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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported) May 24, 2024

 

ARES CAPITAL CORPORATION

(Exact Name of Registrant as Specified in Charter)

 

Maryland   814-00663   33-1089684
(State or Other Jurisdiction
of Incorporation)
  (Commission
File Number)
  (IRS Employer
Identification No.)

 

245 Park Avenue, 44th Floor, New York, NY   10167
(Address of Principal Executive Offices)   (Zip Code)

 

Registrant’s telephone number, including area code (212) 750-7300

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading symbol   Name of each exchange on which registered
Common stock, $0.001 par value   ARCC   NASDAQ Global Select Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

Item 1.01 Entry into a Material Definitive Agreement.

 

On May 24, 2024 (the “Closing Date”), through its wholly owned, consolidated subsidiary Ares Direct Lending CLO 1 LLC (“ARCC CLO”), Ares Capital Corporation (the “Company”) completed a $701.6 million term debt securitization (the “2024 Debt Securitization”). The 2024 Debt Securitization is also known as a collateralized loan obligation and is an on-balance-sheet financing for the Company.

 

The notes offered in the 2024 Debt Securitization (the “CLO Notes”) were issued by ARCC CLO pursuant to an indenture (the “CLO Indenture”) dated as of the Closing Date and include (i) $406.0 million of Class A Senior Floating Rate Notes due April 25, 2036 that were issued to third parties and bear interest at Term SOFR (as defined in the CLO Indenture) plus 1.80% (the “Class A CLO Notes”); (ii) $70.0 million Class B Senior Floating Rate Notes due April 25, 2036 that were issued to third parties and bear interest at Term SOFR plus 2.20% (the “Class B CLO Notes” and, together with the Class A CLO Notes, the “Secured CLO Notes”); and (iii) $225.6 million Subordinated Notes due April 25, 2036, which do not bear interest (the “Subordinated CLO Notes”). The Company acquired all of the Subordinated CLO Notes, which are unsecured obligations of ARCC CLO.

 

The Secured CLO Notes are the secured obligation of ARCC CLO and are backed by a diversified portfolio of senior secured and second lien loans contributed by the Company to ARCC CLO on the Closing Date pursuant to the terms of a contribution agreement (the “Contribution Agreement”). The CLO Indenture contains certain conditions pursuant to which additional loans can be acquired by ARCC CLO, in accordance with rating agency criteria or as otherwise agreed with certain institutional investors who purchased the Secured CLO Notes. Through April 25, 2028, all principal collections received on the underlying collateral may be used by ARCC CLO to purchase new collateral under the direction of Ares Capital Management LLC, the Company’s investment adviser, in its capacity as asset manager (the “Asset Manager”) to ARCC CLO under an asset management agreement (the “Asset Management Agreement”) and in accordance with the Company’s investment strategy, including additional collateral that may be purchased from the Company, pursuant to the terms of a master purchase and sale agreement (the “Master Purchase Agreement”) between the Company as seller and ARCC CLO as buyer. The Asset Manager will waive any management fees that relate to the Company's ownership of the Subordinated CLO Notes. In addition, U.S. Bank Trust Company, National Association (the “Collateral Administrator”) serves as collateral administrator for ARCC CLO under a collateral administration agreement (the “Collateral Administration Agreement”) among ARCC CLO, the Asset Manager and the Collateral Administrator.

 

The CLO Indenture includes customary covenants and events of default. The CLO Notes have not been, and will not be, registered under the Securities Act of 1933, as amended, or any state securities or “blue sky” laws and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or an applicable exemption from registration.

 

The Company expects to use the net proceeds of the offering to repay certain outstanding indebtedness under its debt facilities. The Company may reborrow under its debt facilities for general corporate purposes, which include investing in portfolio companies in accordance with its investment objective.

 

The foregoing descriptions of the Contribution Agreement, the CLO Indenture, the Class A CLO Notes, the Class B CLO Notes, the Subordinated CLO Notes, the Asset Management Agreement, the Collateral Administration Agreement and the Master Purchase Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Contribution Agreement, the CLO Indenture, the Class A CLO Notes, the Class B CLO Notes, the Subordinated CLO Notes, the Asset Management Agreement, the Collateral Administration Agreement and the Master Purchase Agreement, respectively, each filed as exhibits hereto or included within such exhibits, as applicable, and incorporated by reference herein.

 

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of Registrant.

 

The information contained in Item 1.01 to this current report on Form 8-K is by this reference incorporated in this Item 2.03.

 

 

Item 9.01 Financial Statements and Exhibits.

 

(d)            Exhibits:

 

Exhibit Number  Description
4.1  Indenture, dated as of May 24, 2024, by and between Ares Direct Lending CLO 1 LLC, as issuer, and U.S. Bank Trust Company, National Association, as trustee
    
4.2  Form of Class A Senior Floating Rate Notes due 2036 (contained in the Indenture filed as Exhibit 4.1 hereto)
    
4.3  Form of Class B Senior Floating Rate Notes due 2036 (contained in the Indenture filed as Exhibit 4.1 hereto)
    
4.4  Form of Subordinated Notes due 2036 (contained in the Indenture filed as Exhibit 4.1 hereto)
    
10.1  Collateral Administration Agreement, dated as of May 24, 2024, by and between Ares Direct Lending CLO 1 LLC, as issuer, Ares Capital Management LLC, as asset manager, and U.S. Bank Trust Company, National Association as collateral administrator
    
10.2  Asset Management Agreement, dated as of May 24, 2024, by and between Ares Direct Lending CLO 1 LLC, as issuer and Ares Capital Management LLC, as asset manager
    
10.3  Master Purchase and Sale Agreement, dated as of May 24, 2024, by and between Ares Capital Corporation, as seller, and Ares Direct Lending CLO 1 LLC, as buyer
    
10.4  Contribution Agreement, dated as of May 24, 2024, by and between Ares Capital Corporation, as transferor, and Ares Direct Lending CLO 1 LLC, as transferee
    
104   Cover Page Interactive Data File (embedded within Inline XBRL Document)

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 ARES CAPITAL CORPORATION
    
Date: May 31, 2024   
    
 By: /s/ Scott C. Lem
 Name: Scott C. Lem
 Title: Chief Financial Officer and Treasurer

 

 

 

Exhibit 4.1

 

ARES DIRECT LENDING CLO 1 LLC,

ISSUER

 

AND

 

U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,

TRUSTEE

 

INDENTURE

 

Dated as of May 24, 2024

 

COLLATERALIZED LOAN OBLIGATIONS

 

 

 

 

Table of Contents

 

      Page 
      
PRELIMINARY STATEMENT   1 
      
GRANTING CLAUSE   1 
         
ARTICLE I  DEFINITIONS   2 
         
Section 1.1  Definitions   2 
Section 1.2  Assumptions as to Underlying Assets   60 
Section 1.3  Rules of Construction   63 
         
ARTICLE II  THE DEBT   64 
         
Section 2.1  Forms Generally   64 
Section 2.2  Forms of Notes and Certificate of Authentication   64 
Section 2.3  Authorized Amount; Note Interest Rate; Stated Maturity; Denominations   65 
Section 2.4  Execution, Authentication, Delivery and Dating   66 
Section 2.5  Registration, Registration of Transfer and Exchange   67 
Section 2.6  Mutilated, Destroyed, Lost or Stolen Notes   74 
Section 2.7  Payment of Principal, Interest and Other Distributions; Principal and Interest Rights Preserved   75 
Section 2.8  Persons Deemed Owners   77 
Section 2.9  Cancellation   77 
Section 2.10  Global Notes; Temporary Notes   78 
Section 2.11  Additional Issuances of Notes   79 
Section 2.12  Tax Treatment; Tax Certifications   81 
Section 2.13  No Gross Up   83 
Section 2.14  Non-Permitted Holders; Compulsory Sales   83 
         
ARTICLE III  CONDITIONS PRECEDENT; CERTAIN PROVISIONS RELATING TO COLLATERAL   84 
         
Section 3.1  General Provisions   84 
Section 3.2  Security for the Notes   85 
Section 3.3  Additional Notes – General Provisions   86 
Section 3.4  Delivery of Underlying Assets and Eligible Investments   86 
Section 3.5  Purchase and Delivery of Underlying Assets and Other Actions During the Initial Investment Period   87 
Section 3.6  Representations Regarding Collateral   89 
         
ARTICLE IV  SATISFACTION AND DISCHARGE   90 
         
Section 4.1  Satisfaction and Discharge of Indenture   90 
Section 4.2  Repayment of Monies Held by Paying Agent   91 
         
ARTICLE V  REMEDIES   91 
         
Section 5.1  Events of Default   91 
Section 5.2  Acceleration of Maturity; Rescission and Annulment   92 
Section 5.3  Collection of Indebtedness and Suits for Enforcement by Trustee   93 
Section 5.4  Remedies   94 
Section 5.5  Optional Preservation of Collateral   96 
Section 5.6  Trustee May Enforce Claims Without Possession of Notes   97 
Section 5.7  Application of Money Collected   98 

 

ii

 

 

TABLE OF CONTENTS
(Continued)

 

      Page 
         
Section 5.8  Limitation on Suits   98 
Section 5.9  Unconditional Rights of Holders to Receive Principal and Interest   99 
Section 5.10  Restoration of Rights and Remedies   99 
Section 5.11  Rights and Remedies Cumulative   99 
Section 5.12  Delay or Omission Not Waiver   99 
Section 5.13  Control by Holders   99 
Section 5.14  Waiver of Past Defaults   100 
Section 5.15  Undertaking for Costs   100 
Section 5.16  Waiver of Stay or Extension Laws   100 
Section 5.17  Sale of Collateral   101 
Section 5.18  Action on the Notes   101 
         
ARTICLE VI  THE TRUSTEE   101 
         
Section 6.1  Certain Duties and Responsibilities   101 
Section 6.2  Notice of Event of Default   103 
Section 6.3  Certain Rights of Trustee   103 
Section 6.4  Not Responsible for Recitals or Issuance of Notes   106 
Section 6.5  May Hold Notes, Etc.   106 
Section 6.6  Money Held for the Benefit of Applicable Parties   106 
Section 6.7  Compensation and Reimbursement   107 
Section 6.8  Corporate Trustee Required; Eligibility   108 
Section 6.9  Resignation and Removal; Appointment of Successor   108 
Section 6.10  Acceptance of Appointment by Successor   109 
Section 6.11  Merger, Conversion, Consolidation or Succession to Business of Trustee   110 
Section 6.12  Co-Trustee   110 
Section 6.13  Certain Duties of Trustee Related to Delayed Payment of Proceeds   111 
Section 6.14  Representations and Warranties of the Trustee   111 
Section 6.15  Authenticating Agents   111 
Section 6.16  Fiduciary for Holders Only; Agent for all other Secured Parties   112 
Section 6.17  Withholding   112 
         
ARTICLE VII  COVENANTS   113 
         
Section 7.1  Payments on the Notes   113 
Section 7.2  Compliance With Laws   113 
Section 7.3  Maintenance of Books and Records   113 
Section 7.4  Maintenance of Office or Agency   113 
Section 7.5  Money for Security Payments to be Held for the Benefit of the Secured Parties   113 
Section 7.6  Existence of Issuer   115 
Section 7.7  Protection of Collateral   116 
Section 7.8  Opinions as to Collateral   117 
Section 7.9  Performance of Obligations   117 
Section 7.10  Negative Covenants   117 
Section 7.11  Statement as to Compliance   119 
Section 7.12  Issuer May Consolidate, etc., Only on Certain Terms   119 

 

iii

 

 

TABLE OF CONTENTS
(Continued)

 

      Page 
         
Section 7.13  Successor Substituted   120 
Section 7.14  No Other Business   120 
Section 7.15  Compliance with Asset Management Agreement   121 
Section 7.16  Notice of Rating Changes   121 
Section 7.17  Reporting   121 
Section 7.18  Calculation Agent   121 
Section 7.19  Certain Tax Matters   123 
Section 7.20  Purchase of Notes; Surrender of Notes   124 
Section 7.21  Section 3(c)(7) Procedures   124 
Section 7.22  Involuntary Bankruptcy Proceedings   125 
Section 7.23  Closing Date Assets   125 
         
ARTICLE VIII  SUPPLEMENTAL INDENTURES   125 
         
Section 8.1  Supplemental Indentures without Consent of Holders   125 
Section 8.2  Supplemental Indentures with Consent of Holders   129 
Section 8.3  Procedures Related to Supplemental Indentures   130 
Section 8.4  Determination of Effect on Holders   131 
Section 8.5  Execution of Supplemental Indentures   131 
Section 8.6  Effect of Supplemental Indentures or Amendments   131 
Section 8.7  Reference in Notes to Supplemental Indentures   132 
Section 8.8  Effect of Benchmark Transition Event   132 
         
ARTICLE IX  REDEMPTION OF DEBT   132 
         
Section 9.1  Optional Redemption or Redemption Following a Tax Event   132 
Section 9.2  Issuer Notice of Redemption   136 
Section 9.3  Notice of Redemption; Withdrawal of Notice   136 
Section 9.4  Notes Payable on Redemption Date   137 
Section 9.5  Mandatory Redemptions; Special Redemptions   138 
Section 9.6  Optional Re-Pricing   138 
         
ARTICLE X  ACCOUNTS, ACCOUNTINGS AND RELEASES   140 
         
Section 10.1  Collection of Money; General Account Requirements   140 
Section 10.2  Collection Account   142 
Section 10.3  Collateral Account; Unused Proceeds Account; Payment Account; Variable Funding Account; Expense Reserve Account; Hedge Counterparty Collateral Account   143 
Section 10.4  Reports by Trustee   146 
Section 10.5  Accountings   146 
Section 10.6  Release of Collateral   147 
Section 10.7  Reports by Independent Accountants   148 
Section 10.8  Additional Reports   149 
Section 10.9  Certain Notices to the Holders   149 
         
ARTICLE XI  APPLICATION OF MONIES   160 
         
Section 11.1  Disbursements of Monies from Payment Account   160 
Section 11.2  Contributions   155 

 

iv

 

 

TABLE OF CONTENTS
(Continued)

 

      Page 
         
ARTICLE XII  SALE OF UNDERLYING ASSETS; SUBSTITUTION   155 
         
Section 12.1  Sales of Underlying Assets and Eligible Investments   155 
Section 12.2  Portfolio Criteria and Trading Restrictions.   168 
Section 12.3  [Reserved]   164 
Section 12.4  Optional Purchase of any Ares Collateral Obligation or Substitution   164 
Section 12.5  [Reserved]   166 
Section 12.6  Restructured Loans; Workout Loans; Specified Equity Securities   166 
         
ARTICLE XIII  NOTEHOLDERS' RELATIONS   166 
         
Section 13.1  Subordination   166 
Section 13.2  Standard of Conduct   167 
Section 13.3.  Right to List of Holders and Documents   167 
Section 13.4.  Non-Petition   167 
         
