity are offered by the
principal London office of Wachovia in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, for such
day.

 

19

 

“Lien” means any mortgage
or deed of trust, pledge, hypothecation, collateral assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, claim, preference,
priority or other security interest or preferential arrangement in the nature
of a security interest of any kind or nature whatsoever (including any
conditional sale, lease or other title retention agreement, sale subject to a
repurchase obligation, any easement, right of way or other encumbrance on title
to real property, and any financing lease having substantially the same
economic effect as any of the foregoing) or the filing of or agreement to give
any financing statement perfecting a security interest under the UCC or
comparable law of any jurisdiction.

 

“Lien Release Dividend”
has the meaning assigned to that term in Section 2.07(d).

 

“Lien Release Dividend
Date” means the date specified by the Borrower, which date may be any
Business Day, provided written notice is given in accordance with Section 2.07(d).

 

“Loan Agreement” means the
loan agreement, credit agreement or other agreement pursuant to which a Loan
Asset has been issued or created and each other agreement that governs the
terms of or secures the obligations represented by such Loan Asset or of which
the holders of such Loan Asset are the beneficiaries.

 

“Loan Asset” means any loan
originated or acquired by the Transferor in the ordinary course of its
business, which loan includes, without limitation, (i) the Required Loan
Documents and Loan Asset File, and (ii) all right, title and interest of
the Transferor in and to the loan and any Underlying Collateral, but excluding,
in each case, the Retained Interest, any Attached Equity and Excluded Amounts
and which loan was (x) acquired from the Transferor by the Borrower prior
to the Restatement Date pursuant to the Original Purchase and Sale Agreement or
(y) acquired by the Borrower from the Equityholder under the Second Tier
Purchase and Sale Agreement and by the Equityholder from the Transferor under
the First Tier Purchase and Sale Agreement and owned by the Borrower on the
initial Advance Date (as set forth on the Loan Asset Schedule delivered on the
initial Advance Date) or acquired by the Borrower after the initial Advance
Date pursuant to the delivery of the Loan Assignments and listed on Schedule
I to such Loan Assignments, which Schedule I is in the possession of
Ares Capital Funding LLC and includes specific accounts, instruments or general
intangibles.

 

“Loan Asset Checklist”
means an electronic or hard copy, as applicable, of a checklist delivered by or
on behalf of the Borrower to the Collateral Custodian, for each Loan Asset, of (a) all
Required Loan Documents to be included within the respective Loan Asset File,
which shall specify (i) whether such document is an original or a copy and
(ii) whether such Loan Asset is a Third Party Acquired Loan Asset.

 

“Loan Asset File” means,
with respect to each Loan Asset, a file containing (a) each of the
documents and items as set forth on the Loan Asset Checklist with respect to
such Loan Asset and (b) duly executed originals (to the extent required by
the Credit Policy and the Servicing Standard) and copies of any other Records
relating to such Loan Assets and Portfolio Assets pertaining thereto.

 

20

 

“Loan Asset Register”
has the meaning assigned to that term in Section 5.03(l).

 

“Loan Asset Schedule” means
the schedule of Loan Agreements evidencing Loan Assets delivered by the
Borrower to the Collateral Custodian and the Agent. Each such schedule shall
set forth, as to any Eligible Loan Asset to be Pledged hereunder, the
applicable information specified on Schedule V, which shall also be
provided to the Collateral Custodian in electronic format acceptable to the
Collateral Custodian.

 

“Loan Assignments”
means, collectively, the First Tier Loan Assignment (as such term is defined in
the First Tier Purchase and Sale Agreement) and the Second Tier Loan Assignment
(as such term is defined in the Second Tier Purchase and Sale Agreement).

 

“Loan-to-Value Ratio”
means, with respect to any Loan Asset, as of any date of determination, the
percentage equivalent of a fraction, (i) the numerator of which is equal
to the commitment amount as provided in the applicable Loan Agreements of such
Loan Asset plus the commitment amount of any other senior or pari passu
Indebtedness of the related Obligor (including, in the case of Revolving Loan
Assets and Delayed Draw Loan Assets, without duplication, the maximum
availability thereof) and (ii) the denominator of which is equal to the
enterprise value of the Underlying Collateral securing such Loan Asset (as
determined by the Transferor in accordance with the Credit Policy and the
Servicing Standard unless the Agent in its reasonable discretion disagrees with
such determination, in which case the Agent shall determine the enterprise
value of the Underlying Collateral).  In
the event the Borrower disagrees with the Agent’s determination of the
enterprise value of the Underlying Collateral, the Borrower may (at its
expense) retain any Approved Valuation Firm to value such Underlying
Collateral, and if the value determined by such firm is greater than the Agent’s
determination of the enterprise value of the Underlying Collateral, such firm’s
valuation shall become the enterprise value of such Underlying Collateral; provided that the enterprise value of such
Underlying Collateral shall be the value assigned by the Agent until such firm
has determined its value).

 

“Lyon” has the
meaning assigned to that term in the Preliminary Statement.

 

“Make-Whole Premium” means (i) to
the extent the Make-Whole Premium is required to be paid pursuant to this
Agreement on or prior to the date which is one year following the Restatement
Date, 3.00% of the Maximum Facility Amount or the amount by which the Maximum
Facility Amount is reduced, as applicable, (ii) to the extent the
Make-Whole Premium is required to be paid pursuant to this Agreement on or
prior to the date which is two years following the Restatement Date but after
the first anniversary of the Restatement Date, 2.00% of the Maximum Facility
Amount or the amount by which the Maximum Facility Amount is reduced, as
applicable, and (iii) to the extent the Make-Whole Premium is required to
be paid pursuant to this Agreement on or prior to the date which is three years
following the Restatement Date but after the second anniversary of the
Restatement Date, 1.00% of the Maximum Facility Amount or the amount by which
the Maximum Facility Amount is reduced, as applicable; provided that, in the foregoing clauses
(i) through (iii), the Make-Whole Premium shall be calculated
without giving effect to the proviso in the definition of “Maximum Facility
Amount”.

 

“Management Agreement”
means the Investment Advisory and Management Agreement, dated as of September 30,
2004 (amended as of June 1, 2006), between Ares Capital 

 

21

 

Corporation
and Ares Capital Management LLC, as further amended, restated or otherwise
modified from time to time.

 

“Margin Stock” means “margin
stock” as such term is defined in Regulation T, U or X of the Federal Reserve
Board.

 

“Material Adverse Effect”
means, with respect to any event or circumstance, a material adverse effect on (a) the
business, condition (financial or otherwise), operations, performance or
properties of the Transferor, the Servicer or the Borrower, (b) the
validity, enforceability or collectability of this Agreement or any other
Transaction Document or the validity, enforceability or collectability of the
Loan Assets generally or any material portion of the Loan Assets, (c) the
rights and remedies of the Trustee, the Agent, the Note Purchaser and the
Secured Parties with respect to matters arising under this Agreement or any
other Transaction Document, (d) the ability of each of the Borrower and
the Servicer, to perform their respective obligations under this Agreement or
any other Transaction Document, or (e) the status, existence, perfection,
priority or enforceability of the Trustee’s, the Agent’s or the other Secured
Parties’ lien on the Collateral Portfolio.

 

“Material Modification”
means any amendment or waiver of, or modification or supplement to, a Loan Agreement
governing a Loan Asset executed or effected on or after the Cut-Off Date for
such Loan Asset (or, solely in the case of clause (d)(ii)(y), a change
to any loan senior to a Loan Asset) which:

 

(a)                                  reduces or
forgives any or all of the principal amount due under such Loan Asset;

 

(b)                                 delays or
extends the required or scheduled amortization in any way that increases the
Average Life of such Loan Asset; provided
that the Average Life of such Loan Asset may be increased by not more than 20%
from its Average Life on the related Cut-Off Date if the Net Leverage Ratio of
such Loan Asset is not more than 85% of the maximum established in the Net
Leverage Ratio covenant of such Loan Asset;

 

(c)                                  waives one or
more interest payments, permits any interest due in cash to be deferred or
capitalized and added to the principal amount of such Loan Asset (other than
any deferral or capitalization already allowed by the terms of the Loan
Agreement of any PIK Loan Asset), or reduces the spread or coupon with respect
to such Loan Asset; provided that
such spread or coupon may be reduced a maximum of one time and by not more than
20% from the spread or coupon on the related Cut-Off Date; provided  further
that the Interest Coverage Ratio of such Loan Asset is greater than
2.0:1 at the time of such reduction;

 

(d)                                 (i) in the
case of a First Lien Loan Asset, contractually or structurally subordinates
such Loan Asset by operation of a priority of payments, turnover provisions,
the transfer of assets in order to limit recourse to the related Obligor or the
granting of Liens (other than “permitted liens” as defined in the applicable
Loan Agreement for such Loan Asset or such comparable definition if “permitted
liens” is not defined therein, so long as such definition is reasonable and
customary) on any of the Underlying Collateral securing such Loan Asset or (ii) in
the case of a First Lien Last Out Loan Asset, Second Lien Loan Asset or
Subordinated Loan 

 

22

 

Asset,
(x) contractually or structurally subordinates such Loan Asset to any
obligation (other than any loan which existed at the Cut-Off Date for such Loan
Asset which is senior to such Loan Asset) by operation of a priority of
payments, turnover provisions, the transfer of assets in order to limit
recourse to the related Obligor or the granting of Liens (other than “permitted
liens” as defined in the applicable Loan Agreement for such Loan Asset or such
comparable definition if “permitted liens” is not defined therein, so long as
such definition is reasonable and customary) on any of the Underlying
Collateral securing such Loan Asset or (y) increases the commitment amount
of any loan senior to such Loan Asset and the Net Leverage Ratio of such Loan
Asset increases by more than 0.5x as a result of such increase;

 

(e)                                  substitutes,
alters or releases the Underlying Collateral securing such Loan Asset and each
such substitution, alteration or release, as determined in the sole reasonable
discretion of the Agent, materially and adversely affects the value of such
Loan Asset;

 

(f)                                    provides
additional funds to the Obligor of such Loan Asset with the intent of keeping
that Loan Asset current; or

 

(g)                                 amends, waives,
forbears, supplements or otherwise modifies (i) the meaning of “Net
Leverage Ratio”, “Interest Coverage Ratio” or “Permitted Liens” or any
respective comparable definitions in the Loan Agreement for such Loan Asset or (ii) any
term or provision of such Loan Agreement referenced in or utilized in the
calculation of the “Net Leverage Ratio”, “Interest Coverage Ratio” or “Permitted
Liens” or any respective comparable definitions for such Loan Asset, in either
case in a manner that, in the sole reasonable judgment of the Agent, is
materially adverse to the Secured Parties.

 

“Maximum Facility Amount”
means initially $400,000,000, as such amount may be reduced from time to time
pursuant to Section 2.18(b); provided
that at all times when an Event of Default has occurred, the Maximum Facility
Amount shall mean the aggregate Advances Outstanding at such time.

 

“Moody’s” means Moody’s
Investors Service, Inc. (or its successors in interest).

 

“Mortgage” means the
mortgage, deed of trust or other instrument creating a Lien on an interest in
real property securing a Loan Asset, including the assignment of leases and
rents related thereto.

 

“Multiemployer Plan”
means a “multiemployer plan” as defined in Section 4001(a)(3) of
ERISA that is or was at any time during the current year or the preceding five
years contributed to by the Borrower or any ERISA Affiliate on behalf of its
employees.

 

“Net Leverage Ratio” means,
with respect to any Loan Asset for any Relevant Test Period, the meaning of “Net
Leverage Ratio” or any comparable definition in the Loan Agreement for each
such Loan Asset, and in any case that “Net Leverage Ratio” or such comparable
definition is not defined in such Loan Agreement, the ratio of (a) Indebtedness
minus Unrestricted Cash to (b) EBITDA.

 

“Non-Usage Fee” has the
meaning ascribed thereto in the Fee Letter.

 

23

 

“Note Purchaser” means,
collectively, Wachovia and/or any other Person to whom the Note Purchaser
assigns any part of its rights and obligations under this Agreement and the
other Transaction Documents in accordance with the terms of Section 11.04.

 

“Noteless Loan Asset”
means a Loan Asset with respect to which the Loan Agreements (i) do not
require the Obligor to execute and deliver a promissory note to evidence the
indebtedness created under such Loan Asset or (ii) require any holder of
the indebtedness created under such Loan Asset to affirmatively request a
promissory note from the related Obligor.

 

“Notice and Request for
Consent” has the meaning assigned to that term in Section 2.07(d)(i).

 

“Notice of Borrowing” means
an irrevocable written notice of borrowing from the Borrower to the Agent in
the form attached hereto as Exhibit F.

 

“Notice of Reduction”
means a notice of a reduction of the Advances Outstanding or a reduction of the
Maximum Facility Amount, as applicable, pursuant to Section 2.18,
in the form attached hereto as Exhibit G or Exhibit H,
as applicable.

 

“Obligations” means all
present and future indebtedness and other liabilities and obligations
(howsoever created, arising or evidenced, whether direct or indirect, absolute
or contingent, or due or to become due) of the Borrower to the Note Purchaser,
the Agent, the Bank, the Trustee or the Collateral Custodian arising under this
Agreement and/or any other Transaction Document and shall include, without limitation,
all liability for principal of and interest on the Advances, indemnifications
and other amounts due or to become due by the Borrower to the Note Purchaser,
the Agent or the Trustee under this Agreement and/or any other Transaction
Document, including, without limitation, any Make-Whole Premium and costs and
expenses payable by the Borrower to the Note Purchaser, the Agent, the Bank,
the Trustee or the Collateral Custodian, including reasonable attorneys’ fees,
costs and expenses, including without limitation, interest, fees and other
obligations that accrue after the commencement of an insolvency proceeding (in
each case whether or not allowed as a claim in such insolvency proceeding).

 

“Obligor” means,
collectively, each Person obligated to make payments under a Loan Agreement,
including any guarantor thereof.

 

“Officer’s Certificate”
means a certificate signed by the president, the secretary, an assistant
secretary, the chief financial officer or any vice president, as an authorized
officer, of any Person.

 

“Opinion of Counsel” means
a written opinion of counsel, which opinion and counsel are acceptable to the
Agent in its sole discretion; provided
that Latham & Watkins LLP, Richards Layton & Finger, P.A. and
Venable LLP shall be considered acceptable counsel for purposes of this
definition.

 

“Optional Sale” has
the meaning assigned to that term in Section 2.07(c).

 

24

 

“Optional Sale Date”
means any Business Day, provided 45 days’ prior written notice is given in
accordance with Section 2.07(c).

 

“Original Agreement”
has the meaning assigned to that term in the Preliminary Statement.

 

“Original Loan Asset”
means each Loan Asset acquired by the Borrower prior to the Restatement Date.

 

“Original Purchase and
Sale Agreement” shall mean that certain Purchase and Sale Agreement, dated
as of November 3, 2004, by and between the Transferor, as the seller, and
the Borrower, as the Buyer, as amended and modified prior to the Restatement
Date.

 

“Outstanding Balance”
means, with respect to any Loan Asset as of any date of determination, the
outstanding principal balance of any advances or loans made to the related
Obligor pursuant to the related Loan Agreement as of such date of determination
(exclusive of any interest and Accreted Interest).

 

“Payment Date” means the 15th day of each of January, April, July and October or,
if such day is not a Business Day, the next succeeding Business Day, commencing
on the 15th day of April 2010; provided, that the final Payment Date
shall occur on the Collection Date.

 

“Payment Duties” has
the meaning assigned to that term in Section 10.02(b)(i).

 

“Pension Plans” has
the meaning assigned to that term in Section 4.01(x).

 

“Permitted Investments”
means negotiable instruments or securities or other investments that (i) except
in the case of demand or time deposits, investments in money market funds and
Eligible Repurchase Obligations, are represented by instruments in bearer or
registered form or ownership of which is represented by book entries by a
Clearing Agency or by a Federal Reserve Bank in favor of depository
institutions eligible to have an account with such Federal Reserve Bank who
hold such investments on behalf of their customers, (ii) as of any date of
determination, mature by their terms on or prior to the Business Day preceding
the next Payment Date, and (iii) evidence:

 

(a)                                  direct
obligations of, and obligations fully guaranteed as to full and timely payment
by, the United States (or by any agency thereof to the extent such obligations
are backed by the full faith and credit of the United States);

 

(b)                                 demand
deposits, time deposits or certificates of deposit of depository institutions
or trust companies incorporated under the laws of the United States or any
state thereof and subject to supervision and examination by federal or state
banking or depository institution authorities; provided,
that at the time of the Borrower’s investment or contractual
commitment to invest therein, the commercial paper, if any, and short-term
unsecured debt obligations (other than such obligation whose rating is based on
the credit of a Person other than such institution or trust company) of such
depository institution or trust company shall have a credit rating from Fitch
and each Rating Agency in the Highest Required Investment Category granted by
Fitch and such Rating Agency;

 

25

 

(c)                                  commercial
paper, or other short term obligations, having, at the time of the Borrower’s
investment or contractual commitment to invest therein, a rating in the Highest
Required Investment Category granted by each Rating Agency and Fitch;

 

(d)                                 demand
deposits, time deposits or certificates of deposit that are fully insured by
the FDIC and either have a rating on their certificates of deposit or
short-term deposits from Moody’s and S&P of “P-1” and “A-1”, respectively,
and if rated by Fitch, from Fitch of “F-1+”;

 

(e)                                  notes that are
payable on demand or bankers’ acceptances issued by any depository institution
or trust company referred to in clause (b) above;

 

(f)                                    investments in
taxable money market funds or other regulated investment companies having, at
the time of the Borrower’s investment or contractual commitment to invest
therein, a rating of the Highest Required Investment Category from each Rating
Agency and Fitch (if rated by Fitch);

 

(g)                                 time deposits
(having maturities of not more than 90 days) by an entity the commercial paper
of which has, at the time of the Borrower’s investment or contractual commitment
to invest therein, a rating of the Highest Required Investment Category granted
by each Rating Agency and Fitch; or

 

(h)                                 Eligible
Repurchase Obligations with a rating acceptable to the Rating Agencies and
Fitch, which in the case of S&P, shall be “A-1” and in the case of Fitch
shall be “F-1+”.

 

The Trustee may pursuant to
the direction of the Servicer or the Agent, as applicable, purchase or sell to
itself or an Affiliate, as principal or agent, the Permitted Investments
described above.

 

“Permitted Liens” means any
of the following as to which no enforcement, collection, execution, levy or
foreclosure proceeding shall have been commenced (a) Liens for state,
municipal or other local Taxes if such Taxes shall not at the time be due and
payable or if a Person shall currently be contesting the validity thereof in
good faith by appropriate proceedings and with respect to which reserves in
accordance with GAAP have been provided on the books of such Person, (b) Liens
imposed by law, such as materialmen’s, warehousemen’s, mechanics’, carriers’,
workmen’s and repairmen’s Liens and other similar Liens, arising by operation
of law in the ordinary course of business for sums that are not overdue or are
being contested in good faith and (c) Liens granted pursuant to or by the
Transaction Documents.

 

“Permitted Refinancing”
means any refinancing transaction undertaken by the Transferor, the Borrower or
an Affiliate of the Transferor that is secured, directly or indirectly, by any
Loan Asset currently or formerly included in the Collateral Portfolio or any
portion thereof or any interest therein released from the Lien of this
Agreement.

 

“Permitted Securitization”
means any private or public term or conduit securitization transaction (a) undertaken
by the Transferor, the Borrower or an Affiliate of the Transferor, that is
secured, directly or indirectly, by any Loan Asset currently or formerly 

 

26

 

included
in the Collateral Portfolio or any portion thereof or any interest therein
released from the Lien of this Agreement, including, without limitation, any
collateralized loan obligation or collateralized debt obligation offering or
other asset securitization and (b) in the case of a term securitization in
which the Transferor or an Affiliate thereof or underwriter or placement agent
has agreed to purchase or place 100% of the equity and non-investment grade
tranches of notes issued in such term securitization transaction.  For the avoidance of doubt, notwithstanding
any agreement by the Transferor or an Affiliate to purchase or place 100% of
the equity in such term securitization transaction, any such party agreeing to
so purchase or place may designate other Persons as purchasers of such equity
provided such party or parties remain primarily liable therefor if such
designees fail to purchase or place in connection with the closing date of such
term securitization and/or, after the closing of such term securitization, may
transfer equity it purchases at the closing thereof.

 

“Person” means an
individual, partnership, corporation (including a statutory or business trust),
limited liability company, joint stock company, trust, unincorporated
association, sole proprietorship, joint venture, government (or any agency or
political subdivision thereof) or other entity.

 

“PIK Loan Asset”
means a Loan Asset which provides for a portion of the interest that accrues
thereon to be added to the principal amount of such Loan Asset for some period
of the time prior to such Loan Asset requiring the current cash payment of such
previously capitalized interest, which cash payment shall be treated as an
Interest Collection at the time it is received.

 

“Pledge” means the pledge
of any Eligible Loan Asset or other Portfolio Asset pursuant to Article II.

 

“Pledge Agreement” means
that certain Pledge Agreement, dated as of the Restatement Date, between the
Equityholder, as pledgor, and the Trustee, as pledgee, as such Pledge Agreement
may from time to time be amended, restated, supplemented or otherwise modified
from time to time in accordance with the terms thereof.

 

“Portfolio Assets” means
all Loan Assets owned by the Borrower, together with all proceeds thereof and
other assets or property related thereto, including all right, title and
interest of the Borrower 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 Transferor is entitled as lender under
the applicable Loan Agreement;

 

(c)                                  the Controlled
Accounts and the Concentration Account, to the extent amounts on deposit
therein or credited thereto relate to the Collateral Portfolio, together with
all cash and investments in each of the foregoing other than amounts earned on
investments therein;

 

27

 

(d)                                 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;

 

(e)                                  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;

 

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

 

(g)                                 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;

 

(h)                                 the Purchase
and Sale Agreements (including, without limitation, rights of recovery of the
Borrower against the Equityholder and the Transferor) and the assignment to the
Trustee, for the benefit of the Secured Parties, of all UCC financing
statements filed by the Borrower against the Equityholder and filed by the
Equityholder against the Transferor under or in connection with the Purchase
and Sale Agreements;

 

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

 

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

 

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

 

“Prime Rate” means
the rate announced by Wachovia from time to time as its prime rate in the
United States, such rate to change as and when such designated rate
changes.  The Prime Rate is not intended
to be the lowest rate of interest charged by Wachovia or any other specified
financial institution in connection with extensions of credit to debtors.

 

“Principal Collection
Account” means a sub-account (account number 787456-202 at the Bank) of the
Collection Account into which Principal Collections shall be segregated.

 

“Principal Collections”
means any deposits by the Borrower in accordance with Section 2.06(a)(i) or
Section 2.07(e)(i) or, with respect to any Loan Asset, all
amounts received which are not Interest Collections, including, without
limitation, all Recoveries, all Insurance Proceeds, all scheduled payments of
principal and principal prepayments and all guaranty payments and proceeds of
any liquidations, sales, dispositions or securitizations, in each case,
attributable to the principal of such Loan Asset; provided that, for the avoidance of doubt, “Principal
Collections” shall not include amounts on deposit in the Unfunded Exposure
Account or amounts withdrawn pursuant to Section 2.21.

 

28

 

“Proceeds” means,
with respect to any Collateral Portfolio, all property that is receivable or
received when such Collateral Portfolio is collected, sold, liquidated,
foreclosed, exchanged, or otherwise disposed of, whether such disposition is
voluntary or involuntary, and includes all rights to payment with respect to
any insurance relating to such Collateral Portfolio.

 

“Purchase and Sale
Agreements” means the First Tier Purchase and Sale Agreement and the Second
Tier Purchase and Sale Agreement.

 

“Rating Agency” means
each of S&P, Moody’s and Fitch.

 

“Records” means all
documents relating to the Loan Assets, including books, records and other
information executed in connection with the origination or acquisition of the
Collateral Portfolio or maintained with respect to the Collateral Portfolio and
the related Obligors that the Borrower, the Transferor or the Servicer have
generated, in which the Borrower, the Transferor or the Equityholder have
acquired an interest pursuant to the Purchase and Sale Agreements or in which
the Borrower, the Transferor or the Equityholder have otherwise obtained an
interest.

 

“Recoveries” means,
as of the time any Underlying Collateral with respect to any Loan Asset subject
to clauses (ii) or (iv) of the definition of “Value
Adjustment Event”, as applicable, is sold, discarded or abandoned (after a
determination by the Servicer that such Underlying Collateral has little or no
remaining value) or otherwise determined to be fully liquidated by the Servicer
in accordance with the Credit Policy and the Servicing Standard, the proceeds
from the sale of the Underlying Collateral, the proceeds of any related
Insurance Policy, any other recoveries with respect to such Loan Asset, as
applicable, the Underlying Collateral, and amounts representing late fees and
penalties, net of any amounts received that are required under such Loan Asset,
as applicable, to be refunded to the related Obligor.

 

“Register” has the
meaning assigned to that term in Section 2.14.

 

“Release Date” has
the meaning set forth in Section 2.07(e).

 

“Relevant Test Period”
means, with respect to any Loan Asset, the relevant test period for the
calculation of Net Leverage Ratio or Interest Coverage Ratio, as applicable,
for such Loan Asset in the Loan Agreements or, if no such period is provided
for therein, for Obligors delivering monthly financing statements, each period
of the last 12 consecutive reported calendar months, and for Obligors
delivering quarterly financing statements, each period of the last four
consecutive reported fiscal quarters of the principal Obligor on such Loan
Asset; provided that with respect
to any Loan Asset for which the relevant test period is not provided for in the
Loan Agreement, if an Obligor is a newly-formed entity as to which 12
consecutive calendar months have not yet elapsed, “Relevant Test Period” shall
initially include the period from the date of formation of such Obligor to the
end of the twelfth calendar month or fourth fiscal quarter (as the case may be)
from the date of formation, and shall subsequently include each period of the
last 12 consecutive reported calendar months or four consecutive reported
fiscal quarters (as the case may be) of such Obligor.

 

“Remittance Period” means, (i) as
to the Initial Payment Date, the period beginning on January 1, 2010 and
ending on, and including, the Determination Date immediately 

 

29

 

preceding
such Payment Date and (ii) as to any subsequent Payment Date, the period
beginning on the first day after the most recently ended Remittance Period and
ending on, and including, the Determination Date immediately preceding such
Payment Date, or, with respect to the final Remittance Period, the Collection
Date.

 

“Replacement Servicer”
has the meaning assigned to that term in Section 6.01(c).

 

“Reporting Date”
means the date that is two Business Days prior to the 15th of each calendar month (unless in such month a
Payment Date occurs, in which case two Business Days prior to such Payment
Date), commencing February, 2010.

 

“Required Loan Documents”
means, for each Loan Asset, originals (except as otherwise indicated) of the
following documents or instruments, all as specified on the related Loan Asset
Checklist:

 

(a)                                  (i) other
than in the case of a Noteless Loan Asset, the original or, if accompanied by
an original “lost note” affidavit and indemnity, a copy of, the underlying
promissory note, endorsed by the Borrower or the prior holder of record either
in blank or to the Trustee (and evidencing an unbroken chain of endorsements
from each prior holder thereof evidenced in the chain of endorsements either in
blank or to the Trustee, subject to Section 11.18), with any
endorsement to the Trustee to be in the following form: “U.S. Bank National
Association, as Trustee for the Secured Parties”, and (ii) in the case of
a Noteless Loan Asset (x) a copy of each transfer document or instrument
relating to such Noteless Loan Asset evidencing the assignment of such Noteless
Loan Asset to the Transferor and from the Transferor to the Borrower (or, in
the case of Third Party Acquired Loan Assets purchased by the Transferor from
third parties, from such third party directly to the Borrower as provided in Section 11.18)
and from the Borrower either to the Trustee or in blank, and (y) a copy of
the Loan Asset Register with respect to such Noteless Loan Asset, as described
in Section 5.03(l)(ii);

 

(b)                                 originals or
copies of each of the following, to the extent applicable to the related Loan
Asset; any related loan agreement, credit agreement, note purchase agreement,
security agreement (if separate from any Mortgage), sale and servicing
agreement, acquisition agreement, subordination agreement, intercreditor
agreement or similar instruments, guarantee, Insurance Policy, assumption or
substitution agreement or similar material operative document, in each case
together with any amendment or modification thereto, as set forth on the Loan
Asset Checklist;

 

(c)                                  if any Loan
Asset is secured by a Mortgage, in each case as set forth in the Loan Asset
Checklist:

 

(i)                                     either (i) the
original Mortgage, the original assignment of leases and rents, if any, and the
originals of all intervening assignments, if any, of the Mortgage and
assignments of leases and rents with evidence of recording thereon, (ii) copies
thereof certified by the Servicer, by closing counsel or by a title company or
escrow company to be true and complete copies thereof where the originals have
been transmitted for recording until such time as the originals are returned by
the public recording office; provided
that, solely for purposes of the Review Criteria, the Collateral

 

30

 

Custodian
shall have no duty to ascertain whether any certification set forth in this
subsection (c)(ii) has been received, other than a certification which has
been clearly delineated as being provided by the Servicer or (iii) copies
certified by the public recording offices where such documents were recorded to
be true and complete copies thereof in those instances where the public
recording offices retain the original or where the original recorded documents
are lost; and

 

(ii)                                  other than with
respect to any Agented Note, to the extent the Borrower is the sole lender
under the Loan Agreement, an Assignment of Mortgage and of any other material
recorded security documents (including any assignment of leases and rents) in
recordable form, executed by the Borrower or the prior holder of record, in
blank or to the Trustee (and evidencing an unbroken chain of assignments from
the prior holder of record to the Trustee), with any assignment to the Trustee
to be in the following form: “U.S. Bank National Association, as Trustee for
the Secured Parties”;

 

(d)                                 with respect to
any Loan Asset originated by the Transferor and with respect to which the
Transferor acts as administrative agent (or in a comparable capacity), either (i) copies
of the UCC-1 Financing Statements, if any, and any related continuation
statements, each showing the Obligor as debtor and the Trustee as total
assignee or showing the Obligor, as debtor and the Transferor as secured party
and each with evidence of filing thereon, or (ii) copies of any such
financing statements certified by the Servicer to be true and complete copies
thereof in instances where the original financing statements have been sent to
the appropriate public filing office for filing, in each case as set forth in
the Loan Asset Checklist.

 

“Required Note Purchasers”
has the meaning assigned to that term in Section 11.01(a).

 

“Required Reports”
means, collectively, the Servicing Report required pursuant to Section 6.08(b),
the Servicer’s Certificate required pursuant to Section 6.08(c),
the financial statements of the Servicer required pursuant to Section 6.08(d),
the tax returns of the Borrower and the Servicer required pursuant to Section 6.08(e),
the financial statements and valuation reports of each Obligor required
pursuant to Section 6.08(f), the annual statements as to compliance
required pursuant to Section 6.09, and the annual independent
public accountant’s report required pursuant to Section 6.10.

 

“Responsible Officer”
means, with respect to any Person, any duly authorized officer of such Person
with direct responsibility for the administration of this Agreement and also,
with respect to a particular matter, any other duly authorized officer of such
Person to whom such matter is referred because of such officer’s knowledge of
and familiarity with the particular subject.

 

“Restatement Date”
shall mean January 22, 2010.

 

“Restricted Junior
Payment” means (i) any dividend or other distribution, direct or
indirect, on account of any class of membership interests of the Borrower 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 Borrower; (ii) any redemption, retirement, 

 

31

 

sinking
fund or similar payment, purchase or other acquisition for value, direct or
indirect, of any class of membership interests of the Borrower 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 Borrower now or hereafter
outstanding, and (iv) any payment of management fees by the Borrower
(except for reasonable management fees to the Transferor or its Affiliates in
reimbursement of actual management services performed).  For the avoidance of doubt, (x) payments
and reimbursements due to the Servicer in accordance with this Agreement or any
other Transaction Document do not constitute Restricted Junior Payments, and (y) distributions
by the Borrower to holders of its membership interests of Loan Assets or of
cash or other proceeds relating thereto which have been substituted by the
Borrower in accordance with this Agreement shall not constitute Restricted
Junior Payments.

 

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

 

“Review Criteria” has
the meaning assigned to that term in Section 12.02(b)(i).

 

“Revolving Loan Asset”
means a Loan Asset that is a line of credit or contains an unfunded commitment
arising from an extension of credit by the Transferor to an Obligor, pursuant
to the terms of which amounts borrowed may be repaid and subsequently
reborrowed.

 

“S&P” means Standard &
Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc. (or
its successors in interest).

 

“Scheduled Payment”
means each scheduled payment of principal and/or interest required to be made
by an Obligor on the related Loan Asset, as adjusted pursuant to the terms of
the related Loan Agreement.

 

“Second Extension” has the
meaning assigned to that term in Section 2.19.

 

“Second Lien Loan Asset”
means any Loan Asset that (i) is secured by a valid and perfected second
priority security interest on all of the Obligor’s assets constituting
Underlying Collateral for the Loan Asset (whether or not there is also a
security interest of a higher or lower priority in additional collateral),
subject to any “permitted liens” as defined in the applicable Loan Agreement
for such Loan Asset or such comparable definition if “permitted liens” is not
defined therein, so long as such definition is reasonable and customary, (ii) with
respect to priority of payment obligations is pari passu with the indebtedness
of the holder with the first priority security interest except after an event
of default thereunder, (iii) pursuant to an intercreditor agreement
between the Borrower and the holder of such first priority security interest,
the amount of the indebtedness covered by such first priority security interest
is limited (in terms of aggregate dollar amount or percent of outstanding
principal or both), and (iv) has a Loan-to-Value Ratio of not greater than
70%.

 

32

 

“Second Tier Loan Assignment”
has the meaning set forth in the Second Tier Purchase and Sale Agreement.

 

“Second Tier Purchase and
Sale Agreement” means that certain Second Tier Purchase and Sale Agreement,
dated as of the Restatement Date, between the Equityholder, as the seller, and
the Borrower, as the purchaser, as amended, modified, waived, supplemented,
restated or replaced from time to time.

 

“Secured Party” means
each of the Agent, the Note Purchaser (together with its successors and
assigns), the Trustee and the Collateral Custodian.

 

“Securities Act”
means the U.S. Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

“Servicer” means at any
time the Person then authorized, pursuant to Section 6.01 to
service, administer, and collect on the Loan Assets and exercise rights and
remedies in respect of the same.

 

“Servicer Termination Event”
means the occurrence of any one or more of the following events:

 

(a)                                  any failure by
the Servicer to make any payment, transfer or deposit into the Collection
Account (including, without limitation, with respect to bifurcation and
remittance of Interest Collections and Principal Collections) or the Unfunded
Exposure Account, as required by this Agreement or any Transaction Document
which continues unremedied for a period of two Business Days;

 

(b)                                 any failure on
the part of the Servicer duly to (i) observe or perform in any material
respect any other covenants or agreements of the Servicer set forth in this
Agreement or the other Transaction Documents to which the Servicer is a party
(including, without limitation, any material delegation of the Servicer’s
duties that is not permitted by Section 6.01 of this Agreement) or (ii) comply
in any material respect with the Credit Policy and the Servicing Standard
regarding the servicing of the Collateral Portfolio and in each case the same
continues unremedied for a period of 30 days (if such failure can be remedied)
after the earlier to occur of (x) the date on which written notice of such
failure requiring the same to be remedied shall have been given to the Servicer
by the Agent or the Trustee and (y) the date on which a Responsible
Officer of the Servicer acquires knowledge thereof;

 

(c)                                  the failure of
the Servicer to make any payment when due (after giving effect to any related
grace period) under one or more agreements for borrowed money to which it is a
party in an aggregate amount in excess of United States $7,500,000,
individually or in the aggregate, or the occurrence of any event or condition
that has resulted in the acceleration of such amount of recourse debt whether
or not waived;

 

(d)                                 a Bankruptcy
Event shall occur with respect to the Servicer;

 

(e)                                  the Servicer
consents to or otherwise permits to occur, without the prior written consent of
the Agent, any material amendment, modification, change, supplement or 

 

33

 

rescission
(any of the foregoing an “amendment” for purposes of this clause (e)) of
or to the Credit Policy and the Servicer fails to receive the written consent
of the Agent within 10 Business Days after notice of such amendment has been
delivered to the Agent (which notice shall be delivered by the Servicer within
seven Business Days after the effectiveness of such amendment); provided that no such written consent
shall be required in the case of an amendment which was mandated by any
Applicable Law or Governmental Authority;

 

(f)                                    Ares or an
Affiliate thereof shall cease to be the Servicer;

 

(g)                                 at any time,
Ares fails to maintain the Asset Coverage Ratio at greater than or equal to
2:1;

 

(h)                                 Ares permits
Shareholders’ Equity at the last day of any of its fiscal quarter to be less
than the greater of (i) 40% of the total assets of the Servicer and its
Subsidiaries as at the last day of such fiscal quarter (determined on a
consolidated basis, without duplication, in accordance with GAAP) and (ii) $300,000,000
plus 25% of the net proceeds of the sale of equity interests by the Servicer and
its Subsidiaries after the Restatement Date;

 

(i)                                     any change in
the management of the Servicer (whether by resignation, termination,
disability, death or lack of day-to-day management) relating to any three of
Michael Arougheti, R. Kipp deVeer, Mitchell Goldstein, Eric Beckman and Michael
Smith (or other individuals acceptable to the Agent), or any failure by any
three of the aforementioned Persons to provide active and material
participation in the Servicer’s daily activities including, but not limited to,
general management, underwriting, and the credit approval process and credit
monitoring activities, and a reputable, experienced individual reasonably
satisfactory to the Agent has not been appointed within 30 days of such event; provided that time relating to an
individual’s vacation within the Servicer’s employee policy and customary
industry standards shall not constitute lack of day-to-day management or
failure to provide active and material participation in the Servicer’s daily
activities.  The Agent deems each of John
Kissick, Anthony Ressler, Bennett Rosenthal, David Sachs, Gregory Margolies,
David Kaplan and Seth Brufsky to be an acceptable, experienced appointee for
purposes of replacing any of the individuals described in the preceding sentence;

 

(j)                                     any failure by
the Servicer to deliver (i) any required Servicing Report on or before the
date occurring two Business Days after the date such report is required to be
made or given, as the case may be or (ii) any other Required Reports
hereunder on or before the date occurring five Business Days after the date
such report is required to be made or given, as the case may be, in each case
under the terms of this Agreement;

 

(k)                                  any
representation, warranty or certification made by the Servicer in any Transaction
Document or in any certificate delivered pursuant to any Transaction Document
shall prove to have been incorrect when made, which has a Material Adverse
Effect on the Agent or any of the Secured Parties 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 Servicer by the Agent or the Trustee and (ii) the
date on which a Responsible Officer of the Servicer acquires knowledge thereof;

 

34

 

(l)                                     any financial
or other information reasonably requested by the Agent, the Note Purchaser or
the Trustee is not provided as requested within a reasonable amount of time
following such request;

 

(m)                               the rendering
against the Servicer of one or more final judgments, decrees or orders for the
payment of money in excess of United States $25,000,000, individually or in the
aggregate, and the continuance of such judgment, decree or order unsatisfied
and in effect for any period of more than 60 consecutive days without such
judgment, decree or order being vacated, stayed or discharged during such 60
day period;

 

(n)                                 other than the
Acquisition, any change in the control of the Servicer that takes the form of
either a merger or consolidation that does not comply with the provisions of Section 5.04(a) of
this Agreement;

 

(o)                                 the occurrence
of the Facility Maturity Date;

 

(p)                                 an Affiliate of
the Servicer fails to be the Equityholder; 
or

 

(q)                                 any other event
which has caused, or which may cause, a Material Adverse Effect on the assets,
liabilities, financial condition, business or operations of the Servicer or the
ability of the Servicer to meet its obligations under the Transaction Documents
to which it is a party.

 

“Servicer Termination
Notice” has the meaning assigned to that term in Section 6.01(b).

 

“Servicer’s Certificate”
has the meaning assigned to that term in Section 6.08(c).

 

“Servicing Fees” means the
fee payable to the Servicer on each Payment Date in arrears in respect of each
Remittance Period, which fee shall be equal to the product of (i) 0.50%, (ii) the
arithmetic mean of the aggregate outstanding principal balance of the
Collateral Portfolio on the first day and on the last day of the related
Remittance Period and (iii) the actual number of days in such Remittance
Period divided by 360.

