SECOND TIER PURCHASE AND SALE AGREEMENT

 

TABLE OF CONTENTS

 

			Page
ARTICLE I.	DEFINITIONS		1
Section 1.1.		General	1
Section 1.2.		Specific Terms	2
Section 1.3.		Other Terms	5
Section 1.4.		Computation of Time Periods	5
Section 1.5.		Certain References	5
ARTICLE II.	SALE AND PURCHASE OF THE ELIGIBLE LOAN ASSETS AND OTHER PORTFOLIO ASSETS		5
Section 2.1.		Sale and Purchase of the Eligible Loan Assets and the Other Portfolio Assets	5
Section 2.2.		Purchase Price	8
Section 2.3.		Payment of Purchase Price	8
Section 2.4.		Nature of the Sales	9
ARTICLE III.	CONDITIONS OF SALE AND PURCHASE		10
Section 3.1.		Conditions Precedent to Effectiveness	10
Section 3.2.		Conditions Precedent to All Purchases	11
ARTICLE IV.	REPRESENTATIONS AND WARRANTIES		12
Section 4.1.		Representations and Warranties of the Seller	12
Section 4.2.		Representations and Warranties of the Seller Relating to the Agreement and the Sale Portfolio	20
Section 4.3.		Representations and Warranties of the Purchaser	21
ARTICLE V.	COVENANTS OF THE SELLER		23
Section 5.1.		Protection of Title of the Purchaser	23
Section 5.2.		Affirmative Covenants of the Seller	25
Section 5.3.		Negative Covenants of the Seller	29
ARTICLE VI.	REPURCHASES AND SUBSTITUTION BY THE SELLER		31
Section 6.1.		Repurchase of Loan Assets	31
Section 6.2.		Substitution of Loan Assets	32
Section 6.3.		Repurchase Limitations	33
ARTICLE VII.	ADDITIONAL RIGHTS AND OBLIGATIONS IN RESPECT OF THE SALE PORTFOLIO		33
Section 7.1.		Rights of the Purchaser	33
Section 7.2.		Notice to Trustee, Agent and Note Purchaser	34

 

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TABLE OF CONTENTS

(cont’d)

 

			Page
ARTICLE VIII.	SELLER TERMINATION EVENTS			34
Section 8.1.		Seller Termination Events		34
Section 8.2.		Remedies		36
Section 8.3.		Survival of Certain Provisions		37
ARTICLE IX.	INDEMNIFICATION			37
Section 9.1.		Indemnification by the Seller		37
Section 9.2.		Assignment of Indemnities		40
ARTICLE X.	MISCELLANEOUS			41
Section 10.1.		Liability of the Seller		41
Section 10.2.		Limitation on Liability		41
Section 10.3.		Amendments; Limited Agency		41
Section 10.4.		Waivers; Cumulative Remedies		41
Section 10.5.		Notices		41
Section 10.6.		Merger and Integration		41
Section 10.7.		Severability of Provisions		42
Section 10.8.		GOVERNING LAW; JURY WAIVER		42
Section 10.9.		Consent to Jurisdiction; Service of Process		42
Section 10.10.		Costs, Expenses and Taxes		42
Section 10.11.		Counterparts		43
Section 10.12.		Bankruptcy Non-Petition and Limited Recourse; Claims		43
Section 10.13.		Binding Effect; Assignability		43
Section 10.14.		Waiver of Setoff		44
Section 10.15.		Headings and Exhibits		44
Section 10.16.		Rights of Inspection		44
Section 10.17.		Subordination		45
Section 10.18.		Breaches of Representations, Warranties and Covenants		45
Section 10.19.		Confidentiality		45
Section 10.20.		Assignments of Loan Assets		45

 

SCHEDULES AND EXHIBITS

 

Schedule I	-	Sale Portfolio List
Exhibit A	-	Form of Second Tier Loan Assignment
Exhibit B	-	Form of Officer’s Purchase Date Certificate
Exhibit C	-	Form of Power of Attorney for Seller

 

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SECOND TIER PURCHASE AND SALE AGREEMENT

 

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

 

W I T N E S S E T H:

 

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

 

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

 

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

 

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

 

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

 

ARTICLE I.

DEFINITIONS

 

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

 

 

“hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision, and Article, Section, Schedule and Exhibit references, unless otherwise specified, refer to Articles and Sections of and Schedules and Exhibits to this Agreement.  Capitalized terms used herein but not defined herein shall have the respective meanings assigned to such terms in the Note Purchase Agreement, provided that, if, within such definition in the Note Purchase Agreement a further term is used which is defined herein, then such further term shall have the meaning given to such further term herein.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“ Purchaser ” has the meaning specified in the Preamble.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(iv)           all income and Proceeds of the foregoing.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE II.

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(m)           The Seller shall, at all times, continue to fulfill its obligations under, and in strict conformance with the terms of all Loan Agreements (other than with respect to funding obligations to Obligors in connection with Revolving Loan Assets and Delayed Draw Loan

 

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

 

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

 

Section 2.2.             Purchase Price .

 

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

 

Section 2.3.             Payment of Purchase Price .

 

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

 

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

 

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

 

(d)            Upon the payment of the Purchase Price for any Purchase, title to the Sale Portfolio included in such Purchase shall vest in the Purchaser, whether or not the conditions precedent to such Purchase and the other covenants and agreements contained herein were in fact

 

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satisfied; provided that the Purchaser shall not be deemed to have waived any claim it may have under this Agreement for the failure by the Seller in fact to satisfy any such condition precedent, covenant or agreement.

 

Section 2.4.             Nature of the Sales .

 

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

 

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

 

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ARTICLE III.

CONDITIONS OF SALE AND PURCHASE

 

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

 

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

 

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

 

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

 

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

 

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

 

(vi)           copies of tax and judgment lien searches in all jurisdictions reasonably requested by the Purchaser or its assignees and requests for information (or a similar UCC search report certified by a party acceptable to the Purchaser and its

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)            The following statements shall be true:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES

 

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

 

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

 

(b)            Due Qualification .  The Seller is duly qualified to do business and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease

 

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of its property or the conduct of its business requires such qualification, licenses and/or approvals.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(n)            Exchange Act Compliance; Regulations T, U and X .  None of the transactions contemplated herein or in the other Transaction Documents (including, without limitation, the use of the proceeds from the Sale of the Sale Portfolio) will violate or result in a violation of Section 7 of the Exchange Act, or any regulations issued pursuant thereto, including, without limitation, Regulations T, U and X of the Board of Governors of the Federal Reserve

 

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System, 12 C.F.R., Chapter II.  The Seller does not own or intend to carry or purchase, and no proceeds from the Sale of the Sale Portfolio will be used to carry or purchase, any Margin Stock or to extend “purpose credit” within the meaning of Regulation U.

 

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

 

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

 

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

 

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

 

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event has occurred or condition exists that might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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(z)                                    Security Interest .

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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