ARTICLE XIV  MISCELLANEOUS   168 
         
Section 14.1  Form of Documents Delivered to Trustee   168 
Section 14.2  Acts of Holders   168 
Section 14.3  Notices to Transaction Parties   169 
Section 14.4  Notices to Rating Agencies; Rule 17g-5 Procedures   170 
Section 14.5  Notices to Holders; Waiver   171 
Section 14.6  Effect of Headings and Table of Contents   172 
Section 14.7  Successors and Assigns   172 
Section 14.8  Severability   172 
Section 14.9  Benefits of Indenture   172 
Section 14.10  Governing Law   172 
Section 14.11  Submission to Jurisdiction   172 
Section 14.12  Counterparts   172 
Section 14.13  Waiver of Jury Trial   173 
Section 14.14  Liability of Issuer   173 
Section 14.15  De-Listing of the Notes   173 
Section 14.16  Liability Regarding Term SOFR Replacement   173 
Section 14.17  Confidential Information   173 
         
ARTICLE XV  ASSIGNMENT OF ASSET MANAGEMENT AGREEMENT   174 
         
Section 15.1  Assignment of Asset Management Agreement   174 
         
ARTICLE XVI  HEDGE AGREEMENT   175 
         
Section 16.1  Hedge Agreements   175 

 

v

 

 

TABLE OF CONTENTS
(Continued)

 

EXHIBITS

 

 

Exhibit A-1  Form of Rated Note
Exhibit A-2  Form of Subordinated Note
Exhibit B  Form of Transfer Certificate (Transfer to Regulation S Global)
Exhibit C  Form of Transfer Certificate (Transfer to Rule 144A Global)
Exhibit D  [Reserved]
Exhibit E  Form of Certifying Holder Certificate
Exhibit F  [Reserved]
Exhibit G  [Reserved]
Exhibit H  Form of Account Agreement
Exhibit I  Form of Contribution Notice
Exhibit J  [Reserved]
Exhibit K  [Reserved]
Exhibit L  [Reserved]
    
Schedule A  [Reserved]
Schedule B  Standard & Poor's Suggested Industry Classification
Schedule C  [Reserved]
Schedule D  [Reserved]
Schedule E  [Reserved]
Schedule F  Standard & Poor's Rating Definitions/Recovery Rates
Schedule G  Content of Monthly Report
Schedule H  Content of Payment Date Report
    
Annex I  Purchaser Deemed Representations and Agreements

 

 

vi

 

 

 

INDENTURE, dated as of May 24, 2024 (the "Indenture"), between Ares Direct Lending CLO 1 LLC, a limited liability company organized under the laws of the State of Delaware, as the issuer (the "Issuer"), and U.S. Bank Trust Company, National Association, a national banking association, as trustee (herein, together with its permitted successors in the trusts hereunder, the "Trustee").

 

PRELIMINARY STATEMENT

 

WHEREAS, the Issuer is duly authorized to execute and deliver this Indenture to provide for the Notes issuable as provided in this Indenture. All covenants and agreements made by the Issuer herein are for the benefit and security of the Secured Parties. The Issuer and the Trustee are entering into this Indenture for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged.

 

All things necessary to make this Indenture a valid agreement of the Issuer and the Trustee in accordance with the terms of this Indenture have been done.

 

GRANTING CLAUSE

 

Subject to the priorities and the exclusions, if any, specified below in this granting clause (the "Granting Clause"), the Issuer hereby Grants to the Trustee, for the benefit and security of each Secured Party (to the extent of its interest hereunder, including under the Priority of Payments), all of its right, title and interest in, to and under, in each case, whether now owned or existing, or hereafter acquired or arising, all loans and investments and, in each case as defined in the UCC, accounts, chattel paper, deposit accounts, instruments, financial assets, investment property, general intangibles, letter of credit rights, contract rights, commercial tort claims, documents, equipment, goods, inventory, promissory notes, securities and other supporting obligations, and other property of any type or nature in which the Issuer has an interest, including all proceeds (as defined in the UCC) with respect to the foregoing. Such Grants include, but are not limited to:

 

(a)            the Underlying Assets, Eligible Investments, Restructured Loans, Workout Loans and Equity Securities (other than Margin Stock) which the Issuer has caused or now or hereafter causes to be delivered to the Trustee (directly or through an Intermediary or bailee) on or after the Closing Date, all payments thereon or with respect thereto;

(b)            the rights of the Issuer under the Asset Management Agreement, the Contribution Agreement, the Master Purchase and Sale Agreement, the Collateral Administration Agreement, the Retention of Net Economic Interest Letter and any Hedge Agreement;

(c)            each Pledged Account (subject, in the case of the Hedge Counterparty Collateral Account, to the terms of the applicable Hedge Agreement);

(d)            money (as defined in the UCC) previously or now or hereafter delivered to the Trustee (directly or through an Intermediary or bailee) for the benefit of the Secured Parties;

(e)            to the extent not otherwise specified above, all other securities, accounts, chattel paper, contract rights, financial assets, general intangibles (including payment intangibles), instruments, investment property and security entitlements and supporting obligations consisting of, arising from or relating to any of the property described in clauses (a) through (d) above; and

(f)            all Proceeds of any of the foregoing (including all proceeds of any Margin Stock).

Notwithstanding the foregoing, the Collateral shall not include any Excluded Property. All of the property and assets described in the foregoing clauses (a) through (f), but excluding any Excluded Property, shall constitute the "Collateral."

Such Grants are made to secure the Rated Notes issued under this Indenture equally and ratably without prejudice, priority or distinction between any Rated Notes and any other Rated Notes by reason of difference of time of issuance or otherwise, except as expressly provided in this Indenture, and to secure, in accordance with the priorities set forth in the Priority of Payments, (A) the payment of all amounts due on the Rated Notes in accordance with their terms and (B) the payment of all other sums payable under this Indenture to any Secured Party, all as provided in this Indenture (collectively, the "Secured Obligations"). Holders of the Subordinated Notes will not have the benefit of the security interest granted hereunder.

Except to the extent otherwise provided in this Indenture, this Indenture shall constitute a security agreement under the laws of the State of New York applicable to agreements made and to be performed therein, for the benefit of the Secured Parties. Upon the occurrence of any Event of Default hereunder, and in addition to any other rights available under this Indenture or any other instruments included in the Collateral held for the benefit and security of the Secured Parties or otherwise available at law or in equity but subject to the terms hereof, the Trustee shall have all rights and remedies of a secured party on default under the laws of the State of New York and other applicable law to enforce the assignments and security interests contained herein and, in addition, shall have the right, subject to compliance with any mandatory requirements of applicable law and the terms of this Indenture, to sell or apply any rights and other interests assigned or pledged hereby in accordance with the terms hereof at public and/or private sale.

The Trustee acknowledges such Grants, accepts the powers hereunder in accordance with the provisions hereof and agrees to hold the Collateral for the benefit of the Secured Parties as provided herein.

Article I
DEFINITIONS

Section 1.1         Definitions. Except as otherwise specified herein or as the context may otherwise require, the following terms have the respective meanings set forth below for all purposes of this Indenture. The terms "account," "certificated security," "chattel paper," "entitlement order," "financial asset," "general intangible," "instrument," "investment property," "security," "securities account," "securities intermediary," "security entitlement," "supporting obligation" and "uncertificated security" have the respective meanings set forth in Articles 8 and 9 of the Uniform Commercial Code.

Whenever any reference is made to an amount the determination or calculation of which is governed by Section 1.2, the provisions of Section 1.2 shall be applicable to such determination or calculation, whether or not reference is specifically made to Section 1.2, unless some other method of determination or calculation is expressly specified in the particular provision.

"Account Agreement": An agreement in substantially the form of Exhibit H hereto.

"Accountants' Certificate": An agreed-upon procedures report of a firm of Independent certified public accountants of international reputation appointed by the Issuer pursuant to Section 10.7.

"Accountants' Payment Date Report": The meaning specified in Section 10.7(b).

"Accountants' Report": The meaning specified in Section 5.5(e).

"Accredited Investor": The meaning set forth in Rule 501(a) under the Securities Act.

"Act": The meaning specified in Section 14.2(a).

"Additional Notes": The meaning specified in Section 2.11(a).

"Additional Equity Issuance": The meaning specified in Section 2.11(b).

2

"Administrative Expenses": Amounts (including fees, costs and disbursements of counsel and indemnities) due or accrued with respect to any Payment Date (other than Closing Date expenses) to: (i) the Trustee, the Bank and U.S. Bank National Association (in all capacities) pursuant to Section 6.7; (ii) the Bank under the Collateral Administration Agreement (including fees and expenses in connection with the compilation of the Transparency Reports pursuant to the Collateral Administration Agreement or any related side letter, if applicable) and each other applicable Transaction Document and the Intermediary under the Account Agreement; (iii) any Rating Agency fees and expenses in connection with any rating of the Notes or the provision of credit estimates for any of the Collateral and surveillance fees in connection with such ratings or credit estimates; (iv) the Retention Holder, the Independent accountants, agents and counsel of the Issuer for fees (including retainers) and expenses; (v) any other Person in respect of any governmental fee, charge or tax (other than withholding taxes) and any amounts due in respect of the listing of the Notes on any stock exchange; (vi) all taxes, governmental fees (including annual return fees); (vii) any reserve established for Dissolution Expenses in connection with a Redemption, discharge of this Indenture or following an Event of Default and (viii) any other Person in respect of any other fees, costs, charges, expenses and indemnities permitted under this Indenture ((A) excluding the Asset Management Fee but (B) including (1) any other monies expended by the Asset Manager and reimbursable under the Asset Management Agreement, (2) registered office fees and (3) any fees and expenses related to the Transparency Reports) and the documents delivered pursuant to or in connection with this Indenture and the Notes, including any fees and expenses incurred by such other Persons in connection with any amendment or other modification to this Indenture or such other document.

"Affected Class": With respect to a Tax Event, any Class of Rated Notes that, as a result of such Tax Event, has received less than the aggregate amount of the interest on and principal of such Class of Notes that such Class would have otherwise received on the immediately succeeding Payment Date.

"Affiliate" or "Affiliated": With respect to a Person, (i) any other Person who, directly or indirectly, is in control of, or controlled by, or is under common control with, such Person or (ii) any other Person who is a director, manager, member, partner, shareholder, officer or employee (a) of such Person, (b) of any subsidiary or parent company of such Person or (c) of any Person described in clause (i) above. For the purposes of this definition, control of a Person shall mean the power, direct or indirect, (x) to vote more than 50% of the securities having ordinary voting power for the election of directors of any such Person or (y) to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. For purposes of calculating compliance with clause (vi) of the Eligibility Criteria, obligors in respect of Underlying Assets shall be deemed not to be Affiliates if they have distinct corporate family ratings and/or distinct issuer credit ratings.

"Agent Members": Members of, or participants in, the Depository.

"Aggregate Excess Funded Spread": As of any date of determination, the amount obtained by multiplying: (a) the Benchmark applicable to the relevant Rated Notes during the Interest Accrual Period in which such Measurement Date occurs by (b) the amount (not less than zero) equal to (i) the Aggregate Principal Amount (excluding any Defaulted Obligation and the unfunded portion of any Delayed-Draw Loan or of any Revolving Credit Facility) as of such date of determination, minus (ii) the sum of (1) the Reinvestment Target Par Balance and (2) the proceeds of the issuance of Additional Notes (if any) treated as Principal Proceeds.

"Aggregate Outstanding Amount": When used with respect to any Class or Classes of Notes, as of any date, the aggregate principal amount of such Notes Outstanding on any date of determination.

"Aggregate Principal Amount": When used with respect to any or all of the Underlying Assets or Eligible Investments on any date of determination, the aggregate of the Principal Balances of such Underlying Assets and the Balances of such Eligible Investments on such date of determination.

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"AI/QP": Any Person that, at the time of its acquisition, purported acquisition or proposed acquisition of Notes, is both an Accredited Investor and a Qualified Purchaser.

"Alternative Reference Rate": A replacement rate for the Benchmark that is a Benchmark Replacement. If the Benchmark Replacement cannot be determined by the Asset Manager, then the Alternative Reference Rate shall mean the first alternative set forth in the order below that can be determined by the Asset Manager as of the Benchmark Replacement Date: (1) the rate proposed by the Asset Manager and consented to by a Majority of the Controlling Class and a Majority of the Subordinated Notes; and (2) the Fallback Rate. Notice of any such determination shall be delivered by the Asset Manager to the Issuer, the Trustee (who shall, within five Business Days, forward such notice to the Rating Agency, the Holders of the Rated Notes and the Holders of the Subordinated Notes), the Collateral Administrator and the Calculation Agent.

"Applicable Legend": With respect to any Class of Notes, the applicable legend set forth in Exhibit A.

"Applicable Recovery Amount": With respect to any Underlying Asset, the Standard & Poor's Recovery Amount (for the category of assets of which such Underlying Asset is an example) for such Underlying Asset.

"ARCC": Ares Capital Corporation.

"ARCC Entities": Collectively, ARCC and each of ARCC's majority-owned Affiliates.

"Ares Collateral Obligations": Originated Assets and other Underlying Assets acquired from any ARCC Entity.

"ARRC": The Alternative Reference Rates Committee convened by the Board of Governors of the Federal Reserve System.

"Asset Management Agreement": The Asset Management Agreement, dated as of the Closing Date, between the Issuer and the Asset Manager, as may be amended, restated, supplemented or otherwise modified from time to time in accordance with its terms.

"Asset Management Fee": Collectively, the Senior Asset Management Fee, the Subordinated Asset Management Fee and the Incentive Asset Management Fee.

"Asset Manager": Ares Capital Management LLC, a Delaware limited liability company, in its capacity as such, until a successor Person shall have become the asset manager pursuant to the provisions of the Asset Management Agreement, and thereafter "Asset Manager" shall mean such successor Person. Each reference herein to the Asset Manager shall be deemed to constitute a reference as well to any agent of the Asset Manager and to any other Person to whom the Asset Manager has delegated any of its duties hereunder, in each case during such time as and to the extent that such agent or other Person is performing such duties.

"Asset Manager Standard": The standard of care applicable to the Asset Manager when performing services on behalf of the Issuer as set forth in the Asset Management Agreement.

"Asset Replacement Percentage": On any date of calculation, a fraction (expressed as a percentage) where the numerator is the Aggregate Principal Amount of the Collateral that was indexed to the Benchmark Replacement for the applicable Corresponding Tenor as of such calculation date and the denominator is the Aggregate Principal Amount of the Collateral as of such calculation date, as calculated by the Asset Manager.

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"Assignment": An interest in a loan acquired directly by way of sale or assignment.

"Authenticating Agent": With respect to the Notes or a Class of the Notes, the Person designated by the Trustee to authenticate such Notes on behalf of the Trustee pursuant to Section 6.15.

"Authorized Denomination": A minimum denomination (based on the initial principal amount) of $250,000 and integral multiples of U.S.$1.

"Authorized Officer": With respect to the Issuer, any Officer or any other Person who is authorized to act for the Issuer in matters relating to, and binding upon, the Issuer, or an officer of the Asset Manager in matters for which the Asset Manager has authority to act on behalf of the Issuer. With respect to the Asset Manager, any officer, employee or agent of the Asset Manager who is authorized to act for the Asset Manager in matters relating to, and binding upon, the Asset Manager with respect to the subject matter of the request, certificate or order in question. With respect to the Collateral Administrator, any director, president, vice president, assistant vice president, associate or other officer of the Collateral Administrator customarily performing functions similar to those performed by the persons who at the time shall be such officers, or to whom any corporate trust matter is referred within the corporate trust group (or any successor group of the Collateral Administrator) because of his or her knowledge of and familiarity with the particular subject and having responsibility for the administration of the Collateral Administration Agreement. With respect to the Trustee or any other bank or trust company acting as trustee of an express trust or as custodian, a Trust Officer. Each party may receive and accept a certification of the authority of any other party as conclusive evidence of the authority of any Person to act, and such certification may be considered as in full force and effect until receipt by such other party of written notice to the contrary.