 

“Servicing File”
means, for each Loan Asset, (a) copies of each of the Required Loan
Documents and (b) any other portion of the Loan Asset File which is not
part of the Required Loan Documents.

 

“Servicing Report” has the
meaning assigned to that term in Section 6.08(b).

 

“Servicing Standard”
means, with respect to any Loan Assets included in the Collateral Portfolio, to
service and administer such Loan Assets on behalf of the Secured Parties in
accordance with Applicable Law, the terms of this Agreement, the Loan
Agreements, all customary and usual servicing practices for loans like the Loan
Assets and, to the extent consistent with the foregoing, (i) if the
Servicer is the originator or an Affiliate thereof, the higher of: (A) in
a manner which the Servicer believes to be consistent with the practices and
procedures followed by institutional servicers of national standing relating to
assets of the nature and character of the Loan Assets, and (B) the same
care, skill, prudence and diligence with 

 

35

 

which
the Servicer services and administers loans for its own account or for the account
of others, and (ii) if the Servicer is not the originator or an Affiliate
thereof, the same care, skill, prudence and diligence with which the Servicer
services and administers loans for its own account or for the account of
others.

 

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

 

“State” means one of the
fifty states of the United States or the District of Columbia.

 

“Stated Maturity Date”
means January 22, 2013 or such later date as is agreed to in writing by
the Borrower, the Servicer, the Agent and the Note Purchaser pursuant to Section 2.19.

 

“Subordinated Loan Asset”
means any Loan Asset that (i) is not a First Lien Loan Asset, First Lien
Last Out Loan Asset or Second Lien Loan Asset and (ii) has a Loan-to-Value
Ratio not greater than 75%.

 

“Subsidiary” means with
respect to a person, a corporation, partnership or other entity of which shares
of stock or other ownership interests having ordinary voting power (other than
stock or such other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors or
other managers of such corporation, partnership or other entity are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such person.

 

“Substitute Eligible Loan
Asset” means each Eligible Loan Asset Pledged by the Borrower to the
Trustee, on behalf of the Secured Parties, pursuant to Section 2.07(a) or
Section 2.07(e)(ii).

 

“Taxes” means any
present or future taxes, levies, imposts, duties, charges, assessments or fees
of any nature (including interest, penalties, and additions thereto) that are
imposed by any Governmental Authority.

 

“Term Loan Asset”
means a Loan Asset that is a term loan that has been fully funded and does not
contain any unfunded commitment on the part of the Transferor arising from an
extension of credit by the Transferor to an Obligor.

 

“Third Party Acquired
Loan Asset” means any Loan Asset purchased by the Transferor from third
parties not Affiliated with the Transferor and then sold from the Transferor to
the Equityholder pursuant to the First Tier Purchase and Sale Agreement and
from the Equityholder to the Borrower pursuant to the Second Tier Purchase and
Sale Agreement.

 

“Transaction Documents”
means this Agreement, the Variable Funding Note, the Purchase and Sale
Agreements, the Collection Account Agreement, the Unfunded Exposure Account
Agreement, the Intercreditor Agreement, the Trustee and Collateral Custodian
Fee 

 

36

 

Letter,
the Fee Letter, the Pledge Agreement and each document, instrument or agreement
related to any of the foregoing.

 

“Transferee Letter”
has the meaning assigned to that term in Section 11.04(a).

 

“Transferor” means Ares, in
its capacity as the transferor hereunder and as the seller under the First Tier
Purchase and Sale Agreement, together with its successors and assigns in such
capacity.

 

“Trustee” has the meaning
assigned to that term in the preamble hereto.

 

“Trustee Expenses”
means the trustee expenses set forth in the Trustee and Collateral Custodian
Fee Letter and any other accrued and unpaid fees, expenses (including
reasonable attorneys’ fees, costs and expenses) and indemnity amounts payable
by the Borrower or the Servicer to the Trustee under the Transaction Documents.

 

“Trustee and Collateral
Custodian Fee Letter” means the Trustee and Collateral Custodian Fee
Letter, dated as of the Restatement Date, between the Trustee, the Collateral
Custodian, the Borrower, the Servicer and the Agent, as such letter may be
amended, modified, supplemented, restated or replaced from time to time.

 

“Trustee Fees” means
the trustee fees set forth in the Trustee and Collateral Custodian Fee Letter,
as such fee letter may be amended, restated, supplemented and/or otherwise
modified from time to time.

 

“Trustee Termination
Notice” has the meaning assigned to that term in Section 10.05.

 

“U.S. Bank” has the meaning
assigned to that term in the preamble hereto.

 

“UCC” means the Uniform
Commercial Code as from time to time in effect in the specified jurisdiction.

 

“Underlying Collateral”
means, with respect to a Loan Asset, any property or other assets designated
and pledged or mortgaged as collateral to secure repayment of such Loan Asset,
as applicable, including, without limitation, mortgaged property and/or a
pledge of the stock, membership or other ownership interests in the related
Obligor and all proceeds from any sale or other disposition of such property or
other assets.

 

“Unfunded Exposure
Account” means a special trust account (account number 787456-702 at the
Bank) in the name of the Borrower and under the sole dominion and control of
the Trustee for the benefit of the Secured Parties; provided, that the funds deposited therein (including any
interest and earnings thereon) from time to time shall constitute the property
and assets of the Borrower and the Borrower shall be solely liable for any
Taxes payable with respect to the Unfunded Exposure Account.

 

“Unfunded Exposure Account Agreement”
means that certain Unfunded Exposure Account Agreement, dated the Restatement
Date, among the Borrower, the Servicer, 

 

37

 

the
Bank, the Agent, and the Trustee, which agreement relates to the Unfunded
Exposure Account, as such agreement may from time to time be amended,
supplemented or otherwise modified in accordance with the terms thereof.

 

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

 

“Unfunded Exposure Equity
Amount” means, on any date of determination, an amount equal to (a) the
Exposure Amount multiplied by (b) the difference of (i) 100% minus
(ii) the Applicable Percentage.

 

“Unfunded Exposure Equity
Shortfall” means, on any date of determination, an amount equal to the
excess, if any, of the Unfunded Exposure Equity Amount over the amount on
deposit in the Unfunded Exposure Account.

 

“United States” means the
United States of America.

 

“Unmatured Event of Default”
means any event that, if it continues uncured, will, with lapse of time, notice
or lapse of time and notice, constitute an Event of Default.

 

“Unrestricted Cash” the
meaning of “Unrestricted Cash” or any comparable definition in the Loan
Agreements for each Loan Asset, and in any case that “Unrestricted Cash” or
such comparable definition is not defined in such Loan Agreement, all cash
available for use for general corporate purposes and not held in any reserve
account or legally or contractually restricted for any particular purposes or
subject to any lien (other than blanket liens permitted under or granted in
accordance with such Loan Agreement).

 

“Value Adjustment Event”
means, with respect to any Loan Asset, the occurrence of any one or more of the
following events after the related Cut-Off Date:

 

(i)                                     (x) The
Interest Coverage Ratio for any Relevant Test Period with respect to such Loan
Asset is less than 90% of the Interest Coverage Ratio with respect to such Loan
Asset as calculated on the applicable Cut-Off Date, or (y) the Net
Leverage Ratio for any Relevant Test Period of the related Obligor with respect
to such Loan Asset is more than 0.50x higher than such Net Leverage Ratio as
calculated on the applicable Cut-Off Date;

 

(ii)                                  an Obligor
payment default under any Loan Asset (after giving effect to any applicable
grace or cure periods, but in any case not to exceed five Business Days, in
accordance with the Loan Agreement);

 

(iii)                               any other
Obligor default under any Loan Asset (after giving effect to any applicable
grace or cure periods in accordance with the Loan Agreement);

 

(iv)                              a Bankruptcy
Event with respect to the related Obligor;

 

(v)                                 the occurrence
of a Material Modification (in accordance with clauses (b)-(c) or
clauses (e)-(g) of the definition thereof) with respect to
such Loan Asset; or

 

38

 

(vi)                              the occurrence
of a Material Modification (in accordance with clauses (a) or (d) of
the definition thereof) with respect to such Loan Asset.

 

“Variable Funding Note”
has the meaning assigned to such term in Section 2.01(a).

 

“Wachovia” means Wachovia
Bank, National Association, a national banking association, in its individual
capacity, and its successors and assigns.

 

“Wachovia Variable
Funding Certificate” has the meaning assigned to that term in Section 2.01(a).

 

“Wachovia Variable
Funding Note” has the meaning assigned to that term in Section 2.01(a).

 

“Warranty Event”
means, as to any Loan Asset, the discovery that as of the related Cut-Off Date
for such Loan Asset there existed a breach of any representation or warranty
relating to such Loan Asset, whether pursuant to this Agreement (as amended and
restated) or, with respect to any Original Loan Asset, pursuant to the Original
Agreement, as applicable (other than any representation or warranty that the
Loan Asset satisfies the criteria of the definition of Eligible Loan Asset) and
the failure of Borrower to cure such breach, or cause the same to be cured,
within 30 days after the earlier to occur of the Borrower’s receipt of notice
thereof from the Agent or the Borrower becoming aware thereof.

 

“Warranty Loan Asset”
means any Loan Asset that fails to satisfy any criteria of the definition of
Eligible Loan Asset as of the Cut-Off Date for such Loan Asset (or, with
respect to any Original Loan Asset, such Loan Asset failed to satisfy any
criteria of the definition of “Eligible Loan” as defined in the Original
Agreement as of the Cut-Off Date for such Loan Asset) or a Loan Asset with
respect to which a Warranty Event has occurred; provided that, any Loan Asset approved by the Agent
in accordance with Section 11 of Schedule III on the applicable
Cut-Off Date shall not be a Warranty Loan Asset due to the failure of such Loan
Asset to satisfy the requirements of Section 11 of Schedule III on
any date thereafter.

 

“WFS” has the meaning
assigned to that term in the Preliminary Statement.

 

“Yield” means with respect
to any Remittance Period, the sum for each day in such Remittance Period
determined in accordance with the following formula:

 

YR x L

D

 

where:                                                                                     YR                                =                                         the Yield Rate
applicable on such day;

 

L                                         =                                         the Advances
Outstanding on such day; and

 

D                                       =                                         360 or, to the
extent the Yield Rate is the Base Rate, 365 or 366 days, as applicable;

 

39

 

provided that (i) no provision
of this Agreement shall require the payment or permit the collection of Yield
in excess of the maximum permitted by Applicable Law and (ii) Yield shall
not be considered paid by any distribution if at any time such distribution is
later required to be rescinded by the Note Purchaser to the Borrower or any
other Person for any reason including, without limitation, such distribution
becoming void or otherwise avoidable under any statutory provision or common
law or equitable action, including, without limitation, any provision of the
Bankruptcy Code.

 

“Yield Rate” means, as of
any date of determination, an interest rate per annum equal to LIBOR
for such date plus the Applicable Spread; provided that (i) if the Note Purchaser shall have
notified the Agent that a Eurodollar Disruption Event has occurred, the Yield
Rate shall be equal to the Base Rate plus the Applicable Spread until
the Note Purchaser shall have notified the Agent that such Eurodollar
Disruption Event has ceased, at which time the Yield Rate shall again be equal
to LIBOR for such date plus the Applicable Spread and (ii) if any
Event of Default has occurred, the Yield Rate shall be increased to the Default
Funding Rate, effective as of the date of the occurrence of such Event of
Default, and shall remain at the Default Funding Rate following the occurrence
of such Event of Default.

 

SECTION 1.02                                                                    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 1.03                                                                    Computation of
Time Periods. Unless otherwise stated in this Agreement, in the
computation of a period of time from a specified date to a later specified
date, the word “from” means “from and including” and the words “to” and “until”
each mean “to but excluding.”

 

ARTICLE II.

THE FACILITY

 

SECTION 2.01                                                                    Variable
Funding Note and Advances.

 

(a)                                  Variable
Funding Note. The Borrower has heretofore delivered or shall, on
the Restatement Date (and on the terms and subject to the conditions
hereinafter set forth), deliver to the Note Purchaser at the address set forth
in Section 11.02, a duly executed variable funding note (the “Variable
Funding Note”), in substantially the form of Exhibit I, in an
aggregate face amount equal to $400,000,000, and otherwise duly completed.
Interest shall accrue on the Variable Funding Note, and the Variable Funding
Note shall be payable, as described herein. The amount of “Advances Outstanding”
(as defined in the Original Agreement) held by Wachovia (as an institutional
purchaser party to the Original Agreement) and outstanding as of the
Restatement Date, as evidenced by that certain Third Amended, Restated and
Substituted Variable Funding Certificate issued to Wachovia pursuant to the
Original Agreement (the “Wachovia Variable Funding Certificate”), shall
be deemed to constitute Advances Outstanding of Wachovia (as the Note Purchaser
hereunder) on the Restatement Date under the Variable Funding Note issued to
Wachovia pursuant to this Section 2.01(a) (the 

 

40

 

“Wachovia
Variable Funding Note”).  For the
avoidance of doubt, the Wachovia Variable Funding Note shall amend and restate
the Wachovia Variable Funding Certificate and shall continue, but shall not
constitute payment upon or novation of, the outstanding balance on the Wachovia
Variable Funding Certificate.

 

(b)                                 Advances. On the terms
and conditions hereinafter set forth, the Note Purchaser shall make Advances
under the Variable Funding Note to the Borrower secured by Eligible Loan Assets
from time to time during the period from the Closing Date until the Facility
Maturity Date. Under no circumstances shall the Note Purchaser make any Advance
if after giving effect to such Advance and the addition to the Collateral
Portfolio of the Eligible Loan Assets being acquired by the Borrower using the
proceeds of such Advance, (i) an Event of Default has occurred or would
result therefrom or an Unmatured Event of Default exists or would result
therefrom or (ii) the aggregate Advances Outstanding would exceed the
Borrowing Base.

 

(c)                                  Notations on
Variable Funding Note. The Agent is hereby authorized to enter on
a schedule attached to the Variable Funding Note a notation (which may be
computer generated) with respect to each Advance under the Variable Funding
Note made by the Note Purchaser of:  (i) the
date and principal amount thereof, and (ii) each repayment of principal
thereof, and any such recordation shall constitute prima facie evidence of the
accuracy of the information so recorded. 
The failure of the Agent to make any such notation on the schedule
attached to any Variable Funding Note shall not limit or otherwise affect the
obligation of the Borrower to repay the Advances in accordance with their
respective terms as set forth herein.

 

SECTION 2.02                                                                    Procedure for
Advances.

 

(a)                                  Until the
occurrence of the Facility Maturity Date, the Note Purchaser will make Advances
on any Business Day at the request of the Borrower, subject to and in
accordance with the terms and conditions of Sections 2.01 and 2.02
and subject to the provisions of Article III hereof.

 

(b)                                 Each Advance
shall be made on at least one Business Day’s irrevocable written notice from the
Borrower to the Agent, with a copy to the Trustee and the Collateral Custodian,
in the form of a Notice of Borrowing; provided
that such Notice of Borrowing shall be deemed to have been received by the
Agent on a Business Day if delivered no later than 5:00 p.m. (New York
City time) on such Business Day and if not delivered by such time, shall be
deemed to have been received on the following Business Day. The Borrower or
Servicer shall post all Loan Agreements and other loan documents and
information with respect to each proposed Eligible Loan Asset, if any, to an
IntraLinks (or other replacement) website to which the Agent has access. Each
Notice of Borrowing shall include a duly completed Borrowing Base Certificate
(updated to the date such Advance is requested and giving pro forma effect to the Advance requested
and the use of the proceeds thereof), and shall specify:

 

(i)                                     the aggregate
amount of such Advance, which amount shall not cause the Advances Outstanding
to exceed the Borrowing Base; provided
that, except with respect to an Advance pursuant to Section 2.02(f),
the amount of such Advance must be at least equal to $500,000;

 

41

 

(ii)                                  the proposed
date of such Advance;

 

(iii)                               a
representation that all conditions precedent for an Advance described in Article III
hereof have been satisfied; and

 

(iv)                              the amount of
cash that will be funded into the Unfunded Exposure Account in connection with
the Advance, if applicable.

 

On the date of each Advance,
the Note Purchaser shall, upon satisfaction of the applicable conditions set
forth in Article III, make available to the Borrower on the
applicable Advance Date in same day funds, the amount of such Advance, by
payment into the account which the Borrower has designated in writing; provided that, with respect to an Advance
funded pursuant to Section 2.02(f), the Note Purchaser shall remit
the Advance equal to the Exposure Amount Shortfall in same day funds to the
Unfunded Exposure Account.

 

(c)                                  The Advances
shall bear interest at the Yield Rate.

 

(d)                                 Subject to Section 2.18
and the other terms, conditions, provisions and limitations set forth herein,
the Borrower may borrow, repay or prepay and reborrow Advances without any
penalty, on and after the Restatement Date and prior to the Facility Maturity
Date.

 

(e)                                  Determinations
by the Note Purchaser of the existence of any Eurodollar Disruption Event (any
such determination to be communicated to the Borrower by written notice from
the Agent promptly after the Agent learns of such event), or of the effect of
any Eurodollar Disruption Event on its making or maintaining Advances at LIBOR,
shall be conclusive absent manifest error.

 

(f)                                    Notwithstanding
anything to the contrary herein (including, without limitation, the occurrence
of an Event of Default or the existence of an Unmatured Event of Default or a
Borrowing Base Deficiency), if, upon the occurrence of an Event of Default, the
amount on deposit in the Unfunded Exposure Account is less than the aggregate
Exposure Amount, the Borrower shall request an Advance in the amount of such
shortfall (the “Exposure Amount Shortfall”).  Following receipt of a Notice of Borrowing
(which shall specify the account details of the Unfunded Exposure Account where
the funds will be made available), the Note Purchaser shall fund such Exposure
Amount Shortfall in accordance with Section 2.02(b),
notwithstanding anything to the contrary herein (including, without limitation,
the Borrower’s failure to satisfy any of the conditions precedent set forth in Section 3.02).

 

SECTION 2.03                                                                    [Reserved]

 

SECTION 2.04                                                                    Remittance
Procedures. The Servicer, as agent for the Agent and the Note
Purchaser, shall instruct the Trustee and, if the Servicer fails to do so, the
Agent may instruct the Trustee, to apply funds on deposit in the Controlled
Accounts as described in this Section 2.04.

 

(a)                                  Interest
Payments Absent an Event of Default. So long as no Event of
Default has occurred and, in any case, prior to the declaration, or automatic
occurrence, of the Facility Maturity Date, the Servicer shall, and if the
Servicer fails to do so the Agent may, on 

 

42

 

each
Payment Date, direct the Trustee to transfer Interest Collections held by the
Bank in the Collection Account which were received in the immediately prior
Remittance Period, in accordance with the Servicing Report, to the following
Persons in the following amounts and priority:

 

(i)                                     FIRST, pari
passu to (a) the Trustee, in payment in full of all
accrued Trustee Fees and all Trustee Expenses, and (b) the Collateral
Custodian, in payment in full of all accrued Collateral Custodian Fees and
Collateral Custodian Expenses; provided
that amounts payable to the Trustee for Trustee Expenses and Collateral
Custodian for Collateral Custodian Expenses pursuant to the foregoing clauses
(a) and (b) shall not exceed $40,000 for any Payment Date
and SECOND to the Servicer, in payment in full of all accrued Servicing Fees;

 

(ii)                                  to the Agent,
for the benefit of the Note Purchaser, all Yield and the Non-Usage Fee that is
accrued and unpaid as of the last day of the related Remittance Period;

 

(iii)                               to the Agent,
for the benefit of the Note Purchaser, the Agent or the Collateral Custodian as
applicable, all accrued and unpaid fees, expenses (including reasonable
attorneys’ fees, costs and expenses) and indemnity amounts payable by the
Borrower to the Agent, the Note Purchaser or the Collateral Custodian under the
Transaction Documents;

 

(iv)                              to pay the
outstanding Advances to the extent required to satisfy any outstanding
Borrowing Base Deficiency;

 

(v)                                 to pay the
Advances Outstanding, together with any applicable Make-Whole Premium, in
connection with any complete refinancing or termination of this Agreement in
accordance with Section 2.18(b);

 

(vi)                              to pay any
other amounts due (other than with respect to the repayment of Advances) under
this Agreement and the other Transaction Documents (including any indemnity
amounts due from the Borrower hereunder and thereunder);

 

(vii)                           to the
Servicer, in respect of all reasonable expenses (except allocated overhead)
incurred during the immediately ended Remittance Period in connection with the
performance of its duties hereunder or paid on behalf of the Borrower, plus any
outstanding deferred reimbursement amount plus interest thereon as further set
forth in Section 6.07; and

 

(viii)                        to the
Borrower, any remaining amounts.

 

(b)                                 Principal
Payments Absent an Event of Default.  So long as no Event of Default has occurred
and, in any case, prior to the declaration, or automatic occurrence, of the
Facility Maturity Date, the Servicer shall, and if the Servicer fails to do so
the Agent may, on each Payment Date, direct the Trustee to transfer Principal
Collections held by the Bank in the Collection Account which were received in
the immediately prior Remittance Period, in 

 

43

 

accordance
with the Servicing Report, to the following Persons in the following amounts
and priority:

 

(i)                                     to pay amounts
due under Section 2.04(a)(i) through (iv), to the
extent not paid thereunder;

 

(ii)                                  in the event
the Borrowing Base is less than $200,000,000 after giving effect to any
distributions on that day, to pay the Advances Outstanding until paid in full;

 

(iii)                               to pay the
Advances Outstanding, together with any applicable Make-Whole Premium, in
connection with any complete refinancing or termination of this Agreement in
accordance with Section 2.18(b);

 

(iv)                              to pay any
other amounts due (other than with respect to the repayment of Advances) under
this Agreement and the other Transaction Documents (including any indemnity
amounts due from the Borrower hereunder and thereunder);

 

(v)                                 to the
Servicer, in respect of all reasonable expenses (except allocated overhead)
incurred during the immediately ended Remittance Period in connection with the
performance of its duties hereunder or paid on behalf of the Borrower, plus any
outstanding deferred reimbursement amount plus interest thereon as further set
forth in Section 6.07; and

 

(vi)                              to the
Borrower, any remaining amounts.

 

(c)                                  Payment Date
Transfers Upon the Occurrence of an Event of Default. If an Event
of Default has occurred or, in any case, after the declaration, or automatic
occurrence, of the Facility Maturity Date, the Servicer shall, and if the
Servicer fails to do so the Agent may, on each Payment Date, direct the Trustee
to transfer collected funds held by the Bank in the Collection Account which
were received in the immediately prior Remittance Period, in accordance with
the Servicing Report, to the following Persons in the following amounts and
priority:

 

(i)                                     FIRST, pari
passu to (a) the Trustee, in payment in full of all
accrued Trustee Fees and all Trustee Expenses, and (b) the Collateral
Custodian, in payment in full of all accrued Collateral Custodian Fees and
Collateral Custodian Expenses; provided
that amounts payable to the Trustee for Trustee Expenses and Collateral
Custodian for Collateral Custodian Expenses pursuant to the foregoing clauses
(a) and (b) shall not exceed $40,000 for any Payment Date
and SECOND to the Servicer, in payment in full of all accrued Servicing Fees;

 

(ii)                                  to the Agent,
for the benefit of the Note Purchaser, all accrued and unpaid Yield and the
Non-Usage Fee as of the last day of the related Remittance Period;

 

(iii)                               to the Unfunded
Exposure Account in an amount necessary to cause the amount on deposit in the
Unfunded Exposure Account to equal the Exposure Amount;

 

44

 

(iv)                              to the Agent,
for the benefit of the Note Purchaser, the Agent or the Collateral Custodian,
as applicable, all accrued and unpaid fees, expenses (including reasonable
attorneys’ fees, costs and expenses) and indemnity amounts payable by the
Borrower to the Agent, the Note Purchaser or the Collateral Custodian under the
Transaction Documents;

 

(v)                                 to pay the
Advances, until paid in full;

 

(vi)                              to pay any
other amounts due under this Agreement and the other Transaction Documents
(including any indemnity amounts due from the Borrower hereunder and
thereunder);

 

(vii)                           to the
Servicer, in respect of all reasonable expenses (except allocated overhead)
incurred during the immediately ended Remittance Period in connection with the
performance of its duties hereunder or paid on behalf of the Borrower, plus any
outstanding deferred reimbursement amount plus interest thereon as further set
forth in Section 6.07; and

 

(viii)                        to the
Borrower, any remaining amounts.

 

(d)                                 Unfunded
Exposure Account. Funds on deposit in the Unfunded Exposure Account
as of any date of determination may be withdrawn to fund draw requests of the
relevant Obligors under any Revolving Loan Asset or Delayed Draw Loan Asset; provided that, until an Event of Default
has occurred, the amount withdrawn to fund such draw request shall not create
any Borrowing Base Deficiency. Any such draw request made by an Obligor, along
with wiring instructions for the applicable Obligor, shall be forwarded by the
Borrower or the Servicer to the Trustee (with a copy to the Agent) in the form
of a Disbursement Request, and the Trustee shall instruct the Bank to fund such
draw request in accordance with the Loan Agreement pertaining to such Revolving
Loan Asset or Delayed Draw Loan Asset. Until an Event of Default has occurred,
any amounts on deposit in the Unfunded Exposure Account which exceed the
Unfunded Exposure Equity Amount as of any date of determination shall be
deposited into the Principal Collection Account as Principal Collections. On
and after the occurrence of an Event of Default, any amounts on deposit in the
Unfunded Exposure Account which exceed the Exposure Amount as of any date of
determination shall be deposited into the Principal Collection Account as
Principal Collections.

 

(e)                                  Insufficiency
of Funds. For the sake of clarity, the parties hereby agree
that if the funds on deposit in the Collection Account are insufficient to pay
any amounts due and payable on a Payment Date or otherwise, the Borrower shall
nevertheless remain responsible for, and shall pay when due, all amounts
payable under this Agreement and the other Transaction Documents in accordance
with the terms of this Agreement and the other Transaction Documents.

 

SECTION 2.05                                                                    Instructions to
the Trustee and the Bank. All instructions and directions given to
the Trustee or the Bank by the Servicer, the Borrower or the Agent pursuant to Section 2.04
shall be in writing (including instructions and directions transmitted to the
Trustee or the Bank by telecopy or e-mail), and such written instructions and
directions shall be 

 

45

 

delivered
with a written certification that such instructions and directions are in
compliance with the provisions of Section 2.04. The Servicer and
the Borrower shall promptly transmit to the Agent by telecopy or e-mail a copy
of all instructions and directions given to the Trustee or the Bank by such
party pursuant to Section 2.04. The Agent shall promptly transmit
to the Servicer and the Borrower by telecopy or e-mail a copy of all instructions
and directions given to the Trustee or the Bank by the Agent, pursuant to Section 2.04.
In the event the Trustee or the Bank receives instructions from the Servicer or
the Borrower which conflict with any instructions received by the Agent, the
Trustee or the Bank, as applicable, shall rely on and follow the instructions
given by the Agent; provided that
the Trustee or Bank, as applicable, shall promptly provide notification to the
Servicer or the Borrower of such conflicting instructions; provided, further,
that any such failure on the part of the Trustee to deliver such notice shall
not render such action by the Trustee invalid.

 

SECTION 2.06                                                                    Borrowing Base
Deficiency Payments.

 

(a)                                  In addition to
any other obligation of the Borrower to cure any Borrowing Base Deficiency
pursuant to the terms of this Agreement, if, on any day prior to the Collection
Date, any Borrowing Base Deficiency exists, then the Borrower shall, within
five Business Days from the date of such Borrowing Base Deficiency, eliminate
such Borrowing Base Deficiency in its entirety by effecting one or more of the
following actions in order to eliminate such Borrowing Base Deficiency as of
such date of determination: (i) deposit cash in United States dollars into
the Principal Collection Account, (ii) repay Advances (together with any
Breakage Fees and all accrued and unpaid costs and expenses of the Agent and
Note Purchaser, in each case in respect of the amount so prepaid), and/or (iii) subject
to the approval of the Agent, in its sole discretion (and the Agent shall use
reasonable efforts to give such approval in a timely fashion), Pledge
additional Eligible Loan Assets.

 

(b)                                 No later than
2:00 p.m. on the Business Day prior to the proposed repayment of Advances
or Pledge of additional Eligible Loan Assets pursuant to Section 2.06(a),
the Borrower (or the Servicer on its behalf) shall deliver (i) to the
Agent (with a copy to the Trustee and the Collateral Custodian), notice of such
repayment or Pledge and a duly completed Borrowing Base Certificate, updated to
the date such repayment or Pledge is being made and giving pro forma effect to
such repayment or Pledge, and (ii) to the Agent, if applicable, a
description of any Eligible Loan Asset and each Obligor of such Eligible Loan
Asset to be Pledged and added to the updated Loan Asset Schedule.  Any notice pertaining to any repayment or any
Pledge pursuant to this Section 2.06 shall be irrevocable.

 

SECTION 2.07                                                                    Substitution
and Sale of Loan Assets; Affiliate Transactions.

 

(a)                                  Substitutions. The Borrower
may, with the consent of the Agent in its sole discretion, replace any Loan
Asset as a Loan Asset so long as (i) 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 Borrower 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
immediately after giving effect to such substitution and any other sale or
transfer substantially contemporaneous therewith, such Borrowing Base
Deficiency 

 

46

 

shall
be cured or closer to being cured and (ii) simultaneously therewith, the
Borrower Pledges (in accordance with all of the terms and provisions contained
herein) a Substitute Eligible Loan Asset.

 

(b)                                 Discretionary
Sales. The Borrower shall be permitted to sell Loan Assets to Persons other
than the Transferor or its Affiliates from time to time; provided that (i) the proceeds of
such sale shall be deposited into the Collection Account to be disbursed in
accordance with Section 2.04 hereof, (ii) no event has
occurred, or would result from such sale, which constitutes an Event of Default
and no event has occurred and is continuing, or would result from such sale,
which constitutes an Unmatured Event of Default or a Borrowing Base Deficiency;
provided that the Borrower may
sell Loan Assets 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 sale and any other substitution or transfer substantially contemporaneous
therewith, the Borrowing Base Deficiency shall be cured or closer to being
cured and (iii) the prior written consent of the Agent shall be required
if such Loan Asset is sold for an amount which is less than the Adjusted
Borrowing Value.

 

(c)                                  Optional Sales. On any
Optional Sale Date the Borrower shall have the right to prepay all or a portion
of the Advances Outstanding in connection with the sale and assignment by the Borrower
of all or a portion of the Loan Assets, as the case may be in connection with a
Permitted Securitization or a Permitted Refinancing (each, an “Optional Sale”),
subject to the following terms and conditions:

 

(i)                                     The Borrower
shall have given the Agent (with a copy to the Trustee and the Collateral
Custodian) at least 45 days’ prior written notice of its intent to effect an
Optional Sale in connection with a Permitted Securitization or a Permitted
Refinancing, and the Agent shall have delivered to the Borrower its prior
written consent (in its sole discretion) to such Optional Sale, unless such 45
days’ notice requirement is waived or reduced by the Agent; provided that no such consent will be
required for any Optional Sale of any Loan Asset at a price equal to or greater
than the Adjusted Borrowing Value of such Loan Asset as of the date of the
Optional Sale to the extent that the aggregate Outstanding Balance of all Loan
Assets sold pursuant to this proviso (taking into account the proposed sale) during
the 12-month period immediately preceding and including the proposed date of
such sale does not exceed 15% of the highest aggregate Outstanding Balance of
any month during such 12-month period;

 

(ii)                                  Unless an
Optional Sale is to be effected on a Payment Date (in which case the relevant
calculations with respect to such Optional Sale shall be reflected on the
applicable Servicing Report), the Servicer shall deliver to the Agent (with a
copy to the Trustee and the Collateral Custodian) a certificate and evidence to
the reasonable satisfaction of the Agent (which evidence may consist solely of
a certificate from the Servicer) that the Borrower shall have sufficient funds
on the related Optional Sale Date to effect the contemplated Optional Sale in
accordance with this Agreement.  In
effecting an Optional Sale, the Borrower may use the Proceeds of sales of the
Loan Assets to repay all or a portion of the Obligations;

 

47

 

(iii)                               no Event of
Default has occurred, or would result from such Optional Sale, and no Unmatured
Event of Default or Borrowing Base Deficiency exists or would result from such
Optional Sale; and

 

(iv)                              on the related
Optional Sale Date, the Borrower shall have deposited into the Collection Account,
in immediately available funds, the proceeds of such Optional Sale, which shall
at least equal the aggregate Adjusted Borrowing Value of the Loan Assets being
sold.

 

(d)                                 Lien Release
Dividend. 
Notwithstanding any provision contained in this Agreement to the
contrary, provided no Event of Default has occurred and no Unmatured Event of
Default exists, on a Lien Release Dividend Date, the Borrower may dividend to
the Equityholder and the Equityholder may dividend to the Transferor a portion
of those Loan Assets that were sold by the Transferor to the Equityholder and
by the Equityholder to the Borrower, or portions thereof (each, a “Lien
Release Dividend”), subject to the following terms and conditions, as
certified by the Borrower and the Transferor to the Agent (with a copy to the
Trustee and the Collateral Custodian):

 

(i)                                     The Borrower
and the Transferor shall have given the Agent, with a copy to the Trustee and
the Collateral Custodian, at least five Business Days prior written notice
requesting that the Note Purchaser consent to the effectuation of a Lien
Release Dividend, in the form of Exhibit J hereto (a “Notice and
Request for Consent”), which consent shall be given in the sole and
absolute discretion of the Note Purchaser; provided
that, if the Note Purchaser shall not have responded to the Notice and Request
for Consent by 11:00 a.m. on the day that is one Business Day prior to the
proposed Lien Release Dividend Date, the Note Purchaser shall be deemed not to
have given its consent;

 

(ii)                                  On any Lien
Release Dividend Date, no more than four Lien Release Dividends shall have been
made during the 12-month period immediately preceding the proposed Lien Release
Dividend Date;

 

(iii)                               After giving
effect to the Lien Release Dividend on the Lien Release Dividend Date, (A) no
Borrowing Base Deficiency, Event of Default or Unmatured Event of Default shall
exist, (B) the representations and warranties contained in Sections
4.01 and 4.02 hereof shall continue to be correct in all material
respects, except to the extent relating to an earlier date, (C) the
eligibility of any Loan Asset remaining as part of the Collateral Portfolio
after the Lien Release Dividend will be redetermined as of the Lien Release
Dividend Date, (D) no claim shall have been asserted or proceeding
commenced challenging the enforceability or validity of any of the Required
Loan Documents and (E) there shall have been no material adverse change as
to the Servicer or the Borrower;

 

(iv)                              Such Lien
Release Dividend must be in compliance with Applicable Law and may not (A) be
made with the intent to hinder, delay or defraud any creditor of the Borrower
or (B) leave the Borrower, immediately after giving effect to the Lien
Release Dividend, (x) insolvent, (y) with insufficient funds to pay
its obligations as 

 

48

 

and when they become due or (z) with
inadequate capital for its present and anticipated business and transactions;

 

(v)                                 On or prior to
the Lien Release Dividend Date, the Borrower shall have (A) delivered to
the Agent, with a copy to the Trustee and the Collateral Custodian, a list
specifying all Loan Assets or portions thereof to be transferred pursuant to
such Lien Release Dividend and the Agent shall have approved same in its sole
discretion and (B) obtained all authorizations, consents and approvals
required to effectuate the Lien Release Dividend;

 

(vi)                              A portion of a
Loan Asset may be transferred pursuant to a Lien Release Dividend provided that (A) such transfer does
not have an adverse effect on the portion of such Loan Asset remaining as a
part of the Collateral Portfolio, any other aspect of the Collateral Portfolio,
the Note Purchaser, the Agent or any other Secured Party and (B) a new
promissory note (other than with respect to a Noteless Loan Asset) for the
portion of the Loan Asset remaining as a part of the Collateral Portfolio has
been executed, and the original thereof has been endorsed to the Trustee and
delivered to the Collateral Custodian;

 

(vii)                           Each Loan
Asset, or portion thereof, as applicable, shall be transferred at a value equal
to the Outstanding Balance thereof, exclusive of any accrued and unpaid
interest or Accreted Interest thereon;

 

(viii)                        The Borrower
shall deliver a Borrowing Base Certificate (including a calculation of the
Borrowing Base after giving effect to such Lien Release Dividend) to the Agent;
and

 

(ix)                                The Borrower
shall have paid in full an aggregate amount equal to the sum of all amounts due
and owing to the Agent, the Note Purchaser, the Trustee or the Collateral
Custodian, as applicable, under this Agreement and the other Transaction
Documents, to the extent accrued to such date (including, without limitation,
Breakage Fees) with respect to the Loan Assets to be transferred pursuant to
such Lien Release Dividend and incurred in connection with the transfer of such
Loan Assets pursuant to such Lien Release Dividend; and

 

(x)                                   The Borrower
and the Servicer (on behalf of the Borrower) shall pay the reasonable legal
fees and expenses of the Agent, the Note Purchaser, the Trustee and the
Collateral Custodian in connection with any Lien Release Dividend (including,
but not limited to, expenses incurred in connection with the release of the
Lien of the Trustee, on behalf of the Secured Parties, and any other party
having an interest in the Loan Assets in connection with such Lien Release
Dividend).

 

(e)                                  Repurchase or
Substitution of Warranty Loan Assets.  If on any day a Loan Asset is (or becomes) a
Warranty Loan Asset, no later than 10 Business Days following the earlier of
knowledge by the Borrower of such Loan Asset becoming a Warranty Loan Asset or
receipt by the Borrower from the Agent or the Servicer of written notice
thereof, the Borrower shall either:

 

49

 

(i)                                     make a deposit
to the Collection Account (for allocation pursuant to Section 2.04)
in immediately available funds in an amount equal to the Advance Date Assigned
Value multiplied by the principal balance of such Loan Asset (exclusive of
Accreted Interest), any expenses or fees with respect to such Loan Asset and
costs and damages incurred by the Agent or by any Note Purchaser in connection
with any violation by such Loan Asset of any predatory or abusive lending law
which is an Applicable Law (a notification regarding the amount of such
expenses or fees to be provided by the Agent to the Borrower); provided that the Agent shall have the
right to determine whether the amount so deposited is sufficient to satisfy the
foregoing requirements; or

 

(ii)                                  with the prior
written consent of the Agent, in its sole discretion, substitute for such
Warranty Loan Asset a Substitute Eligible Loan Asset.

 

Upon confirmation of the
deposit of the amounts set forth in Section 2.07(e)(i) into
the Collection Account or the delivery by the Borrower of a Substitute Eligible
Loan Asset for each Warranty Loan Asset (the date of such confirmation or
delivery, the “Release Date”), such Warranty Loan Asset and related
Portfolio Assets shall be removed from the Collateral Portfolio and, as
applicable, the Substitute Eligible Loan Asset and related Portfolio Assets
shall be included in the Collateral Portfolio. 
On the Release Date of each Warranty Loan Asset, the Trustee, for the
benefit of the Secured Parties, shall automatically and without further action
be deemed to release to the Borrower, without recourse, representation or
warranty, all the right, title and interest and any Lien of the Trustee, for
the benefit of the Secured Parties in, to and under the Warranty Loan Asset and
any related Portfolio Assets and all future monies due or to become due with
respect thereto.