"Balance": On any date, with respect to Eligible Investments in any Pledged Account, the aggregate of: (i) the current balance of Cash, demand deposits, time deposits, certificates of deposit and federal funds; (ii) the principal amount of interest-bearing corporate and Government Securities, money market accounts and repurchase obligations; and (iii) the accreted value (but not greater than the face amount) of non-interest-bearing government and corporate securities and commercial paper.

"Bank": U.S. Bank Trust Company, National Association, a national banking association with trust powers organized under the laws of the United States (or successor thereto as Trustee under this Indenture), in its individual capacity, and not as Trustee.

"Bankruptcy Code": The United States bankruptcy code, as set forth in Title 11 of the United States Code, as amended.

"Bankruptcy Subordination Agreement": The meaning specified in Section 5.4(e).

"Benchmark": Initially, Term SOFR; provided that if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to Term SOFR or the then current Benchmark, then "Benchmark" means the applicable Alternative Reference Rate; provided that the Benchmark for any Note shall be no less than zero. The Issuer (or the Asset Manager on its behalf) will notify the Rating Agency of the adoption of any Alternative Reference Rate.

"Benchmark Determination Date": An Interest Determination Date, or, in the event of an Alternative Reference Rate adopted pursuant to the terms of this Indenture, such other date as designated by the Asset Manager.

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"Benchmark Replacement": The first alternative set forth in the order below that can be determined by the Asset Manager as of the Benchmark Replacement Date:

 

(1)            the sum of: (a) Daily Simple SOFR and (b) the applicable Benchmark Replacement Adjustment;

(2)            the sum of: (a) the alternate rate of interest that has been selected or recommended by the Relevant Governmental Body as the replacement for the then-current Benchmark for the applicable Corresponding Tenor and (b) the Benchmark Replacement Adjustment;

(3)            the sum of: (a) the ISDA Fallback Rate and (b) the Benchmark Replacement Adjustment; and

(4)            the sum of: (a) the alternate rate of interest that has been selected by the Asset Manager as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to any industry-accepted rate of interest as a replacement for the then-current Benchmark for U.S. dollar denominated collateralized loan obligation securitizations at such time and (b) the Benchmark Replacement Adjustment;

provided that, at the election of the Asset Manager, if a Benchmark Transition Event described in clause (4) of the definition thereof has occurred (and no prior Benchmark Transition Event has occurred) and the Asset Replacement Percentage with respect to any of the rates described in clauses (1) through (3) above is equal to or greater than 50%, the Benchmark Replacement shall be such rate or the rate described in clause (4) above; provided further that the Benchmark Replacement shall not be Libor.

"Benchmark Replacement Adjustment": The first alternative set forth in the order below that can be determined by the Asset Manager as of the Benchmark Replacement Date:

(1)            the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected, endorsed or recommended by the Relevant Governmental Body for the applicable Unadjusted Benchmark Replacement;

(2)            if the applicable Unadjusted Benchmark Replacement is equivalent to the ISDA Fallback Rate, then the ISDA Fallback Adjustment; and

(3)            the spread adjustment (which may be a positive or negative value or zero) that has been selected by the Asset Manager giving due consideration to any industry-accepted spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the then-current Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar denominated collateralized loan obligation securitization transactions at such time.

"Benchmark Replacement Conforming Changes": With respect to any Alternative Reference Rate, any technical, administrative or operational changes (including changes to the definition of "Interest Accrual Period," timing and frequency of determining rates and making payments of interest, and other administrative matters) that the Asset Manager decides may be necessary or appropriate to correct an error with respect to the application or implementation of the Benchmark or to reflect the adoption of such Alternative Reference Rate in a manner substantially consistent with market practice (or, if the Asset Manager decides that adoption of any portion of such market practice is not administratively feasible or if the Asset Manager determines that no market practice for use of the Alternative Reference Rate exists, in such other manner as the Asset Manager determines is reasonably necessary).

"Benchmark Replacement Date": (1) In the case of clause (1) or (2) of the definition of "Benchmark Transition Event," the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of the relevant Benchmark permanently or indefinitely ceases to provide such Benchmark, (2) in the case of clause (3) of the definition of "Benchmark Transition Event," the date of the public statement or publication of information or (3) in the case of clause (4) of the definition of "Benchmark Transition Event," the Benchmark Determination Date following the date of such Monthly Report or Payment Date Report.

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"Benchmark Transition Event": The occurrence of one or more of the following events with respect to the then-current Benchmark:

(1)            a public statement or publication of information by or on behalf of the administrator of the Benchmark announcing that the administrator has ceased or will cease to provide the Benchmark permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Benchmark;

(2)            a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark, the central bank for the currency of the Benchmark, an insolvency official with jurisdiction over the administrator for the Benchmark, a resolution authority with jurisdiction over the administrator for the Benchmark or a court or an entity with similar insolvency or resolution authority over the administrator for the Benchmark, which states that the administrator of the Benchmark has ceased or will cease to provide the Benchmark permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Benchmark;

(3)            a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark announcing that the Benchmark is no longer representative; or

(4)            the Asset Replacement Percentage is greater than 50%, as reported in the most recent Monthly Report or Payment Date Report.

"Benefit Plan Investor": Any (i) "employee benefit plan" (as defined in Section 3(3) of ERISA) that is subject to Part 4 of subtitle B of Title I of ERISA, (ii) "plan" described in Section 4975(e)(1) of the Code to which Section 4975 of the Code applies or (iii) entity whose underlying assets are deemed to include "plan assets" by reason of any such employee benefit plan's or any such plan's investment in the entity within the meaning of the Plan Asset Regulation or otherwise.

"Business Day": Any day other than a Saturday, Sunday or a day on which commercial banking institutions are authorized or obligated by law, regulation or executive order to close in New York, New York, Los Angeles, California, and any city in which the Corporate Trust Office is located (which initially will be Boston, Massachusetts); with respect to any payment to be made by a Paying Agent, the city in which such Paying Agent is located; and, with respect to the final payment on any Note, the place of presentation and surrender of such Note.

"Calculation Agent": The meaning specified in Section 7.18(a).

"Cash": Such coin or currency of the United States of America as at the time shall be legal tender for payment of all public and private debts.

"CCC Excess": As of any Measurement Date, an amount equal to the excess, if any, of the Aggregate Principal Amount of all CCC Underlying Assets, over an amount equal to 20.0% of the Maximum Investment Amount; provided that in determining which Underlying Assets fall into the CCC Excess, the CCC Underlying Assets with the lowest Current Market Value Percentages will be deemed to constitute such excess.

"CCC Excess Adjustment Amount": As of any Measurement Date, an amount equal to the excess, if any, of (a) the Aggregate Principal Amount of all Underlying Assets included in the CCC Excess over (b) the sum of the Current Market Values of all Underlying Assets included in the CCC Excess.

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"CCC Underlying Asset": An Underlying Asset (other than a Defaulted Obligation or a Deferred Interest Asset) with a Standard & Poor's Rating of "CCC+" or lower.

"Certificate of Authentication": The Trustee's or Authenticating Agent's certificate of authentication on any Note.

"Certificated Security": The meaning specified in Article 8 of the UCC.

"Certifying Person": Any Person that certifies that it is the owner of a beneficial interest in a Global Note (a) substantially in the form of Exhibit E or (b) with respect to an Act of Holders or exercise of voting rights, including any amendment pursuant to Section 8.2, in the form required by the applicable consent form.

"CFTC": The Commodity Futures Trading Commission.

"Class": All of the Notes having the same priority in right of payment of principal (as a single class).

"Class A Notes": The Class A Senior Floating Rate Notes having the applicable Note Interest Rate and Stated Maturity as set forth in Section 2.3.

"Class B Notes": The Class B Senior Floating Rate Notes having the applicable Note Interest Rate and Stated Maturity as set forth in Section 2.3.

"Class Break-Even Default Rate": With respect to the Highest Ranking Class (disregarding any Class of Notes that is not then rated by S&P), as of the date of determination, the maximum percentage of defaults, as of any Measurement Date, which the Current Portfolio or the Proposed Portfolio, as applicable, can sustain (as determined through application of the Standard & Poor's CDO Monitor), such that after giving effect to S&P's assumptions on recoveries and timing of defaults and interest rates and to the Priority of Payments, will result in sufficient funds remaining for (x) the payment of the Highest Ranking Class (disregarding any Class of Notes that is not then rated by S&P) in full by the Stated Maturity and (y) the timely payment of interest on the Highest Ranking Class (disregarding any Class of Notes that is not then rated by S&P). After the Effective Date, S&P will provide the Asset Manager with the Class Break-Even Default Rates for each Standard & Poor's CDO Monitor based upon the Weighted Average Spread and the Weighted Average S&P Recovery Rate to be associated with such Standard & Poor's CDO Monitor as selected by the Asset Manager (with a copy to the Collateral Administrator) in accordance with the definition of Standard & Poor's CDO Monitor or any other Weighted Average Spread and Weighted Average S&P Recovery Rate selected by the Asset Manager from time to time.

"Class Default Differential": With respect to the Highest Ranking Class (disregarding any Class of Notes that is not then rated by S&P), as of any Measurement Date, the rate calculated by subtracting the Class Scenario Default Rate at such time from the Class Break-Even Default Rate at such time.

"Class Scenario Default Rate": With respect to the Highest Ranking Class (disregarding any Class of Notes that is not then rated by S&P), as of any Measurement Date, an estimate of the cumulative default rate for the Current Portfolio or the Proposed Portfolio, as applicable, consistent with S&P's initial rating of such Highest Ranking Class (disregarding any Class of Notes that is not then rated by S&P) as determined by application of the Standard & Poor's CDO Monitor at such time.

"Clearing Agency": An organization registered as a "clearing agency" pursuant to Section 17A of the Exchange Act.

"Clearing Corporation": The meaning specified in Article 8 of the UCC.

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"Clearing Corporation Security": A security that is registered in the name of, or endorsed to, a Clearing Corporation or its nominee or is in the possession of the Clearing Corporation in bearer form or endorsed in blank by an appropriate Person.

"Clearstream": Clearstream Banking, société anonyme, a corporation organized under the laws of the Grand Duchy of Luxembourg.

"Closing Date": May 24, 2024.

"Closing Date Assets": The meaning set forth in the definition of "Cost Basis."

"Closing Date Participations": The Participations acquired by the Issuer from ARCC on the Closing Date pursuant to the Contribution Agreement.

"Code": The United States Internal Revenue Code of 1986, as amended.

"Collateral": The meaning specified in the Granting Clause.

"Collateral Account": The account established pursuant to Section 10.1(b) and described in Section 10.3(a).

"Collateral Administration Agreement": An agreement, dated as of the Closing Date, among the Issuer, the Asset Manager and the Collateral Administrator, as may be amended, restated, supplemented or otherwise modified from time to time in accordance with its terms.

"Collateral Administrator": The Bank, in its capacity as collateral administrator under the Collateral Administration Agreement or any successor collateral administrator under the Collateral Administration Agreement.

"Collateral Portfolio": On any date of determination, all Pledged Obligations held in or credited to any Pledged Accounts, excluding Eligible Investments consisting of Interest Proceeds.

"Collateral Quality Tests": The Weighted Average S&P Recovery Rate Test, the Weighted Average Spread Test, the Weighted Average Life Test, the Weighted Average Coupon Test and the Standard & Poor's CDO Monitor Test.

"Collection Account": The Interest Collection Account and/or the Principal Collection Account, as the context requires.

"Competent Authority": A competent authority of any Holder or potential investor in the Notes (as determined under the EU Securitisation Regulation or the UK Securitisation Regulation).

"Confidential Information": The meaning specified in Section 14.17(b).

"Contribution": The meaning specified in Section 11.2(a).

"Contribution Account": The account established pursuant to Section 10.1(b) and described in 10.3(h).

"Contribution Agreement": The Contribution Agreement, dated as of the Closing Date, between the Issuer and ARCC, relating to the contribution of Underlying Assets, including, but not limited to, those listed on Schedule I to the Indenture, from ARCC to the Issuer from time to time, as may be amended, restated, supplemented or otherwise modified from time to time in accordance with its terms.

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"Contribution Notice": With respect to a Contribution, the notice, in the form attached hereto as Exhibit I provided by a Contributor to the Issuer, the Trustee and the Asset Manager (a) containing the following information: (i) information evidencing the Contributor's beneficial ownership of Subordinated Notes, (ii) the amount of such Contribution, (iii) the Payment Date (if any) on which such Contribution shall begin to be repaid to the Contributor, (iv) the rate of return (if any) applicable to such Contribution, (v) the Contributor's contact information and (vi) payment instructions for the payment of Contribution Repayment Amounts (if any) (together with any information reasonably requested by the Trustee or the Paying Agent) and (b) attaching the consent of the Asset Manager to such Payment Date and the rate of return applicable thereto (if any). For the avoidance of doubt, a Contributor may specify in the Contribution Notice that no rate of return is required and that no Contribution Repayment Amount is required in connection with such Contribution.

"Contribution Repayment Amount": The meaning specified in Section 11.2(c).

"Contributor": The meaning specified in Section 11.2(a).

"Controlled Portfolio Company": Any company that, at the time the Loan is acquired by the Issuer, is majority owned by the Asset Manager, an Affiliate thereof, or an account, fund, client or portfolio company established and majority owned by the Asset Manager or an Affiliate thereof.

"Controlling Class": The Class A Notes for so long as any Class A Notes are Outstanding, and thereafter the Highest Ranking Class of Notes Outstanding.

"Controlling Person": Any person (other than a Benefit Plan Investor) that has discretionary authority or control with respect to the assets of the Issuer or that provides investment advice for a fee (direct or indirect) with respect to such assets (or any "affiliate" of such a person (as defined in the Plan Asset Regulation)).

"Corporate Trust Office": The principal office of the Trustee at which the Trustee administers its trust activities, currently located at (a) for Note transfer purposes and presentment of the Notes for final payment thereon, the corporate office of the Trustee located at U.S. Bank Trust Company, National Association, EP-MN-WS2N, 111 Fillmore Avenue East, St. Paul, MN 55017, Attention: Bondholder Services – EP –MN-WS2N, Ref: Ares Direct Lending CLO 1, or (b) for all other purposes, the corporate office of the Trustee located at U.S. Bank Trust Company, National Association, One Federal Street, 3rd Floor, Boston, MA 02110, Reference: Ares Direct Lending CLO 1, Attention: [***], e-mail: [***], with a copy to [***], or such other address as the Trustee may designate from time to time by notice to the Holders, the Asset Manager and the Issuer), and the principal corporate trust office of any successor Trustee.

"Corresponding Tenor": Three months.