 

(f)                                    Conditions to
Sales, Substitutions and Repurchases. Any sales, substitutions
or repurchases effected pursuant to Sections 2.07(a), (b), (c) or
(e) shall be subject to the satisfaction of the following
conditions (as certified in writing to the Agent and Trustee by the Borrower):

 

(i)                                     the Borrower
shall deliver a Borrowing Base Certificate to the Agent in connection with such
sale, substitution or repurchase;

 

(ii)                                  the Borrower
shall deliver a list of all Loan Assets to be sold, substituted, repurchased;

 

(iii)                               no selection
procedures adverse to the interests of the Agent or the Note Purchaser were
utilized by the Borrower in the selection of the Loan Assets to be sold,
repurchased or substituted;

 

(iv)                              the Borrower
shall give one Business Day’s notice of such sale (other than in the case of an
Optional Sale), substitution or repurchase;

 

(v)                                 the Borrower
shall notify the Agent of any amount to be deposited into the Collection
Account in connection with any sale, substitution or repurchase;

 

50

 

(vi)                              the
representations and warranties contained in Sections 4.01, 4.02
and 4.03 hereof shall continue to be correct in all material respects,
except to the extent relating to an earlier date;

 

(vii)                           any repayment
of Advances Outstanding in connection with any sale, substitution or repurchase
of Loan Assets hereunder shall comply with the requirements set forth in Section 2.18;

 

(viii)                        the Borrower
and Servicer (on behalf of the Borrower) shall agree to pay the reasonable
legal fees and expenses of the Agent, the Note Purchaser, the Trustee and the
Collateral Custodian in connection with any such sale, substitution or repurchase
(including, but not limited to, expenses incurred in connection with the
release of the Lien of the Trustee on behalf of the Secured Parties and any
other party having an interest in the Loan Asset in connection with such sale,
substitution or repurchase); and

 

(ix)                                other than in
the case of Section 2.07(e) and solely in the event that Ares
or an Affiliate is no longer the Servicer and the Facility Maturity Date has
not yet occurred (or, in the case of the declaration of the Facility Maturity
Date that arises solely pursuant to Section 7.01(d) due solely
to the occurrence of an event described in clauses (g) or (h) of
the definition of “Servicer Termination Event” or clause (o) of the
definition of “Servicer Termination Event” (to the extent arising solely due to
the occurrence of an event described in clauses (g) or (h) of
the definition thereof), until on or after the earlier of (x) the date
that is twelve months after the occurrence of such Facility Maturity Date or (y) the
occurrence of a Facility Maturity Date for any other reason other than an event
described in clauses (g) or (h) of the definition of “Servicer
Termination Event” or clause (o) of the definition of “Servicer
Termination Event” (to the extent arising solely due to the occurrence of an
event described in clauses (g) or (h) of the definition
thereof), the Borrower shall have consented to such sale or substitution.

 

(g)                                 Affiliate
Transactions. Notwithstanding anything to the contrary set forth
herein or in any other Transaction Document, neither the Equityholder nor the
Transferor shall reacquire from the Borrower and the Borrower shall not
transfer to the Equityholder, the Transferor or to Affiliates of the Transferor
or the Equityholder, and none of the Transferor, the Equityholder nor any
Affiliates thereof will have a right or ability to purchase, the Loan Assets
without the prior written consent of the Agent, except in the case of
repurchases of Loan Assets by the Equityholder pursuant to Section 6.1
of the Second Tier Purchase and Sale Agreement and by the Transferor pursuant
to Section 6.1 of the First Tier Purchase and Sale Agreement.  For the avoidance of doubt, nothing in this clause
(g) shall prohibit the Borrower or the Equityholder, respectively,
from transferring or distributing its Loan Assets to the holders of its equity
or Affiliates, as applicable, in accordance with Section 2.07(a), 2.07(c),
2.07(d) or 2.07(e) herein.

 

(h)                                 Limitations on
Sales, Substitutions and Repurchases.

 

(i)                                     The Outstanding
Balance of all Loan Assets subject to clauses (ii), (iv) or (vi) of
the definition of “Value Adjustment Event” which were included in all Lien
Release Dividends or substituted by the Borrower pursuant to Section 2.07(a),
in each case during the 12-month period immediately preceding the proposed Lien
Release 

 

51

 

Dividend Date or date of
substitution, as applicable, 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). Any Lien Release Dividend or
substitution of a “Delinquent Loan” or a “Charged-Off Loan” (as each such term
is defined in the Original Agreement) effected pursuant to the Original
Agreement during the 12-month period immediately preceding the date of
determination shall be included in this calculation.

 

(ii)                                  The Outstanding
Balance of all Loan Assets (other than Warranty Loan Assets) sold pursuant to Section 2.07(b),
sold without the consent of the Agent in accordance with Section 2.07(c) (in
each case, other than Loan Assets subject to clauses (ii), (iv) or
(vi) of the definition of “Value Adjustment Event”), substituted
pursuant to Section 2.07(a) or released pursuant to Section 2.07(d) during
the 12-month period immediately preceding the proposed date of sale,
substitution or Lien Release Dividend (or such lesser number of months as shall
have elapsed as of such date) 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). Any “Discretionary
Sale”, “Optional Sale”, “Substitute Loan” or “Lien Release Dividend” (as each
such term is defined in the Original Agreement) effected pursuant to the
Original Agreement during the 12-month period immediately preceding the date of
determination shall be included in this calculation.

 

(iii)                               Rule 3a-7.  Notwithstanding anything in this Section 2.07,
the Borrower shall not, and the Servicer shall not on the Borrower’s behalf,
purchase, sell or substitute any Loan Asset with the primary purpose of
recognizing gain or decreasing losses on such Loan Asset or in any manner that
would cause the Borrower not to be in compliance with the requirements of Rule 3a-7
under the 1940 Act.

 

SECTION 2.08                                                                    Payments and
Computations, Etc.

 

(a)                                  All amounts to
be paid or deposited by the Borrower or the Servicer hereunder shall be paid or
deposited in accordance with the terms hereof no later than 5:00 p.m. (New
York City time) on the day when due in lawful money of the United States in
immediately available funds to the Collection Account or such other account as
is designated by the Agent. The Borrower or the Servicer, as applicable, shall,
to the extent permitted by Applicable Law, pay to the Secured Parties interest
on all amounts not paid or deposited when due (taking into account any grace
period provided for herein) to any of the Secured Parties hereunder at the
Default Funding Rate, payable on demand, from the date of such nonpayment until
such amount is paid in full (as well after as before judgment); provided, that such interest rate shall
not at any time exceed the maximum rate permitted by Applicable Law. Any
Obligation hereunder shall not be reduced by any distribution of any portion of
Available Collections if at any time such distribution is rescinded or required
to be returned by the Note Purchaser to the Borrower or any other Person for
any reason. All computations of interest and all computations of Yield and
other fees hereunder shall be made on the basis of a year of 360 days for the
actual number of days (including the first but excluding the last day) elapsed,
other than calculations with respect to the Base Rate, which shall be based on
a year consisting of 365 or 366 days, as applicable.

 

52

 

(b)                                 Whenever any
payment hereunder shall be stated to be due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of payment
of Yield or any fee payable hereunder, as the case may be.

 

(c)                                  If any Advance
requested by the Borrower and approved by the Note Purchaser and the Agent
pursuant to Section 2.02 is not for any reason whatsoever, except
as a result of the gross negligence or willful misconduct of, or failure to
fund such Advance on the part of, the Note Purchaser, the Agent or an Affiliate
thereof, made or effectuated, as the case may be, on the date specified
therefor, the Borrower shall indemnify the Note Purchaser against any loss,
cost or expense incurred by the Note Purchaser related thereto (other than any
such loss, cost or expense solely due to the gross negligence or willful misconduct
or failure to fund such Advance on the part of the Note Purchaser, the Agent or
an Affiliate thereof), including, without limitation, any loss (including cost
of funds and reasonable out-of-pocket expenses), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired
by the Note Purchaser to fund Advances or maintain the Advances. The Note
Purchaser shall provide to the Borrower documentation setting forth the amounts
of any loss, cost or expense referred to in the previous sentence, such
documentation to be conclusive absent manifest error.

 

SECTION 2.09                                                                    Fees. The Borrower
shall pay the Note Purchaser (either directly or through the Agent) certain
fees (the “Fees”)
in the amounts and on the dates set forth in a fee letter, dated the Closing
Date and amended and restated on the Restatement Date, among the Borrower,
Ares, the Agent and the Note Purchaser (as further amended, modified,
supplemented or restated from time to time, the “Fee Letter”).

 

SECTION 2.10                                                                    Increased
Costs; Capital Adequacy.

 

(a)                                  If, due to
either (i) the introduction of or any change following the Restatement
Date (including, without limitation, any change by way of imposition or
increase of reserve requirements) in or in the interpretation, administration
or application following the Restatement Date of any Applicable Law (including,
without limitation, any law or regulation resulting in any interest payments
paid to the Note Purchaser under this Agreement being subject to any Tax,
except for Taxes on the overall net income of the Note Purchaser), in each case
whether foreign or domestic or (ii) the compliance with any guideline or
request following the Restatement Date from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
any increase in the cost to the Agent, the Note Purchaser, or any Affiliate,
successor or assign thereof (each of which shall be an “Affected Party”)
of agreeing to make or making, funding or maintaining any Advance (or any
reduction of the amount of any payment (whether of principal, interest, fee,
compensation or otherwise) to any Affected Party hereunder), as the case may
be, the Borrower shall, from time to time, after written demand by the Agent
(which demand shall be accompanied by a statement setting forth in reasonable
detail the basis for such demand), on behalf of such Affected Party, pay to the
Agent, on behalf of such Affected Party, additional amounts sufficient to
compensate such Affected Party for such increased costs or reduced payments
within 10 days after such demand; provided,
that the amounts payable under this Section 2.10 shall be without
duplication of amounts payable under Section 2.11 and shall not
include any Excluded Taxes.

 

53

 

(b)                                 If either (i) the
introduction of or any change following the Restatement Date in or in the
interpretation, administration or application following the Restatement Date of
any law, guideline, rule or regulation, directive or request or (ii) the
compliance by any Affected Party with any law, guideline, rule, regulation,
directive or request following the Restatement Date, from any central bank, any
Governmental Authority or agency, including, without limitation, compliance by
an Affected Party with any request or directive regarding capital adequacy, has
or would have the effect of reducing the rate of return on the capital of any
Affected Party, as a consequence of its obligations hereunder or any related
document or arising in connection herewith or therewith to a level below that
which any such Affected Party could have achieved but for such introduction,
change or compliance (taking into consideration the policies of such Affected
Party with respect to capital adequacy), by an amount deemed by such Affected
Party to be material, then, from time to time, after demand by such Affected
Party (which demand shall be accompanied by a statement setting forth in
reasonable detail the basis for such demand), the Borrower shall pay the Agent
on behalf of such Affected Party such additional amounts as will compensate
such Affected Party for such reduction.

 

(c)                                  In determining
any amount provided for in this Section 2.10, the Affected Party
may use any reasonable averaging and attribution methods. The Agent, on behalf
of any Affected Party making a claim under this Section 2.10, shall
submit to the Borrower a certificate setting forth in reasonable detail the
basis for and the computations of such additional or increased costs, which certificate
shall be conclusive absent manifest error.

 

SECTION 2.11                                                                    Taxes.

 

(a)                                  All payments
made by an Obligor in respect of a Loan Asset and all payments made by the
Borrower or made by the Servicer on behalf of the Borrower under this Agreement
will be made free and clear of and without deduction or withholding for or on
account of any Taxes.  If any Taxes are
required to be withheld from any amounts payable to any Indemnified Party, then
the amount payable to such Person will be increased (the amount of such
increase, the “Additional Amount”) such that every net payment made
under this Agreement after withholding for or on account of any Taxes
(including, without limitation, any Taxes on such increase) is not less than
the amount that would have been paid had no such deduction or withholding been
made.  The foregoing obligation to pay
Additional Amounts with respect to payments required to be made by the Borrower
or Servicer under this Agreement will not, however, apply with respect to Taxes
imposed on or measured by net income or franchise Taxes imposed on any
Indemnified Party by a taxing jurisdiction in which any such Person is
organized, conducts business or is paying Taxes (as the case may be) (“Excluded
Taxes”).

 

(b)                                 The Borrower
will indemnify, from funds available to it pursuant to Section 2.04
(and to the extent the funds available for indemnification provided by the
Borrower is insufficient the Servicer, on behalf of the Borrower, will
indemnify) each Indemnified Party for the full amount of Taxes payable by such
Person in respect of Additional Amounts and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto.  All payments in respect of this
indemnification shall be made within 10 days from the date a written invoice
therefor is delivered to the Borrower.

 

54

 

(c)                                  Within 30 days
after the date of any payment by the Borrower or by the Servicer on behalf of
the Borrower of any Taxes, the Borrower or the Servicer, as applicable, will
furnish to the Agent and the Note Purchaser at the applicable address set forth
on this Agreement, appropriate evidence of payment thereof.

 

(d)                                 If any assignee
of the Note Purchaser is not created or organized under the laws of the United
States or a political subdivision thereof, such Note Purchaser shall deliver to
the Borrower, with a copy to the Agent, (i) within 15 days after becoming
an assignee hereunder, two (or such other number as may from time to time be
prescribed by Applicable Law) duly completed copies of IRS Form W-8BEN or Form W-8ECI
(or any successor forms or other certificates or statements that may be
required from time to time by the relevant United States taxing authorities or
Applicable Law), as appropriate, to permit the Borrower to make payments
hereunder for the account of such Note Purchaser without deduction or
withholding of United States federal income or similar Taxes and (ii) upon
the obsolescence of or after the occurrence of any event requiring a change in,
any form or certificate previously delivered pursuant to this Section 2.11(d),
copies (in such numbers as may from time to time be prescribed by Applicable
Law or regulations) of such additional, amended or successor forms,
certificates or statements as may be required under Applicable Law to permit
the Borrower or the Servicer to make payments hereunder for the account of such
Lender without deduction or withholding of United States federal income or
similar Taxes.

 

(e)                                  If, in
connection with an agreement or other document providing liquidity support,
credit enhancement or other similar support to the Note Purchaser in connection
with this Agreement or the funding or maintenance of Advances hereunder, the
Note Purchaser is required to compensate a bank or other financial institution
in respect of Taxes under circumstances similar to those described in this Section 2.11,
then, within 10 days after demand by each applicable Note Purchaser, the
Servicer shall pay (or to the extent the Servicer does not make such payment
the Borrower shall pay) to the Note Purchaser such additional amount or amounts
as may be necessary to reimburse the Note Purchaser for any amounts paid by
them.

 

Without prejudice to the
survival of any other agreement of the Borrower and the Servicer hereunder, the
agreements and obligations of the Borrower and the Servicer contained in this Section 2.11
shall survive the termination of this Agreement.

 

SECTION 2.12                                                                    Collateral
Assignment of Agreements. The Borrower hereby collaterally assigns to
the Trustee, for the benefit of the Secured Parties, all of the Borrower’s
right and title to and interest in, to and under (but not any obligations
under) the Purchase and Sale Agreements (and any UCC financing statements filed
under or in connection therewith), the Loan Agreements related to each Loan
Asset, all other agreements, documents and instruments evidencing, securing or
guarantying any Loan Asset and all other agreements, documents and instruments
related to any of the foregoing but excluding any Excluded Amounts, Retained
Interest or Attached Equity (the “Assigned Documents”). In furtherance
and not in limitation of the foregoing, the Borrower hereby collaterally
assigns to the Trustee, for the benefit of the Secured Parties, its right to
indemnification under Article IX of each Purchase and Sale Agreement.  The Borrower confirms that until the
Collection Date the Trustee on behalf of the Secured Parties shall have the
sole right to enforce the Borrower’s rights and remedies under the Purchase and
Sale Agreements and any UCC financing statements filed under or in 

 

55

 

connection
therewith for the benefit of the Secured Parties. The parties hereto agree that
such collateral assignment to the Trustee, for the benefit of the Secured
Parties, shall terminate upon the Collection Date.

 

SECTION 2.13                                                                    Grant of a
Security Interest. To secure the prompt, complete and indefeasible
payment in full when due, whether by lapse of time, acceleration or otherwise,
of the Obligations and the performance by the Borrower of all of the covenants
and obligations to be performed by it pursuant to this Agreement and each other
Transaction Document, whether now or hereafter existing, due or to become due,
direct or indirect, or absolute or contingent, the Borrower hereby (a) collaterally
assigns and pledges to the Trustee, on behalf of the Secured Parties, and (b) grants
a security interest to the Trustee, on behalf of the Secured Parties, in all of
the Borrower’s right, title and interest in, to and under (but none of the
obligations under) all of the Collateral Portfolio, whether now existing or
hereafter arising or acquired by the Borrower, and wherever the same may be
located. For the avoidance of doubt, the Collateral Portfolio shall not include
any Excluded Amounts, and the Borrower does not hereby assign, pledge or grant
a security interest in any such amounts. Anything herein to the contrary
notwithstanding, (a) the Borrower shall remain liable under the Collateral
Portfolio to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by the Trustee, for the benefit of the Secured
Parties, of any of its rights in the Collateral Portfolio shall not release the
Borrower from any of its duties or obligations under the Collateral Portfolio,
and (c) none of the Agent, the Trustee or the Note Purchaser (nor its
successors and assigns) shall have any obligations or liability under the
Collateral Portfolio by reason of this Agreement, nor shall the Agent, the
Trustee, or the Note Purchaser (nor its successors and assigns) be obligated to
perform any of the obligations or duties of the Borrower thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.

 

SECTION 2.14                                                                    Evidence of
Debt. The Agent shall maintain, solely for this purpose as the agent of the
Borrower, at its address referred to in Section 11.02 a copy of
each assignment and acceptance agreement and participation agreement delivered
to and accepted by it and a register for the recordation of the names and
addresses and interests of the Note Purchasers (the “Register”). The entries in
the Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Agent and each Note Purchaser shall treat each
person whose name is recorded in the Register as a Note Purchaser under this
Agreement for all purposes of this Agreement. The Register shall be available
for inspection by the Borrower or any Note Purchaser at any reasonable time and
from time to time upon reasonable prior notice.

 

SECTION 2.15                                                                    Survival of
Representations and Warranties. It is understood and
agreed that the representations and warranties set forth in Sections 4.01,
4.02 and 4.03 are made and are true and correct on the date of
this Agreement and on each Cut-Off Date unless such representations and
warranties are made as of a specific date.

 

SECTION 2.16                                                                    Release of Loan
Assets.

 

(a)                                  The Borrower
may obtain the release of (i) any Loan Asset (and the related Portfolio
Assets pertaining thereto) released pursuant to a Lien Release Dividend, sold
or 

 

56

 

substituted
in accordance with the applicable provisions of Section 2.07 or
liquidated in accordance with Section 6.05 and 12.08(a) and
any Portfolio Assets pertaining to such Loan Asset and (ii) any Collateral
Portfolio that expires by its terms and all amounts in respect thereof have been
paid in full by the related Obligor and deposited in the Collection Account.
The Trustee, for the benefit of the Secured Parties, shall at the sole expense
of the Servicer, execute such documents and instruments of release as may be
prepared by the Servicer on behalf of the Borrower, give notice of such release
to the Collateral Custodian (in the form of Exhibit N) and take
other such actions as shall reasonably be requested by the Borrower to effect
such release of the Lien created pursuant to this Agreement. Upon receiving
such notification by the Trustee as described in the immediately preceding
sentence, the Collateral Custodian shall deliver the Required Loan Documents to
the Borrower.

 

(b)                                 Promptly after
the Collection Date has occurred, the Note Purchaser and the Agent, in
accordance with their respective interests, shall release to the Borrower, for
no consideration but at the sole expense of the Borrower, their respective
remaining interests in the Portfolio Assets, free and clear of any Lien resulting
solely from an act by the Trustee, Note Purchaser or the Agent but without any
other representation or warranty, express or implied, by or recourse against
the Note Purchaser or the Agent.

 

SECTION 2.17                                                                    Treatment of
Amounts Paid by the Borrower. Amounts paid by the
Borrower pursuant to Section 2.07 on account of Loan Assets shall
be treated as payments of Principal Collections or Interest Collections, as
applicable, on Loan Assets hereunder.

 

SECTION 2.18                                                                    Prepayment;
Termination.

 

(a)                                  Except as expressly
permitted or required herein, including, without limitation, any repayment
necessary to cure a Borrowing Base Deficiency, Advances may only be prepaid in
whole or in part at the option of the Borrower at any time by delivering a
Notice of Reduction at least one Business Day prior to such reduction (which
notice shall include a Borrowing Base Certificate) and upon payment in full of
any Breakage Fees and other accrued and unpaid costs and expenses of Agent and
Note Purchaser related to such prepayment; provided
that no such reduction shall be given effect unless (i) sufficient funds
have been remitted to pay all such amounts in full, as determined by the Agent,
in its sole discretion and (ii) no event would result from such prepayment
which would constitute an Event of Default or an Unmatured Event of Default.
Any notice relating to any repayment pursuant to this Section 2.18(a) shall
be irrevocable.

 

(b)                                 Notwithstanding
any other provision hereof, the Borrower shall not terminate this Agreement or
any other Transaction Document or reduce the Maximum Facility Amount prior to
the date which is five Business Days prior to the Stated Maturity Date without
the Agent’s prior written consent, which consent may be withheld in the Agent’s
sole discretion; provided, that (i)
upon three Business Days’ prior written notice to the Agent, and only so long
as no Event of Default has occurred and no Unmatured Event of Default exists,
the Borrower may terminate this Agreement upon payment in full of all
outstanding Advances, all accrued and unpaid Yield, any Breakage Fees, all
accrued and unpaid costs and expenses of Agent and Note Purchaser, payment of
the Make-Whole Premium and payment of all other Obligations and (ii) with
the prior written consent of the Agent, the Borrower may reduce the Maximum
Facility 

 

57

 

Amount
upon payment in full of the Make-Whole Premium and delivery of a Notice of
Reduction at least one Business Day prior to such reduction; provided, further that no Event of Default
or Unmatured Event of Default would result from such reduction in the Maximum
Facility Amount. Any termination of this Agreement shall be subject to Section 11.05.

 

(c)                                  Notwithstanding
anything to the contrary in Section 2.18(b), no Make-Whole Premium
shall be payable by the Borrower in the event that either (i)(x) the
Obligations are refinanced by the proceeds of any other financing of the
Transferor or any of its Affiliates by any of the Agent or any of their
respective Affiliates or (y) the Agent or any of their respective
Affiliates enters into another credit facility or other financing with the
Transferor or any of its Affiliates substantially concurrently with the
termination of this Agreement (provided
that in either case of clause (x) or clause (y) above, the aggregate
commitments of such financing shall equal or exceed the Advances Outstanding on
such date, and the Agent or their respective Affiliates hold at least 51% of
the aggregate commitments of such replacement or other financing), (ii) as
of any date of determination, the Agent has not approved greater than 33% of
the Eligible Loan Assets submitted by the Borrower for approval prior to such
date, such percentage to be calculated based on the number of Eligible Loan
Assets reviewed; provided, that
only Eligible Loan Assets with respect to which the Borrower has provided the
Agent with all of the information reasonably requested by the Agent to make
such approval determination for such Eligible Loan Asset; provided,  further,
that at least 15 Eligible Loan Assets that meet the criteria of the foregoing
proviso must have been reviewed for this clause (ii) to apply. For the
avoidance of doubt, any reference to “Eligible Loan Asset” in this Section 2.18(c)
shall include Loan Assets which are not “Eligible Loan Assets” solely due to
the failure to satisfy clause 11 of Schedule III to this Agreement or (iii) this
Agreement is terminated within five Business Days prior to the Stated Maturity
Date.

 

(d)                                 The Borrower
hereby acknowledges and agrees that the Make-Whole Premium constitutes
additional consideration for the Note Purchaser to enter into this Agreement.

 

SECTION 2.19                                                                    Extension of
Stated Maturity Date.  The
Borrower may, within 60 days but not less than 45 days prior to the Stated
Maturity Date, make a request to extend the date set forth in the definition of
“Stated Maturity Date” for an additional period of one year. The Stated
Maturity Date may be extended by one year by mutual agreement among the Agent,
the Note Purchaser, the Borrower and the Servicer (such extension, the “Initial
Extension”). Following such Initial Extension, the Borrower may, within 60
days but not less than 45 days prior to the Stated Maturity Date (as revised by
the Initial Extension), make a request to extend the date set forth in the
definition of “Stated Maturity Date” (as revised by the Initial Extension) for
an additional period of one year. The Stated Maturity Date (as revised by the
Initial Extension) may be extended by one year upon the mutual agreement among
the Agent, the Note Purchaser, the Borrower and the Servicer (such extension,
the “Second Extension”). The effectiveness of either the Initial
Extension or the Second Extension shall be conditioned upon the payment of the
Additional Structuring Fee (as defined in the Fee Letter) to the Agent for the
Agent’s own account, in immediately available funds. The Borrower confirms that
the Note Purchaser and the Agent, in their sole and absolute discretion,
without regard to the value or performance of the Loan Assets or any other
factor, may elect not to extend the Stated Maturity Date.

 

58

 

SECTION 2.20                                                                    Collections and
Allocations.

 

(a)                                  The Servicer
shall promptly identify any collections received as being on account of
Interest Collections, Principal Collections or other Available Collections and
shall transfer, or cause to be transferred, all Available Collections received
in the Concentration Account or received directly by it to the Collection
Account by the close of business on the second Business Day after such
Collections are received.  Within fifteen
days following the Restatement Date, the Servicer shall instruct all Obligors
to remit Interest Collections and Principal Collections directly to the Collection
Account. Upon the transfer of Available Collections to the Collection Account,
the Servicer shall segregate Principal Collections and Interest Collections and
transfer the same to the Principal Collection Account and the Interest
Collection Account, respectively.  The
Servicer shall further include a statement as to the amount of Principal
Collections and Interest Collections on deposit in the Principal Collection
Account and the Interest Collection Account on each Reporting Date in the
Servicing Report delivered pursuant to Section 6.08(b).

 

(b)                                 On the Cut-Off
Date with respect to any Loan Asset, the Servicer will deposit into the
Collection Account all Available Collections received in respect of Eligible
Loan Assets being transferred to and included as part of the Collateral
Portfolio on such date.

 

(c)                                  With the prior
written consent of the Agent (a copy of which will be provided by the Servicer
to the Trustee), the Servicer may withdraw from the Collection Account any
deposits thereto constituting Excluded Amounts if the Servicer has, prior to
such withdrawal and consent, delivered to the Agent a report setting forth the
calculation of such Excluded Amounts in form and substance satisfactory to the
Agent in its sole discretion.

 

(d)                                 Prior to notice
of exclusive control, the Servicer shall, pursuant to written instruction
(which may be in the form of standing instructions), direct the Trustee to
invest, or cause the investment of, funds on deposit in the Controlled Accounts
in Permitted Investments, from the date of this Agreement until the Collection
Date. Absent any such written instruction, such funds shall not be invested. A
Permitted Investment acquired with funds deposited in any Controlled Account
shall mature not later than the Business Day immediately preceding any Payment
Date, and shall not be sold or disposed of prior to its maturity unless the
Servicer determines there is a substantial risk of material deterioration of
such Permitted Investment, in its commercially reasonable discretion. All such
Permitted Investments shall be registered in the name of the Bank or its
nominee for the benefit of the Agent or Trustee, and otherwise comply with
assumptions of the legal opinions of Latham & Watkins LLP dated the
Restatement Date and delivered in connection with this Agreement. All income
and gain realized from any such investment, as well as any interest earned on
deposits in any Controlled Account shall be distributed in accordance with the
provisions of Article II hereof. In the event the Borrower or
Servicer direct the funds to be invested in investments which are not Permitted
Investments, the Borrower shall deposit in the Collection Account or the
Unfunded Exposure Account, as the case may be (with respect to investments made
hereunder of funds held therein), an amount equal to the amount of any actual
loss incurred, in respect of any such investment, immediately upon realization
of such loss. None of the Bank, the Trustee, the Agent or the Note Purchaser
shall be liable for the amount of any loss incurred, in respect of any
investment, or lack of investment, of funds held in any Controlled Account.

 

59

 

(e)                                  Until the
Collection Date, the Borrower shall have no rights of direction or withdrawal,
with respect to amounts held in any Controlled Account, except to the extent
explicitly set forth in Section 2.04 or Section 2.21.

 

SECTION 2.21                                                                    Reinvestment of
Principal Collections.

 

On the terms and conditions
hereinafter set forth as certified in writing to the Trustee and Agent, prior
to the Facility Maturity Date, the Servicer may, to the extent of any Principal
Collections on deposit in the Principal Collection Account:

 

(a)                                  withdraw such
funds for the purpose of reinvesting in additional Eligible Loan Assets to be
Pledged hereunder; provided that
the following conditions are satisfied:

 

(i)                                     all conditions
precedent set forth in Section 3.04 have been satisfied;

 

(ii)                                  no Event of
Default has occurred, or would result from such withdrawal and reinvestment,
and no Unmatured Event of Default or Borrowing Base Deficiency exists or would
result from such withdrawal and reinvestment;

 

(iii)                               the
representations and warranties contained in Sections 4.01, 4.02
and 4.03 hereof shall continue to be correct in all material respects,
except to the extent relating to an earlier date;

 

(iv)                              the Servicer
provides same day written notice to the Agent and the Trustee by facsimile or
email (to be received no later than 1:00 p.m. on such day) of the request
to withdraw Principal Collections and the amount of such request;

 

(v)                                 the notice
required in clause (iv) above shall be accompanied by a
Disbursement Request and a Borrowing Base Certificate, each executed by the
Borrower and a Responsible Officer of the Servicer; and

 

(vi)                              the Trustee
provides to the Agent by facsimile (to be received no later than 1:30 p.m.
on that same day) a statement reflecting the total amount on deposit as of the
opening of business on such day in the Principal Collection Account; or

 

(b)                                 withdraw such
funds for the purpose of making payments in respect of the Advances Outstanding
at such time in accordance with and subject to the terms of Section 2.18.

 

Upon the satisfaction of the
applicable conditions set forth in this Section 2.21 (as certified
by the Borrower to the Trustee and the Agent), the Trustee will release funds
from the Principal Collection Account to the Servicer in an amount not to
exceed the lesser of (A) the amount requested by the Servicer and (B) the
amount on deposit in the Principal Collection Account on such day.

 

60

 

ARTICLE
III.

 

CONDITIONS
PRECEDENT

 

SECTION 3.01                                                                    Conditions
Precedent to Effectiveness.

 

(a)                                  This Agreement
shall be effective upon satisfaction of the conditions precedent that:

 

(i)                                     all reasonable
up-front expenses and fees (including legal fees and any fees required under
the Fee Letter) that are invoiced at or prior to the Restatement Date shall
have been paid in full;

 

(ii)                                  (x) payment
in full of all Indebtedness owed to Wachovia Bank, National Association
pursuant to the JPMorgan Loan Documents and (y) the closing of the amended
JPMorgan Loan Documents, to the reasonable satisfaction of the Agent;

 

(iii)                               any and all
information submitted to the Note Purchaser by the Borrower, the Transferor,
the Equityholder or the Servicer or any of their Affiliates is true, accurate,
complete in all material respects and not misleading in any material respect;

 

(iv)                              the Note
Purchaser shall have received, all documentation and other information
requested by the Note Purchaser in its sole discretion and/or required by
regulatory authorities with respect to the Borrower, the Transferor and the
Servicer under applicable “know your customer” and anti-money laundering rules and
regulations, including, without limitation, the USA PATRIOT Act, all in form
and substance reasonably satisfactory to the Note Purchaser;

 

(v)                                 the Agent shall
have received on or before the date of such Advance the items listed in Schedule
I hereto, each in form and substance satisfactory to the Agent and the Note
Purchaser;

 

(vi)                              the Agent and
Note Purchaser have received approval from their internal credit committee and
all other necessary approvals, as required by the Agent, in its sole
discretion; and

 

(vii)                           no material
adverse effect on the business, assets, financial conditions or performance of
the Servicer and its subsidiaries, including the Borrower, on a consolidated
basis, has occurred.

 

(b)                                 By its
execution and delivery of this Agreement, each of the Borrower and Servicer
hereby certifies that, and the Agent hereby acknowledges that, each of the
conditions precedent to the effectiveness of this Agreement set forth in this Section 3.01
have been satisfied.

 

SECTION 3.02                                                                    Conditions
Precedent to All Advances. Each Advance (including the Initial
Advance, except as explicitly set forth below) to the Borrower from the Note
Purchaser shall be subject to the further conditions precedent that:

 

61

 

(a)                                  On the Advance
Date of such Advance, the following statements shall be true and correct, and
the Borrower by accepting any amount of such Advance shall be deemed to have
certified that:

 

(i)                                     the Servicer
(on behalf of the Borrower) shall have delivered to the Agent (with a copy to
the Collateral Custodian and copies of the Notice of Borrowing and Borrowing
Base Certificate to the Trustee only) no later than 5:00 p.m. on the date
that is one Business Day prior to the related Advance Date: (A) a Notice
of Borrowing, (B) a Borrowing Base Certificate, (C) a Loan Asset
Schedule and (D) except with respect to an Advance under Section 2.02(f),
Loan Assignments in the form of Exhibit A to the Purchase and Sale
Agreements (including Schedule I thereto) and containing such additional
information as may be reasonably requested by the Agent;

 

(ii)                                  except with
respect to an Advance under Section 2.02(f), the Borrower shall
have 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 Advance 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) from the closing attorneys
of such Loan Assets certifying the possession of the Required Loan Documents; provided that, notwithstanding the
foregoing, the Borrower shall cause the Loan Asset Checklist and the Required
Loan Documents to be in the possession of the Collateral Custodian within five
Business Days of any related Advance Date as to any Loan Assets;

 

(iii)                               the
representations and warranties contained in Sections 4.01, 4.02
and 4.03 are true and correct in all material respects, and (except with
respect to an Advance required by Section 2.02(f)) there exists no
breach of any covenant contained in Sections 5.01, 5.02, 5.03
and 5.04 before and after giving effect to the Advance to take place on
such Advance Date and to the application of proceeds therefrom, on and as of
such day as though made on and as of such date (other than any representation
and warranty that is made as of a specific date);

 

(iv)                              on and as of
such Advance Date, after giving effect to such Advance and the addition to the
Collateral Portfolio of the Eligible Loan Assets being acquired by the Borrower
using the proceeds of such Advance (except with respect to an Advance required
by Section 2.02(f)), the Advances Outstanding does not exceed the
Borrowing Base;

 

(v)                                 no Event of
Default has occurred, or would result from such Advance, and no Unmatured Event
of Default or Borrowing Base Deficiency exists or would result from such
Advance;

 

(vi)                              no event has
occurred and is continuing, or would result from such Advance, which
constitutes a Servicer Termination Event or any event which, if it continues
uncured, will, with notice or lapse of time, constitute a Servicer Termination
Event;

 

62

 

(vii)                           since the
Closing Date, no material adverse change has occurred in the ability of the
Servicer, Transferor, the Equityholder or the Borrower to perform its
obligations under any Transaction Document;

 

(viii)                        no Liens exist
in respect of Taxes which are prior to the lien of the Trustee on the Eligible
Loan Assets to be Pledged on such Advance Date; and

 

(ix)                                all terms and
conditions of each Purchase and Sale Agreement required to be satisfied in
connection with the assignment of each Eligible Loan Asset being Pledged
hereunder on such Advance Date (and the Portfolio Assets related thereto),
including, without limitation, the perfection of the Borrower’s interests
therein, shall have been satisfied in full, and all filings (including, without
limitation, UCC filings) required to be made by any Person and all actions
required to be taken or performed by any Person in any jurisdiction to give the
Trustee, for the benefit of the Secured Parties, a first priority perfected
security interest (subject only to Permitted Liens) in such Eligible Loan
Assets and the Portfolio Assets related thereto and the proceeds thereof shall
have been made, taken or performed, and with respect to each Eligible Loan
Asset so assigned pursuant to each Purchase and Sale Agreement, the Transferor
and the Equityholder shall not have been subject to any Change of Control since
the Restatement Date, other than a Change of Control previously approved by the
Agent in writing.

 

(b)                                 The Agent shall
have approved in its sole and absolute discretion each of the Eligible Loan
Assets identified in the applicable Loan Asset Schedule for inclusion in the
Collateral Portfolio on the applicable Advance Date.

 

(c)                                  No Applicable
Law shall prohibit, 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 such Advances by the Note Purchaser or the proposed
Pledge of Eligible Loan Assets in accordance with the provisions hereof.

 

(d)                                 Except with
respect to an Advance required by Section 2.02(f), the Facility
Maturity Date has not yet occurred.

 

The failure of the Borrower
to satisfy any of the foregoing conditions precedent in respect of any Advance
shall give rise to a right of the Agent and the Note Purchaser, which right may
be exercised at any time on the demand of the Note Purchaser, to rescind the related
Advance and direct the Borrower to pay to the Agent for the benefit of the Note
Purchaser an amount equal to the Advances made during any such time that any of
the foregoing conditions precedent were not satisfied.

 

SECTION 3.03                                                                    Advances Do Not
Constitute a Waiver. No Advance made hereunder shall constitute a
waiver of any condition to the Note Purchaser’s obligation to make such an
advance unless such waiver is in writing and executed by the Note Purchaser.

 

SECTION 3.04                                                                    Conditions to
Pledges of Loan Assets. Each Pledge of an additional Eligible Loan
Asset pursuant to Section 2.06, a Substitute Eligible Loan Asset
pursuant to Section 2.07(a) or (e), an additional
Eligible Loan Asset pursuant to Section 2.21 or 

 

63

 

any
other Pledge of a Loan Asset hereunder shall be subject to the further
conditions precedent that (as certified to the Trustee by the Borrower):

 

(a)                                  the Servicer
(on behalf of the Borrower) shall have delivered to the Agent (with a copy to
the Collateral Custodian and copies of the Notice of Borrowing and Borrowing
Base Certificate to the Trustee only) no later than 5:00 p.m. on the date
that is one Business Day prior to the related Cut-Off Date: (A) a
Borrowing Base Certificate, (B) a Loan Asset Schedule and (C) Loan
Assignments in the form of Exhibit A to the Purchase and Sale Agreements
(including Schedule I thereto) and containing such additional
information as may be reasonably requested by the Agent;

 

(b)                                 the Borrower
shall have 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 Cut-Off 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) from the closing attorneys
of such Loan Assets certifying the possession of the Required Loan Documents; provided that, notwithstanding the
foregoing, the Borrower shall cause the Loan Asset Checklist and the Required
Loan Documents to be in the possession of the Collateral Custodian within five
Business Days of any related Cut-Off Date as to any Loan Assets;

 

(c)                                  no Liens exist
in respect of Taxes which are prior to the lien of the Trustee on the Eligible
Loan Assets to be Pledged on such Cut-Off Date;

 

(d)                                 all terms and
conditions of each Purchase and Sale Agreement required to be satisfied in
connection with the assignment of each Eligible Loan Asset being Pledged
hereunder on such Cut-Off Date (and the Portfolio Assets related thereto),
including, without limitation, the perfection of the Borrower’s interests
therein, shall have been satisfied in full, and all filings (including, without
limitation, UCC filings) required to be made by any Person and all actions
required to be taken or performed by any Person in any jurisdiction to give the
Trustee, for the benefit of the Secured Parties, a first priority perfected security
interest (subject only to Permitted Liens) in such Eligible Loan Assets and the
Portfolio Assets related thereto and the proceeds thereof shall have been made,
taken or performed;

 

(e)                                  the Agent shall
have approved in its sole and absolute discretion each of the Eligible Loan
Assets identified in the applicable Loan Asset Schedule for inclusion in the
Collateral Portfolio on the applicable Cut-Off Date;

 

(f)                                    no Event of
Default has occurred, or would result from such Pledge, and no Unmatured Event of
Default exists, or would result from such Pledge (other than, with respect to
any Pledge of an Eligible Loan Asset necessary to cure a Borrowing Base
Deficiency in accordance with Section 2.06 or 2.07, an
Unmatured Event of Default arising solely pursuant to such Borrowing Base
Deficiency); and

 

(g)                                 the
representations and warranties contained in Sections 4.01, 4.02
and 4.03 are true and correct in all material respects, and there exists
no breach of any covenant contained in Sections 5.01, 5.02, 5.03
and 5.04 before and after giving effect to the Pledge to 

 

64

 

take
place on such Cut-Off Date, on and as of such day as though made on and as of
such date (other than any representation and warranty that is made as of a
specific date).

 

ARTICLE IV.

 

REPRESENTATIONS AND WARRANTIES

 

SECTION 4.01                                                                    Representations
and Warranties of the Borrower.  The Borrower hereby represents and warrants,
as of the Restatement Date, as of each applicable Cut-Off Date, as of each applicable
Advance Date, as of each Payment Date and as of each other date provided under
this Agreement or the other Transaction Documents on which such representations
and warranties are required to be (or deemed to be) made:

 

(a)                                  Organization,
Good Standing and Due Qualification.  The Borrower is a limited liability company
duly organized, validly existing and in good standing under the laws of
Delaware (subject to Section 5.02(r)) and has the power and all
licenses necessary to own its assets and to transact the business in which it
is engaged and is duly qualified and in good standing under the laws of each
jurisdiction where the transaction of such business or its ownership of the
Loan Assets and the Collateral Portfolio requires such qualification.