"Cost Basis": With respect to each Underlying Asset acquired by the Issuer from ARCC on the Closing Date pursuant to the Contribution Agreement (collectively, the "Closing Date Assets"), the cost basis of such asset at the time of its acquisition by ARCC as reflected in its books and records.

"Covenant-Lite Loan": A loan for which (i) the obligor thereof is not subject to any financial covenants thereunder or (ii) the obligor thereof is required to comply with one or more Incurrence Covenants but is not subject to any Maintenance Covenants; provided, that, for all purposes other than the determination of the S&P Recovery Rate for such loan, a loan that is subject to a cross-default provision to, or is pari passu with, another debt obligation of the underlying obligor, which requires the obligor to comply with one or more financial covenants or Maintenance Covenants (which covenants may, but are not required to, apply only when such other debt obligation is funded) will not constitute a Covenant-Lite Loan.

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"Coverage Tests": Collectively, the Overcollateralization Test and the Interest Coverage Test.

"Credit Improved Obligation": Any Underlying Asset that in the Asset Manager's commercially reasonable business judgment has significantly improved in credit quality from the condition of its credit at the time of acquisition, which may (but need not) be based on any of the following criteria:

(a)            the issuer of such Underlying Asset has shown improved financial results since the published financial reports first produced after it was acquired by the Issuer;

(b)            the obligor of such Underlying Asset since the date on which such Underlying Asset was acquired by the Issuer has raised significant equity capital or has raised other capital that has improved the liquidity or credit standing of such obligor;

(c)            with respect to which one or more of the following criteria applies: (A) such Underlying Asset has been upgraded or put on a watch list for possible upgrade by the Rating Agency since the date on which such Underlying Asset was acquired by the Issuer; (B) the Disposition Proceeds (excluding Disposition Proceeds that constitute Interest Proceeds) of such Loan are reasonably expected to be at least 101% of the purchase price thereof or (C) the price of such Loan has changed during the period from the date on which it was acquired by the Issuer to the proposed sale date by a percentage either more positive, or less negative, as the case may be, than the percentage change in the average price of the applicable Eligible Loan Index plus 0.25% over the same period; or

(d)            if the Underlying Asset is a Floating Rate Underlying Asset, its interest rate spread has decreased (in accordance with its Underlying Instruments) since the date on which it was first acquired by the Issuer by at least 0.25%.

"Credit Risk Obligation": Means:

(a)            any Underlying Asset that in the Asset Manager's commercially reasonable business judgment has a significant risk of declining in credit quality or, with a lapse of time, becoming a Defaulted Obligation, which may (but need not) be based on any of the following criteria: (1) such Underlying Asset has been downgraded or put on a watch list for possible downgrade by the Rating Agency since the date on which such Underlying Asset was acquired by the Issuer; (2) if such Underlying Asset is a Loan, the market value of such Underlying Asset has changed during the period from the date on which it was acquired by the Issuer to the date of determination by a percentage more negative than 1.00%; or (3) if such Underlying Asset is a Loan, the terms of the Loan have been modified such that the Effective Spread is increased by at least 0.50%; or

(b)            any Underlying Asset with respect to which a Majority of the Controlling Class vote to treat such Underlying Asset as a Credit Risk Obligation.

"Currency Hedge": Any interest rate or currency exchange or protection agreement or option agreement in respect thereof.

"Current Market Value": With respect to any Underlying Asset or Workout Loan as of any Measurement Date:

(a)            the product of the principal amount of such Underlying Asset multiplied by:

(i)            the value for such Underlying Asset provided by any of Loan Pricing Corporation, Mark-It Partners Inc., Interactive Data Corporation or any other Independent nationally recognized pricing service subscribed to by the Asset Manager, of which the Asset Manager shall have provided 10 Business Days' prior notice to the Rating Agency;

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(ii)            if no such pricing service is available, the average of at least three bids for such Underlying Asset obtained by the Asset Manager from nationally recognized dealers (that are Independent from each other and from the Asset Manager);

(iii)            if no such pricing service is available and only two bids for such Underlying Asset can be obtained, the lower of such two bids; and

(iv)            if no such pricing service is available and only one bid for such Underlying Asset can be obtained, such bid except that if the Asset Manager is not a registered investment adviser (or relying adviser), a Current Market Value determined from the bid price of only one bid may be used for a period of 30 days immediately following the date of such bid; or

(b)            if, after the Asset Manager has made commercially reasonable efforts to obtain the Current Market Value in accordance with clause (a) above, the Current Market Value cannot be determined, the Current Market Value of an Underlying Asset will be the lowest of:

(i)            (x) if such Underlying Asset is a Second Lien Loan, the product of 60% and the principal amount of such Underlying Asset or (y) if such Underlying Asset is not a Second Lien Loan, the product of 70% and the principal amount of such Underlying Asset;

(ii)            the Current Market Value as determined by the Asset Manager; provided this is the same price as the Asset Manager assign to the same Underlying Asset in other funds for which it acts as asset manager or investment advisor; or

(iii)            the product of (x) the purchase price at which the Issuer acquired such Underlying Asset, and (y) the principal amount of such Underlying Asset at the time so acquired.

"Current Market Value Percentage": With respect to any Underlying Asset as of any Measurement Date, the amount (expressed as a percentage) equal to the Current Market Value of such Underlying Asset on such date divided by the Principal Balance of such Underlying Asset on such date. For the purpose of calculating the Current Market Value Percentage on any day, the Current Market Value Percentage on any day that is not a Business Day shall be deemed to be the Current Market Value Percentage on the immediately preceding Business Day.

"Current Pay Obligation": Any Underlying Asset (other than a DIP Loan) that would otherwise be a Defaulted Obligation but as to which (i) no default has occurred and is continuing with respect to the payment of interest and any contractual principal or other scheduled payments (if any) and the most recent interest and contractual principal payment due (if any) was paid in cash and the Asset Manager reasonably expects that the next interest payment due will be paid in cash on the scheduled payment date and the principal thereof will be paid in cash by maturity or as otherwise contractually due, which judgment will not subsequently be called into question as a result of subsequent events; (ii) if the issuer of such Underlying Asset is in a bankruptcy proceeding, the issuer has made all payments that the bankruptcy court has approved; (iii) such Underlying Asset has a Current Market Value of at least 80% of its par value; (iv) if such Underlying Asset is a PIK Loan no interest on such Underlying Asset remains deferred in accordance with the terms thereof; and (v) the S&P Additional Current Pay Criteria are satisfied; provided, however, that to the extent the Aggregate Principal Amount of all Underlying Assets that would otherwise be Current Pay Obligations exceeds 5% of the Maximum Investment Amount, such excess over 5% shall constitute Defaulted Obligations; provided, further, that in determining which of the Underlying Assets shall be included in such excess, the Underlying Assets with the lowest Current Market Value Percentage shall be deemed to constitute such excess.

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"Current Portfolio": As of any date of determination, the Aggregate Principal Amount of Underlying Assets and Principal Proceeds held as Eligible Investments acquired with Principal Proceeds existing immediately prior to the maturation, sale or other disposition of an Underlying Asset or immediately prior to the acquisition of an Underlying Asset, as the case may be.

"Cut-Off Date": Each date on or after the Closing Date on which either (a) an Underlying Asset is transferred to the Issuer or (b) an Underlying Asset is transferred by the Issuer.

"Daily Simple SOFR": For any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Asset Manager in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining "Daily Simple SOFR" for business loans; provided that if the Asset Manager decides (in its sole discretion) that any such convention is not administratively feasible for the Asset Manager, then the Asset Manager may establish another convention in its reasonable discretion.

"Deep Discount Obligation": Any Underlying Asset that is a Loan acquired by the Issuer which:

(a)            has a Standard & Poor's Rating below "B-" and the purchase price thereof is less than 85% of its Principal Balance (other than a Revolving Credit Facility that satisfies clauses (b)(x) and (b)(y) of this definition);

(b)            is a Revolving Credit Facility that (x) is pari passu in right of payment of principal and interest with a term obligation of the same obligor that has a Standard & Poor's Rating below "B-" and a Current Market Value Percentage of less than 85%, (y) is secured by a pari passu lien on the same collateral, and (z) has a purchase price of less than 75% of its Principal Balance;

(c)            has a Standard & Poor's Rating of "B-" or higher and the purchase price thereof is less than 80% of its Principal Balance (other than a Revolving Credit Facility that satisfies clauses (d)(x) and (d)(y) of this definition); or

(d)            is a Revolving Credit Facility that (x) is pari passu in right of payment of principal and interest with a term obligation of the same obligor that has a Standard & Poor's Rating of "B-" or higher and a Current Market Value Percentage of less than 80%, (y) is secured by a pari passu lien on the same collateral, and (z) has a purchase price of less than 75% of its Principal Balance;

in the case of each of clauses (a) and (c), until the Current Market Value Percentage of such Underlying Asset for any period of 30 consecutive days equals or exceeds 90%, and in the case of each of clauses (b) and (d), until the Current Market Value Percentage of such Underlying Asset for any period of 30 consecutive days equals or exceeds 85%.

Any Underlying Asset that would otherwise be considered a Deep Discount Obligation but that is acquired with the proceeds of a sale of an Underlying Asset that was not a Deep Discount Obligation at the time of its acquisition shall not be considered a Deep Discount Obligation, so long as the Asset Manager, using its commercially reasonable business judgment, believes that such acquired Underlying Asset is of better credit quality than the previous, sold asset, at the time of its acquisition, and such acquired Underlying Asset: (v) has a Standard & Poor's Rating no lower than the Standard & Poor's Rating of the previously sold Underlying Asset, (w) together with all such acquired Underlying Assets then outstanding and included in the Collateral do not exceed 5% of the Maximum Investment Amount (provided that such acquired Underlying Assets with a purchase price below 75% (expressed as a percentage of the par amount of such Underlying Assets) shall not exceed 2.5% of the Maximum Investment Amount), (x) together with all such acquired Underlying Assets since the Closing Date do not exceed 10% of the Effective Date Target Par Amount, (y) is acquired or committed to be acquired within five Business Days of such sale, and (z) is acquired at a purchase price that equals or exceeds both (1) the sale price of the sold Underlying Asset (expressed as a percentage of par) and (2) 65% of its Principal Balance.

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"Default": Any Event of Default or any occurrence that is, or with notice or the lapse of time or both would become, an Event of Default.

"Defaulted Interest": Any interest due and payable in respect of any Rated Notes for so long as any Rated Notes are Outstanding, which was not punctually paid on the applicable Payment Date or at Stated Maturity and remains unpaid.

"Defaulted Obligation": Any Underlying Asset included in the pool of assets owned by the Issuer, as of any date of determination:

(a)            as to which there has occurred and is continuing a default with respect to the payment of interest or principal, without regard to any grace period applicable thereto or waiver thereof except as set forth in this clause (a); provided, that such default shall have not been cured; provided, further, that any such default shall be subject to a grace period of up to five Business Days or seven calendar days, whichever is greater, from the date of such default if the Asset Manager has certified to the Trustee that, in its judgment, the payment failure is not due to credit-related reasons;

(b)            that is a participation interest in a loan or other debt obligation that would, if such loan or other debt obligation were an Underlying Asset, constitute a "Defaulted Obligation" (other than under this clause (b)) or with respect to which the Selling Institution has a Standard & Poor's Rating of "SD" or "CC" or below or had such rating before such rating was withdrawn and which has not been reinstated as of the date of determination (a "Defaulted Participation Obligation");

(c)            that is a Selling Institution Defaulted Participation;

(d)            as to which any bankruptcy, insolvency or receivership proceeding has been initiated in connection with the issuer thereof, or as to which there has been proposed or effected any distressed exchange or other distressed debt restructuring where the issuer of such Underlying Asset has offered the debt holders of such Underlying Asset a new security or package of securities that, in the commercially reasonable business judgment of the Asset Manager, either (x) amounts to a diminished financial obligation or (y) has the purpose of helping the issuer avoid default; provided, that any Underlying Asset received in a bankruptcy, insolvency or receivership proceeding or in a distressed exchange or other distressed debt restructuring will not be treated as a Defaulted Obligation if it otherwise satisfies the definition of "Underlying Asset"; provided, further, that neither a Current Pay Obligation nor a DIP Loan (with respect to the bankruptcy, insolvency, receivership proceeding, distressed exchange or other debt restructuring with respect to which such DIP Loan was received) will constitute a Defaulted Obligation under this clause (d);

(e)            that has a Standard & Poor's Rating of "CC" or lower or "SD", or in each case had such rating before such rating was withdrawn and which has not been reinstated as of the date of determination (in each case excluding Current Pay Obligations); or

(f)            that is pari passu with or subordinated to other indebtedness for borrowed money owing by the issuer thereof (provided that both the Underlying Asset and such other debt obligation are full recourse obligations of the applicable issuer or secured by the same collateral and the security interest securing the other obligation is senior to or pari passu with the security interest securing the Underlying Asset), to the extent that (x) a payment default of the type described in clause (a) (for the avoidance of doubt, giving effect to the provisos thereto) has occurred with respect to such other indebtedness or (y) the Standard & Poor's Rating on such other indebtedness is "CC" or lower or "SD" or such other indebtedness had such issuer rating of S&P before such rating was withdrawn and which has not been reinstated as of the date of determination (in the case of clause (y) only, excluding Current Pay Obligations).

The Asset Manager shall give the Trustee prompt written notice should it become aware that any Underlying Asset has become a Defaulted Obligation. Until so notified, the Trustee shall not be deemed to have notice or knowledge to the contrary.

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Notwithstanding the foregoing, the Asset Manager may declare any Underlying Asset included in the pool of assets owned by the Issuer to be a Defaulted Obligation if, in the Asset Manager's commercially reasonable business judgment, the credit quality of the issuer of such asset has significantly deteriorated such that there is a reasonable expectation of payment default as of the next scheduled payment date with respect to such asset.

"Deferred Asset Management Fee": With respect to the Asset Manager on any Payment Date, any portion of the Asset Management Fee for such Payment Date that the Asset Manager elects to defer in the manner provided in the Asset Management Agreement, together with any amounts so deferred on prior Payment Dates that remain unpaid. The Deferred Asset Management Fee will be treated as Interest Proceeds, unless the Asset Manager elects to designate any such amounts as Principal Proceeds.

"Deferred Interest Asset": A PIK Loan that has deferred payments of interest or other amounts in Cash and not reduced such deferred interest (or other amount) balance to zero and that (a) in the case of a PIK Loan that has a Standard & Poor's Rating of "BBB-" or above, has either (i) deferred any interest for a period of 12 consecutive months or more or (ii) deferred payments of interest in an amount equal to (or greater than) two periodic interest payments or (b) in the case of a PIK Loan that has a Standard & Poor's Rating of "BB+" or below, has either (i) deferred any interest for a period of six consecutive months or more or (ii) deferred payments of interest in an amount equal to (or greater than) one periodic interest payment.

"Definitive Note": Any Note issued in definitive, fully registered form without interest coupons.

"Delayed-Draw Loan": A loan with respect to which the Issuer is obligated to make or otherwise fund future term-loan advances to a borrower, but such future term-loan advances may not be paid back and reborrowed; provided, that for purposes of the Portfolio Criteria, the principal balance of a Delayed-Draw Loan, as of any date of determination, refers to the sum of (i) the funded portion of such Delayed-Draw Loan as of such date and (ii) the unfunded portion of such Delayed-Draw Loan as of such date.