 

(b)                                 Power and
Authority; Due Authorization; Execution and Delivery.  The Borrower has the power, authority and
legal right to make, deliver and perform this Agreement and each of the
Transaction Documents to which it is a party and all of the transactions contemplated
hereby and thereby, and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement and each of the
Transaction Documents to which it is a party, and to grant to the Trustee, for
the benefit of the Secured Parties, a first priority perfected security
interest in the Collateral Portfolio on the terms and conditions of this
Agreement, subject only to Permitted Liens.

 

(c)                                  Binding
Obligation.  This
Agreement and each of the Transaction Documents to which the Borrower is a
party constitutes the legal, valid and binding obligation of the Borrower,
enforceable against it in accordance with their respective terms, except as the
enforceability hereof and thereof may be limited by Bankruptcy Laws and by
general principles of equity (whether such enforceability is considered in a
proceeding in equity or at law).

 

(d)                                 All Consents
Required.  No consent
of any other party and no consent, license, approval or authorization of, or
registration or declaration with, any Governmental Authority, bureau or agency
is required in connection with the execution, delivery or performance by the
Borrower of this Agreement or any Transaction Document to which it is a party
or the validity or enforceability of this Agreement or any such Transaction
Document or the Loan Assets or the transfer of an ownership interest or
security interest in such Loan Assets, other than such as have been met or
obtained and are in full force and effect.

 

(e)                                  No Violation.  The execution, delivery and performance of
this Agreement and all other agreements and instruments executed and delivered
or to be executed and delivered pursuant hereto or thereto in connection with
the Pledge of the Collateral Portfolio will not (i) create any Lien on the
Collateral Portfolio other than Permitted Liens or (ii) violate any 

 

65

 

Applicable
Law or the certificate of formation or limited liability company agreement of
the Borrower or (iii) violate any contract or other agreement to which the
Borrower is a party or by which the Borrower or any property or assets of the
Borrower may be bound.

 

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

 

(g)                                 Selection Procedures.  In selecting the Loan Assets to be Pledged
pursuant to this Agreement, no selection procedures were employed which are
intended to be adverse to the interests of the Note Purchaser.

 

(h)                                 Bulk Sales.  The grant of the security interest in the
Collateral Portfolio by the Borrower to the Trustee, for the benefit of the
Secured Parties, pursuant to this Agreement, is in the ordinary course of
business for the Borrower and is not subject to the bulk transfer or any
similar statutory provisions in effect in any applicable jurisdiction.

 

(i)                                     Pledge of
Collateral Portfolio.  Except as
otherwise expressly permitted by the terms of this Agreement, no item of
Collateral Portfolio has been sold, transferred, assigned or pledged by the
Borrower to any Person, other than as contemplated by Article II
and the Pledge of such Collateral Portfolio to the Trustee, for the benefit of
the Secured Parties, pursuant to the terms of this Agreement.

 

(j)                                     Indebtedness.  The Borrower has no Indebtedness or other
indebtedness, secured or unsecured, direct or contingent (including
guaranteeing any obligation), other than (i) Indebtedness incurred under
the terms of the Transaction Documents and (ii) Indebtedness incurred
pursuant to certain ordinary business expenses arising pursuant to the
transactions contemplated by this Agreement and the other Transaction
Documents.

 

(k)                                  Sole Purpose.  The Borrower has been formed solely for the
purpose of engaging in transactions of the types contemplated by this
Agreement, and has not engaged in any business activity other than the
negotiation, execution and to the extent applicable, performance of this
Agreement and the transactions contemplated by the Transaction Documents.

 

(l)                                     No Injunctions.  No injunction, writ, restraining order or other
order of any nature adversely affects the Borrower’s performance of its
obligations under this Agreement or any Transaction Document to which the
Borrower is a party.

 

(m)                               Taxes.  The Borrower has filed or caused to be filed
(on a consolidated basis or otherwise) on a timely basis all tax returns
(including, without limitation, all foreign, federal, state, local and other
tax returns) required to be filed by it, is not liable for Taxes payable by any
other Person and has paid or made adequate provisions for the payment of all
Taxes, assessments and other governmental charges due and payable from the
Borrower except for 

 

66

 

those
Taxes being contested in good faith by appropriate proceedings and in respect of
which it has established proper reserves on its books. No Tax lien or similar
adverse claim has been filed, and no claim is being asserted, with respect to
any such Tax, assessment or other governmental charge. Any Taxes, fees and
other governmental charges due and payable by the Borrower, as applicable, in
connection with the execution and delivery of this Agreement and the other
Transaction Documents and the transactions contemplated hereby or thereby have
been paid or shall have been paid if and when due.

 

(n)                                 Location.  The Borrower’s location (within the meaning
of Article 9 of the UCC) is Delaware. The chief executive office of the
Borrower (and the location of the Borrower’s records regarding the Collateral
Portfolio (other than those delivered to the Collateral Custodian)) is located
at the address set forth under its name in Section 11.02 (or at
such other address as shall be designated by such party in a written notice to
the other parties hereto).

 

(o)                                 Tradenames.  Except as permitted hereunder, the Borrower’s
legal name is as set forth in this Agreement. Except as permitted hereunder,
the Borrower has not changed its name since its formation; does not have
tradenames, fictitious names, assumed names or “doing business as” names other
than as disclosed on Schedule II hereto (as such schedule may be updated
from time to by the Agent upon receipt of a notice delivered to the Agent
pursuant to Section 5.02(r)); the Borrower’s only jurisdiction of
formation is Delaware, and, except as permitted hereunder, the Borrower has not
changed its jurisdiction of formation.

 

(p)                                 Solvency.  The Borrower is not the subject of any
Bankruptcy Proceedings or Bankruptcy Event. The Borrower is solvent, and the
transactions under this Agreement and any other Transaction Document to which
the Borrower is a party do not and will not render the Borrower insolvent. The
Borrower is paying its debts as they become due (subject to any applicable
grace period); and the Borrower, after giving effect to the transactions
contemplated hereby, will have adequate capital to conduct its business.

 

(q)                                 No Subsidiaries.  The Borrower has no Subsidiaries other than
in connection with retaining equity pursuant to Section 6.05.

 

(r)                                    Value Given.  The Borrower has given fair consideration and
reasonably equivalent value to the Equityholder in exchange for the purchase of
the Loan Assets (or any number of them) from the Equityholder pursuant to the
Second Tier Purchase and Sale Agreement. No such transfer has been made for or
on account of an antecedent debt owed by the Borrower to the Equityholder and
no such transfer is or may be voidable or subject to avoidance under any
section of the Bankruptcy Code.

 

(s)                                  Reports
Accurate.  All
Servicer’s Certificates, Servicing Reports, Notices of Borrowing, Borrowing
Base Certificates and other written or electronic information, exhibits,
financial statements, documents, books, records or reports furnished by the
Servicer to the Agent, the Trustee, the Note Purchaser or the Collateral
Custodian in connection with this Agreement are, as of their date, accurate,
true and correct; provided that,
solely with respect to written or electronic information furnished by the
Servicer which was provided to the Servicer from an Obligor with respect to a
Loan Asset, such information need only be accurate, true and correct to the
knowledge of the Servicer; provided,
further, that the foregoing proviso shall not 

 

67

 

apply
to any information presented in a Servicer’s Certificate, Servicing Report,
Notice of Borrowing or Borrowing Base Certificate.

 

(t)                                    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 proceeds from the sale of the Collateral 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
Borrower does not own or intend to carry or purchase, and no proceeds from the
Advances will be used to carry or purchase, any “margin stock” within the
meaning of Regulation U or to extend “purpose credit” within the meaning of
Regulation U.

 

(u)                                 No Adverse
Agreements.  There are
no agreements in effect adversely affecting the rights of the Borrower to make,
or cause to be made, the grant of the security interest in the Collateral
Portfolio contemplated by Section 2.13.

 

(v)                                 Event of
Default/Unmatured Event of Default.  No event has occurred which constitutes an
Event of Default, and no event has occurred and is continuing which constitutes
an Unmatured Event of Default (other than any Event of Default or Unmatured
Event of Default which has previously been disclosed to the Agent as such).

 

(w)                               Credit Policy
and Servicing Standard.  Each
of the Loan Assets was underwritten or acquired and is being serviced in
conformance with the standard underwriting, credit, collection, operating and
reporting procedures and systems of the Servicer or the Transferor.

 

(x)                                   ERISA.  The present value of all benefits vested
under all “employee pension benefit plans,” as such term is defined in Section 3
of ERISA, maintained by the Borrower or any ERISA Affiliate of the Borrower, or
in which employees of the Borrower or any ERISA Affiliate of the Borrower are
entitled to participate, as from time to time in effect (the “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 Borrower 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.

 

(y)                                 Allocation of
Charges.  There is not any agreement or
understanding between the Servicer and the Borrower (other than as expressly
set forth herein or as consented to by the Agent), providing for the allocation
or sharing of obligations to make payments or otherwise in respect of any
taxes, fees, assessments or other governmental charges; provided that 

 

68

 

it
is understood and acknowledged that the Borrower will be consolidated with the
Servicer for tax purposes.

 

(z)                                   Broker-Dealer.  The Borrower is not a broker-dealer or
subject to the Securities Investor Protection Act of 1970, as amended.

 

(aa)                            Concentration
Account. On or prior to the Account Transition Deadline, the Concentration
Account and the Collection Account are the only accounts to which Obligors have
been instructed by the Borrower, or the Servicer on the Borrower’s behalf, to
send Principal Collections and Interest Collections on the Collateral
Portfolio. After the Account Transition Deadline, the Collection Account is the
only account to which Obligors have been instructed by the Borrower, or the
Servicer on the Borrower’s behalf, to send Principal Collections and Interest
Collections on the Collateral Portfolio. Except as contemplated by the
Intercreditor Agreement, the Borrower has not granted any Person other than the
Agent and the Trustee an interest in the Concentration Account.  The Concentration Account is subject only to
the interests of the parties to the Intercreditor Agreement. The Borrower has
not granted any Person other than the Trustee, for the benefit of the Secured
Parties, an interest in the Collection Account.

 

(bb)                          Second Tier
Purchase and Sale Agreement.  The Second Tier Purchase and Sale Agreement
and the Second Tier Loan Assignments contemplated therein are the only
agreements pursuant to which the Borrower acquires the Collateral Portfolio.
The Original Purchase and Sale Agreement was the only agreement pursuant to
which the Borrower acquired the Collateral Portfolio prior to the Restatement
Date.

 

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

 

(dd)                          Compliance with
Law.  The Borrower has complied in
all material respects with all Applicable Law to which it may be subject, and no
item of the Collateral Portfolio contravenes any Applicable Law (including,
without limitation, all applicable predatory and abusive lending laws, laws, rules and
regulations relating to licensing, truth in lending, fair credit billing, fair
credit reporting, equal credit opportunity, fair debt collection practices and
privacy).

 

(ee)                            Collections.  The Borrower acknowledges that all Available
Collections received by it or its Affiliates with respect to the Collateral
Portfolio Pledged hereunder are held and shall be held in trust for the benefit
of the Trustee, on behalf of the Secured Parties until deposited into the
Collection Account within two Business Days after receipt as required herein.

 

(ff)                                Set-Off, etc.  No Loan Asset has been compromised, adjusted,
extended, satisfied, subordinated, rescinded, set-off or modified by the
Borrower, the Transferor, the Equityholder or the Obligor thereof, and no
Collateral 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 Collateral
Portfolio or otherwise, by the Borrower, the Transferor, the Equityholder or
the Obligor with respect thereto, except, in each case, for amendments,
extensions and modifications, if any, to such Collateral Portfolio otherwise 

 

69

 

permitted
pursuant to Section 6.04(a) of this Agreement and in
accordance with the Credit Policy and the Servicing Standard.

 

(gg)                          Full Payment.  As of the applicable Cut-Off Date thereof,
the Borrower has no knowledge of any fact which should lead it to expect that
any Loan Asset will not be paid in full.

 

(hh)                          Environmental.  With respect to each item of Underlying
Collateral as of the applicable Cut-Off Date for the Loan Asset related to such
Underlying Collateral, to the actual knowledge of a Responsible Officer of the
Borrower: (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 applicable Cut-Off Date for the
Loan Asset related to such Underlying Collateral, none of the Borrower, the
Transferor, the Equityholder nor the Servicer has 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 any such Person have
knowledge or reason to believe that any such notice will be received or is
being threatened.

 

(ii)                                  USA PATRIOT Act.  Neither the Borrower nor any Affiliate of the
Borrower 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)                                  Confirmation
from Transferor and Equityholder.  The Borrower has received in writing from the
Transferor and the Equityholder confirmation that the Transferor and the
Equityholder will not cause the Borrower to file a voluntary bankruptcy
petition under the Bankruptcy Code.

 

(kk)                            Accuracy of
Representations and Warranties.  Each representation or warranty by the
Borrower contained herein or in any certificate or other document furnished by
the Borrower pursuant hereto or in connection herewith is true and correct in
all material respects. The Borrower hereby reaffirms each representation and
warranty made pursuant to the Original 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 

 

70

 

agreement
of the Original Agreement. For the avoidance of doubt, the Borrower hereby
agrees that any such breach of any representation, warranty, covenant or
agreement of the Borrower under the Original Agreement prior to the Restatement
Date shall be treated as a breach of a representation or warranty under this Section 4.01.

 

(ll)                                Reaffirmation
of Representations and Warranties.  On each day that any Advance is made
hereunder, the Borrower shall be deemed to have certified that all
representations and warranties described in Section 4.01 and Section 4.02
are correct on and as of such day as though made on and as of such day, except
for any such representations or warranties which are made as of a specific
date.

 

(mm)                    Security
Interest.

 

(i)                                   This Agreement
creates a valid and continuing security interest (as defined in the applicable
UCC) in the Collateral Portfolio in favor of the Trustee, on behalf of the
Secured Parties, 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 Borrower;

 

(ii)                                the Collateral
Portfolio is comprised of “instruments”, “security entitlements”, “general
intangibles”, “tangible chattel paper”, “accounts”, “certificated securities”, “uncertificated
securities”, “securities accounts”, “deposit accounts”, “supporting obligations”
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
Borrower has complied with its obligations under this Section 4.01(mm);

 

(iii)                             with respect to
Collateral Portfolio that constitute “security entitlements”:

 

a.                                       all of such
security entitlements have been credited to one of the Controlled Accounts and
the securities intermediary for each Controlled Account has agreed to treat all
assets credited to such Controlled Account as “financial assets” within the
meaning of the applicable UCC;

 

b.                                      the Borrower
has taken all steps necessary to cause the securities intermediary to identify
in its records the Borrower, for the benefit of the Secured Parties, as the
Person having a security entitlement against the securities intermediary in
each of the Controlled Accounts; and

 

c.                                       the Controlled
Accounts are not in the name of any Person other than the Borrower, subject to
the lien of the Trustee, for the benefit of the Secured Parties.  The securities intermediary of any Controlled
Account which is a “securities account” under the UCC has agreed to comply with
the entitlement orders and instructions of the Borrower, the Servicer and the
Trustee (acting at the direction of the Agent) in accordance with the
Transaction Documents, including causing cash to be invested in Permitted
Investments; provided that, upon
the delivery of a notice of exclusive control under the Collection Account
Agreement or Unfunded Exposure Account Agreement by the Trustee (acting at the
direction 

 

71

 

of the Agent), the
securities intermediary has agreed to only follow the entitlement orders and
instructions of the Trustee, on behalf of the Secured Parties, including with
respect to the investment of cash in Permitted Investments.

 

(iv)                              all Controlled
Accounts constitute “securities accounts” or “deposit accounts” as defined in
the applicable UCC;

 

(v)                                 with respect to
any Controlled Account which constitutes a “deposit account” as defined in the
applicable UCC, the Borrower, the Bank and the Trustee, on behalf of the
Secured Parties, have entered into an account control agreement which permits
the Trustee on behalf of the Secured Parties to direct disposition of the funds
in such deposit account;

 

(vi)                              the Borrower
owns and has good and marketable title to (or with respect to assets securing
any Loan Assets, a valid security interest in) the Collateral Portfolio free
and clear of any Lien (other than Permitted Liens) of any Person;

 

(vii)                           the Borrower
has received all consents and approvals required by the terms of any Loan Asset
to the granting of a security interest in the Loan Assets hereunder to the
Trustee, on behalf of the Secured Parties;

 

(viii)                        the Borrower
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 the Collateral Portfolio and that portion of
the Loan Assets in which a security interest may be perfected by filing granted
to the Trustee, on behalf of the Secured Parties, under this Agreement; provided that filings in respect of real
property shall not be required;

 

(ix)                                other than as
expressly permitted by the terms of this Agreement and the security interest
granted to the Trustee, on behalf of the Secured Parties, pursuant to this
Agreement, the Borrower has not pledged, assigned, sold, granted a security
interest in or otherwise conveyed any of the Collateral Portfolio.  The Borrower has not authorized the filing of
and is not aware of any financing statements against the Borrower that include
a description of collateral covering the Collateral Portfolio other than any
financing statement (A) relating to the security interests granted to the
Borrower under the Second Tier Purchase and Sale Agreement, or (B) relating
to the closing of a Permitted Securitization contemplated by Section 2.07(c),
or (C) that has been terminated and/or fully and validly assigned to the
Trustee on or prior to the Closing Date. The Borrower is not aware of the
filing of any judgment or Tax lien filings against the Borrower;

 

(x)                                   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 has been,
or subject to the delivery requirements contained herein, will be delivered to
the Collateral Custodian;

 

(xi)                                other than in
the case of Noteless Loan Assets, the Borrower has received, or subject to the
delivery requirements contained herein will receive, a written 

 

72

 

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 12.11
may serve as such acknowledgement;

 

(xii)                             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;

 

(xiii)                          with respect to
any Collateral 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 specially 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 of
transfer by the Borrower of such certificated security; and

 

(xiv)                         with respect to
any Collateral Portfolio that constitutes an “uncertificated security”, that
the Borrower 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.

 

SECTION 4.02                                                                    Representations
and Warranties of the Borrower Relating to the Agreement and the Collateral
Portfolio.  The
Borrower hereby represents and warrants, as of the Restatement Date, as of each
applicable Cut-Off Date, as of each applicable Advance Date, as of each Payment
Date and any date which Loan Assets are Pledged hereunder and as of each other
date provided under this Agreement or the other Transaction Documents on which
such representations and warranties are required to be (or deemed to be) made:

 

(a)                                  Valid Transfer
and Security Interest. This Agreement constitutes a grant of a
security interest in all of the Collateral Portfolio to the Trustee, for the
benefit of the Secured Parties, which upon the delivery of the Required Loan
Documents to the Collateral Custodian, the crediting of Loan Assets to the
Controlled Accounts and the filing of the financing statements, shall be a
valid and first priority perfected security interest in the Loan Assets forming
a part of the Collateral Portfolio and in that portion of the Loan Assets in
which a security interest may be perfected by filing subject only to Permitted
Liens.  Neither the Borrower nor any
Person claiming through or under Borrower shall have any claim to or interest
in the Controlled Accounts and, if this Agreement constitutes the grant of a
security interest in such property, except for the interest of the Borrower in
such property as a debtor for purposes of the UCC.

 

(b)                                 Eligibility of
Collateral Portfolio. As of the Restatement Date, each Cut-Off Date and
each Advance Date, (i) the Loan Asset Schedule and the information contained in
each Notice of Borrowing, is an accurate and complete listing of all the Loan
Assets contained in the Collateral Portfolio as of the related Cut-Off Date and
the information contained therein with 

 

73

 

respect
to the identity of such item of Collateral Portfolio and the amounts owing
thereunder is true and correct as of the related Cut-Off Date, (ii) each
Loan Asset designated on any Borrowing Base Certificate as an Eligible Loan
Asset and each Loan Asset included as an Eligible Loan Asset in any calculation
of Borrowing Base or Borrowing Base Deficiency is an Eligible Loan Asset and (iii) with
respect to each item of Collateral 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
Borrower in connection with the transfer of a security interest in each item of
Collateral Portfolio to the Trustee, for the benefit of the Secured Parties,
have been duly obtained, effected or given and are in full force and effect.

 

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

 

(d)                                 Reaffirmation
of Representations and Warranties. The Borrower hereby
reaffirms that each representation and warranty made pursuant to Section 4.02
of the Original Agreement and represents and warrants that each such
representation and warranty was, as of its date, true and correct in all
material respects. For the avoidance of doubt, the Borrower hereby agrees that
any such breach of any representation or warranty made by the Borrower under Section 4.02
of the Original Agreement prior to the Restatement Date shall be treated as a
breach of a representation or warranty under this Section 4.02,
including, without limitation, for purposes of the Borrower’ obligation to
repurchase Warranty Loan Assets.

 

SECTION 4.03                                                                    Representations
and Warranties of the Servicer.  The Servicer hereby represents and warrants,
as of the Restatement Date, as of each applicable Cut-Off Date, as of each
applicable Advance Date, as of each Payment Date and as of each other date
provided under this Agreement or the other Transaction Documents on which such
representations and warranties are required to be (or deemed to be) made:

 

(a)                                  Organization
and Good Standing.  The
Servicer has been duly organized and is validly existing as a corporation in
good standing under the laws of the State of Maryland (except as such
jurisdiction is changed as permitted hereunder), 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 to enter into and perform its
obligations pursuant to this Agreement.

 

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

 

(c)                                  Power and
Authority; Due Authorization; Execution and Delivery.  The Servicer (i) has all necessary
power, authority and legal right to (a) execute and deliver this Agreement
and the other Transaction Documents to which it is a party, (b) carry out
the terms of the 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 and the other Transaction Documents to which it
is a party.  This Agreement and each
other Transaction 

 

74

 

Document
to which the Servicer is a party have been duly executed and delivered by the
Servicer.

 

(d)                                 Binding
Obligation.  This
Agreement and each other Transaction Document to which the Servicer is a party
constitutes a legal, valid and binding obligation of the Servicer enforceable
against the Servicer in accordance with its respective terms, except as such
enforceability may be limited by Bankruptcy Laws and general principles of
equity (whether considered in a suit at law or in equity).

 

(e)                                  No Violation.  The consummation of the transactions
contemplated by this Agreement 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 Servicer’s
articles of incorporation or by-laws or any contractual obligation of the
Servicer, (ii) result in the creation or imposition of any Lien upon any
of the Servicer’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 Servicer, threatened against the Servicer,
before any Governmental Authority (i) asserting the invalidity of this
Agreement or any other Transaction Document to which the Servicer is a party, (ii) seeking
to prevent the consummation of any of the transactions contemplated by this
Agreement or any other Transaction Document to which the Servicer 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)                                 All Consents
Required.  All
approvals, authorizations, consents, orders, licenses or other actions of any
Person or of any Governmental Authority (if any) required for the due
execution, delivery and performance by the Servicer of this Agreement and any
other Transaction Document to which the Servicer is a party have been obtained.

 

(h)                                 Reports
Accurate.  No
Borrowing Base Certificate, information, exhibit, financial statement,
document, book, record or report furnished by the Servicer to the Agent, the
Trustee, the Note Purchaser or the Collateral Custodian in connection with this
Agreement is inaccurate in any material respect as of the date it is dated, and
no such document contains any material misstatement of fact or omits to state a
material fact or any fact necessary to make the statements contained therein
not misleading; provided that,
solely with respect to written or electronic information furnished by the
Servicer which was provided to the Servicer from an Obligor with respect to a
Loan Asset, such information need only be accurate, true and correct to the
knowledge of the Servicer; 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.

 

75

 

(i)                                     Credit Policy
and Servicing Standard.  The
Servicer has complied in all material respects with (i) the Credit Policy
with regard to the origination and underwriting of the Loan Assets and (ii) the
Servicing Standard with regard to the servicing of the Loan Assets.

 

(j)                                     Collections.  The Servicer acknowledges that all Available
Collections received by it or its Affiliates with respect to the Collateral
Portfolio transferred or Pledged hereunder are held and shall be held in trust
for the benefit of the Secured Parties until deposited into the Collection
Account within two Business Days from receipt as required herein.

 

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

 

(l)                                     Solvency.  The Servicer is not the subject of any
Bankruptcy Proceedings or Bankruptcy Event. 
The transactions under this Agreement and any other Transaction Document
to which the Servicer is a party do not and will not render the Servicer not
solvent.

 

(m)                               Taxes.  The Servicer has filed or caused to be filed
all tax returns that are required to be filed by it.  The Servicer 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 Servicer), and no Tax lien has been filed and, to the Servicer’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 the other Transaction Documents (including, without limitation, the use of
the Proceeds from the sale of the Collateral 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.

 

(o)                                 Security
Interest.  The
Servicer will take all steps necessary to ensure that the Borrower has granted
a security interest (as defined in the UCC) to the Trustee, for the benefit of
the Secured Parties, in the Collateral Portfolio, which is enforceable in
accordance with Applicable Law upon execution and delivery of this
Agreement.  Upon the filing of UCC-1
financing statements naming the Trustee as secured party and the Borrower as
debtor, the Trustee, for the benefit of the Secured Parties, shall have a valid
and first priority perfected security interest in the Loan Assets and that
portion of the Collateral Portfolio in which a security interest may be
perfected by filing (except for any Permitted Liens).  All filings (including, without limitation,
such UCC filings) as are necessary for the perfection of the Secured Parties’
security interest in the Loan Assets and that portion of the Collateral
Portfolio in which a security interest may be perfected by filing have been (or
prior to the applicable Advance will be) made.

 

(p)                                 ERISA.  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 

 

76

 

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 Servicer
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.

 

(q)                                 USA PATRIOT Act.  Neither the Servicer nor any Affiliate of the
Servicer is (i) a country, territory, organization, person or entity named
on an 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.

 

(r)                                    Environmental.  With respect to each item of Underlying
Collateral, to the actual knowledge of a Responsible Officer of the
Servicer:  (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. The Servicer 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 Servicer, have knowledge or reason to believe that any such notice will be
received or is being threatened.

 

(s)                                  No Injunctions.  No injunction, writ, restraining order or
other order of any nature adversely affects the Servicer’s performance of its
obligations under this Agreement or any Transaction Document to which the
Servicer is a party.

 

(t)                                    Concentration
Account. On or prior to the Account Transition Deadline, the Concentration
Account and the Collection Account are the only accounts to which Obligors have
been instructed by the Servicer on the Borrower’s behalf to send Available
Collections on the Collateral Portfolio. After the Account Transition Deadline,
the Collection Account is the only account to which Obligors have been
instructed by the Servicer on the Borrower’s behalf to send Available
Collections on the Collateral Portfolio. Except as contemplated by the
Intercreditor Agreement, the Servicer has not granted any Person other than the
Agent and the Trustee an interest in the Concentration Account.  The Concentration Account is subject only to
the interests of the parties to the Intercreditor Agreement.

 

77

 

(u)                                 Allocation of
Charges.  There is not any agreement or
understanding between the Servicer and the Borrower (other than as expressly
set forth herein or as consented to by the Agent), providing for the allocation
or sharing of obligations to make payments or otherwise in respect of any
taxes, fees, assessments or other governmental charges; provided that it is understood and
acknowledged that the Borrower will be consolidated with the Servicer for tax
purposes.

 

(v)                                 Servicer
Termination Event.  No event
has occurred which constitutes a Servicer Termination Event (other than any
Servicer Termination Event which has previously been disclosed to the Agent as
such).

 

(w)                               Broker-Dealer.  The Servicer is not a broker-dealer or
subject to the Securities Investor Protection Act of 1970, as amended.

 

(x)                                   Compliance with
Applicable Law. The Servicer has complied in all material respects
with all Applicable Law to which it may be subject, and no Loan Asset in the
Collateral Portfolio contravenes in any respect any Applicable Law.

 

(y)                                 Reaffirmation
of Representations and Warranties.  The Servicer hereby reaffirms that each
representation and warranty made pursuant to the Original 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 of the Servicer under the Original Agreement prior to
the Restatement Date. For the avoidance of doubt, the Servicer hereby agrees
that any such breach of any representation, warranty, covenant or agreement
under the Original Agreement shall be treated as a breach of a representation
or warranty under this Section 4.03.

 

SECTION 4.04                                                                    Representations
and Warranties of the Trustee.  The Trustee in its individual capacity and as
Trustee represents and warrants as follows:

 

(a)                                  Organization;
Power and Authority.  It is a
duly organized and validly existing national banking association in good
standing under the laws of the United States. 
It has full corporate power, authority and legal right to execute,
deliver and perform its obligations as Trustee under this Agreement.

 

(b)                                 Due
Authorization.  The
execution and delivery of this Agreement and the consummation of the
transactions provided for herein have been duly authorized by all necessary
association action on its part, either in its individual capacity or as
Trustee, as the case may be.

 

(c)                                  No Conflict.  The execution and delivery of this Agreement,
the performance of the transactions contemplated hereby and the fulfillment of
the terms hereof will not conflict with, result in any breach of its articles
of incorporation or bylaws or any of the material terms and provisions of, or
constitute (with or without notice or lapse of time or both) a default under
any indenture, contract, agreement, mortgage, deed of trust, or other
instrument to which the Trustee is a party or by which it or any of its
property is bound.

 

78

 

(d)                                 No Violation.  The execution and delivery of this Agreement,
the performance of the transactions contemplated hereby and the fulfillment of
the terms hereof will not conflict with or violate, in any material respect,
any Applicable Law.

 

(e)                                  All Consents
Required.  All
approvals, authorizations, consents, orders or other actions of any Person or
Governmental Authority applicable to the Trustee, required in connection with
the execution and delivery of this Agreement, the performance by the Trustee of
the transactions contemplated hereby and the fulfillment by the Trustee of the
terms hereof have been obtained.

 

(f)                                    Validity, Etc.  The Agreement constitutes the legal, valid
and binding obligation of the Trustee, enforceable against the Trustee in
accordance with its terms, except as such enforceability may be limited by
applicable Bankruptcy Laws and general principles of equity (whether considered
in a suit at law or in equity).

 

SECTION 4.05                                                                    Representations
and Warranties of the Note Purchaser.  The Note Purchaser hereby represents and
warrants that it is (a) either a Qualified Institutional Buyer under Rule 144A
of the Securities Act or an institutional “Accredited Investor” as defined in Rule (1)-501(a)(1)-(3) or
(7) under the Securities Act and (b) a “qualified purchaser” under
the 1940 Act.

 

SECTION 4.06                                                                    Representations
and Warranties of the Collateral Custodian.  The Collateral Custodian in its individual
capacity and as Collateral Custodian represents and warrants as follows:

 

(a)                                  Organization;
Power and Authority.  It is a
duly organized and validly existing national banking association in good
standing under the laws of the United States. 
It has full corporate power, authority and legal right to execute,
deliver and perform its obligations as Collateral Custodian under this
Agreement.

 

(b)                                 Due
Authorization.  The
execution and delivery of this Agreement and the consummation of the
transactions provided for herein have been duly authorized by all necessary
association action on its part, either in its individual capacity or as
Collateral Custodian, as the case may be.

 

(c)                                  No Conflict.  The execution and delivery of this Agreement,
the performance of the transactions contemplated hereby and the fulfillment of
the terms hereof will not conflict with, result in any breach of its articles
of incorporation or bylaws or any of the material terms and provisions of, or
constitute (with or without notice or lapse of time or both) a default under
any indenture, contract, agreement, mortgage, deed of trust, or other
instrument to which the Collateral Custodian is a party or by which it or any
of its property is bound.

 

(d)                                 No Violation.  The execution and delivery of this Agreement,
the performance of the transactions contemplated hereby and the fulfillment of
the terms hereof will not conflict with or violate, in any material respect,
any Applicable Law.

 

(e)                                  All Consents
Required.  All
approvals, authorizations, consents, orders or other actions of any Person or
Governmental Authority applicable to the Collateral Custodian, required in
connection with the execution and delivery of this Agreement, the performance
by 

 

79

 

the
Collateral Custodian of the transactions contemplated hereby and the
fulfillment by the Collateral Custodian of the terms hereof have been obtained.

 

(f)                                    Validity, Etc.  The Agreement constitutes the legal, valid
and binding obligation of the Collateral Custodian, enforceable against the
Collateral Custodian in accordance with its terms, except as such
enforceability may be limited by applicable Bankruptcy Laws and general
principles of equity (whether considered in a suit at law or in equity).

 

ARTICLE V.

 

GENERAL COVENANTS

 

SECTION 5.01                                                                    Affirmative
Covenants of the Borrower.

 

From the Closing Date until
the Collection Date:

 

(a)                                  Organizational
Procedures and Scope of Business.  The Borrower will observe all organizational
procedures required by its certificate of formation, limited liability company
agreement and the laws of its jurisdiction of formation. Without limiting the
foregoing, the Borrower will limit the scope of its business to: (i) the
acquisition of Eligible Loan Assets and the ownership and management of the
Portfolio Assets and the related assets in the Collateral Portfolio; (ii) the
sale, transfer or other disposition of Loan Assets as and when permitted under
the Transaction Documents; (iii) entering into and performing under the
Transaction Documents; (iv) consenting or withholding consent as to
proposed amendments, waivers and other modifications of the Loan Agreements to
the extent not in conflict with the terms of this Agreement or any other
Transaction Document; (v) exercising any rights (including but not limited
to voting rights and rights arising in connection with a Bankruptcy Event with
respect to an Obligor or the consensual or non-judicial restructuring of the
debt or equity of an Obligor) or remedies in connection with the Loan Assets
and participating in the committees (official or otherwise) or other groups
formed by creditors of an Obligor to the extent not in conflict with the terms
of this Agreement or any other Transaction Document; and (vi) to engage in
any activity and to exercise any powers permitted to limited liability
companies under the laws of the State of Delaware that are related to the
foregoing and necessary, convenient or advisable to accomplish the foregoing.

 

(b)                                 Special Purpose
Entity Requirements.  The
Borrower will at all times:  (i) maintain
at least one Independent Director; (ii) maintain its own separate books
and records and bank accounts; (iii) hold itself out to the public and all
other Persons as a legal entity separate from the Equityholder and any other
Person (although, in connection with certain advertising and marketing, the
Borrower may be identified as a Subsidiary of Ares); (iv) have a Board of
Directors separate from that of the Equityholder and any other Person; (v) file
its own tax returns, if any, as may be required under Applicable Law, to the
extent (1) not part of a consolidated group filing a consolidated return
or returns or (2) not treated as a division for tax purposes of another taxpayer,
and pay any Taxes so required to be paid under Applicable Law in accordance
with the terms of this Agreement; (vi) except as contemplated by the
Transaction Documents, not commingle its assets with assets of any other
Person; (vii) conduct its business 

 

80

 

in
its own name and strictly comply with all organizational formalities to
maintain its separate existence (although, in connection with certain
advertising and marketing, the Borrower may be identified as a Subsidiary of
Ares); (viii) maintain separate financial statements, except to the extent
that the Borrower’s financial and operating results are consolidated with those
of Ares in consolidated financial statements; (ix) pay its own liabilities
only out of its own funds; (x) maintain an arm’s-length relationship with
its Affiliates and the Equityholder; (xi) pay the salaries of its own
employees, if any; (xii) not hold out its credit or assets as being available
to satisfy the obligations of others; (xiii) maintain separate office space
(which may be a separately identified area in office space shared with one or
more Affiliates of the Borrower) and allocate fairly and reasonably any
overhead for shared office space; (xiv) use separate stationery, invoices and
checks (although, in connection with certain advertising and marketing, the
Borrower may be identified as a Subsidiary of Ares); (xv) except as expressly
permitted by this Agreement, not pledge its assets as security for the
obligations of any other Person; (xvi) correct any known misunderstanding
regarding its separate identity; (xvii) maintain adequate capital in light of
its contemplated business purpose, transactions and liabilities and pay its
operating expenses and liabilities from its own assets; (xviii) cause its Board
of Directors to meet at least annually or act pursuant to written consent and
keep minutes of such meetings and actions and observe in all material respects
all other Delaware limited liability company formalities; (xix) not acquire the
obligations or any securities of its Affiliates; and (xx) cause the directors,
officers, agents and other representatives of the Borrower to act at all times
with respect to the Borrower consistently and in furtherance of the foregoing and
in the best interests of the Borrower. Where necessary, the Borrower will
obtain proper authorization from its members for limited liability company
action.

 

(c)                                  Preservation of
Company Existence.  The
Borrower will maintain its limited liability company existence in good standing
under the laws of its jurisdiction of formation and will promptly obtain and
thereafter maintain qualifications to do business as a foreign limited
liability company in any other state in which it does business and in which it is
required to so qualify under Applicable Law.

 

(d)                                 Compliance with
Legal Opinions.  The
Borrower shall take all other actions necessary to maintain the accuracy of the
factual assumptions set forth in the legal opinions of Latham &
Watkins LLP, as special counsel to the Borrower, issued in connection with the
Purchase and Sale Agreements and relating to the issues of substantive
consolidation and true sale of the Loan Assets.

 

(e)                                  Deposit of
Collections.  The
Borrower shall promptly (but in no event later than two Business Days after
receipt) deposit or cause to be deposited into the Collection Account any and
all Available Collections received by the Borrower, the Servicer or any of
their Affiliates.

 

(f)                                    Disclosure of
Purchase Price.  The
Borrower shall disclose to the Agent and the Note Purchaser the purchase price
for each Loan Asset proposed to be transferred to the Equityholder and then to
the Borrower pursuant to the terms of the Purchase and Sale Agreements.

 

81

 

(g)                                 Obligor
Defaults.  The
Borrower shall give, or shall cause Servicer to give, notice to the Agent and
the Note Purchaser within two Business Days of the Borrower’s, the Transferor’s
or the Servicer’s actual knowledge of the occurrence of any default by an
Obligor under any Loan Asset.

 

(h)                                 Required Loan
Documents.  The
Borrower shall deliver to the Collateral Custodian a hard copy of the Required
Loan Documents and the Loan Asset Checklist pertaining to each Loan Asset
within five Business Days of the Cut-Off Date pertaining to such Loan Asset.

 

(i)                                     Taxes.  The Borrower 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 4.01(m)).

 

(j)                                     Notice of Event
of Default.  The
Borrower shall notify the Agent of the occurrence of any Event of Default under
this Agreement promptly upon obtaining actual knowledge of such event. In
addition, no later than two Business Days following the Borrower’s knowledge or
notice of the occurrence of any Event of Default, the Borrower will provide to
the Agent a written statement of a Responsible Officer of the Borrower setting
forth the details of such event and the action that the Borrower proposes to
take with respect thereto.

 

(k)                                  Notice of
Material Events.  The
Borrower shall, promptly upon becoming aware thereof, notify the Agent of any
event or other circumstance that is reasonably likely to have a Material
Adverse Effect.

 

(l)                                     Notice of Income
Tax Liability.  The
Borrower shall furnish to the Agent 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 Borrower
itself 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.

 

(m)                               Notice of
Auditors’ Management Letters.  The Borrower shall promptly notify the Agent
after the receipt of any auditors’ management letters received by the Borrower
or by its accountants.

 

(n)                                 Notice of
Breaches of Representations and Warranties under this Agreement.  The Borrower shall promptly notify the Agent
if any representation or warranty set forth in Section 4.01 or Section 4.02
was incorrect at the time it was given or deemed to have been given and at the
same time deliver to 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 Borrower shall notify the Agent in the
manner set forth in the preceding sentence before any Cut-Off Date of any facts
or circumstances within the knowledge of the Borrower which would render any of
the said representations and 

 

82

 

warranties
untrue at the date when such representations and warranties were made or deemed
to have been made.

 

(o)                                 Notice of
Breaches of Representations and Warranties under the Purchase and Sale
Agreements.  The
Borrower confirms and agrees that the Borrower will, upon receipt of notice or
discovery thereof, promptly send to the Agent and the Trustee a notice of (i) any
breach of any representation, warranty, agreement or covenant under either of
the Purchase and Sale Agreements or (ii) any event or occurrence that,
upon notice, or upon the passage of time or both, would constitute such a
breach, in each case, promptly upon learning thereof

 

(p)                                 Notice of
Proceedings.  The
Borrower shall notify the Agent, as soon as possible and in any event within
three Business Days, after the Borrower receives notice or obtains knowledge
thereof, 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 Collateral Portfolio, the Transaction Documents, the
Trustee’s, for the benefit of the Secured Parties, interest in the Collateral
Portfolio, or the Borrower, the Servicer, the Equityholder or the Transferor or
any of their Affiliates. For purposes of this Section 5.01(p), (i) any
settlement, judgment, labor controversy, litigation, action, suit or proceeding
affecting the Collateral Portfolio, the Transaction Documents, the Trustee’s,
for the benefit of the Secured Parties, interest in the Collateral Portfolio,
or the Borrower or the Equityholder in excess of $1,000,000 shall be deemed to
be material and (ii) any settlement, judgment, labor controversy,
litigation, action, suit or proceeding affecting the Servicer or the Transferor
or any of their Affiliates (other than the Borrower or the Equityholder) in
excess of $25,000,000 shall be deemed to be material.

 

(q)                                 Notice of ERISA
Reportable Events.  The
Borrower shall promptly notify the Agent 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
Borrower (or any Affiliate thereof), a copy of such notice.

 

(r)                                    Notice of
Accounting Changes.  As soon as
possible and in any event within three Business Days after the effective date
thereof, the Borrower will provide to the Agent notice of any change in the
accounting policies of the Borrower.

 

(s)                                  Additional
Documents.  The
Borrower shall provide the Agent with copies of such documents as the Agent may
reasonably request evidencing the truthfulness of the representations set forth
in this Agreement.

 

(t)                                    Protection of
Security Interest.  With
respect to the Collateral Portfolio acquired by the Borrower, the Borrower will
(i) with respect to the Collateral Portfolio acquired on and after the
Restatement Date, acquire such Collateral Portfolio pursuant to and in
accordance with the terms of the Second Tier Purchase and Sale Agreement, (ii) (at
the expense of the Servicer, on behalf of the Borrower) take all action
necessary to perfect, protect and more fully evidence the Borrower’s ownership
of such Collateral Portfolio free and clear of any Lien other than the Lien
created hereunder and Permitted Liens, including, without limitation, (a) with

 

83

 

respect
to the Loan Assets and that portion of the Collateral Portfolio in which a
security interest may be perfected by filing, filing and maintaining (at the
expense of the Servicer, on behalf of the Borrower), effective financing
statements against the Equityholder in all necessary or appropriate filing
offices, (including any amendments thereto or assignments thereof) and filing
continuation statements, amendments or assignments with respect thereto in such
filing offices, (including any amendments thereto or assignments thereof) and (b)
executing or causing to be executed such other instruments or notices as may be
necessary or appropriate, (iii) (at the expense of the Servicer, on behalf
of the Borrower) take all action necessary to cause a valid, subsisting and
enforceable first priority perfected security interest, subject only to
Permitted Liens, to exist in favor of the Trustee (for the benefit of the
Secured Parties) in the Borrower’s interests in all of the Collateral Portfolio
being Pledged hereunder including the filing of a UCC financing statement in
the applicable jurisdiction adequately describing the Collateral Portfolio
(which may include an “all asset” filing), and naming the Borrower as debtor
and the Trustee as the secured party, and filing continuation statements,
amendments or assignments with respect thereto in such filing offices,
(including any amendments thereto or assignments thereof), (iv) permit the
Agent or its agents or representatives to visit the offices of the Borrower
during normal office hours and upon reasonable advance notice examine and make
copies of all documents, books, records and other information concerning the
Collateral Portfolio and discuss matters related thereto with any of the
officers or employees of the Borrower having knowledge of such matters, and (v) take
all additional action that the Agent or the Trustee may reasonably request to
perfect, protect and more fully evidence the respective first priority perfected
security interests of the parties to this Agreement in the Collateral
Portfolio, or to enable the Agent or the Trustee to exercise or enforce any of
their respective rights hereunder.

 

(u)                                 Liens. The Borrower
will promptly notify the Agent of the existence of any Lien on the Collateral
Portfolio (other than Permitted Liens) and the Borrower shall defend the right,
title and interest of the Trustee, for the benefit of the Secured Parties, in,
to and under the Collateral Portfolio against all claims of third parties.

 

(v)                                 Other Documents.  At any time from time to time upon prior
written request of the Agent, at the sole expense of the Borrower, the Borrower
will promptly and duly execute and deliver such further instruments and
documents and take such further actions as the Agent may reasonably request for
the purposes of obtaining or preserving the full benefits of this Agreement
including the first priority security interest (subject only to Permitted
Liens) granted hereunder and of the rights and powers herein granted
(including, among other things, authorizing the filing of such UCC financing
statements as the Agent may request).

 

(w)                               Compliance with
Law.  The Borrower shall at all times
comply in all material respects with all Applicable Law applicable to Borrower
or any of its assets (including, without limitation, Environmental Laws, and
all federal securities laws), and Borrower shall do or cause to be done all
things necessary to preserve and maintain in full force and effect its legal
existence, and all licenses material to its business.

 

(x)                                   Proper Records.  The Borrower shall at all times keep proper
books of records and accounts in which full, true and correct entries shall be
made of its transactions in accordance with GAAP.

 

84

 

(y)                                 Satisfaction of
Obligations.  The
Borrower shall pay, discharge or otherwise satisfy at or before maturity or
before they become delinquent, as the case may be, all its material obligations
of whatever nature, except where the amount or validity thereof is currently
being contested in good faith by appropriate proceedings and reserves with
respect thereto have been provided on the books of the Borrower.

 

(z)                                   Performance of
Covenants.  The
Borrower shall observe, perform and satisfy all the material terms, provisions,
covenants and conditions required to be observed, performed or satisfied by it,
and shall pay when due all costs, fees and expenses required to be paid by it,
under the Transaction Documents. The Borrower shall pay and discharge all
Taxes, levies, liens and other charges on it or its assets and on the
Collateral Portfolio that, in each case, in any manner would create any lien or
charge upon the Collateral Portfolio, except for any such Taxes as are being appropriately
contested in good faith by appropriate proceedings diligently conducted and
with respect to which adequate reserves have been provided.

 

(aa)                            Tax Treatment.  The Borrower, the Transferor, the
Equityholder and the Note Purchaser shall treat the Advances advanced hereunder
as indebtedness of the Borrower (or, so long as the Borrower is treated as a
disregarded entity for U.S. federal income tax purposes, as indebtedness of the
entity of which it is considered to be a part) for U.S. federal income tax
purposes and to file any and all tax forms in a manner consistent therewith.

 

(bb)                          Maintenance of
Records.  The Borrower will maintain
records with respect to the Collateral Portfolio and the conduct and operation
of its business with no less a degree of prudence than if the Collateral
Portfolio were held by the Borrower for its own account and will furnish the
Agent, upon the reasonable request by the Agent, information with respect to
the Collateral Portfolio and the conduct and operation of its business.

 

(cc)                            Obligor
Notification Forms.  The
Borrower shall furnish the Trustee and the Agent with an appropriate power of
attorney to send (at the Agent’s discretion on the Trustee’s behalf, after the
occurrence or declaration of the Facility Maturity Date but subject to the
proviso in Section 7.02(a)) Obligor notification forms to give
notice to the Obligors of the Trustee’s interest in the Collateral Portfolio
and the obligation to make payments as directed by the Agent on the Trustee’s
behalf.

 

(dd)                          Officer’s
Certificate.  On each
anniversary of the date of this Agreement, the Borrower shall deliver an
Officer’s Certificate, in form and substance acceptable to the Agent, providing
(i) a certification, based upon a review and summary of UCC search
results, that there is no other interest in the Collateral Portfolio perfected
by filing of a UCC financing statement other than in favor of the Trustee and (ii) a
certification, based upon a review and summary of tax and judgment lien
searches satisfactory to the Agent, that there is no other interest in the
Collateral Portfolio based on any tax or judgment lien.

 

(ee)                            Continuation
Statements. The Borrower 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 Schedule I hereto or
any other financing statement filed pursuant to this Agreement or in connection
with any Advance hereunder, unless the Collection Date shall have occurred:

 

85

 

(i)                                     authorize and
deliver and 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 Trustee and the Agent an opinion of the counsel
for the Borrower, in form and substance reasonably satisfactory to the Agent,
confirming and updating the opinion delivered pursuant to Schedule I
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.

 

SECTION 5.02                                                                    Negative Covenants
of the Borrower.

 

From the Closing Date until
the Collection Date:

 

(a)                                  Special Purpose
Entity Requirements.  Except as
otherwise permitted by this Agreement, the Borrower shall not (i) guarantee any
obligation of any Person, including any Affiliate; (ii) engage, directly or
indirectly, in any business, other than the actions required or permitted to be
performed under the Transaction Documents; (iii) incur, create or assume any
Indebtedness, other than Indebtedness incurred under the Transaction Documents
and arising in connection with ordinary business expenses arising pursuant to
the transactions contemplated by this Agreement and the other Transaction
Documents; (iv) make or permit to remain outstanding any loan or advance to, or
own or acquire any stock or securities (other than any equity or other
securities retained pursuant to Section 6.05) of, any Person, except
that the Borrower may invest in those Loan Assets and other investments
permitted under the Transaction Documents and may make any advance required or
expressly permitted to be made pursuant to any provisions of the Transaction
Documents and permit the same to remain outstanding in accordance with such
provisions; (v) fail to pay its debts and liabilities from its assets when due;
(vi) create, form or otherwise acquire any Subsidiaries or (vii) release, sell,
transfer, convey or assign any Loan Asset unless in accordance with the
Transaction Documents.

 

(b)                                 Requirements
for Material Actions.  The
Borrower shall not fail to provide that the unanimous consent of all members
(including the consent of the Independent Director(s)) is required for the
Borrower to (i) dissolve or liquidate, in whole or part, or institute
proceedings to be adjudicated bankrupt or insolvent, (ii) institute or consent
to the institution of bankruptcy or insolvency proceedings against it, (iii) file
a petition seeking or consent to reorganization or relief under any applicable
federal or state law relating to bankruptcy or insolvency, (iv) seek or consent
to the appointment of a receiver, liquidator, assignee, trustee, sequestrator,
custodian or any similar official for the Borrower, (v) make any assignment for
the benefit of the Borrower’s creditors, (vi) admit in writing its inability to
pay its debts generally as they become due, or (vii) take any action in
furtherance of any of the foregoing.

 

(c)                                  Protection of
Title.  The Borrower shall not take
any action which would directly or indirectly impair or adversely affect
Borrower’s title to the Collateral Portfolio.

 

(d)                                 Transfer
Limitations.  The
Borrower shall not transfer, assign, convey, grant, bargain, sell, set over,
deliver or otherwise dispose of, or pledge or hypothecate, directly or 

 

86

 

indirectly,
any interest in the Collateral Portfolio to any person other than the Trustee
for the benefit of the Secured Parties, or engage in financing transactions or
similar transactions with respect to the Collateral Portfolio with any person
other than the Agent and the Note Purchaser, in each case, except as otherwise
expressly permitted by the terms of this Agreement.

 

(e)                                  Liens.  The Borrower shall not create, incur or
permit to exist any lien, encumbrance or security interest in or on any of the
Collateral Portfolio subject to the security interest granted by the Borrower
pursuant to this Agreement, other than Permitted Liens.

 

(f)                                    Organizational
Documents.  The
Borrower shall not modify or terminate any of the organizational or operational
documents of the Borrower without the prior written consent of the Agent.

 

(g)                                 Adverse Claims.  Subject to the terms of the Intercreditor
Agreement, the Borrower will not create, or participate in the creation of, or
permit to exist, any Liens in relation to the Concentration Account other than
as disclosed to the Agent and the Trustee and existing as of the date of this
Agreement.

 

(h)                                 Merger,
Acquisitions, Sales, etc.  The
Borrower 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), or liquidate, wind up or dissolve itself
(or suffer any liquidation, winding up or dissolution) without the prior
written consent of the Agent.

 

(i)                                     Use of Proceeds.  The Borrower shall not use the proceeds of
any Advance other than to finance the purchase by the Borrower from the
Equityholder on a “true sale” basis, of Collateral Portfolio pursuant to the
terms of the Second Tier Purchase and Sale Agreement.

 

(j)                                     Limited Assets.  The Borrower shall not hold or own any assets
that are not part of the Collateral Portfolio other than with respect to any
assets released from the Lien of the Trustee hereunder following (i) a
substitution effected in accordance with Section 2.07(a) (so long as the
Borrower has Pledged a Substitute Eligible Loan Asset in connection therewith),
(ii) an Optional Sale in connection with a Permitted Refinancing effected in
accordance with Section 2.07(c), (iii) a Lien Release Dividend effected
in accordance with Section 2.07(d) or (iv) a repurchase or substitution
of a Warranty Loan Asset effected in accordance with Section 2.07(e).

 

(k)                                  Tax Treatment.  The Borrower 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.

 

(l)                                     Extension or
Amendment of Collateral Portfolio.  The Borrower will not, except as otherwise
permitted in Section 6.04(a) of this Agreement and in accordance with
the Credit Policy and the Servicing Standard, extend, amend or otherwise modify
the terms of any Loan Asset (including the Underlying Collateral).

 

(m)                               Second Tier
Purchase and Sale Agreement.  The Borrower will not amend, modify, waive or
terminate any provision of the Second Tier Purchase and Sale Agreement without
the prior written consent of the Agent.

 

87

 

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

 

(o)                                 ERISA Matters.  The Borrower 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 Borrower
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
Borrower, 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 reporting requirements have been waived by regulations.

 

(p)                                 Instructions to
Obligors.  On or prior
to the Account Transition Deadline, the Borrower will not make any change, or
permit the Servicer to make any change, in its instructions to Obligors
regarding payments to be made with respect to the Collateral Portfolio to the
Concentration Account (other than the instructions directing Obligors to make
payments directly to the Collection Account), unless the Agent has consented to
such change (such consent not to be unreasonably withheld or delayed). After
the Account Transition Deadline, the Borrower will not make any change, or
permit the Servicer to make any change, in its instructions to Obligors
regarding payments to be made with respect to the Collateral Portfolio to the
Collection Account, unless the Agent has consented to such change (such consent
not to be unreasonably withheld or delayed, it being understood that any such
account to which the Obligors may be instructed to make payments shall be
subject to an account control agreement which provides the Trustee with a first
priority perfected security interest in such account, as evidenced by an
Opinion of Counsel reasonably acceptable to the Agent).

 

(q)                                 Taxable
Mortgage Pool Matters.  The
sum of the Outstanding Balances of all Loan Assets owned by the Borrower and
that are principally secured by an interest in real property (within the
meaning of Treasury Regulation Section 301.7701(i)-1(d)(3)) shall not at any
time exceed 35% of the aggregate Outstanding Balance of all Loan Assets.

 

(r)                                    Change of
Jurisdiction, Location, Names or Location of Loan Asset Files. The Borrower
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 (other than those listed on Schedule II
hereto, as such schedule may be revised from time to time to reflect name
changes and name usage permitted under the terms of this Section 5.02(r)
after compliance with all terms and conditions of this Section 5.02(r) related
thereto) unless, prior to the effective date of any such change in the
jurisdiction of its formation, name change or use, the Borrower receives prior
written consent from the Agent of such change and delivers to 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 

 

88

 

the
Agent may request in connection therewith. 
The Borrower will not change the location of its chief executive office
unless prior to the effective date of any such change of location, the Borrower
notifies the Agent of such change of location in writing. The Borrower will not
move, or consent to the Collateral Custodian or the Servicer moving, the Loan
Asset Files from the location thereof on the Restatement Date, unless 30 days
prior to the effective date of any such move, the Borrower notifies the Agent
of such move in writing.

 

(s)                                  Allocation of
Charges.  There will not be any
agreement or understanding between the Servicer and the Borrower (other than as
expressly set forth herein or as consented to by the Agent), providing for the
allocation or sharing of obligations to make payments or otherwise in respect
of any Taxes, fees, assessments or other governmental charges; provided that it is understood and
acknowledged that the Borrower will be consolidated with the Servicer for tax
purposes.

 

(t)                                    Deposits to
Special Accounts.  On or prior
to the Account Transition Deadline, except as otherwise contemplated by the
Intercreditor Agreement, the Borrower will not deposit or otherwise credit, or
cause to be so deposited or credited, to the Concentration Account cash or cash
proceeds other than Available Collections in respect of the Collateral
Portfolio. After the Account Transition Deadline, the Borrower will not deposit
or otherwise credit, or cause to be so deposited or credited, to the Collection
Account cash or cash proceeds other than Available Collections in respect of
the Collateral Portfolio.

 

(u)                                 Changes in
Payment Instructions to Obligors.  On or prior to the Account Transition
Deadline, the Borrower will not add or terminate any bank as a Concentration
Account Bank or the Concentration Account (as defined herein), unless the Agent
has consented to such addition or termination (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.

 

SECTION 5.03                                                                    Affirmative
Covenants of the Servicer.

 

From the Closing Date until
the Collection Date:

 

(a)                                  Compliance with
Law.  The Servicer will comply in
all material respects with all Applicable Law, including those with respect to
servicing the Collateral Portfolio or any part thereof pursuant to the terms
hereof.

 

(b)                                 Preservation of
Company Existence.  The
Servicer 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.

 

(c)                                  Obligations and
Compliance with Collateral Portfolio.  The Servicer will duly fulfill and comply
with all obligations on the part of the Borrower to be fulfilled or complied
with under or in connection with the administration of each item of Collateral
Portfolio and will do nothing to impair the rights of the Trustee, for the
benefit of the Secured Parties, or of the Secured Parties in, to and under the
Collateral Portfolio.  It is understood
and agreed that 

 

89

 

the
Servicer does not hereby assume any obligations of the Borrower in respect of
any Advances or assume any responsibility for the performance by the Borrower
of any of its obligations hereunder or under any other agreement executed in
connection herewith that would be inconsistent with the limited recourse
undertaking of the Servicer, in its capacity as seller, under Section 2.1(e) of
the First Tier Purchase and Sale Agreement.

 

(d)                                 Keeping of
Records and Books of Account.

 

(i)                                     The Servicer
will maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing Collateral
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 Collateral Portfolio and the
identification of the Collateral Portfolio.

 

(ii)                                  The Servicer
shall permit the Agent or its respective agents or representatives, to visit
the offices of the Servicer during normal office hours and upon reasonable
advance notice and examine and make copies of all documents, books, records and
other information concerning the Collateral Portfolio and the Servicer’s
servicing thereof and discuss matters related thereto with any of the officers
or employees of the Servicer having knowledge of such matters.

 

(iii)                               The Servicer
will on or prior to the Restatement Date, mark its master data processing records
and other books and records relating to the Collateral Portfolio with a legend,
acceptable to the Agent describing (i) the sale of the Collateral Portfolio (A)
from the Transferor to the Equityholder and (B) from the Equityholder to the
Borrower and (ii) the Pledge from the Borrower to the Trustee, for the benefit
of the Secured Parties.

 

(e)                                  Preservation of
Security Interest.  The
Servicer (at its own expense, on behalf of the Borrower) will file such
financing and continuation statements and any other documents that may be
required by any law or regulation of any Governmental Authority to preserve and
protect fully the first priority perfected security interest of the Trustee,
for the benefit of the Secured Parties, in, to and under the Loan Assets and that
portion of the Collateral Portfolio in which a security interest may be
perfected by filing.

 

(f)                                    Credit Policy.  The Servicer will (i) comply in all material
respects with the Credit Policy and the Servicing Standard in regard to the
Collateral Portfolio, and (ii) furnish to the Agent, prior to its effective
date, prompt written notice of any changes in the Credit Policy.  The Servicer 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.

 

(g)                                 Events of
Default.  The Servicer will provide the
Agent (with a copy to the Trustee) with immediate written notice of the
occurrence of each Event of Default and each 

 

90

 

Unmatured
Event of Default of which the Servicer has knowledge or has received
notice.  In addition, no later than two
Business Days following the Servicer’s knowledge or notice of the occurrence of
any Event of Default or Unmatured Event of Default, the Servicer will provide
to the Trustee and the Agent a written statement of the chief financial officer
or chief accounting officer of the Servicer setting forth the details of such
event and the action that the Servicer proposes to take with respect thereto.

 

(h)                                 Taxes.  The Servicer will file its tax returns and pay
any and all Taxes imposed on it or its property as required under the
Transaction Documents (except as contemplated by Section 4.03(m)).

 

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

 

(j)                                     Proceedings
Related to the Borrower, the Transferor and the Servicer and the Transaction
Documents.  The
Servicer shall notify the Agent as soon as possible and in any event within
three Business Days after any executive officer of the Servicer receives notice
or obtains knowledge thereof of any settlement of, judgment (including a
judgment with respect to the liability phase of a bifurcated trial) in or
commencement of any labor controversy, litigation, action, suit or proceeding
before any court or governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, that could reasonably be expected to
have a Material Adverse Effect on the Borrower, the Transferor or the Servicer
(or any of their Affiliates) or the Transaction Documents. Solely for purposes
of this Section 5.03(j), (i) any settlement, judgment, labor
controversy, litigation, action, suit or proceeding affecting the Transaction
Documents or the Borrower in excess of $1,000,000 shall be deemed to be
expected to have such a Material Adverse Effect and (ii) any settlement,
judgment, labor controversy, litigation, action, suit or proceeding affecting
the Servicer or the Transferor or any of their Affiliates (other than the
Borrower) in excess of $25,000,000 shall be deemed to be expected to have such
a Material Adverse Effect.

 

(k)                                  Deposit of
Collections. The Servicer shall promptly (but in no event later
than two Business Days after receipt) deposit or cause to be deposited into the
Collection Account any and all Available Collections received by the Borrower,
the Servicer or any of their Affiliates.

 

(l)                                     Loan Asset
Register.

 

(i)                                     The Servicer
shall maintain, or cause to be maintained, with respect to each Noteless Loan
Asset a register (which may be in physical or electronic form and readily
identifiable as the loan asset register) (each, a “Loan Asset Register”) in
which it will record, or cause to be recorded, (v) the amount of such Noteless
Loan Asset, (w) the amount of any principal or interest due and payable or to
become due and payable from the Obligor thereunder, (x) the amount of any sum
in respect of such Noteless Loan 

 

91

 

Asset received from the
Obligor, (y) the date of origination of such Noteless Loan Asset and (z) the
maturity date of such Noteless Loan Asset.

 

(ii)                                  At any time a
Noteless Loan Asset is included as part of the Collateral Portfolio pursuant to
this Agreement, the Servicer shall deliver to the Agent, the Trustee and the
Collateral Custodian a copy of the related Loan Asset Register, together with a
certificate of a Responsible Officer of the Servicer (in the form of Exhibit
R) certifying to the accuracy of such Loan Asset Register as of the
applicable Cut-Off Date.

 

(m)                               Special Purpose
Entity Requirements.  The
Servicer shall take such actions as are necessary to cause the Borrower to be
in compliance with the special purpose entity requirements set forth in Sections
5.01(a) and (b) and 5.02(a) and (b).

 

(n)                                 Accounting
Changes.  As soon as possible and in any
event within three Business Days after the effective date thereof, the Servicer
will provide to the Agent notice of any change in the accounting policies of
the Servicer.

 

(o)                                 Proceedings
Related to the Collateral Portfolio.  The Servicer shall notify the Agent as soon
as possible and in any event within three Business Days after any Responsible
Officer of the Servicer receives notice or has actual knowledge of any
settlement of, judgment (including a judgment with respect to the liability
phase of a bifurcated trial) in or commencement of any labor controversy,
litigation, action, suit or proceeding before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, that could reasonably be expected to have a Material Adverse Effect on
the interests of the Trustee or the Secured Parties in, to and under the
Collateral Portfolio. Solely, for purposes of this Section 5.03(o), any
settlement, judgment, labor controversy, litigation, action, suit or proceeding
affecting the Collateral Portfolio or the Trustee’s or the Secured Parties’
interest in the Collateral Portfolio that may reduce the value of the
Collateral Portfolio in excess of $2,500,000 or more shall be deemed to be
expected to have such a Material Adverse Effect.

 

(p)                                 Compliance with
Legal Opinions. The Servicer shall take all other actions
necessary to maintain the accuracy of the factual assumptions set forth in the
legal opinions of Latham & Watkins LLP, as special counsel to the Servicer,
issued in connection with the Transaction Documents and relating to the issues
of substantive consolidation and true sale of the Loan Assets.

 

(q)                                 Instructions to
Agents and Obligors. The Servicer shall direct, or shall cause the
Transferor or the Equityholder to direct, any agent or administrative agent for
any Loan Asset to remit all payments and collections with respect to such Loan
Asset, and, if applicable, to direct the Obligor with respect to such Loan
Asset to remit all such payments and collections with respect to such Loan
Asset directly to (i) on or prior to the Account Transition Deadline, the
Concentration Account or the Collection Account and (ii) after the Account
Transition Deadline, the Collection Account. The Borrower and the Servicer
shall take commercially reasonable steps to ensure, and shall cause the
Transferor or the Equityholder to take commercially reasonable steps to ensure,
that only funds constituting payments and collections relating to Loan Assets
shall be deposited into the Collection Account.

 

92

 

(r)                                    Capacity as
Servicer. The Servicer will ensure that, at all times when
it is dealing with or in connection with the Loan Assets in its capacity as
Servicer, it holds itself out as Servicer, and not in any other capacity.

 

(s)                                  Notice of
Breaches of Representations and Warranties under the Purchase and Sale
Agreements.  The
Servicer confirms and agrees that the Servicer will, upon receipt of notice or
discovery thereof, promptly send to the Agent and the Trustee a notice of (i) any
breach of any representation, warranty, agreement or covenant under either of
the Purchase and Sale Agreements or (ii) any event or occurrence that, upon
notice, or upon the passage of time or both, would constitute such a breach, in
each case, promptly upon learning thereof

 

(t)                                    Audits. Prior to the
Restatement Date and periodically thereafter at the discretion of the Agent,
the Servicer shall allow the Agent (during normal office hours and upon
reasonable advance notice) to review the Servicer’s collection and
administration of the Collateral Portfolio in order to assess compliance by the
Servicer with the Credit Policy and the Servicing Standard, as well as with the
Transaction Documents and to conduct an audit of the Collateral Portfolio and
Required Loan Documents in conjunction with such a review.  Such review shall be reasonable in scope and
shall be completed in a reasonable period of time.

 

(u)                                 Notice of
Breaches of Representations and Warranties under this Agreement.  The Servicer shall promptly, upon receipt of
notice or discovery thereof, notify the Agent if any representation or warranty
set forth in Section 4.03 was incorrect at the time it was given or
deemed to have been given and at the same time deliver to 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 Servicer shall notify the Agent in the manner set forth in the
preceding sentence before any Cut-Off Date of any facts or circumstances within
the knowledge of the Servicer 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.

 

(v)                                 Insurance
Policies. The Servicer has caused, and will cause, to be
performed any and all acts reasonably required to be performed to preserve the
rights and remedies of the Trustee and the Secured Parties in any Insurance
Policies applicable to Loan Assets (to the extent the Servicer or an Affiliate
of the Servicer is the agent or servicer under the applicable Loan Agreement)
including, without limitation, in each case, any necessary notifications of
insurers, assignments of policies or interests therein, and establishments of
co-insured, joint loss payee and mortgagee rights in favor of the Trustee and
the Secured Parties; provided
that, unless the Borrower is the sole lender under such Loan Agreement, the
Servicer shall only take such actions that are customarily taken by or on
behalf of a lender in a syndicated loan facility to preserve the rights of such
lender.

 

(w)                               Concentration
Account.  The Servicer will maintain
exclusive ownership, dominion and control (subject to the terms of the
Intercreditor Agreement) of the Concentration Account and shall not grant the
right to take dominion and control of the Concentration Account to any Person,
except to the Agent as contemplated by this Agreement and except as otherwise
contemplated by the Intercreditor Agreement.

 

93

 

SECTION 5.04                                                                    Negative Covenants
of the Servicer.

 

From the Closing Date until
the Collection Date:

 

(a)                                  Mergers,
Acquisition, Sales, etc. 
Other than the Acquisition, the Servicer will not consolidate with or
merge into any other Person or convey or transfer its properties and assets
substantially as an entirety to any Person, unless the Servicer is the
surviving entity and unless:

 

(i)                                     the Servicer
has delivered to the Agent an Officer’s Certificate and an Opinion of Counsel
each stating that any such consolidation, merger, conveyance or transfer and
any supplemental agreement executed in connection therewith comply with this Section
5.04 and that all conditions precedent herein provided for relating to such
transaction have been complied with and, in the case of the Opinion of Counsel,
that such supplemental agreement is legal, valid and binding with respect to
the Servicer and such other matters as the Agent may reasonably request;

 

(ii)                                  the Servicer
shall have delivered notice of such consolidation, merger, conveyance or transfer
to the Agent;

 

(iii)                               after giving
effect thereto, no Event of Default or Servicer Termination Event or event that
with notice or lapse of time would constitute either an Event of Default or a
Servicer Termination Event shall have occurred; and

 

(iv)                              the Agent shall
have consented in writing to such consolidation, merger, conveyance or
transfer.

 

(b)                                 Change of Name
or Location of Loan Asset Files.  The Servicer 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 Collateral
Portfolio from the address set forth under its name in Section 11.02, 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 thereof on the initial Advance Date, unless the Servicer has
given at least 30 days’ written notice to 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 Trustee, for the benefit of
the Secured Parties, in the Collateral Portfolio.

 

(c)                                  Change in
Payment Instructions to Obligors.  On or prior to the Account Transition
Deadline, the Servicer will not make any change in its instructions to Obligors
regarding payments to be made with respect to the Collateral Portfolio to the
Concentration Account (other than the instructions directing Obligors to make
payments directly to the Collection Account), unless the Agent has consented to
such change (such consent not to be unreasonably withheld or delayed).  After the Account Transition Deadline, the
Servicer will not make any change in its instructions to Obligors regarding
payments to be made with respect to the Collateral Portfolio to the Collection
Account, unless the Agent has consented to such change (such consent not to be
unreasonably withheld or delayed, it being understood that any such account to
which the Obligors may be instructed to make payments shall be subject to an
account 

 

94

 

control
agreement which provides the Trustee with a first priority perfected security
interest in such account, as evidenced by an Opinion of Counsel reasonably
acceptable to the Agent).

 

(d)                                 Extension or
Amendment of Loan Assets.  The
Servicer will not, except as otherwise permitted in Section 6.04(a),
extend, amend or otherwise modify the terms of any Loan Asset (including the
Underlying Collateral).

 

(e)                                  Taxable
Mortgage Pool Matters.  The
Servicer will manage the portfolio and advise the Borrower with respect to
purchases from the Equityholder so as to not at any time allow the sum of the
Outstanding Balances of all Loan Assets owned by the Borrower and that are
principally secured by an interest in real property (within the meaning of
Treasury Regulation Section 301.7701(i)-1(d)(3)) to exceed 35% of the aggregate
Outstanding Balance of all Loan Assets.

 

(f)                                    Allocation of
Charges. There will not be any agreement or understanding between the Servicer
and the Borrower (other than as expressly set forth herein or as consented to
by the Agent), providing for the allocation or sharing of obligations to make
payments or otherwise in respect of any Taxes, fees, assessments or other
governmental charges; provided
that it is understood and acknowledged that the Borrower will be consolidated
with the Servicer for tax purposes.

 

(g)                                 Adverse Claims.  Subject to the terms of the Intercreditor
Agreement, the Servicer will not create, or participate in the creation of, or
permit to exist, any Liens in relation to the Concentration Account other than
as disclosed to the Agent and the Trustee and existing as of the date of this
Agreement.

 

(h)                                 Deposits to
Special Accounts.  Except as
otherwise contemplated by the Intercreditor Agreement, the Servicer will not
deposit or otherwise credit, or cause to be so deposited or credited, to the
Concentration Account cash or cash proceeds other than Available Collections in
respect of the Collateral Portfolio.

 

(i)                                     Changes in
Payment Instructions to Obligors.  The Servicer 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 Servicer to make any change, in its
instructions to Obligors regarding payments to be made with respect to the
Collateral Portfolio to the Concentration Account Bank (other than instructions
directing the Obligors to make payments directly 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.

 

SECTION 5.05                                                                    Affirmative
Covenants of the Trustee.

 

From the Closing Date until
the Collection Date:

 

(a)                                  Compliance with
Law.  The Trustee will comply in all
material respects with all Applicable Law.

 

95

 

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

 

SECTION 5.06                                                                    Negative
Covenants of the Trustee.

 

From
the Closing Date until the Collection Date, the Trustee will not make any
changes to the Trustee Fees without the prior written approval of the Agent.

 

SECTION 5.07                                                                    Affirmative
Covenants of the Collateral Custodian.

 

From the Closing Date until
the Collection Date:

 

(a)                                  Compliance with
Law.  The Collateral Custodian will
comply in all material respects with all Applicable Law.

 

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

 

(c)                                  Location of
Required Loan Documents. 
Subject to Article XII of this Agreement, the Required Loan
Documents shall remain at all times in the possession of the Collateral
Custodian at the address set forth under its name in Section 11.02 unless
notice of a different address is given in accordance with the terms hereof or
unless the Agent agrees to allow certain Required Loan Documents to be released
to the Servicer on a temporary basis in accordance with the terms hereof,
except as such Required Loan Documents may be released pursuant to the terms of
this Agreement.

 

SECTION 5.08                                                                    Negative
Covenants of the Collateral Custodian.

 

From the Closing Date until
the Collection Date:

 

(a)                                  Required Loan
Documents.  The
Collateral Custodian will not dispose of any documents constituting the
Required Loan Documents in any manner that is inconsistent with the performance
of its obligations as the Collateral Custodian pursuant to this Agreement and
will not dispose of any Collateral Portfolio except as contemplated by this
Agreement.

 

(b)                                 No Changes in
Collateral Custodian Fees.  The
Collateral Custodian will not make any changes to the Collateral Custodian Fees
without the prior written approval of the Agent.

 

96

 

ARTICLE
VI.

 

ADMINISTRATION
AND SERVICING OF CONTRACTS

 

SECTION 6.01                                                                    Appointment and
Designation of the Servicer.

 

(a)                                  Initial
Servicer.  The
Borrower, the Note Purchaser and the Agent hereby appoint Ares, pursuant to the
terms and conditions of this Agreement, as Servicer, with the authority to
service, administer and exercise rights and remedies, on behalf of the
Borrower, in respect of the Collateral Portfolio. Until the Agent gives Ares a
Servicer Termination Notice, Ares hereby accepts such appointment and agrees to
perform the duties and responsibilities of the Servicer pursuant to the terms
hereof. The Servicer and the Borrower hereby acknowledge that the Agent and the
Secured Parties are third party beneficiaries of the obligations undertaken by
the Servicer hereunder.

 

(b)                                 Servicer
Termination Notice.  The
Borrower, the Servicer, the Note Purchaser, and the Agent hereby agree that,
upon the occurrence of a Servicer Termination Event, the Agent, by written
notice to the Servicer (with a copy to the Trustee) (a “Servicer
Termination Notice”), may terminate all of the rights,
obligations, power and authority of the Servicer under this Agreement. On and
after the receipt by the Servicer of a Servicer Termination Notice pursuant to
this Section 6.01(b), the Servicer shall continue to perform all
servicing functions under this Agreement until the date specified in the
Servicer Termination Notice or otherwise specified by the Agent in writing or,
if no such date is specified in such Servicer Termination Notice or otherwise
specified by the Agent, until a date mutually agreed upon by the Servicer and
the Agent and shall be entitled to receive, to the extent of funds available
therefor pursuant to Section 2.04, the Servicing Fees therefor until
such date. After such date, the Servicer agrees that it will terminate its
activities as Servicer hereunder in a manner that the Agent believes will
facilitate the transition of the performance of such activities to a successor
Servicer, and the successor Servicer shall assume each and all of the Servicer’s
obligations to service and administer the Collateral Portfolio, on the terms
and subject to the conditions herein set forth, and the Servicer shall use its
best efforts to assist the successor Servicer in assuming such obligations.

 

(c)                                  Appointment of
Replacement Servicer.  At any time
following the delivery of a Servicer Termination Notice, the Agent may, at its
discretion, (i) appoint Wachovia as Servicer under this Agreement and, in such
case, all authority, power, rights and obligations of the Servicer shall pass
to and be vested in Wachovia or (ii) appoint a new Servicer (the “Replacement
Servicer”), which appointment shall take effect upon the
Replacement Servicer accepting such appointment by a written assumption in a
form satisfactory to the Agent in its sole discretion. In the event that
Wachovia or a Replacement Servicer has not accepted its appointment at the time
when the Servicer ceases to act as Servicer, the Agent shall petition a court
of competent jurisdiction to appoint any established financial institution,
having a net worth of not less than United States $50,000,000 and whose regular
business includes the servicing of Collateral Portfolio, as the Replacement
Servicer hereunder.

 

(d)                                 Liabilities and
Obligations of Replacement Servicer. Upon its appointment,
Wachovia or the Replacement Servicer, as applicable, shall be the successor in
all 

 

97

 

respects
to the Servicer with respect to servicing functions under this Agreement and
shall be subject to all the responsibilities, duties and liabilities relating
thereto placed on the Servicer by the terms and provisions hereof, and all
references in this Agreement to the Servicer shall be deemed to refer to Wachovia
or the Replacement Servicer, as applicable; provided,
that Wachovia or Replacement Servicer, as applicable, shall have (i) no
liability with respect to any action performed by the terminated Servicer prior
to the date that Wachovia or Replacement Servicer, as applicable, becomes the
successor to the Servicer or any claim of a third party based on any alleged
action or inaction of the terminated Servicer, (ii) no obligation to perform
any advancing obligations, if any, of the Servicer unless it elects to in its
sole discretion, (iii) no obligation to pay any Taxes required to be paid by
the Servicer (provided that
Wachovia or Replacement Servicer, as applicable, shall pay any income Taxes for
which it is liable), (iv) no obligation to pay any of the fees and expenses of
any other party to the transactions contemplated hereby, and (v) no liability
or obligation with respect to any Servicer indemnification obligations of any
prior Servicer, including the original Servicer.  The indemnification obligations of Wachovia
or the Replacement Servicer, as applicable, upon becoming a Replacement
Servicer, are expressly limited to those arising on account of its failure to
act in good faith and with reasonable care under the circumstances.  In addition, Wachovia or Replacement
Servicer, as applicable, shall have no liability relating to the
representations and warranties of the Servicer contained in Section 4.03.

 

(e)                                  Authority and
Power. All authority and power granted to the Servicer under this Agreement
shall automatically cease and terminate upon termination of this Agreement and
shall pass to and be vested in the Borrower and, without limitation, the
Borrower is hereby authorized and empowered to execute and deliver, on behalf
of the Servicer, as attorney-in-fact or otherwise, all documents and other
instruments, and to do and accomplish all other acts or things necessary or
appropriate to effect the purposes of such transfer of servicing rights.  The Servicer agrees to cooperate with the
Borrower in effecting the termination of the responsibilities and rights of the
Servicer to conduct servicing of the Collateral Portfolio.

 

(f)                                    Subcontracts. The Servicer
may, with the prior written consent of the Agent, subcontract with any other
Person for servicing, administering or collecting the Collateral Portfolio; provided, that (i) the Servicer shall
select any such Person with reasonable care and shall be solely responsible for
the fees and expenses payable to any such Person, (ii) the Servicer shall not
be relieved of, and shall remain liable for, the performance of the duties and
obligations of the Servicer pursuant to the terms hereof without regard to any
subcontracting arrangement and (iii) any such subcontract shall be terminable
upon the occurrence of a Servicer Termination Event.

 

(g)                                 Servicing
Programs.  In the
event that the Servicer uses any software program in servicing the Collateral
Portfolio that it licenses from a third party, the Servicer shall use its best
efforts to obtain, either before the Closing Date or as soon as possible
thereafter, whatever licenses or approvals are necessary to allow the Agent or
the Servicer to use such program and to allow the Servicer to assign such
licenses to Wachovia or to any other Replacement Servicer appointed as provided
in this Agreement.

 

(h)                                 Waiver.  The Borrower acknowledges that the Agent or
any of its Affiliates may act as the Trustee and/or the Servicer, and the
Borrower waives any and all claims 

 

98

 

against
the Note Purchaser, the Trustee and the Servicer relating in any way to the
custodial or collateral administration functions having been performed by the
Agent or any of its Affiliates in accordance with the terms and provisions
(including the standard of care) set forth in the Transaction Documents.

 

SECTION 6.02                                                                    Duties of the
Servicer.