"Deliver" or "Delivered": The taking of the following steps:

(a)            in the case of each Certificated Security or instrument (other than a Clearing Corporation Security or an instrument evidencing debt underlying a Participation), (A) causing the delivery of such Certificated Security or instrument to the Trustee or the Intermediary registered in the name of the Trustee or its affiliated nominee or endorsed to the Trustee or in blank, (B) causing the Trustee or the Intermediary to continuously identify on its books and records that such Certificated Security or instrument is credited to the relevant Pledged Account and (C) causing the Trustee or the Intermediary to maintain continuous possession of such Certificated Security or instrument;

(b)            in the case of each Uncertificated Security (other than a Clearing Corporation Security), (A) causing such Uncertificated Security to be continuously registered on the books of the obligor thereof to the Trustee or the Intermediary and (B) causing the Trustee or the Intermediary to continuously identify on its books and records that such Uncertificated Security is credited to the relevant Pledged Account;

(c)            in the case of each Clearing Corporation Security, causing (A) the relevant Clearing Corporation to continuously credit such Clearing Corporation Security to the securities account of the Intermediary at such Clearing Corporation and (B) the Intermediary to continuously identify on its books and records that such Clearing Corporation Security is credited to the relevant Pledged Account;

(d)            in the case of any Financial Asset that is maintained in book-entry form on the records of an FRB, causing (A) the continuous crediting of such Financial Asset to a securities account of the Intermediary at any FRB and (B) the Intermediary to continuously identify on its books and records that such Financial Asset is credited to the relevant Pledged Account;

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(e)            in the case of cash, causing the deposit of such cash with the Intermediary and causing the Intermediary to continuously identify on its books and records that such cash is credited to the relevant Pledged Account and if such Pledged Account is a securities account, causing the intermediary to agree to treat such cash as a financial asset;

(f)            in the case of each Financial Asset not covered by the foregoing clauses (a) through (e), causing the transfer of such Financial Asset to the Intermediary in accordance with applicable law and regulation and causing the Intermediary to continuously credit such Financial Asset to the relevant Pledged Account;

(g)            in the case of any general intangible, (A) the filing of an appropriate financing statement in the appropriate filing office in accordance with the Uniform Commercial Code as in effect in any relevant jurisdiction and (B) taking such other action as may be necessary under the laws of the State of Delaware in order to ensure that the Trustee has a perfected security interest therein and obtaining any necessary consent to the security interest of the Trustee thereunder; in addition, the Issuer shall obtain any and all consents required by the underlying agreements relating to any such general intangibles for the transfer of ownership thereof to the Issuer and the pledge thereof hereunder (except to the extent that the requirement for such consent is rendered ineffective under Section 9-406 or 9-408 of the UCC);

(h)            with respect to any "deposit account" (within the meaning of the UCC) by causing the relevant depository institution to agree to comply with the instructions of the Trustee regarding the disposition of funds in such account without further consent of the Issuer; and

(i)            in the case of any Underlying Asset or Eligible Investment not of a type described above in this definition of "Deliver" or "Delivered", an Opinion of Counsel shall have been delivered to the Trustee stating the necessary events upon the occurrence of which the security interest of the Trustee in such Collateral shall be a perfected first priority security interest and the Issuer shall have caused to occur such necessary events as set forth in such Opinion of Counsel and shall, within 20 days after the date of such Grant, deliver to the Trustee a certificate stating that such necessary events as set forth in such Opinion of Counsel have taken place and any method specified in such Opinion of Counsel shall constitute "Delivery".

"Deposit": Any Cash deposited with the Trustee by the Issuer on or before the Closing Date for inclusion as Collateral and deposited by the Trustee into the Interest Reserve Account, the Expense Reserve Account or the Unused Proceeds Account on the Closing Date.

"Depository" or "DTC": The Depository Trust Company, its nominees, and their respective successors.

"Determination Date": With respect to a Payment Date, the last Business Day of the immediately preceding Due Period.

"DIP Loan": A Loan (i) obtained or incurred after the entry of an order of relief in a case pending under chapter 11 of the Bankruptcy Code, (ii) to a debtor in possession as described in Section 1107 of the Bankruptcy Code or a trustee (if appointment of such trustee has been ordered pursuant to Section 1104 of the Bankruptcy Code), (iii) on which the related obligor is required to pay interest on a current basis, (iv) approved by a Final Order or interim order of the bankruptcy court so long as such Loan is (A) fully secured by a lien on the debtor's otherwise unencumbered assets pursuant to Section 364(c)(2) of the Bankruptcy Code, (B) fully secured by a lien of equal or senior priority on property of the debtor estate that is otherwise subject to a lien pursuant to Section 364(d) of the Bankruptcy Code or (C) is secured by a junior lien on the debtor's encumbered assets (so long as such Loan is fully secured based on the most recent current valuation or appraisal report, if any, of the debtor) and (v) that has been rated by S&P or has an estimated rating by S&P (or if the Loan does not have a rating or an estimated rating by S&P, the Asset Manager has commenced the process of having a rating assigned by S&P within five Business Days of the date the Loan is acquired by the Issuer).

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"Disposition Proceeds": Any proceeds received with respect to sales of Underlying Assets, Workout Loans, Restructured Loans, Eligible Investments or Equity Securities and the termination of any Hedge Agreement, in each case, net of reasonable out-of-pocket expenses and disposition costs in connection with such sales.

"Dissolution Expenses": An amount certified by the Asset Manager as the sum of (i) the expenses reasonably likely to be incurred in connection with the discharge of this Indenture and the liquidation of the Collateral and dissolution of the Issuer and (ii) any accrued and unpaid Administrative Expenses.

"Distressed Exchange Offer": An offer by the obligor of an Underlying Asset to exchange one or more of its outstanding debt obligations for a different debt obligation of such obligor or to repurchase one of more of its outstanding debt obligations for Cash, or any combination thereof in a distressed exchange or other debt restructuring, as reasonably determined by the Asset Manager, pursuant to which such obligor of such Underlying Asset has issued to the holders of such Underlying Asset a new security or package of securities or obligations that, in the sole judgment of the Asset Manager, amounts to a diminished financial obligation or has the purpose of helping the obligor of such Underlying Asset avoid default; provided that an offer by such obligor to exchange unregistered debt obligations for registered debt obligations shall not be considered a Distressed Exchange Offer.

"Distribution": Any payment of principal or interest or any dividend, premium or fee payment or any other payment made on, or any other distribution in respect of, a security or obligation.

"Dollar", "U.S. Dollar", "U.S.$" or "$": A dollar or other equivalent unit in such coin or currency of the United States of America as at the time shall be legal tender for all debts, public and private.

"Domicile" or "Domiciled": With respect to any issuer of or obligor with respect to an Underlying Asset: (a) except as provided in clause (b) and (c) below, its country of organization; (b) if it is organized in a Tax Advantaged Jurisdiction, each of such jurisdiction and the country in which, in the Asset Manager's good faith estimate, a substantial portion of its operations are located or from which a substantial portion of its revenue is derived, in each case directly or through subsidiaries; or (c) if its payment obligations in respect of such Underlying Asset are guaranteed by a person or entity (in a guarantee agreement with such person or entity, which guarantee agreement complies with the Rating Agency's then current criteria (or guidelines) with respect to guarantees) that is organized in the United States, then the United States.

"Due Date": Each date on which a Distribution is due on a Pledged Obligation.

"Due Period": With respect to any Payment Date, the period commencing on (and including) the day immediately following the tenth Business Day prior to the preceding Payment Date (or, in the case of the Due Period relating to the first Payment Date following the Closing Date, beginning on (and including) the Closing Date) and ending on (and including) the tenth Business Day prior to such Payment Date (or, in the case of a Due Period that is applicable to the Payment Date relating to the Redemption in full of the Notes, Stated Maturity of any Note or the final Liquidation Payment Date ending on (and including) the day preceding such date).

"EBITDA": With respect to any obligor under an Underlying Asset, the meaning ascribed to such term or comparable term in the Underlying Assets, or if there is no such meaning, its earnings before interest, taxes, depreciation and amortization in accordance with GAAP, as determined by the Asset Manager in good faith at the time of acquisition or commitment to acquire such Underlying Asset, which may be based upon sources available to the Asset Manager, including financial statements or information book of such obligor provided to the Asset Manager by the applicable administrative agent.

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"Effective Date": The earliest of (a) the day specified by the Asset Manager in accordance with Section 3.5(e) and (b) September 25, 2024.

"Effective Date Accountants' Certificate": The meaning specified in Section 3.5(g).

"Effective Date Accountants' Comparison Certificate": The meaning specified in Section 3.5(g).

"Effective Date Accountants' Recalculation Certificate": The meaning specified in Section 3.5(g).

"Effective Date Condition": A condition satisfied if each of the Overcollateralization Test and the Collateral Quality Tests is satisfied, and (x) the sum of (1) the Aggregate Principal Amount of the Underlying Assets (provided that for purposes of this clause (1), any Closing Date Participations shall be treated as having a Principal Balance equal to its Applicable Recovery Amount), (2) the Eligible Investments constituting Principal Proceeds (for the avoidance of doubt, prior to the end of the Initial Investment Period, not to include amounts in the Unused Proceeds Account) and (3) the aggregate amount of any prepayment or amortization payment on any Underlying Asset that has not yet been reinvested in other Underlying Assets, is not less than the Effective Date Target Par Amount and (y) the Eligibility Criteria are satisfied. For the purposes of any calculation made in connection with clause (x) of this definition, any Underlying Asset that becomes a Defaulted Obligation on a date prior to the Effective Date shall be treated as having a Principal Balance of the lesser of (i) the applicable S&P Recovery Rate multiplied by the Principal Balance of such Defaulted Obligation (determined without giving effect to this proviso) as of such date and (ii) the Current Market Value of such Defaulted Obligation as of such date.

"Effective Date Ratings Confirmation": Rating Agency Confirmation as of the Effective Date.

"Effective Date Ratings Confirmation Failure": Both (i) the Standard & Poor's Effective Date Deemed Rating Confirmation has not occurred and (ii) the failure to obtain Effective Date Ratings Confirmation within 30 days of the Effective Date.

"Effective Date Target Par Amount": The meaning specified in Section 3.5(a).

"Effective Spread": With respect to any Floating Rate Underlying Asset that bears interest based on the Benchmark, its stated spread or, if such Floating Rate Underlying Asset bears interest based on a floating rate index other than the Benchmark, the Effective Spread shall be the then current base rate applicable to such Floating Rate Underlying Asset plus the rate at which such Floating Rate Underlying Asset pays interest in excess of such base rate minus the Benchmark for the current Interest Accrual Period; provided that with respect to (i) any unfunded commitment of any Revolving Credit Facility or Delayed-Draw Loan, the Effective Spread means the commitment fee payable with respect to such unfunded commitment; (ii) the funded portion of any commitment under any Revolving Credit Facility or Delayed-Draw Loan that bears interest based on the Benchmark, the Effective Spread will be its stated spread or, if such funded portion bears interest based on a floating rate index other than the Benchmark, the Effective Spread will be the then current base rate applicable to such funded portion plus the rate at which such funded portion pays interest in excess of such base rate minus the Benchmark for the current Interest Accrual Period; (iii) any Underlying Instrument of such Floating Rate Underlying Asset that specifies a standalone credit spread adjustment, such credit spread adjustment shall be deemed to be included in its stated spread; (iv) any Underlying Asset that has a Benchmark floor, the Effective Spread will be its stated spread over the Benchmark plus, if positive, (x) the Benchmark floor value minus (y) the Benchmark for the then applicable interest period; and (v) any Floating Rate Underlying Asset that is a PIK Loan, a Partial PIK Loan or an Underlying Asset that is excluded from the definition of "Partial PIK Loan" by the second proviso thereto that (in each case) is deferring interest on the Measurement Date, the Effective Spread will be that portion of its spread, if any, that is not being deferred.

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"Elected Notes": The meaning specified in Section 14.2(e).

"Electing Holder": The meaning specified in Section 14.2(e).

"Eligibility Criteria": The meaning specified in Section 12.2(c).

"Eligible Institution": An institution that is (a) has a combined capital and surplus of at least $200,000,000, is subject to supervision or examination by federal or state banking authority and (b) so long as any Notes rated by S&P is Outstanding (i) has a long term issuer rating of at least "A" and short term issuer rating of "A-1" by S&P (or at least an "A+" by S&P if such institution has no short term rating) or (ii) with respect to securities accounts, if the relevant account is a segregated trust account holding only non-cash investments, has a rating of at least "BBB-" by S&P and is subject to regulations regarding fiduciary funds on deposit similar to Title 12 of the Code of Federal Regulation Section 9.10.

"Eligible Investment Required Ratings": A long-term credit rating of at least "A+" by S&P or a long-term credit rating of at least "A" by S&P and a short-term credit rating of at least "A-1" by S&P.

"Eligible Investments": (a) Cash and (b) any Dollar denominated investment that, at the time it, or evidence of it, is Delivered to the Trustee, is one or more of the following obligations or securities including investments for which the Trustee or an Affiliate of the Trustee provides services and receives compensation therefor:

(i)            (A) direct Registered obligations (1) of the United States of America or (2) the timely payment of principal and interest on which is fully and expressly guaranteed by the United States and (B) Registered obligations (1) of any agency or instrumentality of the United States of America the obligations of which are expressly backed by the full faith and credit of the United States of America or (2) the timely payment of principal and interest on which is fully and expressly guaranteed by such an agency or instrumentality, in each case if such agency or instrumentality has the Eligible Investment Required Ratings;

(ii)            demand and time deposits in, certificates of deposit of, bankers' acceptances issued by, or federal funds sold by any U.S. federal or state depository institution or trust company that has the Eligible Investment Required Ratings (in each case, payable within 183 days after issuance), the commercial paper and/or the debt obligations of such depository institution or trust company at the time of such investment or contractual commitment providing for such investment have the Eligible Investment Required Ratings;

(iii)            commercial paper or other short-term obligations, in each case, with a maturity of not more than 183 days from the date of issuance having at the time of such investment ratings that satisfy the Eligible Investment Required Ratings; and

(iv)            registered money market funds having at all times a long-term credit rating of "AAAm" by S&P (and which must be offshore unless the onshore money market fund makes payment of interest-related dividends exempt from withholding under section 881(e) (1)(A) of the Code);

subject, in each case, to the maturity specified in Article X for the applicable Pledged Account, which in any event may be no longer than 60 days; provided that Eligible Investments acquired with funds in the Pledged Accounts will be held until maturity; provided further, that Eligible Investments shall not include (a) any interest-only security, any security acquired at a price in excess of 100% of the par value thereof or any security whose repayment is subject to substantial non-credit related risk as determined in the sole judgment of the Asset Manager, (b) any security whose rating assigned by S&P includes the subscript "f," "p," "q," "r," "t" or "sf," (c) any security that is subject to an Offer, (d) any other security that is an asset the payments on which are subject to withholding tax if owned by the Issuer unless the issuer or obligor or other Person (and guarantor, if any) is required to make "gross-up" payments that cover the full amount of any such withholding taxes, (e) any security that is secured by real property, (f) any security that is a Structured Finance Security, (g) any security that is represented by a certificate of interest in a grantor trust or (h) any security that is subject to a tender offer, voluntary redemption, exchange offer, conversion or other similar action, or which security includes a put or call option.