 

(a)                                  Duties.  The Servicer shall take or cause to be taken
all such actions as may be necessary or advisable to collect on the Collateral
Portfolio from time to time, all in accordance with Applicable Law and the
Servicing Standard.  Without limiting the
foregoing, the duties of the Servicer shall include the following:

 

(i)                                     supervising the
Collateral Portfolio, including communicating with Obligors, providing consents
and waivers, enforcing and collecting on the Collateral Portfolio and otherwise
managing the Collateral Portfolio on behalf of the Borrower;

 

(ii)                                  maintaining all
necessary servicing records with respect to the Collateral Portfolio and
providing such reports to the Agent (with a copy to the Trustee and the
Collateral Custodian) in respect of the servicing of the Collateral Portfolio
(including information relating to its performance under this Agreement) as may
be required hereunder or as the Agent may reasonably request;

 

(iii)                               maintaining and
implementing administrative and operating procedures (including, without
limitation, an ability to recreate servicing records evidencing the Collateral
Portfolio in the event of the destruction of the originals thereof) and keeping
and maintaining all documents, books, records and other information reasonably
necessary or advisable for the collection of the Collateral Portfolio;

 

(iv)                              promptly
delivering to the Agent, the Trustee or the Collateral Custodian, from time to
time, such information and servicing records (including information relating to
its performance under this Agreement) as the Agent or the Trustee may from time
to time reasonably request;

 

(v)                                 identifying
each Loan Asset clearly and unambiguously in its servicing records to reflect
that such Loan Asset is owned by the Borrower and that the Borrower is Pledging
a security interest therein to the Secured Parties pursuant to this Agreement;

 

(vi)                              notifying the
Agent of any material action, suit, proceeding, dispute, offset, deduction,
defense or counterclaim (1) that is or is threatened to be asserted by an
Obligor with respect to any Loan Asset (or portion thereof) of which it has
knowledge or has received notice; or (2) that could reasonably be expected to
have a Material Adverse Effect;

 

(vii)                           providing the
prompt written notice to the Agent, prior to the effective date thereof, of any
proposed changes in the Credit Policy;

 

99

 

(viii)                        using its best
efforts to maintain the perfected security interest of the Trustee, for the
benefit of the Secured Parties, in the Collateral Portfolio;

 

(ix)                                maintaining the
Loan Asset File with respect to Loan Assets included as part of the Collateral
Portfolio; provided that, so long
as the Servicer is in possession of any Required Loan Documents, the Servicer
will hold such Required Loan Documents in a fireproof safe or fireproof file
cabinet;

 

(x)                                   directing the
Trustee to make payments pursuant to the terms of the Servicing Report in accordance
with Section 2.04;

 

(xi)                                directing the
sale or substitution of Collateral Portfolio in accordance with Section 2.07;

 

(xii)                             providing
administrative assistance to the Borrower with respect to the purchase and sale
of and payment for the Loan Assets;

 

(xiii)                          instructing the
Obligors and the administrative agents on the Loan Assets to make payments
directly into the Collection Account established and maintained with the
Trustee;

 

(xiv)                         delivering the
Loan Asset Files and the Loan Asset Schedule to the Collateral Custodian; and

 

(xv)                            complying with
such other duties and responsibilities as may be required of the Servicer by
this Agreement.

 

It is acknowledged and
agreed that in circumstances in which a Person other than the Borrower, the
Transferor (so long as the Transferor is also the Servicer) or the Servicer
acts as lead agent with respect to any Loan Asset, the Servicer shall perform
its servicing duties hereunder only to the extent a lender under the related
loan syndication Loan Agreements has the right to do so. Notwithstanding
anything to the contrary contained herein, it is acknowledged and agreed that
the performance by the Servicer of its duties hereunder shall be limited
insofar as such performance would conflict with or result in a breach of any of
the express terms of the related Loan Agreements; provided that the Servicer shall (a) provide prompt written
notice to the Agent upon becoming aware of such conflict or breach, (b) have
determined that there is no other commercially reasonable performance that it
could render consistent with the express terms of the Loan Agreements which
would result in all or a portion of the servicing duties being performed in
accordance with this Agreement, and (c) undertake all commercially reasonable
efforts to mitigate the effects of such non-performance including performing as
much of the servicing duties as possible and performing such other commercially
reasonable and/or similar duties consistent with the terms of the Loan
Agreements.

 

(b)                                 Notwithstanding
anything to the contrary contained herein, the exercise by the Agent, the
Trustee and the Secured Parties of their rights hereunder shall not release the
Servicer, the Transferor or the Borrower from any of their duties or
responsibilities with respect to the Collateral Portfolio.  The Secured Parties, the Agent and the
Trustee shall not have any 

 

100

 

obligation
or liability with respect to any Collateral Portfolio, nor shall any of them be
obligated to perform any of the obligations of the Servicer hereunder.

 

(c)                                  Any payment by
an Obligor in respect of any indebtedness owed by it to the Transferor or the
Borrower shall, except as otherwise specified by such Obligor or otherwise
required by contract or law and unless otherwise instructed by the Agent, be
applied as a collection of a payment by such Obligor (starting with the oldest
such outstanding payment due) to the extent of any amounts then due and payable
thereunder before being applied to any other receivable or other obligation of
such Obligor.

 

SECTION 6.03                                                                    Authorization
of the Servicer.

 

(a)                                  Each of the Borrower, the
Agent and the Note Purchaser hereby authorizes the Servicer (including any
successor thereto) to take any and all reasonable steps in its name and on its
behalf necessary or desirable in the determination of the Servicer and not
inconsistent with the sale of the Collateral Portfolio by the Transferor to the
Equityholder and the Equityholder to the Borrower under the Purchase and Sale
Agreements and, thereafter, the Pledge by the Borrower to the Trustee on behalf
of the Secured Parties hereunder, to collect all amounts due under any and all
Collateral Portfolio, including, without limitation, endorsing any of their
names on checks and other instruments representing Interest Collections and
Principal Collections, executing and delivering any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
all other comparable instruments, with respect to the Collateral Portfolio and,
after the delinquency of any Collateral Portfolio and to the extent permitted
under and in compliance with Applicable Law, to commence proceedings with
respect to enforcing payment thereof, to the same extent as the Transferor could
have done if it had continued to own such Collateral Portfolio.  The Transferor, the Borrower and the Trustee
on behalf of the Secured Parties shall furnish the Servicer (and any successors
thereto) with any powers of attorney and other documents necessary or
appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder, and shall cooperate with the Servicer to the
fullest extent in order to ensure the collectability of the Collateral
Portfolio.  In no event shall the Servicer
be entitled to make the Secured Parties, the Agent, the Trustee or the Note
Purchaser a party to any litigation without such party’s express prior written
consent, or to make the Borrower a party to any litigation (other than any
routine foreclosure or similar collection procedure) without the Agent’s
consent.

 

(b)                                 After the
declaration of the Facility Maturity Date but subject to the proviso in Section
7.02(a), at the direction of the Agent, the Servicer shall take such action
as the Agent may deem necessary or advisable to enforce collection of the
Collateral Portfolio; provided,
that the Agent may, at any time that an Event of Default has occurred, notify
any Obligor with respect to any Collateral Portfolio of the assignment of such
Collateral Portfolio to the Trustee on behalf of the Secured Parties and direct
that payments of all amounts due or to become due be made directly to the Agent
or any servicer, collection agent or account designated by the Agent and, upon
such notification and at the expense of the Borrower, the Agent may enforce
collection of any such Collateral Portfolio, and adjust, settle or compromise
the amount or payment thereof.

 

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SECTION 6.04                                                                    Collection of
Payments; Accounts.

 

(a)                                  Collection
Efforts, Modification of Collateral Portfolio.  The Servicer will use its best efforts to
collect or cause to be collected, all payments called for under the terms and
provisions of the Loan Assets included in the Collateral Portfolio as and when
the same become due in accordance with the Credit Policy and the Servicing
Standard.  The Servicer may not waive,
modify or otherwise vary any provision of an item of Collateral Portfolio in a
manner that would impair the collectability of the Collateral Portfolio or in
any manner contrary to the Credit Policy or the Servicing Standard.

 

(b)                                 Acceleration.  If required by the Credit Policy or if
consistent with the Servicing Standard, the Servicer shall accelerate or vote
to accelerate, as applicable, the maturity of all or any Scheduled Payments and
other amounts due under any Loan Asset promptly after such Loan Asset becomes
defaulted.

 

(c)                                  Taxes and other
Amounts.  The Servicer will use its best
efforts to collect all payments with respect to amounts due for Taxes,
assessments and insurance premiums relating to each Loan Asset to the extent
required to be paid to the Borrower for such application under the Loan
Agreement and remit such amounts to the appropriate Governmental Authority or
insurer as required by the Loan Agreements.

 

(d)                                 Payments to
Concentration Account.  (i) On
or prior to the Account Transition Deadline, the Servicer shall have instructed
all Obligors to make all payments in respect of the Collateral Portfolio
directly to the Concentration Account or Collection Account on or before the
applicable Cut-Off Date and (ii) after the Account Transition Deadline, the
Servicer shall have instructed all Obligors to make all payments in respect of
the Collateral Portfolio directly to the Collection Account on or before the
applicable Cut-Off Date; provided
that the Servicer is not required to so instruct any Obligor which is solely a
guarantor unless and until the Servicer calls on the related guaranty.

 

(e)                                  Controlled
Accounts. Each of the parties hereto hereby agrees that (i) each
Controlled Account is intended to be a “securities account” or “deposit account”
within the meaning of the UCC and (ii) except as otherwise expressly provided
herein and in the Collection Account Agreement or Unfunded Exposure Account
Agreement, as applicable, prior to the delivery of a notice of exclusive
control, the Borrower, the Servicer and the Trustee (acting at the direction of
the Agent) shall be entitled to exercise the rights that comprise each
Financial Asset held in each Controlled Account which is a securities account
and have the right to direct the disposition of funds in any Controlled Account
which is a deposit account; provided that
after the delivery of a notice of exclusive control, such rights shall be
exclusively held by the Trustee (acting at the direction of the Agent).  Each of the parties hereto hereby agrees to
cause the securities intermediary that holds any money or other property for
the Borrower in a Controlled Account that is a securities account to agree with
the parties hereto that (A) the cash and other property (subject to Section 6.04(f)
below with respect to any property other than investment property, as defined
in Section 9-102(a)(49) of the UCC) is to be treated as a Financial Asset under
Article 8 of the UCC and (B) regardless of any provision in any other
agreement, for purposes of the UCC, with respect to the Controlled Accounts,
New York shall be deemed to be the Bank’s jurisdiction (within the meaning of Section
9-304 of the UCC) and the securities intermediary’s jurisdiction (within the
meaning of Section 8-110 of the UCC). All securities or other property
underlying any Financial Assets credited to the Controlled Accounts in the form

 

102

 

of
securities or instruments shall be registered in the name of the Bank or if in
the name of the Borrower or the Trustee, Indorsed to the Bank, Indorsed in
blank, or credited to another securities account maintained in the name of the
Bank, and in no case will any Financial Asset credited to the Controlled
Accounts be registered in the name of the Borrower, payable to the order of the
Borrower or specially Indorsed to the Borrower, except to the extent the
foregoing have been specially Indorsed to the Bank or Indorsed in blank.

 

(f)                                    Loan Agreements.  Notwithstanding any term hereof (or any term
of the UCC that might otherwise be construed to be applicable to a “securities
intermediary” as defined in the UCC) to the contrary, none of the Trustee, the
Collateral Custodian nor any securities intermediary shall be under any duty or
obligation in connection with the acquisition by the Borrower, or the grant by
the Borrower to the Trustee, of any Loan Asset in the nature of a loan or a
participation in a loan to examine or evaluate the sufficiency of the documents
or instruments delivered to it by or on behalf of the Borrower under the
related Loan Agreements, or otherwise to examine the Loan Agreements, in order
to determine or compel compliance with any applicable requirements of or
restrictions on transfer (including without limitation any necessary
consents).  The Collateral Custodian
shall hold any Instrument delivered to it evidencing any Loan Asset granted to the
Trustee hereunder as custodial agent for the Trustee in accordance with the
terms of this Agreement.

 

(g)                                 Adjustments.  If (i) the Servicer makes a deposit into the
Collection Account in respect of a Interest Collection or Principal Collection
of a Loan Asset and such Interest Collection or Principal Collection was
received by the Servicer in the form of a check that is not honored for any
reason or (ii) the Servicer makes a mistake with respect to the amount of any
Interest Collection or Principal Collection and deposits an amount that is less
than or more than the actual amount of such Interest Collection or Principal
Collection, the Servicer shall appropriately adjust the amount subsequently
deposited into the Collection Account to reflect such dishonored check or
mistake.  Any Scheduled Payment in
respect of which a dishonored check is received shall be deemed not to have
been paid.

 

SECTION 6.05                                                                    Realization
Upon Loan Assets.  The
Servicer will use reasonable efforts consistent with the Servicing Standard to
foreclose upon or repossess, as applicable, or otherwise comparably convert the
ownership of any Underlying Collateral relating to a defaulted Loan Asset as to
which no satisfactory arrangements can be made for collection of delinquent
payments.  In addition, the Servicer may,
consistent with the Servicing Standard, sell or otherwise transfer, or if it
deems advisable to maximize recoveries, hold any equity or other securities
received by the Borrower in connection with a default, workout, restructuring
or plan of reorganization or similar event under a Loan Asset. The Servicer
will comply with the Servicing Standard and Applicable Law in realizing upon
such Underlying Collateral, and employ practices and procedures including
reasonable efforts consistent with the Servicing Standard to enforce all
obligations of Obligors foreclosing upon, repossessing and causing the sale of
such Underlying Collateral at public or private sale in circumstances other
than those described in the preceding sentence. 
Without limiting the generality of the foregoing, unless the Agent has
specifically given instruction to the contrary, the Servicer may cause the sale
of any such Underlying Collateral to the Servicer or its Affiliates for a
purchase price equal to the then fair market value thereof, any such sale to be
evidenced by a certificate of a Responsible Officer of the Servicer delivered
to the Agent setting forth the Loan Asset, the Underlying Collateral, the 

 

103

 

sale
price of the Underlying Collateral and certifying that such sale price is the
fair market value of such Underlying Collateral.  In any case in which any such Underlying
Collateral has suffered damage, the Servicer will not expend funds in
connection with any repair or toward the foreclosure or repossession of such
Underlying Collateral unless it reasonably determines that such repair and/or
foreclosure or repossession will increase the Recoveries by an amount greater
than the amount of such expenses.  The
Servicer will remit to the Collection Account the Recoveries received in
connection with the sale or disposition of Underlying Collateral relating to a
defaulted Loan Asset.

 

SECTION 6.06                                                                    Servicing
Compensation.  As
compensation for its activities hereunder and reimbursement for its expenses, the
Servicer shall be entitled to be paid the Servicing Fees and reimbursed its
reasonable expenses as provided in Section 2.04.

 

SECTION 6.07                                                                    Payment of
Certain Expenses by Servicer.  The Servicer will be required to pay all
expenses incurred by it in connection with its activities under this Agreement,
including fees and disbursements of its independent accountants, Taxes imposed
on the Servicer, expenses incurred by the Servicer in connection with payments
and reports pursuant to this Agreement, and all other fees and expenses not
expressly stated under this Agreement for the account of the Borrower. The
Servicer, on behalf of the Borrower, will be required to pay all reasonable
fees and expenses owing to any bank or trust company in connection with this Agreement
or the maintenance of the Controlled Accounts and the Concentration
Account.  The Borrower will reimburse the
Servicer for any reasonable expenses incurred hereunder or on behalf of the
Borrower, subject to the availability of funds pursuant to Section 2.04;
provided, that, to the extent
funds are not so available on any Payment Date to reimburse such expenses
incurred during the immediately ended Remittance Period, such reimbursement
amount shall be deferred and payable on the next Payment Date on which funds
are available therefor pursuant to Section 2.04 and such deferred
reimbursement amount shall bear interest beginning on the Payment Date
immediately following the Remittance Period in which such expenses were
incurred until paid at an annual rate equal to the Yield Rate.  For the avoidance of doubt, the Servicer
shall remain liable for, and shall pay in accordance with the terms hereof, all
expenses payable by it as set forth in this Section 6.07 or otherwise
under this Agreement, notwithstanding any failure of the Servicer to be
reimbursed on any Payment Date due to the insufficiency of funds. Following
realization of the Collateral Portfolio and distribution of proceeds in the
manner provided in Section 2.04, any claims of the Servicer against the
Borrower in respect of any deferred reimbursement amount or otherwise shall be
extinguished and shall not thereafter revive.

 

SECTION 6.08                                                                    Reports to the
Agent; Account Statements; Servicing Information.

 

(a)                                  Notice of
Borrowing. On each Advance Date and on each reduction of
Advances Outstanding pursuant to Section 2.18, the Borrower (and the
Servicer on its behalf) will provide a Notice of Borrowing or a Notice of
Reduction, as applicable, and a Borrowing Base Certificate, each updated as of
such date, to the Agent (with a copy to the Trustee).

 

104

 

(b)                                 Servicing
Report.

 

(i)                                     On each
Reporting Date, the Servicer will provide to the Borrower, the Agent and the
Trustee, a monthly statement including (x) a Borrowing Base calculated as of
the most recent Determination Date and (y) a summary prepared with respect to
each Obligor and with respect to each Loan Asset for such Obligor prepared as
of the most recent Determination Date that will be required to set forth only (A)
calculations of the Net Leverage Ratio and the Interest Coverage Ratio for each
such Loan Asset for the most recently ended Relevant Test Period for each such
Loan Asset and (B) whether or not each such Loan Asset shall have become
subject to a Material Modification (such monthly statement, a “Servicing Report”),
with respect to related calendar month signed by a Responsible Officer of the
Servicer and the Borrower and substantially in the form of Exhibit L.

 

(ii)                                  On each
Reporting Date that includes a Payment Date in the same month, in addition to
the information provided under clause (i) above, the Servicer will
provide to the Borrower, the Agent and the Trustee in such monthly statement, (x)
the Interest Collections received during the immediately preceding Remittance
Period and available for distribution pursuant as of such Payment Date, (y) the
Principal Collections received during the immediately preceding Remittance
Period and available for distribution as of such Payment Date, and (z) the
dollar amount to be distributed on such Payment Date at each level of priority
pursuant to Section 2.04.

 

(c)                                  Servicer’s
Certificate.  Together
with each Servicing Report, the Servicer shall submit to the Agent and the
Trustee a certificate substantially in the form of Exhibit M (a “Servicer’s
Certificate”), signed by a Responsible Officer of the
Servicer, which shall include a certification by such Responsible Officer that
no Event of Default or Unmatured Event of Default has occurred.

 

(d)                                 Financial Statements.  The Servicer will submit to the Agent and the
Trustee, (i) within 45 days after the end of each of its fiscal quarters
(excluding the fiscal quarter ending on the date specified in clause (ii)),
commencing March 31, 2010, consolidated unaudited financial statements of the
Servicer for the most recent fiscal quarter, and (ii) within 90 days after the
end of each fiscal year, commencing with the fiscal year ended December 31,
2009, consolidated audited financial statements of the Servicer, audited by a
firm of nationally recognized independent public accountants, as of the end of
such fiscal year.

 

(e)                                  Tax Returns.  Upon demand by the Agent, the Servicer shall
deliver, copies of all federal, state and local tax returns and reports filed
by the Borrower, the Equityholder and the Servicer, or in which the Borrower,
the Equityholder or Servicer was included on a consolidated or combined basis
(excluding sales, use and similar Taxes).

 

(f)                                    Obligor
Financial Statements; Valuation Reports; Other Reports.  The Servicer will deliver to the Agent and
the Trustee, with respect to each Obligor, (i) to the extent received by the
Borrower and/or the Servicer pursuant to the Loan Agreement, the complete
financial reporting package with respect to such Obligor and with respect to
each Loan Asset for such Obligor (including any covenant compliance
certificates with respect to such Obligor and with respect to each Loan Asset
for such Obligor) provided to the Borrower and/or the Servicer either monthly
or quarterly, as the case may be, by such Obligor, which delivery shall be made

 

105

 

within
45 days (or such longer period as specified in the Loan Agreement) after the
end of each such month or such Obligor’s fiscal quarters, as applicable
(excluding the last month or fiscal quarter, as applicable, of each such
Obligor’s fiscal year), and within 90 days (or such longer period as specified
in the Loan Agreement) after the end of each such Obligor’s fiscal year, and (ii)
a quarterly update to the “tear sheet” prepared by the Servicer with respect to
such Obligor and with respect to each Loan Asset for such Obligor, which
delivery shall be made within 45 days (or such longer period as specified in
the Loan Agreement) after the end of each such Obligor’s fiscal quarters
(excluding the last fiscal quarter of each such Obligor’s fiscal year) and
within 90 days (or such longer period as specified in the Loan Agreement) after
the end of each such Obligor’s fiscal year. 
The Servicer will promptly deliver to the Agent, upon reasonable request
and to the extent received by the Borrower and/or the Servicer, all other
documents and information required to be delivered by the Obligors to the
Borrower with respect to any Loan Asset included in the Collateral Portfolio.

 

(g)                                 Amendments to
Loan Assets.  The
Servicer will deliver to the Agent and the Collateral Custodian a copy of any
material amendment, restatement, supplement, waiver or other modification to
the Loan Agreement of any Loan Asset (along with any internal documents
prepared by the Servicer and provided to its investment committee in connection
with such amendment, restatement, supplement, waiver or other modification)
within 10 Business Days of the effectiveness of such amendment, restatement,
supplement, waiver or other modification.

 

(h)                                 Website Access
to Information. 
Notwithstanding anything to the contrary contained herein, information
required to be delivered or submitted to any Secured Party pursuant to Section
5.03(i) and this Article VI shall be deemed to have been delivered
on the date on which such information is posted on an IntraLinks (or other
replacement) website to which the Agent has access.

 

SECTION 6.09                                                                    Annual
Statement as to Compliance.  The Servicer will provide to the Agent and
the Trustee within 90 days following the end of each fiscal year of the
Servicer, commencing with the fiscal year ending on December 31, 2010, a fiscal
report signed by a Responsible Officer of the Servicer certifying that (a) a
review of the activities of the Servicer, and the Servicer’s performance
pursuant to this Agreement, for the fiscal period ending on the last day of
such fiscal year has been made under such Person’s supervision and (b) the
Servicer has performed or has caused to be performed in all material respects
all of its obligations under this Agreement throughout such year and no
Servicer Termination Event has occurred. With respect to the Original
Agreement, the Servicer will provide to the Agent and the Trustee within 90 days
following the end of the fiscal year of the Servicer for 2009, a fiscal report
signed by a Responsible Officer of the Servicer certifying that (a) a review of
the activities of the Servicer, and the Servicer’s performance pursuant to the
Original Agreement, for the fiscal period ending on the last day of such fiscal
year has been made under such Person’s supervision and (b) the Servicer has
performed or has caused to be performed in all material respects all of its
obligations under the Original Agreement throughout such year and no “Servicer
Default” (as defined in the Original Agreement) has occurred.

 

SECTION 6.10                                                                    Annual
Independent Public Accountant’s Servicing Reports.  The Servicer will cause a firm of nationally
recognized independent public accountants (who may also render other services
to the Servicer) to furnish to the Agent and the Trustee within 90 days 

 

106

 

following
the end of each fiscal year of the Servicer, commencing with the fiscal year
ending on December 31, 2010, a report covering such fiscal year to the effect
that such accountants have applied certain agreed-upon procedures (a copy of
which procedures are attached hereto as Schedule IV, it being understood
that the Servicer and the Agent will provide an updated Schedule IV
reflecting any further amendments to such Schedule IV prior to the
issuance of the first such agreed-upon procedures report, a copy of which shall
replace the then existing Schedule IV) to certain documents and records
relating to the Collateral Portfolio under any Transaction Document, compared
the information contained in the Servicing Reports and the Servicer’s
Certificates delivered during the period covered by such report with such
documents and records and that no matters came to the attention of such
accountants that caused them to believe that such servicing was not conducted
in compliance with this Article VI, except for such exceptions as such
accountants shall believe to be immaterial and such other exceptions as shall
be set forth in such statement. With respect to the Original Agreement the
Servicer will cause a firm of nationally recognized independent public
accountants (who may also render other services to the Servicer) to furnish to
the Agent and the Trustee within 90 days following the end of the fiscal year
of the Servicer for 2009, a report covering such fiscal year to the effect that
such accountants have applied certain agreed-upon procedures (a copy of which
procedures were attached to the Original Agreement as Schedule V) to
certain documents and records relating to the Collateral Portfolio under any
Transaction Document in effect immediately prior to the Restatement Date,
compared the information contained in the Servicing Reports and the Servicer’s
Certificates delivered during the period covered by such report with such
documents and records and that no matters came to the attention of such
accountants that caused them to believe that such servicing was not conducted
in compliance with Article VI of the Original Agreement, except for such
exceptions as such accountants shall believe to be immaterial and such other
exceptions as shall be set forth in such statement.

 

SECTION 6.11                                                                    The Servicer
Not to Resign.  The
Servicer shall not resign from the obligations and duties hereby imposed on it
except upon the Servicer’s determination that (i) the performance of its duties
hereunder is or becomes impermissible under Applicable Law and (ii) there is no
reasonable action that the Servicer could take to make the performance of its
duties hereunder permissible under Applicable Law.  Any such determination permitting the
resignation of the Servicer shall be evidenced as to clause (i) above by
an Opinion of Counsel to such effect delivered to the Agent.  No such resignation shall become effective
until a Replacement Servicer shall have assumed the responsibilities and
obligations of the Servicer in accordance with Section 6.02.

 

ARTICLE VII.

 

EVENTS OF DEFAULT

 

SECTION 7.01                                                                    Events of
Default.  If any of the following events
(each, an “Event
of Default”) shall occur:

 

(a)                                  the Borrower,
the Equityholder or the Transferor defaults in making any payment required to
be made under one or more agreements for borrowed money to which it is a party
in an aggregate principal amount in excess of (x) $1,000,000 for the Borrower
or the Equityholder or (y) $7,500,000 for the Transferor and any such failure
continues unremedied for 

 

107

 

two
Business Days and such default is not cured within the applicable cure period,
if any, provided for under such agreement; or

 

(b)                                 any failure on
the part of the Borrower, the Equityholder or the Transferor duly to observe or
perform in any material respect any other covenants or agreements of the
Borrower, the Equityholder or the Transferor set forth in this Agreement or the
other Transaction Documents to which the Borrower, the Equityholder or the
Transferor is a party and the same continues 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 Borrower, the Equityholder or the Transferor by the
Agent or Trustee and (ii) the date on which the Borrower, the Equityholder or
the Transferor acquires knowledge thereof; or

 

(c)                                  the occurrence
of a Bankruptcy Event relating to the Transferor, the Equityholder or the
Borrower; or

 

(d)                                 the occurrence
of a Servicer Termination Event (subject to the applicable cure periods set
forth in the definition of “Servicer
Termination Event”); or

 

(e)                                  (1) the
rendering of one or more final judgments, decrees or orders by a court or
arbitrator of competent jurisdiction for the payment of money in excess individually
or in the aggregate of $25,000,000, against the Transferor, or $1,000,000,
against the Borrower or the Equityholder, and the continuance of such judgment,
decree or order unsatisfied and in effect for any period of more than 60
consecutive days without such judgment, decree or order being vacated, stayed
or discharged during such 60 day period or (2) the Transferor, the Equityholder
or the Borrower shall have made payments of amounts in excess of $25,000,000
(in the case of the Transferor) or $1,000,000 (in the case of the Borrower or
the Equityholder), in the settlement of any litigation, claim or dispute
(excluding payments made from insurance proceeds); or

 

(f)                                    either the
Borrower or the Equityholder shall cease to be an Affiliate of the Transferor
or shall fail to qualify as a bankruptcy-remote entity based upon customary
criteria such that reputable counsel could no longer render a substantive
nonconsolidation opinion with respect thereto; or

 

(g)                                 (1)                                  any Transaction
Document, or any lien or security interest granted thereunder, shall (except in
accordance with its terms), in whole or in part, terminate, cease to be
effective or cease to be the legally valid, binding and enforceable obligation
of the Borrower, the Equityholder, the Transferor, or the Servicer,

 

(2)                                  the Borrower,
the Transferor, the Equityholder, the Servicer or any other party shall,
directly or indirectly, contest in any manner the effectiveness, validity,
binding nature or enforceability of any Transaction Document or any lien or security
interest thereunder, or

 

(3)                                  any security
interest securing any obligation under any Transaction Document shall, in whole
or in part, cease to be a first priority perfected security interest except as
otherwise expressly permitted to be released in accordance with the applicable
Transaction Document; or

 

108

 

(h)                                 the Advances
Outstanding on any day exceeds the Borrowing Base and has not been remedied in
accordance with Section 2.06; provided
that, during the period of time that such event remains unremedied, any
payments required to be made by the Servicer on a Payment Date shall be made
under Section 2.04(c); or

 

(i)                                     failure on the
part of the Borrower, the Equityholder, the Transferor or the Servicer to make
any payment or deposit (including, without limitation, with respect to
bifurcation and remittance of Interest Collections and Principal Collections or
any other payment or deposit required to be made by the terms of the
Transaction Documents, including, without limitation, to any Secured Party,
Affected Party or Indemnified Party) required by the terms of any Transaction
Document (other than Section 2.06) on the day such payment or deposit is
required to be made and the same continues unremedied for two Business Days; or

 

(j)                                     the Borrower or
the Equityholder shall become required to register as an “investment company”
within the meaning of the 1940 Act or the arrangements contemplated by the
Transaction Documents shall require registration as an “investment company”
within the meaning of the 1940 Act; or

 

(k)                                  the Internal
Revenue Service shall file notice of a lien pursuant to Section 6323 of the
Code with regard to any assets of the Borrower, the Equityholder or the
Transferor and such lien shall not have been released within five Business
Days, or the Pension Benefit Guaranty Corporation shall file notice of a lien
pursuant to Section 4068 of ERISA with regard to any of the assets of the
Borrower, the Equityholder or the Transferor and such lien shall not have been
released within five Business Days; or

 

(l)                                     any Change of
Control shall occur; or

 

(m)                               any representation,
warranty or certification made by the Borrower, the Equityholder or the
Transferor in any Transaction Document or in any certificate delivered pursuant
to any Transaction Document shall prove to have been incorrect when made, which
has a Material Adverse Effect on the Secured Parties 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 Borrower, the Equityholder or the Transferor by
the Agent or Trustee and (ii) the date on which a Responsible Officer of the
Borrower, the Equityholder or the Transferor acquires knowledge thereof; or

 

(n)                                 failure to pay,
on the Facility Maturity Date, the outstanding principal of all outstanding
Advances, if any, and all Yield and all Fees accrued and unpaid thereon
together with all other Obligations, including, but not limited to, any
Make-Whole Premium; or

 

(o)                                 an event has
occurred which constitutes an Event of Default under and pursuant to the terms
of the Pledge Agreement;  or

 

(p)                                 (i) failure of
the Borrower or the Equityholder to maintain at least one Independent Director,
which failure is not cured within ten Business Days or (ii) the removal of any
Independent Director of the Borrower or the Equityholder without “cause” (as
such term is defined in the organizational document of the Borrower) or without
giving prior written notice to the Agent, each as required in the
organizational documents of the Borrower; or

 

109

 

(q)                                 the Borrower
ceases to have a valid, perfected ownership interest in all of the Collateral
Portfolio; or

 

(r)                                    the Transferor
fails to transfer to Equityholder or the Equityholder fails to transfer to the
Borrower the applicable Loan Assets and the related Portfolio Assets on an
Advance Date (provided that the
Note Purchaser shall have funded the related Advance) unless the related
Advance is repaid in full with accrued and unpaid Yield thereon within five
Business Days; or

 

(s)                                  either of the
Borrower or the Equityholder makes any assignment or attempted assignment of
their respective rights or obligations under this Agreement or any other
Transaction Document without first obtaining the specific written consent of
the Agent, which consent may be withheld by the Agent in the exercise of its
sole and absolute discretion;

 

then the Agent, with the
consent of the Note Purchaser, may, by notice to the Borrower, declare the
Facility Maturity Date to have occurred; provided,
that, in the case of any event described in Section 7.01(c) above, the
Facility Maturity Date shall be deemed to have occurred automatically upon the
occurrence of such event. Upon any such declaration or automatic occurrence, (i)
the Borrower shall cease purchasing Loan Assets from the Equityholder under the
Second Tier Purchase and Sale Agreement and the Equityholder shall cease
purchasing Loan Assets from the Transferor under the First Tier Purchase and
Sale Agreement, (ii) at the option of the Note Purchaser in its sole
discretion, the Note Purchaser may declare the Variable Funding Note to be
immediately due and payable in full (without presentment, demand, protest or
notice of any kind all of which are hereby waived by the Borrower) and any
other Obligations to be immediately due and payable, and (iii) all proceeds and
distributions in respect of the Portfolio Assets shall be distributed as
described in Section 2.04(c) (provided
that the Borrower shall in any event remain liable to pay such Advances and all
such amounts and Obligations immediately in accordance with Section 2.04(e)
hereof). In addition, upon any such declaration or upon any such automatic
occurrence, the Trustee, on behalf of the Secured Parties and at the direction
of the Agent, shall have, in addition to all other rights and remedies under
this Agreement or otherwise, all other rights and remedies provided under the
UCC of the applicable jurisdiction and other Applicable Law, which rights shall
be cumulative. Without limiting any obligation of the Servicer hereunder, the
Borrower confirms and agrees that the Trustee, on behalf of the Secured Parties
and at the direction of the Agent, (or any designee thereof, including, without
limitation, the Servicer), following an Event of Default, shall, at its option,
have the sole right to enforce the Borrower’s rights and remedies under each
Assigned Document, but without any obligation on the part of the Agent, the
Note Purchaser or any of their respective Affiliates to perform any of the
obligations of the Borrower under any such Assigned Document. If any Event of
Default shall have occurred, the Yield Rate shall be increased to the Default
Funding Rate, effective as of the date of the occurrence of such Event of Default,
and shall apply after the occurrence of such Event of Default.

 

SECTION 7.02                                                                    Additional
Remedies of the Agent.

 

(a)                                  If, (i) upon
the Note Purchaser’s declaration that the Advances made to the Borrower
hereunder are immediately due and payable pursuant to Section 7.01 upon
the occurrence of an Event of Default, or (ii) on the Facility Maturity Date
(other than a Facility

 

110

 

Maturity
Date occurring pursuant to clause (iv) of the definition thereof prior to an
Event of Default), the aggregate outstanding principal amount of the Advances,
all accrued and unpaid Fees and Yield and any other Obligations are not
immediately paid in full, then the Trustee (acting as directed by the Agent) or
the Agent, in addition to all other rights specified hereunder, shall have the
right, in its own name and as agent for the Note Purchaser, to immediately sell
(at the Servicer’s expense) in a commercially reasonable manner, in a
recognized market (if one exists) at such price or prices as the Agent may
reasonably deem satisfactory, any or all of the Collateral Portfolio and apply
the proceeds thereof to the Obligations; provided,
that notwithstanding anything to the contrary herein or in any other
Transaction Document, in the case of the declaration of the Facility Maturity
Date that arises solely pursuant to Section 7.01(d) due solely to the
occurrence of an event described in clauses (g) or (h) of the
definition of “Servicer Termination Event” or clause (o) of the
definition of “Servicer Termination Event” (to the extent arising solely due to
the occurrence of an event described in clauses (g) or (h) of the
definition thereof), the Trustee and the Agent (as applicable) may not order
the assembly or liquidation of the Collateral Portfolio, or take any action or
exercise any power of attorney furnished hereunder in connection with such
assembly or liquidation, until on or after the earlier of (x) the date that is
twelve (12) months after the occurrence of such Facility Maturity Date or (y) the
occurrence of a Facility Maturity Date for any other reason other than an event
described in clauses (g) or (h) of the definition of “Servicer
Termination Event” or clause (o) of the definition of “Servicer
Termination Event” (to the extent arising solely due to the occurrence of an
event described in clauses (g) or (h) of the definition thereof).

 

(b)                                 The parties
recognize that it may not be possible to sell all of the Collateral Portfolio
on a particular Business Day, or in a transaction with the same purchaser, or
in the same manner because the market for the assets constituting the
Collateral Portfolio may not be liquid. Accordingly, the Agent may elect, in
its sole discretion, the time and manner of liquidating any of the Collateral
Portfolio, and nothing contained herein shall obligate the Agent to liquidate
any of the Collateral Portfolio on the date the Note Purchaser declares the
Advances made to the Borrower hereunder to be immediately due and payable
pursuant to Section 7.01 or to liquidate all of the Collateral Portfolio
in the same manner or on the same Business Day.

 

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

 

111

 

(d)                                 Each of the
Borrower and the Servicer agrees, to the full extent that it may lawfully so
agree, that neither it nor anyone claiming through or under it will set up,
claim or seek to take advantage of any appraisement, valuation, stay, extension
or redemption law now or hereafter in force in any locality where any
Collateral Portfolio may be situated in order to prevent, hinder or delay the
enforcement or foreclosure of this Agreement, or the absolute sale of any of
the Collateral Portfolio or any part thereof, or the final and absolute putting
into possession thereof, immediately after such sale, of the purchasers thereof,
and each of the Borrower and the Servicer, for itself and all who may at any
time claim through or under it, hereby waives, to the full extent that it may
be lawful so to do, the benefit of all such laws, and any and all right to have
any of the properties or assets constituting the Collateral Portfolio marshaled
upon any such sale, and agrees that the Trustee, or the Agent on its behalf, or
any court having jurisdiction to foreclose the security interests granted in
this Agreement may sell the Collateral Portfolio as an entirety or in such
parcels as the Trustee or such court may determine.

 

(e)                                  Any amounts
received from any sale or liquidation of the Collateral Portfolio pursuant to
this Section 7.02 in excess of the Obligations will be applied in accordance
with the provisions of Section 2.04(c), or as a court of competent
jurisdiction may otherwise direct.

 

(f)                                    The Agent and
the Note Purchaser shall have, in addition to all the rights and remedies
provided herein and provided by applicable federal, state, foreign, and local
laws (including, without limitation, the rights and remedies of a secured party
under the UCC of any applicable state, to the extent that the UCC is
applicable, and the right to offset any mutual debt and claim), all rights and remedies
available to the Note Purchaser at law, in equity or under any other agreement
between the Note Purchaser and the Borrower.

 

(g)                                 Except as
otherwise expressly provided in this Agreement, no remedy provided for by this
Agreement shall be exclusive of any other remedy, each and every remedy shall
be cumulative and in addition to any other remedy, and no delay or omission to
exercise any right or remedy shall impair any such right or remedy or shall be
deemed to be a waiver of any Event of Default.

 

(h)                                 Each of the
Borrower and the Servicer hereby irrevocably appoints each of the Trustee and
the Agent its true and lawful attorney (with full power of substitution) in its
name, place and stead and at is expense, in connection with the enforcement of
the rights and remedies after the occurrence of an Event of Default, and as
provided for in this Agreement, including without limitation the following
powers:  (a) to give any necessary
receipts or acquittance for amounts collected or received hereunder, (b) to
make all necessary transfers of the Collateral Portfolio in connection with any
such sale or other disposition made pursuant hereto, (c) to execute and deliver
for value all necessary or appropriate bills of sale, assignments and other
instruments in connection with any such sale or other disposition, the Borrower
and the Servicer hereby ratifying and confirming all that such attorney (or any
substitute) shall lawfully do hereunder and pursuant hereto, and (d) to sign
any agreements, orders or other documents in connection with or pursuant to any
Transaction Document. Nevertheless, if so requested by the Trustee or the
Agent, the Borrower shall ratify and confirm any such sale or other disposition
by executing and delivering to the Trustee or the Agent or all proper bills of
sale, assignments, releases and other instruments as may be designated in any
such request; provided that, for
the 

 

112

 

avoidance
of doubt, no right under any power of attorney furnished under this Section 7.02(h)
may be exercised until after the occurrence of an Event of Default.

 

(i)                                     (1)                                  If the Trustee
(acting as directed by the Agent) or the Agent elects to sell the Collateral
Portfolio in whole, but not in part, at a public or private sale, the Borrower
may exercise its right of first refusal to repurchase the Collateral Portfolio,
in whole but not in part, prior to such sale at a purchase price that is not
less than the amount of the Obligations as of the date of such proposed sale.  The Borrower’s right of first refusal shall
terminate not later than 4:00 p.m. on the second Business Day following the
Business Day on which the Borrower receives notice of the Trustee’s or the
Agent’s election to sell such Collateral Portfolio, such notice to attach
copies of all Eligible Bids received by the Trustee or the Agent in respect of
such Collateral Portfolio.

 

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

 

(3)                                  If the Borrower
elects not to exercise its right of first refusal as provided in clauses (1)
or (2) above, the Trustee (acting as directed by the Agent) or the Agent
shall sell such Collateral Portfolio or portion thereof for a purchase price
equal to the highest of the Eligible Bids then received.  For the avoidance of doubt, any determination
of the highest Eligible Bid shall only consider bids for the same parcels of
the Collateral Portfolio.

 

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

 

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

 

113

 

ARTICLE VIII.

 

INDEMNIFICATION

 

SECTION 8.01                                                                    Indemnities by
the Borrower.

 

(a)                                  Without
limiting any other rights which the Agent, the Note Purchaser, the Trustee, the
Bank, the Collateral Custodian or any of their respective Affiliates may have
hereunder or under Applicable Law, the Borrower hereby agrees to indemnify the
Agent, the Note Purchaser, the Trustee, the Bank, the Collateral Custodian and
each of their respective Affiliates, assigns, officers, directors, employees
and agents (each, an “Indemnified Party” for purposes of
this Article VIII) from and against any and all damages, losses, claims,
liabilities and related costs and expenses, including reasonable attorneys’
fees and disbursements (all of the foregoing being collectively referred to as “Indemnified
Amounts”), awarded against or actually incurred by such Indemnified
Party arising out of or as a result of this Agreement or in respect of any of
the Collateral Portfolio, excluding, however, Indemnified Amounts to the extent
resulting solely from (a) gross negligence, bad faith or willful misconduct on
the part of an Indemnified Party or (b) Loan Assets which are uncollectible due
to the Obligor’s financial inability to pay. Without limiting the foregoing,
the Borrower 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 Loan Asset
treated as or represented by the Borrower to be an Eligible Loan Asset which is
not at the applicable time an Eligible Loan Asset, or the purchase by any party
or origination of any Loan Asset which violates Applicable Law;

 

(ii)                                  reliance on any
representation or warranty made or deemed made by the Borrower, the Servicer
(if Ares or one of its Affiliates is the Servicer) or any of their respective
officers under or in connection with this Agreement or any Transaction
Document, which shall have been false or incorrect in any material respect when
made or deemed made or delivered;

 

(iii)                               the failure by
the Borrower or the Servicer (if Ares or one of its Affiliates is the Servicer)
to comply with any term, provision or covenant contained in this Agreement or
any agreement executed in connection with this Agreement, or with any
Applicable Law with respect to any item of Collateral Portfolio, or the
nonconformity of any item of Collateral Portfolio with any such Applicable Law;

 

(iv)                              the failure to
vest and maintain vested in the Trustee, for the benefit of the Secured
Parties, a first priority perfected security interest in the Collateral
Portfolio, free and clear of any Lien other than Permitted Liens, whether
existing at the time of the related Advance or at any time thereafter;

 

(v)                                 on each
Business Day prior to the Collection Date, the occurrence of a Borrowing Base
Deficiency and the same continues unremedied for five Business Days;

 

(vi)                              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 Loan Assets included 

 

114

 

in the Collateral Portfolio
or the other Portfolio Assets related thereto, whether at the time of any
Advance or at any subsequent time;

 

(vii)                           any dispute,
claim, offset or defense (other than the discharge in bankruptcy of an Obligor)
to the payment of any Loan Asset included in the Collateral Portfolio
(including, without limitation, a defense based on such Loan Asset (or the Loan
Agreement evidencing such Loan Asset) not being a legal, valid and binding
obligation of such Obligor enforceable against it in accordance with its
terms), or any other claim resulting from the sale of the merchandise or
services related to such Collateral Portfolio or the furnishing or failure to
furnish such merchandise or services;

 

(viii)                        any failure of
the Borrower or the Servicer (if Ares or one of its Affiliates is the Servicer)
to perform its duties or obligations in accordance with the provisions of the
Transaction Documents to which it is a party or any failure by Ares, the
Borrower or any Affiliate thereof to perform its respective duties under any
Collateral Portfolio;

 

(ix)                                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 Borrower or the Transferor to qualify to do business or file any notice or
business activity report or any similar report;

 

(x)                                   any action
taken by the Borrower or the Servicer in the enforcement or collection of the
Collateral Portfolio;

 

(xi)                                any products
liability claim or personal injury or property damage suit or other similar or
related claim or action of whatever sort arising out of or in connection with
the Underlying Collateral or services that are the subject of any Collateral
Portfolio;

 

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

 

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

 

(xiv)                         any repayment
by the Agent, the Note Purchaser or a Secured Party of any amount previously distributed
in payment of Advances or payment of Yield or Fees or any other amount due
hereunder, in each case which amount the Agent, the Note Purchaser or a Secured
Party believes in good faith is required to be repaid;

 

(xv)                            except with
respect to funds held in the Concentration Account on or prior to the Account
Transition Deadline, the commingling by the Borrower or the Servicer of
payments and collections required to be remitted to the Collection Account or
the Unfunded Exposure Account with other funds;

 

115

 

(xvi)                         any
investigation, litigation or proceeding related to this Agreement (or the
Transaction Documents), or the use of proceeds of Advances or the Collateral
Portfolio, or the administration of the Loan Assets by the Borrower or the
Servicer (unless such administration is carried out by Wachovia or any of its
Affiliates in the capacity of the Servicer, if applicable);

 

(xvii)                      any failure by
the Borrower to give reasonably equivalent value to the Equityholder in
consideration for the transfer by the Equityholder to the Borrower of any item
of Collateral 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;

 

(xviii)                   the use of the proceeds of
any Advance in a manner other than as provided in this Agreement and the
Transaction Documents;

 

(xix)                           any failure of
the Borrower, the Servicer or any of their respective agents or representatives
to remit to the Collection Account within two Business Days of receipt,
payments and collections with respect to the Collateral Portfolio remitted to
the Borrower, the Servicer or any such agent or representative (other than such
a failure on the part of Wachovia or any of its Affiliates in the capacity of
Servicer, if applicable); and/or

 

(xx)                              the failure of
any Concentration Account Bank to remit any amounts held in a Concentration
Account pursuant to the instructions of the Servicer or the Agent (to the
extent such Person is entitled to give such instructions in accordance with the
terms hereof and of the Intercreditor Agreement) whether by reason of the
exercise of set-off rights or otherwise.

 

(b)                                 Any amounts
subject to the indemnification provisions of this Section 8.01 shall be paid
by the Borrower to the Agent on behalf of the applicable Indemnified Party
within five Business Days following the Agent’s written demand therefor on
behalf of the applicable Indemnified Party (and the Agent shall pay such
amounts to the applicable Indemnified Party promptly after the receipt by the
Agent of such amounts). The Agent, on behalf of any Indemnified Party making a
request for indemnification under this Section 8.01, shall submit
to the Borrower a certificate setting forth in reasonable detail the basis for
and the computations of the Indemnified Amounts with respect to which such
indemnification is requested, which certificate shall be conclusive absent
demonstrable error.

 

(c)                                  If for any
reason the indemnification provided above in this Section 8.01 is
unavailable to the Indemnified Party or is insufficient to hold an Indemnified
Party harmless in respect of any losses, claims, damages or liabilities, then
the Borrower or the Servicer, as the case may be, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
not only the relative benefits received by such Indemnified Party on the one
hand and the Borrower or the Servicer, 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.

 

116

 

(d)                                 If the Borrower
has made any payments in respect of Indemnified Amounts to the Agent on behalf
of an Indemnified Party pursuant to this Section 8.01 and such
Indemnified Party thereafter collects any of such amounts from others, such
Indemnified Party will promptly repay such amounts collected to the Borrower,
without interest.

 

(e)                                  The obligations
of the Borrower under this Section 8.01 shall survive the
resignation or removal of the Agent, the Note Purchaser, the Servicer, the
Trustee or the Collateral Custodian and the termination of this Agreement.

 

SECTION 8.02                                                                    Indemnities by
Servicer.

 

(a)                                  Without
limiting any other rights which any Indemnified Party may have hereunder or
under Applicable Law, the Servicer hereby agrees to indemnify each Indemnified
Party from and against any and all Indemnified Amounts, awarded against or
incurred by any Indemnified Party as a consequence of any of the following,
excluding, however, Indemnified Amounts to the extent resulting from gross
negligence, bad faith or willful misconduct on the part of any Indemnified
Party claiming indemnification hereunder:

 

(i)                                     the inclusion,
in any computations made by it in connection with any Borrowing Base
Certificate or other report prepared by it hereunder, of any Loan Assets which
were not Eligible Loan Assets as of the date of any such computation;

 

(ii)                                  reliance on any
representation or warranty made or deemed made by the Servicer or any of its
officers under or in connection with this Agreement or any other Transaction
Document, any Servicing Report, Servicer’s Certificate or any other information
or report delivered by or on behalf of the Servicer pursuant hereto, which
shall have been false, incorrect or misleading in any material respect when
made or deemed made or delivered;

 

(iii)                               the failure by
the Servicer to comply with (A) any term, provision or covenant contained
in this Agreement or any other Transaction Document, or any other agreement
executed in connection with this Agreement, or (B) any Applicable Law
applicable to it with respect to any Portfolio Assets;

 

(iv)                              any litigation,
proceedings or investigation against the Servicer;

 

(v)                                 any action or
inaction by the Servicer that causes the Trustee, for the benefit of the
Secured Parties, not to have a first priority perfected security interest in
the Collateral Portfolio, free and clear of any Lien other than Permitted
Liens, whether existing at the time of the related Advance or any time
thereafter;

 

(vi)                              except as
permitted by this Agreement and the Intercreditor Agreement, the commingling by
the Servicer of payments and collections required to be remitted to the
Collection Account or the Unfunded Exposure Account with other funds;

 

(vii)                           any failure of
the Servicer or any of its agents or representatives (including, without
limitation, agents, representatives and employees of such Servicer acting
pursuant to authority granted under Section 6.01 hereof) to remit
to Collection 

 

117

 

Account, payments and
collections with respect to Loan Assets remitted to the Servicer or any such
agent or representative within two Business Days of receipt;

 

(viii)                        the failure by
the Servicer to perform any of its duties or obligations in accordance with the
provisions of this Agreement or any other Transaction Document or errors or
omissions related to such duties; and/or

 

(ix)                                any of the
events or facts giving rise to a breach of any of the Servicer’s
representations, warranties, agreements and/or covenants set forth in Article IV,  Article V or Article VI
or this Agreement.

 

(b)                                 Any Indemnified
Amounts shall be paid by the Servicer to the Agent, for the benefit of the
applicable Indemnified Party, within five Business Days following receipt by
the Servicer of the Agent’s written demand therefor (and the Agent shall pay
such amounts to the applicable Indemnified Party promptly after the receipt by
the Agent of such amounts).

 

(c)                                  If the Servicer
has made any indemnity payments to the Agent, on behalf of an Indemnified Party
pursuant to this Section 8.02 and such Indemnified Party thereafter
collects any of such amounts from others, such Indemnified Party will promptly
repay such amounts collected to the Servicer, without interest.

 

(d)                                 The Servicer
shall have no liability for making indemnification hereunder to the extent any
such indemnification constitutes recourse for uncollectible or uncollected Loan
Assets.

 

(e)                                  The obligations
of the Servicer under this Section 8.02 shall survive the
resignation or removal of the Agent, the Note Purchaser, the Trustee or the
Collateral Custodian and the termination of this Agreement.

 

(f)                                    Any
indemnification pursuant to this Section 8.02 shall not be payable
from the Collateral Portfolio.

 

Each applicable Indemnified
Party shall deliver to the Indemnifying Party under Section 8.01
and Section 8.02, within a reasonable time after such Indemnified
Party’s receipt thereof, copies of all notices and documents (including court
papers) received by such Indemnified Party relating to the claim giving rise to
the Indemnified Amounts.

 

SECTION 8.03                                                                    Legal
Proceedings.  In the
event an Indemnified Party becomes involved in any action, claim, or legal,
governmental or administrative proceeding (an “Action”) for which it
seeks indemnification hereunder, the Indemnified Party shall promptly notify
the other party or parties against whom it seeks indemnification (the “Indemnifying
Party”) in writing of the nature and particulars of the
Action; provided that its failure
to do so shall not relieve the Indemnifying Party of its obligations hereunder
except to the extent such failure has a material adverse effect on the
Indemnifying Party. Upon written notice to the Indemnified Party acknowledging
in writing that the indemnification provided hereunder applies to the Indemnified
Party in connection with the Action (subject to the exclusion in the first
sentence of Section 8.01, the first sentence of Section 8.02
or Section 8.02(d), as applicable), the Indemnifying Party may
assume the defense of the Action at its expense with counsel reasonably
acceptable to the 

 

118

 

Indemnified
Party. The Indemnified Party shall have the right to retain separate counsel in
connection with the Action, and the Indemnifying Party shall not be liable for
the legal fees and expenses of the Indemnified Party after the Indemnifying
Party has done so; provided that
if the Indemnified Party determines in good faith that there may be a conflict
between the positions of the Indemnified Party and the Indemnifying Party in
connection with the Action, or that the Indemnifying Party is not conducting
the defense of the Action in a manner reasonably protective of the interests of
the Indemnified Party, the reasonable legal fees and expenses of the
Indemnified Party shall be paid by the Indemnifying Party; provided, further,
that the Indemnifying Party shall not, in connection with any one Action or
separate but substantially similar or related Actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees or expenses of more than one separate firm of attorneys (and any required
local counsel) for such Indemnified Party, which firm (and local counsel, if
any) shall be designated in writing to the Indemnifying Party by the
Indemnified Party. If the Indemnifying Party elects to assume the defense of
the Action, it shall have full control over the conduct of such defense; provided that the Indemnifying Party and
its counsel shall, as reasonably requested by the Indemnified Party or its
counsel, consult with and keep them informed with respect to the conduct of
such defense. The Indemnifying Party shall not settle an Action without the
prior written approval of the Indemnified Party unless such settlement provides
for the full and unconditional release of the Indemnified Party from all
liability in connection with the Action. The Indemnified Party shall reasonably
cooperate with the Indemnifying Party in connection with the defense of the
Action.

 

SECTION 8.04                                                                    After-Tax Basis.  Indemnification under Section 8.01
and 8.02 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.

 

ARTICLE IX.

THE AGENT

 

SECTION 9.01                                                                    The Agent.

 

(a)                                  Each Secured
Party hereby appoints and authorizes the Agent as its agent hereunder and
hereby further authorizes the Agent to appoint additional agents to act on its
behalf and for the benefit of each Secured Party.  Each Secured Party further authorizes the
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement and the other Transaction Documents as are delegated to
the Agent by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto.  With
respect to other actions which are incidental to the actions specifically
delegated to the Agent hereunder, the Agent shall not be required to take any
such incidental action hereunder, but shall be required to act or to refrain
from acting (and shall be fully protected in acting or refraining from acting)
upon the direction of the Note Purchaser; provided
that the Agent shall not be required to take any action hereunder if the taking
of such action, in the reasonable determination of the Agent, shall be in
violation of any Applicable Law or contrary to any provision of this Agreement
or shall expose the Agent to liability hereunder or otherwise.  In the event the Agent requests the 

 

119

 

consent
of the Note Purchaser pursuant to the foregoing provisions and the Agent does
not receive a consent (either positive or negative) from such Person within ten
Business Days of such Person’s receipt of such request, then such Note
Purchaser shall be deemed to have declined to consent to the relevant action.

 

(b)                                 The Borrower
irrevocably authorizes the Agent and appoints the Agent as its attorney-in-fact
to act on behalf of the Borrower (i) to file financing statements
necessary or desirable in the Agent’s sole discretion to perfect and to
maintain the perfection and priority of the interest of the Secured Parties in
the Collateral Portfolio and (ii) to file a carbon, photographic or other
reproduction of this Agreement or any financing statement with respect to the
Collateral Portfolio as a financing statement in such offices as the Agent in
its sole discretion deems necessary or desirable to perfect and to maintain the
perfection and priority of the interests of the Secured Parties in the
Collateral Portfolio.  This appointment
is coupled with an interest and is irrevocable.

 

(c)                                  If the Borrower
or the Servicer, as applicable, fails to perform any of its agreements or
obligations under Section 5.01(t), Section 5.02(r) or
Section 5.03(e), the Agent may (but shall not be required to)
itself perform, or cause performance of, such agreement or obligation, and the
expenses of the Agent incurred in connection therewith shall be payable by the
Borrower or the Servicer (on behalf of the Borrower), as applicable, upon the
Agent’s demand therefor.

 

(d)                                 Notwithstanding
any provision to the contrary elsewhere in this Agreement, the Agent shall not
have any duties or responsibilities, except those expressly set forth herein,
or any fiduciary relationship with the Note Purchaser, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or otherwise exist against the Agent.

 

(e)                                  Neither the
Agent nor any of its directors, officers, agents or employees shall be liable
for any action taken or omitted to be taken by it or them as Agent under or in
connection with this Agreement or any of the other Transaction Documents,
except for its or their own gross negligence or willful misconduct. Without
limiting the foregoing, the Agent:  (i) may
consult with legal counsel (including counsel for the Borrower or the
Transferor), independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or experts;
(ii) makes no warranty or representation and shall not be responsible for
any statements, warranties or representations made in or in connection with
this Agreement; (iii) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or any of the other Transaction Documents on the
part of the Borrower, the Transferor, or the Servicer or to inspect the
property (including the books and records) of the Borrower, the Transferor, or
the Servicer; (iv) shall not be responsible for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement, any of the other Transaction Documents or any other instrument or
document furnished pursuant hereto or thereto; and (v) shall incur no
liability under or in respect of this Agreement or any of the other Transaction
Documents by acting upon any notice (including notice by telephone), consent,
certificate or other instrument or writing 

 

120

 

(which
may be by facsimile) believed by it to be genuine and signed or sent by the
proper party or parties.

 

(f)                                    Each Secured
Party acknowledges that it has, independently and without reliance upon the Agent,
or any of the Agent’s Affiliates, and based upon such documents and information
as it has deemed appropriate, made its own evaluation and decision to enter
into this Agreement and the other Transaction Documents to which it is a
party.  Each Secured Party also
acknowledges that it will, independently and without reliance upon the Agent,
or any of the Agent’s Affiliates, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own decisions in
taking or not taking action under this Agreement and the other Transaction
Documents to which it is a party.

 

(g)                                 The Note
Purchaser agrees to indemnify the Agent (to the extent not reimbursed by the
Borrower or the Servicer) from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against the Agent in any way relating to or
arising out of this Agreement or any of the other Transaction Documents, or any
action taken or omitted by the Agent hereunder or thereunder; provided that the Note Purchaser shall not
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent’s gross negligence or willful misconduct. Without
limitation of the foregoing, the Note Purchaser agrees to reimburse the Agent
promptly upon demand for any out-of-pocket expenses (including counsel fees)
incurred by the Agent in connection with the administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement and the other Transaction Documents, to the extent that such
expenses are incurred in the interests of or otherwise in respect of the Note
Purchaser hereunder and/or thereunder and to the extent that the Agent is not
reimbursed for such expenses by the Borrower or the Servicer.

 

(h)                                 The Agent may
resign at any time, effective upon the appointment and acceptance of a
successor Agent as provided below, by giving at least five days’ written notice
thereof to the Note Purchaser and the Borrower and may be removed at any time
with cause by the Note Purchaser.  Upon
any such resignation or removal, the Note Purchaser shall appoint a successor
Agent.  The Note Purchaser agrees that it
shall not unreasonably withhold or delay its approval of the appointment of a
successor Agent; provided that
any successor Agent which is not an Affiliate of WFS shall be subject to the
prior consent of the Borrower.  If no
such successor Agent shall have been so appointed, and shall have accepted such
appointment, within 30 days after the retiring Agent’s giving of notice of
resignation or the removal of the retiring Agent, then the retiring Agent may,
on behalf of the Secured Parties, appoint a successor Agent which successor
Agent shall be either (i) a commercial bank organized under the laws of
the United States or of any state thereof and have a combined capital and
surplus of at least $50,000,000 or (ii) an Affiliate of such a bank.  Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations under this Agreement. 
After any retiring Agent’s resignation or removal hereunder as Agent,
the provisions of this Article IX  

 

121

 

shall
continue to inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent under this Agreement.

 

(i)                                     Unless
specifically allocated to a specific Note Purchaser pursuant to the terms of
this Agreement, all amounts received by the Agent on behalf of the Note
Purchaser shall be paid by the Agent to each Note Purchaser in accordance with such
Note Purchaser’s respective Commitment Percentage, on the Business Day received
by the Agent, unless such amounts are received after 12:00 noon on such
Business Day, in which case the Agent shall use its reasonable efforts to pay
such amounts to the Note Purchaser on such Business Day, but, in any event,
shall pay such amounts to such Note Purchaser not later than the following
Business Day.

 

ARTICLE
X.

TRUSTEE

 

SECTION 10.01                                                              Designation of
Trustee.

 

(a)                                  Initial Trustee.  The role of Trustee shall be conducted by the
Person designated as Trustee hereunder from time to time in accordance with
this Section 10.01.  Until
the Agent shall give to U.S. Bank a Trustee Termination Notice, U.S. Bank is
hereby appointed as, and hereby accepts such appointment and agrees to perform
the duties and obligations of, Trustee pursuant to the terms hereof.

 

(b)                                 Successor
Trustee.  Upon the Trustee’s receipt of
a Trustee Termination Notice from the Agent of the designation of a successor
Trustee pursuant to the provisions of Section 10.05, the Trustee
agrees that it will terminate its activities as Trustee hereunder.

 

(c)                                  Secured Party.  The Agent and the Note Purchaser hereby
appoint U.S. Bank, in its capacity as Trustee hereunder, as their agent for the
purposes of perfection of a security interest in the Collateral Portfolio.  U.S. Bank, in its capacity as Trustee
hereunder, hereby accepts such appointment and agrees to perform the duties set
forth in Section 10.02(b).

 

SECTION 10.02                                                              Duties of
Trustee.

 

(a)                                  Appointment.  The Borrower and the Agent each hereby
appoints U.S. Bank to act as Trustee, for the benefit of the Secured
Parties.  The Trustee hereby accepts such
appointment and agrees to perform the duties and obligations with respect
thereto set forth herein.

 

(b)                                 Duties.  On or before the initial Advance Date, and
until its removal pursuant to Section 10.05, the Trustee shall
perform, on behalf of the Secured Parties, the following duties and
obligations:

 

(i)                                     The Trustee
shall make payments pursuant to the terms of the Servicing Report in accordance
with Section 2.04 (the “Payment Duties”).

 

122

 

(ii)                                  The Trustee
shall provide to the Servicer a copy of all written notices and communications
identified as being sent to it in connection with the Loan Assets and the other
Collateral Portfolio held hereunder which it receives from the related Obligor,
participating bank and/or agent bank.  In
no instance shall the Trustee be under any duty or obligation to take any
action on behalf of the Servicer in respect of the exercise of any voting or
consent rights, or similar actions, unless it receives specific written
instructions from the Servicer, prior to the occurrence of an Event of Default
or the Agent, after the occurrence of Event of Default, in which event the
Trustee shall vote, consent or take such other action in accordance with such
instructions.

 

(c)                                  (i)                                     The Agent and
each Secured Party further authorizes the Trustee to take such action as agent
on its behalf and to exercise such powers under this Agreement and the other
Transaction Documents as are expressly delegated to the Trustee by the terms
hereof and thereof, together with such powers as are reasonably incidental
thereto.  In furtherance, and without
limiting the generality of the foregoing, each Secured Party hereby appoints
the Trustee (acting at the direction of the Agent) as its agent to execute and
deliver all further instruments and documents, and take all further action that
the Agent deems necessary or desirable in order to perfect, protect or more
fully evidence the security interests granted by the Borrower hereunder, or to
enable any of them to exercise or enforce any of their respective rights
hereunder, including, without limitation, the execution by the Trustee as
secured party/assignee of such financing or continuation statements, or
amendments thereto or assignments thereof, relative to all or any of the Loan
Assets now existing or hereafter arising, and such other instruments or
notices, as may be necessary or appropriate for the purposes stated
hereinabove.  Nothing in this Section 10.02(c) shall
be deemed to relieve the Borrower or the Servicer of their respective
obligations to protect the interest of the Trustee (for the benefit of the
Secured Parties) in the Collateral Portfolio, including to file financing and
continuation statements in respect of the Collateral Portfolio in accordance
with Section 5.01(t).

 

(ii)                                  The Agent may
direct the Trustee to take any such incidental action hereunder.  With respect to other actions which are
incidental to the actions specifically delegated to the Trustee hereunder, the
Trustee shall not be required to take any such incidental action hereunder, but
shall be required to act or to refrain from acting (and shall be fully
protected in acting or refraining from acting) upon the direction of the Agent;
provided that the Trustee shall
not be required to take any action hereunder at the request of the Agent, any
Secured Parties or otherwise if the taking of such action, in the reasonable
determination of the Trustee, (x) shall be in violation of any Applicable
Law or contrary to any provisions of this Agreement or (y) shall expose
the Trustee to liability hereunder or otherwise (unless it has received
indemnity which it reasonably deems to be satisfactory with respect
thereto).  In the event the Trustee
requests the consent of the Agent and the Trustee does not receive a consent
(either positive or negative) from the Agent within 10 Business Days of its
receipt of such request, then the Agent shall be deemed to have declined to
consent to the relevant action.

 

(iii)                               Except as
expressly provided herein, the Trustee shall not be under any duty or
obligation to take any affirmative action to exercise or enforce any power,
right or remedy available to it under this Agreement (x) unless and until
(and to the 

 

123

 

extent) expressly so
directed by the Agent or (y) prior to the Facility Maturity Date (and upon
such occurrence, the Trustee shall act in accordance with the written
instructions of the Agent pursuant to clause (x)).  The Trustee shall not be liable for any
action taken, suffered or omitted by it in accordance with the request or
direction of any Secured Party, to the extent that this Agreement provides such
Secured Party the right to so direct the Trustee, or the Agent.  The Trustee shall not be deemed to have
notice or knowledge of any matter hereunder, including an Event of Default,
unless a Responsible Officer of the Trustee has knowledge of such matter or
written notice thereof is received by the Trustee.

 

(d)                                 If, in
performing its duties under this Agreement, the Trustee is required to decide
between alternative courses of action, the Trustee may request written instructions
from the Agent as to the course of action desired by it.  If the Trustee does not receive such
instructions within two Business Days after it has requested them, the Trustee
may, but shall be under no duty to, take or refrain from taking any such
courses of action.  The Trustee shall act
in accordance with instructions received after such two Business Day period
except to the extent it has already, in good faith, taken or committed itself
to take, action inconsistent with such instructions.  The Trustee shall be entitled to rely on the
advice of legal counsel and independent accountants in performing its duties
hereunder and shall be deemed to have acted in good faith if it acts in
accordance with such advice.

 

(e)                                  Concurrently
herewith, the Agent directs the Trustee and the Trustee is authorized to enter
into the Pledge Agreement, Collection Account Agreement and Unfunded Exposure
Account Agreement.  For the avoidance of
doubt, all of the Trustee’s rights, protections and immunities provided herein
shall apply to the Trustee for any actions taken or omitted to be taken under
the Pledge Agreement, Collection Account Agreement and Unfunded Exposure
Account Agreement in such capacity.

 

SECTION 10.03                                                              Merger or
Consolidation.

 

Any Person (i) into
which the Trustee may be merged or consolidated, (ii) that may result from
any merger or consolidation to which the Trustee shall be a party, or (iii) that
may succeed to the properties and assets of the Trustee substantially as a
whole, which Person in any of the foregoing cases executes an agreement of
assumption to perform every obligation of the Trustee hereunder, shall be the
successor to the Trustee under this Agreement without further act of any of the
parties to this Agreement.

 

SECTION 10.04                                                              Trustee Compensation.

 

As compensation for its
Trustee activities hereunder, the Trustee shall be entitled to the Trustee Fees
and Trustee Expenses from the Borrower as set forth in the Trustee and
Collateral Custodian Fee Letter.  The Trustee
shall be entitled to receive the Trustee Fees and Trustee Expenses to the
extent of funds available therefor pursuant to the provision of Section 2.04;
provided, that, for the avoidance
of doubt, to the extent funds are not so available on any Payment Date to pay
such fees or reimburse such expenses incurred during the immediately ended
Remittance Period, such payment or reimbursement amount shall be deferred and
payable on the next Payment Date on which funds are available therefor pursuant
to Section 2.04.  The 

 

124

 

Trustee’s
entitlement to receive the Trustee Fees shall cease on the earlier to occur
of:  (i) its removal as Trustee
pursuant to Section 10.05 or (ii) the termination of this
Agreement.

 

SECTION 10.05                                                              Trustee Removal.

 

The Trustee may be removed,
with or without cause, by the Agent by notice given in writing to the Trustee
(the “Trustee Termination Notice”); provided,
notwithstanding its receipt of a Trustee Termination Notice, the Trustee shall
continue to act in such capacity until a successor Trustee has been appointed
and has agreed to act as Trustee hereunder; provided
that the Trustee shall continue to receive compensation of its fees and
expenses in accordance with Section 10.04 above while so serving as the
Trustee prior to a successor Trustee being appointed.

 

SECTION 10.06                                                              Limitation on
Liability.

 

(a)                                  The Trustee may
conclusively rely on and shall be fully protected in acting upon any
certificate, instrument, opinion, notice, letter, telegram or other document
delivered to it and that in good faith it reasonably believes to be genuine and
that has been signed by the proper party or parties.  The Trustee may rely conclusively on and
shall be fully protected in acting upon (a) the written instructions of
any designated officer of the Agent or (b) the verbal instructions of the
Agent.

 

(b)                                 The Trustee may
consult counsel satisfactory to it and the advice or opinion of such counsel
shall be full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.

 

(c)                                  The Trustee
shall not be liable for any error of judgment, or for any act done or step
taken or omitted by it, in good faith, or for any mistakes of fact or law, or
for anything that it may do or refrain from doing in connection herewith except
in the case of its willful misconduct or grossly negligent performance or
omission of its duties and in the case of the negligent performance of its
Payment Duties.

 

(d)                                 The Trustee
makes no warranty or representation and shall have no responsibility (except as
expressly set forth in this Agreement) as to the content, enforceability,
completeness, validity, sufficiency, value, genuineness, ownership or
transferability of the Collateral Portfolio, and will not be required to and
will not make any representations as to the validity or value (except as
expressly set forth in this Agreement) of any of the Collateral Portfolio.  The Trustee shall not be obligated to take
any legal action hereunder that might in its judgment involve any expense or
liability unless it has been furnished with an indemnity reasonably
satisfactory to it.

 

(e)                                  The Trustee
shall have no duties or responsibilities except such duties and
responsibilities as are specifically set forth in this Agreement and no
covenants or obligations shall be implied in this Agreement against the
Trustee.

 

(f)                                    The Trustee
shall not be required to expend or risk its own funds in the performance of its
duties hereunder.

 

125

 

(g)                                 It is expressly
agreed and acknowledged that the Trustee is not guaranteeing performance of or
assuming any liability for the obligations of the other parties hereto or any
parties to the Collateral Portfolio.

 

(h)                                 Subject in all
cases to the last sentence of Section 2.05, in case any reasonable
question arises as to its duties hereunder, the Trustee may, prior to the
occurrence of an Event of Default or the Facility Maturity Date, request
instructions from the Servicer and may, after the occurrence of an Event of
Default or the Facility Maturity Date, request instructions from the Agent, and
shall be entitled at all times to refrain from taking any action unless it has
received instructions from the Servicer or the Agent, as applicable.  The Trustee shall in all events have no
liability, risk or cost for any action taken pursuant to and in compliance with
the instruction of the Agent.  In no
event shall the Trustee be liable for special, indirect or consequential loss
or damage of any kind whatsoever (including but not limited to lost profits),
even if the Trustee has been advised of the likelihood of such loss or damage
and regardless of the form of action.

 

(i)                                     The Trustee
shall not be liable for the acts or omissions of the Collateral Custodian under
this Agreement and shall not be required to monitor the performance of the
Collateral Custodian.  Notwithstanding
anything herein to the contrary, unless appointed as successor Collateral
Custodian hereunder, the Trustee shall have no duty to perform any of the
duties of the Collateral Custodian under this Agreement.

 

SECTION 10.07                                                              Trustee
Resignation.

 

The Trustee may resign at
any time by giving not less than 90 days written notice thereof to the Agent
and with the consent of the Agent, which consent shall not be unreasonably
withheld.  Upon receiving such notice of
resignation, the Agent shall promptly appoint a successor trustee or trustees
by written instrument, in duplicate, executed by the Agent, one copy of which
shall be delivered to the Trustee so resigning and one copy to the successor
trustee or trustees, together with a copy to the Borrower, Servicer and
Collateral Custodian.  If no successor
trustee shall have been appointed and an instrument of acceptance by a
successor Trustee shall not have been delivered to the Trustee within 45 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee. Notwithstanding anything herein to the contrary, the Trustee may not
resign prior to a successor Trustee being appointed.

 

ARTICLE XI.

MISCELLANEOUS

 

SECTION 11.01                                                              Amendments and
Waivers.

 

(a)                                  Except as
provided in Section 11.01(b), no amendment or modification of any
provision of this Agreement shall be effective without the written agreement of
the Borrower, the Servicer, the Trustee, the Bank, the Agent, the Collateral
Custodian and Note Purchasers having in excess of 50% of the Commitment
Percentage (the “Required Note Purchasers”), and no termination or
waiver of any provision of this Agreement or consent to any 

 

126

 

departure
therefrom by the Borrower or the Servicer shall be effective without the
written concurrence of the Agent and Required Note Purchasers. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.  For the
avoidance of doubt, in the event that an Event of Default has occurred but has
been waived unconditionally and in its entirety in accordance with the terms
hereof, such Event of Default shall be deemed to have not “occurred” and
references to “after the occurrence of an Event of Default” 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.

 

(b)                                 Notwithstanding
the provisions of Section 11.01(a), the written consent of Note Purchasers
having 100% of the Commitment Percentage shall be required for any amendment,
modification or waiver (i) reducing any outstanding Advances, or the Yield
thereon, (ii) postponing any date for any payment of any Advance, or the
Yield thereon, (iii) modifying the provisions of this Section 11.01,
(iv) increasing the Maximum Facility Amount or (v) extending the
Stated Maturity Date.

 

SECTION 11.02                                                              Notices, Etc. All notices
and other communications hereunder shall, unless otherwise stated herein, be in
writing (which shall include facsimile communication and communication by
e-mail) 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 Borrower:

 

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

 

127

 

If to the Servicer:

 

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 10017

Attention: Michael J. Arougheti and Raymond Wright

Facsimile No.: (212) 750-1777

Confirmation No.: (212) 750-7300

 

If
to the Transferor:

 

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 10017

Attention: Michael J. Arougheti and Raymond Wright

Facsimile No.: (212) 750-1777

Confirmation No.: (212) 750-7300

 

If to the Agent:

 

Wells
Fargo Securities, LLC

One Wachovia Center, Mail Code:  NC0600

Charlotte, North Carolina 28288

 

128

 

Attention: Kevin Sunday

Facsimile No.: (704) 715-0067

Confirmation No: (704) 374-6230

 

If to the Note Purchaser:

 

Wachovia Bank, National
Association

One Wachovia Center, Mail Code:  NC0600

Charlotte, North Carolina 28288

Attention: Kevin Sunday 

Facsimile No.: (704) 715-0067 

Confirmation No: (704) 374-6230

 

If to the Trustee:

 

U.S. Bank National Association

One Federal Street, Third Floor

Boston, Massachusetts 02110

Attention: Corporate Trust / CDO Unit — Ares Capital CP Funding

Facsimile No: (866) 738-6062

 

If to the Bank:

 

U.S. Bank National Association

One Federal Street, Third Floor

Boston, Massachusetts 02110

Attention: Corporate Trust / CDO Unit — Ares Capital CP Funding

Facsimile No: (866) 738-6062

 

If
to the Collateral Custodian:

 

U.S. Bank National Association

as the Collateral Custodian

1719 Range Way

Florence, SC 29501

Attention: Sandra Farrow

Facsimile No.: 843-673-0162

 

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.

 

129

 

SECTION 11.03                                                              No Waiver;
Remedies. No failure on the part of the Agent, the Trustee
or the Note Purchaser to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.

 

SECTION 11.04                                                              Binding Effect;
Assignability; Multiple Note Purchasers.

 

(a)                                  This Agreement
shall be binding upon and inure to the benefit of the Borrower, the Servicer,
the Agent, the Note Purchaser, the Trustee, the Bank, the Collateral Custodian
and their respective successors and permitted assigns. The Note Purchaser and
its successors and assigns may assign (i) this Agreement and the Note
Purchaser’s rights and obligations hereunder and interest herein in whole or in
part (including by way of the sale of participation interests therein) and/or (ii) any
Advance (or portion thereof) or any Variable Funding Note (or any portion
thereof) to any Person; provided
that the Note Purchaser and any successor and assign shall only assign its
rights and obligations hereunder to an Affiliate of Wachovia and that such
assignee executes and delivers to the Servicer, the Borrower and the Agent a
fully-executed Transferee Letter substantially in the form of Exhibit O
hereto (a “Transferee Letter”) and a fully-executed Joinder Supplement.
None of the Borrower, the Equityholder, the Transferor or the Servicer may
assign any of its rights and obligations hereunder or under any Transaction
Document or any interest herein or in any Transaction Document without the
prior written consent of the Note Purchaser and the Agent.

 

(b)                                 Whenever the term
“Note
Purchaser” is used herein, it shall mean Wachovia and/or each
of its assignees; provided that
each such party shall have a pro rata share of the rights and
obligations of the Note Purchaser hereunder in such percentage amount (the “Commitment Percentage”)
as shall be obtained by dividing such party’s commitment to fund Advances
hereunder by the total commitment of all parties to fund Advances hereunder.
Unless otherwise specified herein, any right at any time of the Note Purchaser
to enforce any remedy, or instruct the Agent to take (or refrain from taking)
any action hereunder, shall be exercised by the Agent only upon direction by
the Required Note Purchasers at such time.

 

(c)                                  Notwithstanding
any other provision of this Section 11.04, the Note Purchaser may
at any time pledge or grant a security interest in all or any portion of its
rights (including, without limitation, rights to payment of principal and
interest) under this Agreement to secure obligations of the Note Purchaser to a
Federal Reserve Bank, without notice to or consent of the Borrower or the
Agent; provided that no such
pledge or grant of a security interest shall release the Note Purchaser from
any of its obligations hereunder, or substitute any such pledgee or grantee for
the Note Purchaser as a party hereto.

 

SECTION 11.05                                                              Term of This
Agreement. This Agreement, including, without limitation, the
Borrower’s obligation to observe its covenants set forth in Articles V
and VI and the Servicer’s obligation to observe its covenants set forth
in Articles V and VI, 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 Borrower or the Servicer pursuant to Articles
III and IV and the indemnification and payment provisions of Article VIII
and Article XI and the provisions of Section 11.07, Section 11.08
and Section 11.09  

 

130

 

shall
be continuing and shall survive any termination of this Agreement.
Notwithstanding anything herein to the contrary, the Collection Date will be
deemed to have occurred upon payment in full of all Obligations pursuant to
clause (i) of the first proviso of Section 2.18(b) or
pursuant to Section 2.18(c)(i).

 

SECTION 11.06                                                              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 11.07                                                              Costs, Expenses
and Taxes.

 

(a)                                  In addition to
the rights of indemnification granted to the Trustee, the Bank, the Agent, the
Note Purchaser, the Collateral Custodian and its Affiliates under Section 8.01
and Section 8.02 hereof, each of the Borrower, the Servicer and the
Transferor agrees to pay on demand all reasonable out-of-pocket costs and
expenses of the Agent, the Note Purchaser, the Trustee, the Bank and the
Collateral Custodian incurred in connection with the preparation, execution, delivery,
administration (including periodic auditing), renewal, amendment or
modification of, or any waiver or consent issued in connection with, this
Agreement, the Transaction Documents 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 for the Agent, the Note
Purchaser, the Trustee, the Bank and the Collateral Custodian with respect
thereto and with respect to advising the Agent, the Note Purchaser, the
Trustee, the Bank and the Collateral Custodian as to their respective 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 Agent,
the Note Purchaser, the Trustee, the Bank or the Collateral Custodian in
connection with the enforcement of this Agreement or any Transaction Document
by such Person and the other documents to be delivered hereunder or in
connection herewith.