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"Eligible Loan Index": With respect to each Underlying Asset that is a Loan, one of the following indices as selected by the Asset Manager upon the acquisition of such Underlying Asset: the CSFB Leveraged Loan Indices (formerly the DLJ Leveraged Loan Index Plus), the Deutsche Bank Leveraged Loan Index, the Goldman Sachs/Loan Pricing Corporation Liquid Leveraged Loan Index, the Banc of America Securities Leveraged Loan Index, the Standard & Poor's/LSTA Leveraged Loan Indices, LCDX or any replacement or other nationally recognized comparable loan index.

"Equity Security": Any security or debt obligation (other than a Workout Loan or Restructured Loan) which at the time of acquisition, conversion or exchange does not satisfy the requirements of the definition of "Underlying Asset" and is not an Eligible Investment.

"ERISA": The United States Employee Retirement Income Security Act of 1974, as amended.

"ERISA Restricted Notes": The Subordinated Notes.

"ESG Prohibited Obligation": Any obligation of an obligor whose principal business, to the best of the Asset Manager's knowledge, is directly derived from any of the following activities of such obligor: (a) the production or marketing of controversial weapons (including antipersonnel landmines, cluster weapons or nuclear, chemical or biological weapons) or the development of nuclear weapons programs, (b) the production or marketing of thermal coal or generating electricity from thermal coal, (c) the exploration, production or transportation of oil from oil sands or unconventional oil and gas extraction, (d) the production of tobacco, (e) the production of or trade in pornography or prostitution, (f) the trade in endangered or protected wildlife, (g) the production or distribution of opioids or (h) the provision of services relating to payday lending.

"EU Securitisation Regulation": Regulation (EU) 2017/2402, as amended, varied or substituted from time to time, including (i) any technical standards thereunder as may be effective from time to time and (ii) any guidance relating thereto as may from time to time be published by a European Union regulator.

"EU Transparency Requirements": The information required under Article 7 of the EU Securitisation Regulation in accordance with the frequency and modalities provided for thereunder.

"EU/UK Retention Interest": The material net economic interest in the securitisation acquired by the Retention Holder in accordance with the Retention of Net Economic Interest Letter, which will be comprised of an interest in the Subordinated Notes with a principal amount outstanding being at least equal to 5% (or such lower amount, including 0%, if such lower amount is required or allowed under the EU/UK Retention Requirements as a result of amendment, repeal or otherwise) of the Retention Basis Amount on the relevant date of determination.

"EU/UK Retention Requirements": The applicable retention requirements in Article 6 of the applicable Securitisation Regulation.

"EU/UK Transparency Requirements": The information required to be made available for the purposes of the EU Transparency Requirements and the UK Transparency Requirements including: (a) a transaction summary and certain Transaction Documents to be made available before pricing; (b) quarterly asset-level reports; (c) quarterly investor reports; (d) any inside information relating to the securitisation that the reporting entity is obliged to make public under the Market Abuse Regulation (Regulation (EU) No 596/2014); and (e) information on "significant events".

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"Euroclear": Euroclear Bank S.A./N.V., as operator of the Euroclear System, and any successor or successors thereto.

"Euronext Dublin": The Irish Stock Exchange plc trading as Euronext Dublin.

"Event of Default": The meaning specified in Section 5.1.

"Event of Default Par Ratio": On any Measurement Date, without duplication, the ratio (expressed as a percentage) obtained by dividing:

(a)            the sum of (i) the Aggregate Principal Amounts of (A) the Underlying Assets (other than Defaulted Obligations and Workout Loans), including the funded and unfunded balance on any Revolving Credit Facility and Delayed-Draw Loans plus (B) all Eligible Investments (including Cash) constituting or acquired with Principal Proceeds excluding the Balance of all Eligible Investments in the Expense Reserve Account and the Variable Funding Account, plus (ii) the sum for each Defaulted Obligation and Workout Loan of the Current Market Value of such Defaulted Obligation and Workout Loan as of such date; by

(b)            the Aggregate Outstanding Amount of the Class A Notes.

"Excel Default Model Input File": An electronic spreadsheet file to be provided to S&P, which file shall include the following information (to the extent such information is not confidential) with respect to each Underlying Asset: (a) the name and country of domicile of the issuer thereof and the particular issue held by the Issuer, (b) the LoanX ID and CUSIP or other applicable identification number associated with such Underlying Asset, (c) the par value of such Underlying Asset, (d) the type of issue (including, by way of example, whether such Underlying Asset is a bond, loan or asset-backed security), using such abbreviations as may be selected by the Collateral Administrator, (e) identification as a cov-lite loan or not with respect to loans for which an S&P Recovery Rate has not been determined by S&P, (f) a description of the index or other applicable benchmark upon which the interest payable on such Underlying Asset is based (including, by way of example, fixed rate, step-up rate, zero coupon and LIBOR), (g) the coupon (in the case of an Underlying Asset which bears interest at a fixed rate) or the spread over the applicable index (in the case of an Underlying Asset which bears interest at a floating rate), (h) the Standard & Poor's Industry Classification Group for such Underlying Asset, (i) the stated maturity date of such Underlying Asset, (j) the Standard & Poor's Rating of such Underlying Asset or the issuer thereof, (k) identification as a first lien-last out loan (i.e., a first lien loan that by its terms will be subordinated after a default by the obligor), if applicable, (l) the priority category assigned by S&P to such Underlying Asset, if available, (m) whether or not the purchase or other acquisition of such Underlying Asset has settled and, if not, the purchase price of such unsettled Underlying Asset, (n) whether or not such Underlying Asset has an Underlying Asset Benchmark floor and, if so, the value of such Underlying Asset Benchmark floor and (o) such other information as the Collateral Administrator in consultation with the Asset Manager may determine to include in such file.

"Exchange Act": The United States Securities Exchange Act of 1934, as amended.

"Exchange Date": The meaning specified in Section 2.2(b).

"Excluded Property": Any Margin Stock.

"Exercise Notice": The meaning specified in Section 9.6(c).

"Expense Reserve Account": The account established pursuant to Section 10.1(b) and described in Section 10.3(e).

"Exposure Amount": With respect to any Revolving Credit Facility or Delayed-Draw Loan, the unfunded commitment of the Issuer with respect thereto.

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"Fair Market Value": With respect to any Underlying Asset and as of any date of determination, the most recent value determined in good faith by the Asset Manager at the end of each fiscal quarter in a manner consistent with the valuation policies and procedures used by the Asset Manager and ARCC to value assets for ARCC's own account, as more fully described in ARCC's publicly filed Form 10-K.

"Fallback Rate": The sum of (1) the Reference Rate Modifier and (2) as determined by the Asset Manager in its commercially reasonable discretion, either (x) the quarterly pay reference rate recognized or acknowledged as being the industry standard replacement rate for leveraged loans (which recognition may be in the form of a press release, a member announcement, member advice, letter, protocol, publication of standard terms or otherwise) by the Loan Syndications and Trading Association or the Relevant Governmental Body or (y) the quarterly pay reference rate (other than Libor) that is used in calculating the interest rate of at least 50% of the Underlying Assets (by par amount), as determined by the Asset Manager as of the first day of the Interest Accrual Period during which such determination is made; provided that, if a Benchmark Replacement can be determined by the Asset Manager at any time when the Fallback Rate is effective, then such Benchmark Replacement shall become the Benchmark and the Fallback Rate shall not apply; provided further that the Fallback Rate for the Notes will be no less than zero. For the avoidance of doubt, the Fallback Rate shall not be Libor or any rate that is unavailable or no longer reported.

"FATCA": Sections 1471 through 1474 of the Code, any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, any intergovernmental agreement entered into in connection with such Sections of the Code, or any U.S. or non-U.S. fiscal or regulatory legislation, rules, practices or guidance notes adopted pursuant to any such intergovernmental agreement or analogous provisions of non-U.S. law.

"FB Funding": ARCC FB Funding, LLC, a Delaware limited liability company.

"Fee Letter": The meaning specified in Section 6.7(a)(i).

"Final Offering Memorandum": The final Offering Memorandum, dated May 22, 2024, in connection with the offer and sale of the Notes.

"Final Order": An order, judgment, decree or ruling the operation or effect of which has not been stayed, reversed or amended and as to which order, judgment, decree or ruling (or any revision, modification or amendment thereof) the time to appeal or to seek review or rehearing has expired and as to which no appeal or petition for review or rehearing was filed or, if filed, remains pending.

"Finance Lease": A lease agreement or other agreement entered into evidencing any transaction pursuant to which the obligation of the lessee to pay rent or other amounts on a triple net basis under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, are required to be classified and accounted for as a capital lease on a balance sheet of the lessee under generally accepted accounting principles; but only if (a) the lease or other transaction provides for the unconditional obligation of the lessee to pay a stated amount of principal no later than a stated maturity date, together with interest on the principal, and the payment of the obligation is not subject to any material non-credit-related risk as reasonably determined by the Asset Manager, (b) the obligation of the lessee with respect to the lease or other transaction is fully secured, directly or indirectly, by the property that is the subject of the lease, and (c) the interest held with respect to the lease or other transaction is properly treated as debt for U.S. federal income tax purposes.

"Financial Asset": The meaning specified in Article 8 of the UCC.

"First-Lien Last-Out Loan": A Senior Secured Loan that (notwithstanding clause (a) of the definition of such term), prior to a default or liquidation with respect to such loan, is entitled to receive payments pari passu with other Senior Secured Loans of the same obligor, but following a default or liquidation becomes fully subordinated to other Senior Secured Loans of the same obligor and is not entitled to any payments until such other Senior Secured Loans are paid in full; provided that a Senior Secured Loan shall not be treated as a First-Lien Last-Out Loan solely as a result of customary exceptions for Loans secured by a first-priority perfected security interest, including with respect to a Super-Priority Revolving Facility.

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"Fixed Rate Excess": As of any Measurement Date, a fraction (expressed as a percentage) the numerator of which is the product of (i) the greater of zero and the excess of the Weighted Average Coupon for such Measurement Date over the minimum percentage necessary to pass the Weighted Average Coupon Test on such Measurement Date and (ii) the Aggregate Principal Amount of all Fixed Rate Underlying Assets (excluding any Defaulted Obligations) held by the Issuer as of such Measurement Date, and the denominator of which is the Aggregate Principal Amount of all Floating Rate Underlying Assets (excluding any Defaulted Obligations) held by the Issuer as of such Measurement Date. In computing the Fixed Rate Excess on any Measurement Date, the Weighted Average Coupon for the Measurement Date will be computed as if the Spread Excess were equal to zero.

"Fixed Rate Notes": The Notes (if any) that bear interest at fixed rates.

"Fixed Rate Underlying Assets": Underlying Assets (other than Defaulted Obligations) which bear interest at a fixed rate, including Underlying Assets whose fixed interest rate increases periodically over the life of such Underlying Assets.

"Floating Rate Notes": The Notes that bear interest at floating rates.

"Floating Rate Note Interest Rates": Collectively, the Note Interest Rates for the Floating Rate Notes.

"Floating Rate Underlying Assets": Underlying Assets (other than Defaulted Obligations) that bear interest at floating rates.

"Form 15-E": United States Securities and Exchange Commission Form ABS Due Diligence 15-E, as amended, supplemented or modified from time to time and/or any applicable successor form.

"FRB": Any Federal Reserve Bank.

"Funding Condition": A condition that is satisfied on any date of determination if (a) the amount on deposit in the Variable Funding Account is equal to or greater than an amount equal to (b) the aggregate principal amount of the unfunded portion of the Revolving Credit Facilities and Delayed-Draw Loans held by the Issuer as of such determination date.

"GAAP": The meaning specified in Section 6.3(p).

"Global Notes": Collectively, the Temporary Global Notes, the Regulation S Global Notes and the Rule 144A Global Notes.

"Government Security": A security issued or guaranteed by the United States of America or an agency or instrumentality thereof representing a full faith and credit obligation of the United States of America and, with respect to each of the foregoing, that is maintained in book-entry form on the records of any Federal Reserve Bank.

"Grant": To grant, bargain, sell, warrant, alienate, remise, demise, release, convey, assign, transfer, mortgage, pledge, create and grant a security interest in and right of setoff against, deposit, set over or confirm. A Grant of the Collateral, or any portion thereof, shall include all rights, powers and options (but none of the obligations) of the granting party in respect thereof, including the immediate continuing right to claim for, collect, receive and give receipts for principal and interest payments in respect of the Collateral, and all other monies payable thereunder, to give and receive notices and other communications, to grant waivers or make other agreements, to exercise all rights and options, to bring legal or other proceedings in the name of the granting party or otherwise, and generally to do and receive anything that the granting party is or may be entitled to do or receive thereunder or with respect thereto.

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"Group I Countries": Australia, the Netherlands, New Zealand and the United Kingdom.

"Group II Countries": Germany, Ireland, Sweden and Switzerland.

"Group III Countries": Austria, Belgium, Denmark, Finland, France, Iceland, Liechtenstein, Luxembourg and Norway.

"Hedge Agreement": Any Interest Rate Hedge or Currency Hedge, as applicable, in each case entered into to manage the Issuer's risk.

"Hedge Counterparty": Any Interest Rate Hedge Counterparty or hedge counterparty entering into a Currency Hedge, as applicable.

"Hedge Counterparty Collateral Account": The account established pursuant to Section 10.1(b) and described in Section 10.3(g).

"Hedge Counterparty Credit Support": As of any date of determination, any Cash or cash equivalents on deposit in, or otherwise to the credit of, the Hedge Counterparty Collateral Account in an amount required to satisfy the then-current Rating Agency criteria as determined by the Asset Manager in its reasonable business judgment.

"Hedge Guarantor": Any Person that absolutely and unconditionally guarantees the obligations of a Hedge Counterparty under the related Hedge Agreement in a form satisfactory to the Rating Agency as evidenced by the Rating Agency Confirmation obtained in connection therewith. Any Hedge Guarantor will be subject to Rating Agency Confirmation.

"Higher Ranking Class": With respect to any Class of Notes, each Class of Notes that is senior in right of payment of principal to such Class in the Note Payment Sequence.

"Highest Ranking Class": The Class of Outstanding Notes that is most senior in right of payment of principal in the Note Payment Sequence; provided, that in the event no Rated Notes remain Outstanding, the Highest Ranking Class will be the Subordinated Notes.

"Holder": With respect to any Note, the Person in whose name such Note is registered in the Note Register.

"IAI/QP": Any Person that, at the time of its acquisition, purported acquisition or proposed acquisition of Notes, is both an Institutional Accredited Investor and a Qualified Purchaser.

"Incentive Asset Management Fee": The meaning specified in the Asset Management Agreement.

"Incentive Internal Rate of Return": The meaning specified in the Asset Management Agreement.

"Incurrence Covenant": A covenant by a borrower to comply with certain financial covenants only upon the occurrence of certain actions by the borrower, including, but not limited to, debt issuance, payment of dividends, share purchase, merger, acquisitions or divestitures.

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"Indenture": This instrument as originally executed and, if from time to time further supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, as so supplemented or amended.

 

"Independent": As to any Person, any other Person who (i) does not have and is not committed to acquire any material direct or indirect financial interest in such Person or in any Affiliate of such Person, (ii) is not connected with such Person as an officer, employee, promoter, underwriter, voting trustee, partner, director, manager, member or Person performing similar functions and (iii) is not Affiliated with an entity that fails to satisfy the criteria set forth in clauses (i) and (ii). "Independent" when used with respect to any accountant may include an accountant who audits the books of any Person if in addition to satisfying the criteria set forth above the accountant is independent with respect to such Person within the meaning of Rule 101 of the Code of Ethics and Professional Conduct of the American Institute of Certified Public Accountants.

 

"Information": S&P's "Credit FAQ: Anatomy Of A Credit Estimate: What It Means And How We Do It" dated January 14, 2021 and any other available information S&P reasonably requests in order to produce a credit estimate for a particular asset.

 

"Initial Investment Period": The period from, and including, the Closing Date to, but excluding, the Effective Date.

 

"Initial Purchaser": BNP Paribas Securities Corp.

 

"Institutional Accredited Investor": An institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) who is not a Qualified Institutional Buyer.

 

"Interest Accrual Period": The period from and including the Closing Date to but excluding the first Payment Date after the Closing Date, and each successive period from and including each Payment Date to but excluding the following Payment Date; provided that, the Interest Accrual Period with respect to (i) any Class of Rated Notes that is subject to a Refinancing will be the period from and including the Payment Date preceding the Partial Redemption Date or Redemption Date, as the case may be, to but excluding the Partial Redemption Date or Redemption Date, as applicable, and (ii) the corresponding Refinancing or Replacement Debt relating to such Class of Rated Notes that is subject to a Refinancing will be the period from and including the Partial Redemption Date or Redemption Date, as applicable, to but excluding the following Payment Date. For purposes of determining any Interest Accrual Period in the case of the Fixed Rate Notes, the Payment Date shall be assumed to be the 25th day of the relevant month (irrespective of whether such day is a Business Day).

 

"Interest Collection Account": The account established pursuant to Section 10.1(b) and described in Section 10.2(a).

 

"Interest Coverage Ratio": With respect to any Class or Classes of Outstanding Rated Notes, the ratio (expressed as a percentage) obtained by dividing:

 

(a)            the sum of (i) the Scheduled Distributions of Interest Proceeds expected to be received (regardless of whether the due date of any such Scheduled Distribution has yet occurred) on the Pledged Obligations with respect to the Payment Date corresponding to such Measurement Date (excluding (x) accrued and unpaid interest on Defaulted Obligations and (y) interest on PIK Loans and Partial PIK Loans and Underlying Assets that are excluded from the definition of "Partial PIK Loan" by the second proviso thereto that is not paid in Cash) plus (ii) all other Interest Proceeds received in such Due Period, minus (iii) the amounts payable in clauses (i) through (v) of the Priority of Interest Payments on such Payment Date; by

 

(b)            the sum of the Interest Distribution Amounts due for such Notes and for any Higher Ranking Class of Notes on such Payment Date; provided that any Contribution designated as Interest Proceeds shall be excluded from the calculation of the Interest Coverage Ratio.

 

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"Interest Coverage Test": A test that will be satisfied as of any Measurement Date on and after the Determination Date immediately preceding the Interest Coverage Test Date, if the Interest Coverage Ratio is equal to or greater than 120.00%.

 

"Interest Coverage Test Date": The second Payment Date after the Closing Date.

 

"Interest Determination Date": With respect to each Class of Rated Notes, the second U.S. Government Securities Business Day preceding the first day of each Interest Accrual Period.

 

"Interest Distribution Amount": With respect to any Class of Notes and any Payment Date, (a) the aggregate amount of interest accrued, at the applicable Note Interest Rate or Note Interest Rates, during the related Interest Accrual Period (pro-rated, as applicable, with respect to any Re-Priced Class) on (i) the Aggregate Outstanding Amount of the Notes of such Class during such Interest Accrual Period and (ii) any Defaulted Interest not previously paid relating thereto, plus (b) any Defaulted Interest not previously paid.

 

"Interest Proceeds": With respect to any Payment Date, without duplication:

 

(a)            all payments of interest received during the related Due Period on the Pledged Obligations (including Reinvestment Income, if any, but excluding (i) Workout Loans, (ii) Restructured Loans, (iii) any interest received on Defaulted Obligations, (iv) any interest received on any Partial PIK Loan or PIK Loan or Underlying Asset that is excluded from the definition of "Partial PIK Loan" by the second proviso thereto to the extent constituting non-cash interest, (v) any accrued interest acquired with Principal Proceeds or Unused Proceeds, (vi) all interest accrued as of the Closing Date in respect of the Underlying Assets that comprise the initial Collateral Portfolio as of the Closing Date and (vii) with respect to any Partial Redemption Date, Partial Redemption Interest Proceeds);

 

(b)            unless otherwise designated by the Asset Manager, all amendment and waiver fees, all late payment fees and all other fees and commissions received during such Due Period in connection with the Pledged Obligations (other than fees and commissions received in connection with (i) the acquisition of Pledged Obligations, (ii) Defaulted Obligations, (iii) a reduction in the principal amount of an Underlying Asset, (iv) a reduction in the interest rate payable by an Underlying Asset and (v) an extension of maturity of an Underlying Asset);

 

(c)            if elected by the Asset Manager, recoveries on any Equity Securities or Defaulted Obligations (including interest received on Defaulted Obligations and proceeds of Equity Securities and other assets acquired or received by the Issuer in lieu of a current or prior Defaulted Obligation or a portion thereof in connection with a workout, restructuring or similar transaction of the obligor thereof) to the extent that total recoveries received by the Issuer thereon exceed the outstanding principal amount the related Underlying Asset at the time of default;

 

(d)            to the extent such amount was acquired with Interest Proceeds, accrued interest received in connection with any Pledged Obligation;

 

(e)            [Reserved];

 

(f)             all payments (other than amounts constituting Principal Proceeds under clause (j) of the definition thereof) received pursuant to any Hedge Agreements in respect of such Payment Date;

 

(g)            net proceeds of an Additional Equity Issuance that have been designated as Interest Proceeds by the Asset Manager;

 

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(h)            all payments of principal and interest on Eligible Investments acquired with Interest Proceeds (without duplication);

 

(i)             any Unused Proceeds not applied to pay principal on the Rated Notes in connection with an Effective Date Ratings Confirmation Failure designated as such by the Asset Manager in accordance with Section 10.3(b)(ii)(C);

 

(j)             any Contributions directed by the Asset Manager to be deposited into the Interest Collection Account or transferred from the Contribution Account to the Interest Collection Account; and

 

(k)            any other amounts designated as Interest Proceeds by the Asset Manager in accordance with Section 10.3(e)(ii) or Section 11.1(f)(iii);

 

provided, that, notwithstanding anything to the contrary herein,

 

(i)             subject to clause (ii)(B) of this proviso, proceeds received with respect to a Restructured Loan (including, without limitation, Disposition Proceeds) acquired solely with Contributions or other amounts that may be applied to a Permitted Use, may, at the direction of the Asset Manager, be deposited into the Contribution Account to be applied to a Permitted Use; and

 

(ii)            the Asset Manager (in its sole discretion exercised on or before the related Determination Date by written notice to the Trustee and the Collateral Administrator) may classify any and all amounts (including, for the avoidance of doubt, any Disposition Proceeds or fees) received in respect of any Restructured Loan or Workout Loan as Interest Proceeds or Principal Proceeds; provided that, any and all amounts (including, for the avoidance of doubt, any Disposition Proceeds or fees) received in respect of any Restructured Loan or Workout Loan that was acquired in connection with a workout, restructuring or related scheme to mitigate losses with respect to a Defaulted Obligation or Credit Risk Obligation will constitute Principal Proceeds (and not Interest Proceeds) except that:

 

(A)           if only Principal Proceeds were used to acquire such Restructured Loan or Workout Loan, as applicable, the Asset Manager may classify any and all amounts received in respect thereof as Interest Proceeds only after the sum of the aggregate of all amounts received in respect of such Restructured Loan or Workout Loan, as applicable, plus the aggregate of all amounts received in respect of the related Defaulted Obligation or Credit Risk Obligation, as applicable, is equal to at least the sum of (x) the outstanding Principal Balance of such Underlying Asset when it became a Defaulted Obligation or Credit Risk Obligation, as applicable, and (y)(I) in the case of a Restructured Loan, the aggregate amount of Principal Proceeds used to acquire such Restructured Loan or (II) in the case of a Workout Loan, the greater of the Principal Proceeds used to acquire such Workout Loan and the S&P Collateral Value of such Workout Loan; provided that the Overcollateralization Test must be satisfied after giving effect to any classification of amounts as Interest Proceeds pursuant to this subclause (A);

 

(B)            if only Interest Proceeds and/or Contributions and/or other amounts that may be applied to a Permitted Use were used to acquire such Restructured Loan or Workout Loan, as applicable, the Asset Manager may only classify amounts received in respect thereof as Interest Proceeds after the sum of the aggregate of all recoveries in respect of such Restructured Loan or Workout Loan, as applicable, equals at least its S&P Collateral Value; and

 

(C)            to the extent any combination of Contributions, Interest Proceeds, Principal Proceeds and any other amounts that may be applied to a Permitted Use were applied to acquire such Restructured Loan or Workout Loan after amounts received in respect thereof equal at least the sum of (x) the outstanding Principal Balance of such Underlying Asset when it became a Defaulted Obligation or Credit Risk Obligation, as applicable, and (y)(I) in the case of a Restructured Loan, Principal Proceeds applied to acquire such Restructured Loan or (II) in the case of a Workout Loan, the greater of the Principal Proceeds applied to acquire such Workout Loan and the S&P Collateral Value of such Workout Loan, the Asset Manager shall be permitted to classify any amounts received in respect thereof as Interest Proceeds so long as it ensures compliance with this clause (II) on a pro rata basis to the extent practicable (in its commercially reasonable discretion); provided that the Overcollateralization Test must be satisfied after giving effect to any classification of amounts as Interest Proceeds pursuant to this subclause (C); and

 

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(iii)           if only Interest Proceeds and/or other amounts that may be applied to a Permitted Use were used to acquire a Specified Equity Security, then the Asset Manager shall classify any amounts received in respect thereof (I) first, as Principal Proceeds until the aggregate amount of all collections in respect of such Specified Equity Security and the related Credit Risk Obligation or Defaulted Obligation (measured from the time immediately prior to the workout or restructuring of such Credit Risk Obligation or measured at the time that such Defaulted Obligation became a Defaulted Obligation, as the case may be) is equal to the sum of (A) the outstanding Principal Balance of the related Credit Risk Obligation or Defaulted Obligation (measured at the time immediately prior to the workout or restructuring of such Credit Risk Obligation or measured at the time that such Defaulted Obligation became a Defaulted Obligation, as the case may be), plus (B) the Principal Balance associated with the related Specified Equity Security (measured at the time immediately prior to the receipt of such proceeds), and (II) second, as Interest Proceeds as directed by the Asset Manager in its sole discretion;

 

provided, that the amounts that would otherwise constitute Interest Proceeds may be designated as Principal Proceeds pursuant to this Indenture with notice to the Collateral Administrator.

 

"Interest Rate Hedge": Any interest rate protection agreement, any additional interest rate cap, an interest rate swap, a cancelable interest rate swap or an interest rate floor.

 

"Interest Rate Hedge Counterparty": Any counterparty under any Interest Rate Hedge.

 

"Interest Reserve Account": The account established pursuant to Section 10.1(b) and described in Section 10.3(i).

 

"Intermediary": The entity maintaining a Pledged Account pursuant to an Account Agreement.

 

"Investment Advisers Act": The United States Investment Advisers Act of 1940, as amended.

 

"Investment Company Act": The United States Investment Company Act of 1940, as amended.

 

"Investment Criteria Adjusted Balance": With respect to each Underlying Asset, the outstanding principal balance of such Underlying Asset; provided that the Investment Criteria Adjusted Balance of any:

 

(i)             Deferred Interest Asset will be the Applicable Recovery Amount of such Deferred Interest Asset;

 

(ii)            Deep Discount Obligation will be the product of (x) the purchase price (expressed as a percentage of par) and (y) outstanding principal balance of such Deep Discount Obligation;

 

(iii)           Underlying Asset included in the CCC Excess will be the Current Market Value of such Underlying Asset;

 

provided further, that the Investment Criteria Adjusted Balance for an Underlying Asset that satisfies more than one of the definitions of Deferred Interest Asset or Deep Discount Obligation or that is included in the CCC Excess will be the lowest amount determined pursuant to clauses (i) through (iii) above.

 

"ISDA": The International Swaps and Derivatives Association, Inc. and any successor thereto.

 

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"ISDA Definitions": The 2006 ISDA Definitions published by ISDA as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time.

 

"ISDA Fallback Adjustment": The spread adjustment, (which may be a positive or negative value or zero) that would apply for derivatives transactions referencing the ISDA Definitions to be determined upon the occurrence of an index cessation event with respect to the Benchmark for the Corresponding Tenor.

 

"ISDA Fallback Rate": The rate that would apply for derivatives transactions referencing the ISDA Definitions to be effective upon the occurrence of an index cessation date with respect to the Benchmark for the Corresponding Tenor excluding the applicable ISDA Fallback Adjustment.

 

"Issuer": Ares Direct Lending CLO 1 LLC a Delaware limited liability company, unless and until a successor Person shall have become the Issuer pursuant to the applicable provisions of this Indenture, and thereafter "Issuer" shall mean such successor Person.

 

"Issuer Order" and "Issuer Request": A written order or request dated and signed in the name of the Issuer by an Authorized Officer of the Issuer or by an Authorized Officer of the Asset Manager pursuant to the Asset Management Agreement, as the context may require or permit. An order or request provided in an e-mail by an Authorized Officer of the Issuer or by an Authorized Officer of the Asset Manager on behalf of the Issuer shall constitute an Issuer Order in each case except to the extent the Trustee requests otherwise. For purposes of Section 10.6 and Article XII and the release, sale or acquisition of any Collateral thereunder, "Issuer Order" or "Issuer Request" shall also mean delivery to the Trustee on behalf of the Issuer (or the Asset Manager on its behalf), by e-mail or otherwise in writing, of a trade ticket, trade blotter, confirmation of trade, instruction to post or to commit to the trade, "SWIFT" message, message via Markit Loan Settlement Custodial Services (Markit CIDD) or any other electronic communication or language, which shall constitute a direction and certification that the transaction is in compliance with and satisfies all applicable provisions of Section 10.6 and Article XII of this Indenture.

 

"Issuer's Notice Agent": Any agent in the Borough of Manhattan, the City of New York appointed by the Issuer, where notices and demands to or upon the Issuer in respect of the Notes or this Indenture may be served, which shall initially be Corporation Service Company, at 19 West 44th Street, Suite 200, New York, NY 10036.

 

"Junior Mezzanine Notes": Classes of Notes (other than the Subordinated Notes) that are fully subordinated to the existing Rated Notes and senior to the Subordinated Notes.

 

"LCDX": A loan-only credit default swap index referencing syndicated secured first lien loans sponsored by CDS IndexCo LLC.