 

(b)                                 The Borrower,
the Servicer and the Transferor 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, the other documents to be delivered hereunder or
any other Transaction Document or the funding or maintenance of Advances
hereunder.

 

(c)                                  The Servicer
and the Transferor shall pay on demand all other reasonable out-of-pocket
costs, expenses and Taxes (excluding Taxes imposed on or measured by net
income) incurred by the Agent, the Note Purchaser, the Trustee, the Collateral
Custodian and the Bank, including, without limitation, all costs and expenses
incurred by the Agent and the Note Purchaser in connection with periodic audits
of the Borrower’s, the Transferor’s or the Servicer’s books and records.

 

131

 

(d)                                 For the
avoidance of doubt, except with respect to the costs and expenses to be paid to
the Trustee and the Collateral Custodian, costs and expenses to be paid
pursuant to this Section 11.07 shall exclude all allocable overhead
costs and expenses.

 

SECTION 11.08                                                              No Proceedings. Each of the
Servicer and the Transferor agree that it will not institute against, or join
any other Person in instituting against, the Borrower any proceedings of the
type referred to in the definition of Bankruptcy Event 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.

 

SECTION 11.09                                                              Recourse
Against Certain Parties.

 

(a)                                  No recourse
under or with respect to any obligation, covenant or agreement (including, without
limitation, the payment of any fees or any other obligations) of the Agent or
any Secured Party as contained in this Agreement or any other agreement,
instrument or document entered into by the Agent or any Secured Party pursuant
hereto or in connection herewith shall be had against any administrator of the
Agent or any Secured Party or any incorporator, affiliate, stockholder,
officer, employee or director of the Agent or any Secured Party or of any such
administrator, as such, by the enforcement of any assessment or by any legal or
equitable proceeding, by virtue of any statute or otherwise; it being expressly
agreed and understood that the agreements of each party hereto contained in
this Agreement and all of the other agreements, instruments and documents
entered into by the Agent or any Secured Party pursuant hereto or in connection
herewith are, in each case, solely the corporate obligations of such party (and
nothing in this Section 11.09 shall be construed to diminish in any
way such corporate obligations of such party), and that no personal liability
whatsoever shall attach to or be incurred by any administrator of the Agent or
any Secured Party or any incorporator, stockholder, affiliate, officer,
employee or director of the Note Purchaser or the Agent or of any such
administrator, as such, or any of them, under or by reason of any of the
obligations, covenants or agreements of the Agent or any Secured Party
contained in this Agreement or in any other such instruments, documents or
agreements, or are implied therefrom, and that any and all personal liability
of every such administrator of the Agent or any Secured Party and each
incorporator, stockholder, affiliate, officer, employee or director of the
Agent or any Secured Party or of any such administrator, or any of them, for
breaches by the Agent or any Secured Party of any such obligations, covenants
or agreements, which liability may arise either at common law or in equity, by
statute or constitution, or otherwise, is hereby expressly waived as a
condition of and in consideration for the execution of this Agreement.

 

(b)                                 Notwithstanding
any contrary provision set forth herein, no claim may be made by the Borrower,
the Transferor, the Equityholder or the Servicer or any other Person against the
Agent or any Secured Party or their respective Affiliates, directors, officers,
employees, attorneys or agents for any special, indirect, consequential or
punitive damages in respect to 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 Borrower, the Transferor, the Equityholder and the Servicer
each 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.

 

132

 

(c)                                  No obligation
or liability to any Obligor under any of the Loan Assets is intended to be
assumed by the Agent or any Secured Party under or as a result of this
Agreement and the transactions contemplated hereby.

 

(d)                                 The provisions
of this Section 11.09 shall survive the termination of this
Agreement.

 

SECTION 11.10                                                              Execution in
Counterparts; Severability; Integration. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by e-mail in portable document format (.pdf) or facsimile shall be
effective as delivery of a manually executed counterpart of this Agreement. In
the event that any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby. This Agreement and any agreements or letters
(including fee letters) executed in connection herewith contains the final and
complete integration of all prior expressions by the parties hereto with
respect to the subject matter hereof and shall constitute the entire agreement
among the parties hereto with respect to the subject matter hereof, superseding
all prior oral or written understandings other than any fee letter delivered by
the Servicer to the Agent and the Note Purchaser.

 

SECTION 11.11                                                              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 the Transaction Documents, 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
Borrower and the Servicer agrees that service of process may be effected by
mailing a copy thereof by registered or certified mail, postage prepaid, to the
Borrower or the Servicer, as applicable, at its address specified in Section 11.02
or at such other address as the Agent shall have been notified in accordance
herewith. Nothing in this Section 11.11 shall affect the right of
the Note Purchaser or the Agent to serve legal process in any other manner
permitted by law.

 

133

 

SECTION 11.12                                                              Characterization
of Conveyances Pursuant to the Purchase and Sale Agreements.

 

(a)                                  It is the
express intent of the parties hereto that the conveyance of the Eligible Loan
Assets by the Transferor to the Equityholder and the Equityholder to the
Borrower as contemplated by the Purchase and Sale Agreements be, and be treated
for all purposes (other than accounting purposes and subject to the tax
characterization of the Borrower and the Advances described in Section 5.01(aa)
and Section 5.02(k) hereof) as, a sale by the Transferor and
the Equityholder, as applicable, of such Eligible Loan Assets. It is, further,
not the intention of the parties that such conveyance be deemed a pledge of the
Eligible Loan Assets by the Transferor to the Equityholder and the Equityholder
to the Borrower to secure a debt or other obligation of the Transferor or
Equityholder, as applicable. However, in the event that, notwithstanding the
intent of the parties, the Eligible Loan Assets are held to continue to be
property of the Transferor (in the case of the First Tier Purchase and Sale
Agreement) or the Equityholder (in the case of the Second Tier Purchase and
Sale Agreement), as applicable, then the parties hereto agree that: (i) each
of the Purchase and Sale Agreements shall also be deemed to be a security agreement
under Applicable Law; (ii) the transfer of the Eligible Loan Assets
provided for in the First Tier Purchase and Sale Agreement shall be deemed to
be a grant by the Transferor to the Equityholder of a first priority security
interest (subject only to Permitted Liens) in all of the Transferor’s right,
title and interest in and to the Eligible Loan Assets and all amounts payable
to the holders of the Eligible Loan Assets in accordance with the terms thereof
and all proceeds of the conversion, voluntary or involuntary, of the foregoing
into cash, instruments, securities or other property, including, without
limitation, all amounts from time to time held or invested in the Controlled
Accounts, whether in the form of cash, instruments, securities or other property;
(iii) the transfer of the Original Loan Assets provided for in the
Original Purchase and Sale Agreement shall be deemed to be a grant by the
Transferor to the Borrower of a first priority security interest (subject only
to Permitted Liens) in all of the Transferor’s right, title and interest in and
to the Original Loan Assets and all amounts payable to the holders of the
Original Loan Assets 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; (iv) the
transfer of the Eligible Loan Assets provided for in the Second Tier Purchase
and Sale Agreement shall be deemed to be a grant by the Equityholder to the
Borrower of a first priority security interest (subject only to Permitted
Liens) in all of such Equityholder’s right, title and interest in and to the
Eligible Loan Assets and all amounts payable to the holders of the Eligible
Loan Assets 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; (v) the possession by
the Borrower (or the Collateral Custodian on its behalf) of Loan Assets and
such other items of property as constitute instruments, money, negotiable
documents or chattel paper shall be, subject to clause (vi), for
purposes of perfecting the security interest pursuant to the UCC; and (vi) acknowledgements
from Persons holding such property shall be deemed acknowledgements from
custodians, bailees or agents (as applicable) of the Borrower for the purpose
of perfecting such security interest under Applicable Law. The parties further
agree that any assignment of the interest of the Borrower pursuant to any
provision hereof shall also be deemed to be an assignment of any security
interest created pursuant to the terms of the Purchase and Sale Agreements. The
Borrower shall, to the extent consistent with this Agreement and the other 

 

134

 

Transaction
Documents, take such actions as may be necessary to ensure that, if either of
the Purchase and Sale Agreements were deemed to create a security interest in
the Eligible Loan Assets, 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.

 

(b)                                 It is the
intention of each of the parties hereto that the Eligible Loan Assets conveyed
by the Transferor to the Equityholder pursuant to the First Tier Purchase and
Sale Agreement and by the Equityholder to the Borrower pursuant to the Second
Tier Purchase and Sale Agreement and by the Transferor to the Borrower pursuant
to the Original Purchase and Sale Agreement shall constitute assets owned by
the Borrower and shall not be part of the Transferor’s estate or the
Equityholder’s estate, as applicable, in the event of the filing of a
bankruptcy petition by or against the Transferor or Equityholder, as
applicable, under any bankruptcy or similar law.

 

(c)                                  The Borrower
agrees to treat, and shall cause the Equityholder and the Transferor to treat,
for all purposes (other than accounting purposes and subject to the tax
characterization of the Borrower and the Advances described in Section 5.01(aa)
and Section 5.02(k) hereof) (x) the transactions effected
by the First Tier Purchase and Sale Agreements as sales of assets to the
Equityholder, (y) the transactions effected by the Second Tier Purchase
and Sale Agreements as sales of assets to the Borrower and (z) the
transactions effected by the Original Purchase and Sale Agreement as sales of
the assets to the Borrower. The Borrower and the Servicer each hereby agree to
cause each of the Transferor and the Equityholder, as applicable, to reflect in
the Transferor’s or Equityholder’s financial records, as applicable, and to
include a note in the publicly filed annual and quarterly financial statements
of Ares 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, 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, 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.

 

SECTION 11.13                                                              Confidentiality.

 

(a)                                  Each of the
Agent, the Note Purchaser, the Servicer, the Trustee, the Borrower, the Bank,
the Equityholder, the Transferor and the Collateral Custodian shall maintain
and shall cause each of its employees and officers to maintain the
confidentiality of the Agreement and all information with respect to the other
parties, including all information regarding the business of the Borrower and
the Servicer hereto and their respective businesses, and all information in
connection with or related to the Loan Agreements (including but not limited to
any information provided pursuant to Section 6.08), obtained by it
or them in connection with the structuring, negotiating and execution of the
transactions contemplated herein, except that each such party and its officers
and employees may (i) disclose such information to its external
accountants, investigators, auditors, attorneys or other agents, including any
Approved Valuation Firm engaged by such party in connection with any due 

 

135

 

diligence
or comparable activities with respect to the transactions and Loan Assets
contemplated herein and the agents of such Persons (“Excepted Persons”); provided that each Excepted Person shall,
as a condition to any such disclosure, agree for the benefit of the Agent, the
Note Purchaser, the Servicer, the Trustee, the Borrower, the Bank, the
Equityholder,  the Transferor and the
Collateral Custodian that such information shall be used solely in connection with
such Excepted Person’s evaluation of, or relationship with, the Borrower and
its affiliates, (ii) disclose the existence of the Agreement, but not the
financial terms thereof, (iii) disclose such information as is required by
Applicable Law and (iv) disclose the Agreement and such information in any
suit, action, proceeding or investigation (whether in law or in equity or
pursuant to arbitration) involving any of the Transaction Documents for the
purpose of defending itself, reducing its liability, or protecting or
exercising any of its claims, rights, remedies, or interests under or in
connection with any of the Transaction Documents.  Notwithstanding the foregoing provisions of
this Section 11.13(a), the Servicer may, subject to Applicable Law
and the terms of any Loan Agreements, make available copies of the documents in
the Servicing Files and such other documents it holds in its capacity as
Servicer pursuant to the terms of this Agreement, to any of its creditors.  It is understood that the financial terms
that may not be disclosed except in compliance with this Section 11.13(a) include,
without limitation, all fees and other pricing terms, and all Events of
Default, Servicer Termination Events, and priority of payment provisions.

 

(b)                                 Anything herein
to the contrary notwithstanding, the Borrower, the Equityholder and the
Servicer each hereby consents to the disclosure of any nonpublic information
with respect to it (i) to the Agent, the Note Purchaser,  the Trustee or the Collateral Custodian by
each other, (ii) by the Agent, the Note Purchaser,  the Trustee and the Collateral Custodian to
any prospective or actual assignee or participant of any of them provided such
Person agrees to hold such information confidential, or (iii) by the
Agent, the Note Purchaser, the Trustee and the Collateral Custodian to any
provider of a surety, guaranty or credit or liquidity enhancement to the Note
Purchaser, as applicable, and to any officers, directors, employees, outside
accountants and attorneys of any of the foregoing, provided each such Person is
informed of the confidential nature of such information.  In addition, the Note Purchaser, the Agent,
the Trustee and the Collateral Custodian may disclose any such nonpublic information
as required pursuant to any law, rule, regulation, direction, request or order
of any judicial, administrative or regulatory authority or proceedings (whether
or not having the force or effect of law).

 

(c)                                  Notwithstanding
anything herein to the contrary, the foregoing shall not be construed to
prohibit (i) disclosure of any and all information that is or becomes
publicly known; (ii) disclosure of any and all information (a) if
required to do so by any applicable statute, law, rule or regulation, (b) to
any government agency or regulatory body having or claiming authority to
regulate or oversee any respects of the Note Purchaser’s, the Agent’s,  the Trustee’s or the Collateral Custodian’s
business or that of their affiliates, (c) pursuant to any subpoena, civil
investigative demand or similar demand or request of any court, regulatory
authority, arbitrator or arbitration to which the Agent, the Note Purchaser or
the Trustee or an officer, director, employer, shareholder or affiliate of any
of the foregoing is a party, (d) in any preliminary or final offering
circular, registration statement or contract or other document approved in
advance by the Borrower, the Servicer, the Equityholder or the Transferor or (e) to
any affiliate, independent or internal auditor, agent, employee or attorney of
the Trustee or the Collateral Custodian having a need to know the same, provided that the disclosing party advises
such 

 

136

 

recipient
of the confidential nature of the information being disclosed; or (iii) any
other disclosure authorized by the Borrower, Servicer, the Equityholder or the
Transferor.

 

SECTION 11.14                                                              Non-Confidentiality
of Tax Treatment.

 

All parties hereto agree
that each of them and each of their employees, representatives, and other agents
may disclose to any and all Persons, without limitation of any kind, the tax
treatment and tax structure of the transaction and all materials of any kind
(including, without limitation, opinions or other tax analyses) that are
provided to any of them relating to such tax treatment and tax structure.  “Tax treatment” and “tax structure” shall
have the same meaning as such terms have for purposes of Treasury Regulation Section 1.6011-4;
provided that with respect to any
document or similar item that in either case contains information concerning
the tax treatment or tax structure of the transaction as well as other
information, the provisions of this Section 11.14
shall only apply to such portions of the document or similar item that relate
to the tax treatment or tax structure of the transactions contemplated hereby.

 

SECTION 11.15                                                              Waiver of Set
Off.

 

Each of the parties hereto
hereby waives any right of setoff it may have or to which it may be entitled
under this Agreement from time to time against the Note Purchaser or its
assets.

 

SECTION 11.16                                                              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 11.17                                                              Breaches of
Representations, Warranties and Covenants.

 

For the avoidance of doubt,
no breach or default of any representation, warranty or covenant contained in Sections
4.01, 4.02 or 4.03 or 5.01, 5.02, 5.03, 5.04
that does not constitute an Unmatured Event of Default or Event of Default
shall be deemed to be a breach or default hereunder; provided that the foregoing shall not affect the definition
of “Eligible Loan Asset”, the definition of “Warranty Event”, Sections
2.07(d), 2.07(f), 2.15, 2.21, 3.02(a), 3.04(g),
5.01(n), 8.01, 8.02, 11.05 and the schedules and
exhibits hereto.

 

SECTION 11.18                                                              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”, the chain
of endorsements required therein by the third party to the Transferor, the
Transferor to the Equityholder and the Equityholder 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 

 

137

 

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 11.18 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 Equityholder pursuant to
the Second Tier Purchase and Sale Agreement and by the Equityholder 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 Transferor or Equityholder, as applicable,
pertaining to such sales.

 

SECTION 11.19                                                              Affirmation.

 

Each of the parties hereto
confirm, acknowledge and agree that this Agreement is an amendment and
restatement of the Original Agreement and that the execution, delivery and
performance of this Agreement does not create a novation of any indebtedness
existing under the Original Agreement immediately prior to the amendment and
restatement on the Restatement Date.  The
Borrower confirms, acknowledges and agrees that this Agreement benefits from
all collateral security executed in connection with the Original Agreement and
that the “Obligations” are secured by, and benefit from, all collateral
security and guarantees included in the Transaction Documents.  The Borrower hereby ratifies and confirms
that all of the terms and conditions, representations and covenants contained
in the Transaction Documents shall remain in full force and effect after giving
effect to the execution and effectiveness of this Agreement.

 

SECTION 11.20                                                              Back-Up
Servicer Removal.

 

Each
of the parties hereto agree that Lyon shall no longer be a party to this
Agreement and that Lyon is hereby released from and shall have no further
rights or obligations under this Agreement. By its signature hereto, Lyon is
acknowledging its removal as a party to this Agreement pursuant to this Section 11.20
and is not acknowledging or agreeing to any other provision of this Agreement.

 

ARTICLE
XII.

COLLATERAL CUSTODIAN

 

SECTION 12.01                                                              Designation of
Collateral Custodian.

 

(a)                                  Initial Collateral Custodian.  The role of Collateral Custodian with respect
to the Required Loan Documents shall be conducted by the Person designated as
Collateral Custodian hereunder from time to time in accordance with this Section 12.01.  Until the Agent shall give to U.S. Bank a
Collateral Custodian Termination Notice, U.S. Bank is hereby appointed as, and
hereby accepts such appointment and agrees to perform the duties and
obligations of, Collateral Custodian pursuant to the terms hereof.

 

(b)                                 Successor
Collateral Custodian.  Upon the
Collateral Custodian’s receipt of a Collateral Custodian Termination Notice
from the Agent of the designation of a successor 

 

138

 

Collateral
Custodian pursuant to the provisions of Section 12.05, the
Collateral Custodian agrees that it will terminate its activities as Collateral
Custodian hereunder.

 

SECTION 12.02                                                              Duties of
Collateral Custodian.

 

(a)                                  Appointment.  The Borrower and the Agent each hereby
appoints U.S. Bank to act as Collateral Custodian, for the benefit of the
Secured Parties.  The Collateral
Custodian hereby accepts such appointment and agrees to perform the duties and
obligations with respect thereto set forth herein.

 

(b)                                 Duties.  From the Closing Date until Restatement Date,
the Collateral Custodian was in compliance with its custodial obligations under
the Original Agreement in all material respects. From the Restatement Date
until its removal pursuant to Section 12.05, the Collateral
Custodian shall perform, on behalf of the Secured Parties, the following duties
and obligations:

 

(i)                                     The Collateral
Custodian shall take and retain custody of the Required Loan Documents
delivered by the Borrower pursuant to Section 3.02(a) and Section 3.04(b) hereof
in accordance with the terms and conditions of this Agreement, all for the
benefit of the Secured Parties.  Within
five Business Days of its receipt of any Required Loan Documents, the related
Loan Asset Schedule and a hard copy of the Loan Asset Checklist, the Collateral
Custodian shall review the Required Loan Documents to confirm that (A) such
Required Loan Documents have been properly executed and have no mutilated
pages, (B) UCC and other filings (required by the Required Loan Documents)
have been made, (C) if listed on the Loan Asset Checklist, an Insurance
Policy exists with respect to any real or personal property constituting the
Underlying Collateral, and (D) the related original balance (based on a
comparison to the note or assignment agreement, as applicable), Loan Asset
number and Obligor name, as applicable, with respect to such Loan Asset is
referenced on the related Loan Asset Schedule (such items (A) through (D) collectively,
the “Review Criteria”).  In order
to facilitate the foregoing review by the Collateral Custodian, in connection
with each delivery of Required Loan Documents hereunder to the Collateral
Custodian, the Servicer shall provide to the Collateral Custodian a hard copy
(which may be preceded by an electronic copy, as applicable) of the related
Loan Asset Checklist which contains the Loan Asset information with respect to
the Required Loan Documents being delivered, identification number and the name
of the Obligor with respect to such Loan Asset. 
Notwithstanding anything herein to the contrary, the Collateral
Custodian’s obligation to review the Required Loan Documents shall be limited
to reviewing such Required Loan Documents based on the information provided on
the Loan Asset Checklist. If, at the conclusion of such review, the Collateral
Custodian shall determine that (i) the original balance of the Loan Asset
with respect to which it has received Required Loan Documents is less than as
set forth on the Loan Asset Schedule, the Collateral Custodian shall notify the
Agent and the Servicer of such discrepancy within one Business Day, or (ii) any
Review Criteria is not satisfied, the Collateral Custodian shall within one
Business Day notify the Servicer of such determination and provide the Servicer
with a list of the non-complying Loan Assets and the applicable Review Criteria
that they fail to satisfy. The Servicer shall have five Business Days after
notice or knowledge thereof to 

 

139

 

correct any non-compliance
with any Review Criteria.  In addition,
if requested in writing (in the form of Exhibit N) by the Servicer
and approved by the Agent within 10 Business Days of the Collateral Custodian’s
delivery of such report, the Collateral Custodian shall return any Loan Asset
which fails to satisfy a Review Criteria to the Borrower.  Other than the foregoing, the Collateral
Custodian shall not have any responsibility for reviewing any Required Loan
Documents. Notwithstanding anything to the contrary contained herein, the
Collateral Custodian shall have no duty or obligation with respect to any Loan
Asset checklist delivered to it in electronic form.

 

(ii)                                  In taking and
retaining custody of the Required Loan Documents, the Collateral Custodian
shall be deemed to be acting as the agent of the Secured Parties; provided that the Collateral Custodian
makes no representations as to the existence, perfection or priority of any
Lien on the Required Loan Documents or the instruments therein; and provided, further,
that, the Collateral Custodian’s duties shall be limited to those expressly
contemplated herein.

 

(iii)                               All Required
Loan Documents shall be kept in fire resistant vaults, rooms or cabinets at the
locations specified on the address of the Collateral Custodian in Section 11.02,
or at such other office as shall be specified to the Agent and the Servicer by
the Collateral Custodian in a written notice delivered at least 30 days prior
to such change.  All Required Loan
Documents shall be placed together with an appropriate identifying label and
maintained in such a manner so as to permit retrieval and access. The
Collateral Custodian shall segregate the Required Loan Documents on its
inventory system and will not commingle the physical Required Loan Documents
with any other files of the Collateral Custodian other than those, if any,
relating to Ares and its Affiliates and subsidiaries; provided, however,
the Collateral Custodian shall segregate any commingled files upon written
request of the Agent and the Borrower.

 

(iv)                              On the 12th calendar day of every month (or if such day is
not a Business Day, the next succeeding Business Day), the Collateral Custodian
shall provide a written report to the Agent and the Servicer (in a form
mutually agreeable to the Agent and the Collateral Custodian) identifying each
Loan Asset for which it holds Required Loan Documents and the applicable Review
Criteria that any Loan Asset fails to satisfy.

 

(v)                                 In performing
its duties, the Collateral Custodian shall use the same degree of care and
attention as it employs with respect to similar collateral that it holds as
collateral custodian for others.

 

(c)                                  (i)                                     The Collateral
Custodian agrees to cooperate with the Agent and the Trustee and deliver any
Required Loan Documents to the Trustee or Agent (pursuant to a written request
in the form of Exhibit N), as applicable, as requested in order to
take any action that the Trustee or the Agent deems necessary or desirable in
order to perfect, protect or more fully evidence the security interests granted
by the Borrower hereunder, or to enable any of them to exercise or enforce any
of their respective rights hereunder, including any rights arising with respect
to Article VII. In the event the Collateral Custodian receives
instructions from the Trustee, the Servicer or the Borrower which 

 

140

 

conflict with any
instructions received by the Agent, the Collateral Custodian shall rely on and
follow the instructions given by the Agent.

 

(ii)                                  The Agent may
direct the Collateral Custodian to take any such incidental action
hereunder.  With respect to other actions
which are incidental to the actions specifically delegated to the Collateral
Custodian hereunder, the Collateral Custodian shall not be required to take any
such incidental action hereunder, but shall be required to act or to refrain
from acting (and shall be fully protected in acting or refraining from acting)
upon the direction of the Agent; provided
that the Collateral Custodian shall not be required to take any action
hereunder at the request of the Agent, any Secured Parties or otherwise if the
taking of such action, in the reasonable determination of the Collateral
Custodian, (x) shall be in violation of any Applicable Law or contrary to
any provisions of this Agreement or (y) shall expose the Collateral
Custodian to liability hereunder or otherwise (unless it has received indemnity
which it reasonably deems to be satisfactory with respect thereto).  In the event the Collateral Custodian
requests the consent of the Agent and the Collateral Custodian does not receive
a consent (either positive or negative) from the Agent within 10 Business Days
of its receipt of such request, then the Agent shall be deemed to have declined
to consent to the relevant action.

 

(iii)                               The Collateral
Custodian shall not be liable for any action taken, suffered or omitted by it
in accordance with the request or direction of any Secured Party, to the extent
that this Agreement provides such Secured Party the right to so direct the
Collateral Custodian, or the Agent.  The
Collateral Custodian shall not be deemed to have notice or knowledge of any
matter hereunder, including an Event of Default, unless a Responsible Officer
of the Collateral Custodian has knowledge of such matter or written notice
thereof is received by the Collateral Custodian.

 

SECTION 12.03                                                              Merger or Consolidation.

 

Any Person (i) into
which the Collateral Custodian may be merged or consolidated, (ii) that
may result from any merger or consolidation to which the Collateral Custodian
shall be a party, or (iii) that may succeed to the properties and assets
of the Collateral Custodian substantially as a whole, which Person in any of
the foregoing cases executes an agreement of assumption to perform every
obligation of the Collateral Custodian hereunder, shall be the successor to the
Collateral Custodian under this Agreement without further act of any of the
parties to this Agreement.

 

SECTION 12.04                                                              Collateral
Custodian Compensation.

 

As compensation for its
Collateral Custodian activities hereunder, the Collateral Custodian shall be
entitled to the Collateral Custodian Fees and Collateral Custodian Expenses
from the Borrower as set forth in the Trustee and Collateral Custodian Fee
Letter.  The Collateral Custodian shall
be entitled to receive the Collateral Custodian Fees and Collateral Custodian
Expenses to the extent of funds available therefor pursuant to the provision of
Section 2.04; provided, that,
for the avoidance of doubt, to the extent funds are not so available on any
Payment Date to pay such fees or reimburse such expenses incurred during the
immediately 

 

141

 

ended
Remittance Period, such payment or reimbursement amount shall be deferred and
payable on the next Payment Date on which funds are available therefor pursuant
to Section 2.04. The Collateral Custodian’s entitlement to receive
the Collateral Custodian Fees shall cease on the earlier to occur of:  (i) its removal as Collateral Custodian
pursuant to Section 12.05, (ii) its resignation as Collateral
Custodian pursuant to Section 12.07 of this Agreement or (iii) the
termination of this Agreement.

 

SECTION 12.05                                                              Collateral
Custodian Removal.

 

The Collateral Custodian may
be removed, with or without cause, by the Agent by notice given in writing to
the Collateral Custodian (the “Collateral Custodian Termination Notice”);
provided, notwithstanding its
receipt of a Collateral Custodian Termination Notice, the Collateral Custodian
shall continue to act in such capacity until a successor Collateral Custodian
has been appointed and has agreed to act as Collateral Custodian hereunder.

 

SECTION 12.06                                                              Limitation on
Liability.

 

(a)                                  The Collateral
Custodian may conclusively rely on and shall be fully protected in acting upon
any certificate, instrument, opinion, notice, letter, telegram or other
document delivered to it and that in good faith it reasonably believes to be
genuine and that has been signed by the proper party or parties.  The Collateral Custodian may rely
conclusively on and shall be fully protected in acting upon (a) the
written instructions of any designated officer of the Agent or (b) the
verbal instructions of the Agent.

 

(b)                                 The Collateral
Custodian may consult counsel satisfactory to it and the advice or opinion of
such counsel shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.

 

(c)                                  The Collateral
Custodian shall not be liable for any error of judgment, or for any act done or
step taken or omitted by it, in good faith, or for any mistakes of fact or law,
or for anything that it may do or refrain from doing in connection herewith
except in the case of its willful misconduct or grossly negligent performance
or omission of its duties and in the case of the negligent performance of its
duties in taking and retaining custody of the Required Loan Documents.

 

(d)                                 The Collateral
Custodian makes no warranty or representation and shall have no responsibility
(except as expressly set forth in this Agreement) as to the content,
enforceability, completeness, validity, sufficiency, value, genuineness,
ownership or transferability of the Collateral Portfolio, and will not be
required to and will not make any representations as to the validity or value
(except as expressly set forth in this Agreement) of any of the Collateral
Portfolio.  The Collateral Custodian
shall not be obligated to take any legal action hereunder that might in its
judgment involve any expense or liability unless it has been furnished with an
indemnity reasonably satisfactory to it.

 

(e)                                  The Collateral
Custodian shall have no duties or responsibilities except such duties and
responsibilities as are specifically set forth in this Agreement and no
covenants or obligations shall be implied in this Agreement against the
Collateral Custodian.

 

142

 

(f)                                    The Collateral
Custodian shall not be required to expend or risk its own funds in the
performance of its duties hereunder.

 

(g)                                 It is expressly
agreed and acknowledged that the Collateral Custodian is not guaranteeing
performance of or assuming any liability for the obligations of the other
parties hereto or any parties to the Collateral Portfolio.

 

(h)                                 Subject in all
cases to the last sentence of Section 12.02(c)(i), in case any
reasonable question arises as to its duties hereunder, the Collateral Custodian
may, prior to the occurrence of an Event of Default or the Facility Maturity
Date, request instructions from the Servicer and may, after the occurrence of
an Event of Default or the Facility Maturity Date, request instructions from
the Agent, and shall be entitled at all times to refrain from taking any action
unless it has received instructions from the Servicer or the Agent, as
applicable.  The Collateral Custodian
shall in all events have no liability, risk or cost for any action taken
pursuant to and in compliance with the instruction of the Agent.  In no event shall the Collateral Custodian be
liable for special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Collateral
Custodian has been advised of the likelihood of such loss or damage and
regardless of the form of action.

 

SECTION 12.07                                                              Collateral
Custodian Resignation.

 

Collateral Custodian may
resign and be discharged from its duties or obligations hereunder, not earlier
than 90 days after delivery to the Agent of written notice of such resignation
specifying a date when such resignation shall take effect.  Upon the effective date of such resignation,
or if the Agent gives Collateral Custodian written notice of an earlier
termination hereof, Collateral Custodian shall (i) be reimbursed for any
costs and expenses Collateral Custodian shall incur in connection with the
termination of its duties under this Agreement and (ii) deliver all of the
Required Loan Documents in the possession of Collateral Custodian to the Agent
or to such Person as the Agent may designate to Collateral Custodian in writing
upon the receipt of a request in the form of Exhibit N; provided that the Borrower shall consent
to any successor Collateral Custodian appointed by the Agent (such consent not
to be unreasonably withheld). Notwithstanding anything herein to the contrary,
the Collateral Custodian may not resign prior to a successor Collateral
Custodian being appointed.

 

SECTION 12.08                                                              Release of
Documents.

 

(a)                                  Release for
Servicing.  From time
to time and as appropriate for the enforcement or servicing of any of the
Collateral Portfolio, the Collateral Custodian is hereby authorized (unless and
until such authorization is revoked by the Agent), upon written receipt from
the Servicer of a request for release of documents and receipt in the form
annexed hereto as Exhibit N, to release to the Servicer within two
Business Days of receipt of such request, the related Required Loan Documents
or the documents set forth in such request and receipt to the Servicer.  All documents so released to the Servicer
shall be held by the Servicer in trust for the benefit of the Trustee, on
behalf of the Secured Parties in accordance with the terms of this
Agreement.  The Servicer shall return to
the Collateral Custodian the Required Loan Documents or other such documents (i) promptly
upon the request of the Agent, or (ii) when the Servicer’s need therefor
in connection with such foreclosure or servicing no longer exists, unless the
Loan 

 

143

 

Asset
shall be liquidated, in which case, the Servicer shall deliver an additional
request for release of documents to the Collateral Custodian and receipt
certifying such liquidation from the Servicer to the Trustee, all in the form
annexed hereto as Exhibit N.

 

(b)                                 Limitation on
Release.  The foregoing provision with
respect to the release to the Servicer of the Required Loan Documents and
documents by the Collateral Custodian upon request by the Servicer shall be
operative only to the extent that at any time the Trustee shall not have
released to the Servicer active Required Loan Documents (including those
requested) pertaining to more than 10 Loan Assets at the time being serviced by
the Servicer under this Agreement. 
Promptly after delivery to the Collateral Custodian of any request for
release of documents, the Servicer shall provide notice of the same to the
Agent.  Any additional Required Loan
Documents or documents requested to be released by the Servicer may be released
only upon written authorization of the Agent. 
The limitations of this paragraph shall not apply to the release of
Required Loan Documents to the Servicer pursuant to the immediately succeeding
subsection.

 

(c)                                  Release for
Payment.  Upon receipt by the Collateral
Custodian of the Servicer’s request for release of documents and receipt in the
form annexed hereto as Exhibit N (which certification shall include
a statement to the effect that all amounts received in connection with such
payment or repurchase have been credited to the Collection Account as provided
in this Agreement), the Collateral Custodian shall promptly release the related
Required Loan Documents to the Servicer.

 

SECTION 12.09                                                              Return of
Required Loan Documents.

 

The Borrower may, with the
prior written consent of the Agent (such consent not to be unreasonably
withheld or delayed), require that the Collateral Custodian return each
Required Loan Document (a) delivered to the Collateral Custodian in error
or (b) released from the Lien of the Trustee hereunder pursuant to Section 2.16,
in each case by submitting to the Collateral Custodian and the Agent a written
request in the form of Exhibit N hereto (signed by both the
Borrower and the Agent) specifying the Collateral Portfolio to be so returned
and reciting that the conditions to such release have been met (and specifying
the Section or Sections of this Agreement being relied upon for such
release).  The Collateral Custodian shall
upon its receipt of each such request for return executed by the Borrower and
the Agent promptly, but in any event within five Business Days, return the
Required Loan Documents so requested to the Borrower.

 

SECTION 12.10                                                              Access to
Certain Documentation and Information Regarding the Collateral Portfolio;
Audits of Servicer.

 

The Collateral Custodian
shall provide to the Agent access to the Required Loan Documents and all other
documentation regarding the Collateral Portfolio including in such cases where
the Agent is required in connection with the enforcement of the rights or
interests of the Secured Parties, or by applicable statutes or regulations, to
review such documentation, such access being afforded without charge but only (i) upon
two Business Days prior written request, (ii) during normal business hours
and (iii) subject to the Servicer’s and the Collateral Custodian’s normal
security and confidentiality procedures. 
Prior to the Restatement Date and periodically 

 

144

 

thereafter
at the discretion of the Agent, the Agent may review the Servicer’s collection
and administration of the Collateral Portfolio in order to assess compliance by
the Servicer with the Credit Policy and the Servicing Standard, as well as with
this Agreement and may conduct an audit of the Collateral Portfolio, and
Required Loan Documents in conjunction with such a review.  Such review shall be (subject to Section 5.03(d)(ii))
reasonable in scope and shall be completed in a reasonable period of time.  Without limiting the foregoing provisions of
this Section 12.10, from time to time on request of the Agent, the
Collateral Custodian shall permit certified public accountants or other
auditors acceptable to the Agent to conduct, at the expense of the Servicer (on
behalf of the Borrower), a review of the Required Loan Documents and all other
documentation regarding the Collateral Portfolio.

 

SECTION 12.11                                                              Custodian as
Agent of Trustee.

 

The Collateral Custodian
agrees that, with respect to any Required Loan Documents at any time or times
in its possession or held in its name, the Collateral Custodian shall be the
agent and custodian of the Trustee, for the benefit of the Secured Parties, for
purposes of perfecting (to the extent not otherwise perfected) the Trustee’s
security interest in the Collateral Portfolio and for the purpose of ensuring
that such security interest is entitled to first priority status under the UCC.

 

[Signature pages to follow.]

 

145

 

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

 

	
  THE BORROWER:

  	
  ARES CAPITAL CP FUNDING LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard S. Davis

  
	
   

  	
   

  	
  Name: Richard S. Davis

  
	
   

  	
   

  	
  Title: Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [SIGNATURES CONTINUE ON THE FOLLOWING PAGE]

  

 

Ares
CP I Restated Facility

Amended and Restated Sale and Servicing Agreement

 

 

	
  THE SERVICER:

  	
  ARES CAPITAL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard S. Davis

  
	
   

  	
   

  	
  Name: Richard S. Davis

  
	
   

  	
   

  	
  Title: Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THE TRANSFEROR:

  	
  ARES CAPITAL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard S. Davis

  
	
   

  	
   

  	
  Name: Richard S. Davis

  
	
   

  	
   

  	
  Title: Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [SIGNATURES
  CONTINUE ON THE FOLLOWING PAGE]

  

 

Ares
CP I Restated Facility

Amended and Restated Sale and Servicing Agreement

 

 

	
  THE AGENT:

  	
  WELLS FARGO SECURITIES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jason Powers

  
	
   

  	
   

  	
  Name: Jason Powers

  
	
   

  	
   

  	
  Title: Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THE NOTE PURCHASER:

  	
  WACHOVIA BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kevin Sunday

  
	
   

  	
   

  	
  Name: Kevin Sunday

  
	
   

  	
   

  	
  Title: Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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  THE FOLLOWING PAGE]

  

 

Ares
CP I Restated Facility

Amended and Restated Sale and Servicing Agreement

 

 

	
  THE TRUSTEE:

  	
  U.S. BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John T. Edwards

  
	
   

  	
   

  	
  Name: John T. Edwards

  
	
   

  	
   

  	
  Title: Assistant Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THE BANK:

  	
  U.S. BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John T. Edwards

  
	
   

  	
   

  	
  Name: John T. Edwards

  
	
   

  	
   

  	
  Title: Assistant Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THE COLLATERAL CUSTODIAN:

  	
  U.S. BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John T. Edwards

  
	
   

  	
   

  	
  Name: John T. Edwards

  
	
   

  	
   

  	
  Title: Assistant Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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Ares
CP I Restated Facility

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  Agreed and Acknowledged:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  VARIABLE FUNDING CAPITAL COMPANY LLC, as a Conduit
  Purchaser under the Original Agreement

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Wells Fargo Securities,
  LLC (f/k/a Wachovia Capital Markets, LLC), as attorney-in-fact

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Haojin Wu

  
	
   

  	
   

  	
  Name: Haojin Wu

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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Ares
CP I Restated Facility

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  Agreed and Acknowledged:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARES CAPITAL CP FUNDING II LLC, as the
  Guarantor under the Original Agreement

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard S. Davis

  
	
   

  	
   

  	
  Name: Richard S. Davis

  
	
   

  	
   

  	
  Title: Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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CP I Restated Facility

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  Agreed and Acknowledged Solely for Purposes of Section 11.20:

  
	
   

  	
   

  	
   

  
	
   

  	
  LYON FINANCIAL SERVICES, INC., d/b/a U.S.
  Bank Portfolio Services, not in its individual capacity but solely as Backup
  Servicer under the Original Agreement

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Dockon

  
	
   

  	
   

  	
  Name: John Dockon

  
	
   

  	
   

  	
  Title: Senior Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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Ares
CP I Restated Facility

Amended and Restated Sale and Servicing Agreement

 

 

	
  Agreed and Acknowledged:

  	
   

  	
   

  
	
   

  	
  WACHOVIA BANK, NATIONAL ASSOCIATION, as a Hedge
  Counterparty

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kim V. Farr

  
	
   

  	
   

  	
  Name: Kim V. Farr

  
	
   

  	
   

  	
  Title: Director

  

 

Ares
CP I Restated Facility

Amended and Restated Sale
and Servicing Agreement

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