 

"Limited Liability Company Agreement": The Amended and Restated Limited Liability Company Agreement of the Issuer, dated as of the Closing Date, entered into by ARCC, as sole member, and Donald J. Puglisi, as independent manager, as further amended, restated or otherwise modified from time to time.

 

"Liquidation Payment Date": The date or dates designated by the Trustee for distributions under Section 5.7.

 

"Loan": Any (i) loan made by a bank or other financial institution to an obligor or (ii) Participation in a loan described in clause (i) of this definition.

 

"Long-Dated Asset": Any Underlying Asset with a maturity later than the earliest Stated Maturity of the Notes.

 

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"Lower Ranking Class": With respect to any Class, each Class that is junior in right of payment of principal to such Class under the Note Payment Sequence and, with respect to each Class of Rated Notes, the Subordinated Notes.

 

"Maintenance Covenant": A covenant by a borrower that requires such borrower to comply with certain financial covenants during the periods or as of a specified day or in each reporting period, as the case may be, specified in the underlying loan agreement, regardless of any action taken by such borrower; provided that notwithstanding anything to the contrary herein, a financial covenant that applies only when the related loan is funded shall constitute a maintenance covenant for purposes hereof.

 

"Majority": With respect to the Notes or any Class, the Holders of more than 50% of the Aggregate Outstanding Amount of the Notes of such Class.

 

"Margin Stock": The meaning specified under Regulation U.

 

"Master Participation Agreement": The Master Participation Agreement, dated as of the Closing Date, between FB Funding, as transferor, and the Issuer, as transferee.

 

"Master Purchase and Sale Agreement": The Master Purchase and Sale Agreement, dated as of the Closing Date, between the Issuer and ARCC, as may be amended, restated, supplemented or otherwise modified from time to time in accordance with its terms.

 

"Multilateral Assignment Agreement": The Multilateral Assignment Agreement, dated as of the Closing Date, among the Issuer, the Retention Holder, and FB Funding, as credit facility borrower.

 

"Material Covenant Default": A default by an obligor with respect to any Underlying Asset, and subject to any grace periods contained in the related Reference Instruments, that gives rise to the right of the lender(s) thereunder to accelerate the principal of such Underlying Asset.

 

"maturity": With respect to any Underlying Asset, the date on which such obligation shall be deemed to mature (or its maturity date) shall be the earlier of (x) the Stated Maturity of such obligation or (y) if the Issuer has a right to require the issuer or obligor of such Underlying Asset to acquire, redeem or retire such Underlying Asset (at or above par) on any one or more dates prior to its stated maturity (a "put right") and the Asset Manager certifies to the Trustee that it shall exercise such put right on any such date, the maturity date shall be the date specified in such certification as long as (A) the Aggregate Principal Amount of Underlying Assets owned by the Issuer for which a certification has been delivered pursuant to the foregoing clause (y) does not exceed 1% of the Maximum Investment Amount and (B) the Asset Manager has not previously failed to exercise any "put right" for which a certification has been delivered pursuant to the foregoing clause (y).

 

"Maturity": With respect to any Note, the date on which the unpaid principal of such Note becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.

 

"Maturity Amendment": The meaning specified in Section 12.2(k).

 

"Maximum Investment Amount": On the Closing Date and any Measurement Date prior to the Effective Date, an amount equal to $700,000,000, and, on and after the Effective Date, an amount equal to the sum (without duplication) of (i) the Aggregate Principal Amount of the Underlying Assets, (ii) the aggregate amount of any Principal Proceeds invested in Eligible Investments, and (iii) any remaining uninvested proceeds, including, but not limited to, amounts in the Principal Collection Account and Unused Proceeds Account, from the issuance of the Notes on such Measurement Date.

 

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"Measurement Date": On and after the Effective Date, (i) each date on which the Portfolio Criteria are applied in connection with an acquisition, disposition or substitution of an Underlying Asset, (ii) the Effective Date, (iii) each Determination Date, (iv) each Report Determination Date, (v) the date on which an Underlying Asset becomes a Defaulted Obligation and (vi) any Business Day specified as a Measurement Date, with not less than two Business Days' notice, by a Rating Agency.

 

"Monthly Report": Each report containing the information set forth on Schedule G, as the same may be modified and amended by mutual agreement between the Collateral Administrator and the Asset Manager, that is delivered pursuant to Section 10.5(a).

 

"Moody's": Moody's Investors Service, Inc. and any successor thereto.

 

"Net Collateral Principal Balance": On any Measurement Date, without duplication, an amount equal to the difference between:

 

(a)            the sum of:

 

(i)             the Aggregate Principal Amount of the Underlying Assets, including the funded and unfunded balance on any Revolving Credit Facility and Delayed-Draw Loans, but excluding Underlying Assets that are Defaulted Obligations, Deferred Interest Assets, Current Pay Obligations, Long-Dated Assets, Deep Discount Obligations, Workout Loans and Closing Date Participations; plus

 

(ii)            the Balance of all Eligible Investments (including Cash) constituting or acquired with Principal Proceeds on such Measurement Date excluding the Balance of all Eligible Investments in the Expense Reserve Account, Hedge Counterparty Collateral Account, Contribution Account, Interest Reserve Account and the Variable Funding Account; plus

 

(iii)           with respect to each Defaulted Obligation and each Deferred Interest Asset, the lesser of (x) the Applicable Recovery Amount of such Defaulted Obligation or Deferred Interest Asset as of such date and (y) the Principal Balance of such Defaulted Obligation and such Deferred Interest Asset as of such date multiplied by the Current Market Value Percentage thereof as of the most recent Determination Date; provided, that for purposes of the Overcollateralization Ratio, the Net Collateral Principal Balance will be zero for any Defaulted Obligation which the Issuer has owned for more than three years during which such Underlying Asset was at all times a Defaulted Obligation; plus

 

(iv)           with respect to each Current Pay Obligation, its Principal Balance, except that with respect to any Current Pay Obligation, the Current Market Value of which is determined under clause (b) of the definition thereof, the S&P Collateral Value will be used; plus

 

(v)            with respect to each Deep Discount Obligation, the product of (x) the net purchase price paid by the Issuer for the Deep Discount Obligation (expressed as a percentage of par), determined by subtracting from the purchase price thereof the amount of any accrued interest acquired with principal and any syndication and other upfront fees paid to the Issuer and by adding the amount of any related transaction costs (including assignment fees) paid by the Issuer to the seller of the Underlying Asset or its agent, multiplied by (y) the Principal Balance of such Deep Discount Obligation; plus

 

(vi)           with respect to each Closing Date Participation (for the avoidance of doubt, for only so long as such Closing Date Participation remains a Participation), prior to the Effective Date, its Principal Balance, and on the Effective Date and anytime thereafter, its Applicable Recovery Amount; plus

 

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(vii)          (a) with respect to each Long-Dated Asset maturing less than or equal to two years after the earliest Stated Maturity of the Notes, the lesser of (x) its Current Market Value and (y) 70% multiplied by its principal balance, and (b) with respect to each Long-Dated Asset maturing more than two years after the earliest Stated Maturity of the Notes, zero; plus

 

(viii)         with respect to each Workout Loan, its S&P Collateral Value thereof; and

 

(b)            the CCC Excess Adjustment Amount.

 

provided, that for purposes of determinations with respect to any Underlying Asset, if more than one subclause would apply, the lowest value determined under such applicable subclauses will be used in determining the Net Collateral Principal Balance.

 

Ninety-Partner Limitation”: The meaning specified in Section 2.12(i).

 

"Non-Call Period": The period beginning on the Closing Date and ending on April 25, 2026.

 

"Non-Emerging Market Obligor": An obligor that is Domiciled in (a) the United States, (b) any country that has a foreign currency issuer credit rating of at least "AA" by S&P.

 

"Non-Permitted Holder": (i) Any U.S. Person (or any account for whom such Person is acquiring such Note or beneficial interest) that is not both (A) either (x) a Qualified Institutional Buyer or (y) with respect to the Subordinated Notes only, an Accredited Investor (including an Institutional Accredited Investor), and (B) a Qualified Purchaser; or (ii) with respect to an ERISA Restricted Note, any Person for which the representations made or deemed to be made by such Person for purposes of ERISA, Section 4975 of the Code or applicable Similar Law in any representation letter or Transfer Certificate, or by virtue of deemed representations are or become untrue, whose acquisition, holding or disposition of such Note or interests therein would constitute or result in a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code (or in a violation of Similar Law) unless an exemption is available (all the conditions of which have been satisfied), or whose holding of such Note may result in 25% or more of the value of that Class being held by Benefit Plan Investors.

 

"Notes": Collectively, the Rated Notes and the Subordinated Notes.

 

"Note Interest Amount": As to each Class of Notes and each Interest Accrual Period, the amount of interest payable in respect of each $100,000 principal amount of such Class of Notes for such Interest Accrual Period.

 

"Note Interest Rate": With respect to each Class of Floating Rate Notes, the per annum stated interest rate payable on such Class of Floating Rate Notes with respect to each Interest Accrual Period, as indicated in Section 2.3 and expressed as the Benchmark plus a spread, subject to Section 9.6. With respect to each Class of Fixed Rate Notes, the per annum stated interest rate payable on such Class of Fixed Rate Notes with respect to each Interest Accrual Period, as indicated in Section 2.3, subject to Section 9.6.

 

"Note Payment Sequence": The application, in accordance with the Priority of Payments, of Interest Proceeds, Principal Proceeds, Refinancing Proceeds or Partial Redemption Interest Proceeds, as applicable, in the following order:

 

(i)             to the payment of accrued and unpaid interest on the Class A Notes, until such amounts have been paid in full;

 

(ii)            to the payment of principal of the Class A Notes, in whole or in part, until the Class A Notes have been paid in full;

 

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(iii)           to the payment of accrued and unpaid interest on the Class B Notes, until such amounts have been paid in full; and

 

(iv)           to the payment of principal of the Class B Notes, in whole or in part, until the Class B Notes have been paid in full.

 

"Note Register": The register maintained by the Notes Registrar with respect to the Notes pursuant to Section 2.5.

 

"Notes": Collectively, the Rated Notes and the Subordinated Notes.

 

"Notes Registrar": The meaning specified in Section 2.5(a).

 

"Notice": Any request, demand, authorization, direction, notice, consent, confirmation, certification, waiver, Act of Holders or other action.

 

"Notice of Default": The meaning specified in Section 5.1(e).

 

"Notice of Substitution": The meaning specified in Section 12.4(g).

 

"NRSRO Website": The website established by the Issuer pursuant to the requirements of Rule 17g-5.

 

"Offer": With respect to any security or debt obligation, any offer by the issuer of such security or borrower with respect to such debt obligation or by any other Person made to all of the holders of such security or debt obligation to purchase or otherwise acquire such security or debt obligation (other than pursuant to any redemption in accordance with the terms of any related Reference Instrument or for the purpose of registering the security or debt obligation) or to exchange such security or debt obligation for any other security, debt obligation, Cash or other property.

 

"Officer": With respect to the Issuer or any other company or corporation, the Chairman of the board of directors, any Director, member, manager, the President, any Vice President, the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer of such entity; with respect to any partnership, any general partner thereof; and with respect to the Trustee, the Intermediary, the Bank (in any capacity under the Transaction Documents) or any other bank or trust company acting as trustee of an express trust or as custodian, any Trust Officer.

 

"Officer's Certificate": With respect to any Person, a certificate signed by an Authorized Officer of such Person.

 

"Ongoing Expense Excess Amount": On any Payment Date, an amount equal to the excess, if any, of (i)(a) $300,000 (per annum) plus (b) 0.0275% (per annum) of the Aggregate Principal Amount of the Collateral Portfolio, measured on a quarterly basis as of the first day of the Due Period preceding such Payment Date, over (ii) the sum of (without duplication) (x) all amounts paid pursuant to clause (ii) of the Priority of Interest Payments on such Payment Date plus (y) all amounts paid on account of Administrative Expenses during the related Due Period pursuant to Section 11.1(d).

 

"Ongoing Expense Reserve Shortfall": On any Payment Date, the excess, if any, of $250,000 over the amount then on deposit in the Expense Reserve Account without giving effect to any deposit thereto on such Payment Date pursuant to subclause (iii) of the Priority of Interest Payments.

 

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"Opinion of Counsel": A written opinion addressed to the Trustee and if requested by it, a Rating Agency, in form and substance reasonably satisfactory to the Trustee, and if such opinion is requested by a Rating Agency, such Rating Agency, of Latham & Watkins LLP, Nixon Peabody LLP, Cadwalader, Wickersham & Taft LLP, Richards, Layton & Finger, P.A. or any other nationally or internationally recognized law firm experienced in the subject matter of the opinion, practicing in any state of the United States of America or the District of Columbia, which law firm may, except as otherwise expressly provided in this Indenture, be counsel for the Issuer or the Asset Manager and which attorney shall be reasonably satisfactory to the Trustee and Independent of the Asset Manager.

 

"Optional Redemption": The meaning specified in Section 9.1(a).

 

"Organizational Documents": The Issuer's Certificate of Formation and Limited Liability Company Agreement, as supplemented, amended and restated from time to time in accordance with their terms.

 

"Originated Asset": An Underlying Asset that is sold or transferred to the Issuer and with respect to which the Retention Holder (i) itself or through related entities, directly or indirectly, was involved or will be involved in the original agreement which created or will create such Underlying Asset or (ii) purchased or will purchase such Originated Asset for its own account prior to selling or transferring such Underlying Asset to the Issuer.

 

"Originator Requirement": A requirement that will be satisfied if, at any time, the aggregate outstanding principal amount of all Originated Assets, divided by the aggregate outstanding principal amount of all Underlying Assets, is greater than 50% (as determined by the Asset Manager); provided, that if the Asset Manager reasonably determines (based on guidance provided by the European Banking Authority or a legal opinion from legal counsel of reputable standing) that:

 

(a)            a percentage lower than 50.1% applies and notifies the Issuer, the Trustee, the Collateral Administrator and the Initial Purchaser (for the avoidance of doubt, none of whose consent is required to be obtained) in writing of such determination, then the Originator Requirement shall (without the consent of any Person) be amended so that the required percentage is such lower number; and/or

 

(b)            the relevant calculation under the EU/UK Retention Requirements is only applicable on the date on which a securitization is established and not on an ongoing basis through the life of the securitization and notifies the Issuer, the Trustee, the Collateral Administrator and the Initial Purchaser (for the avoidance of doubt, none of whose consent is required to be obtained) in writing of such determination, then the Originator Requirement shall (without the consent of any Person) be amended so that it is not applicable and does not need to be satisfied at any time other than on the Closing Date.

 

"Outstanding": With respect to a Class of Notes, as of any date of determination, all of such Class of Notes previously authenticated and delivered under this Indenture except:

 

(a)            Notes previously cancelled by the Notes Registrar or delivered to the Notes Registrar or Trustee, as applicable, for cancellation or registered in the Note Register on the date the Trustee provides notice to the Holders pursuant to Section 4.1 that this Indenture has been discharged;

 

(b)            Repurchased Notes and Surrendered Notes that have not yet been cancelled by the Notes Registrar or the Trustee, as applicable; provided that solely for purposes of calculating the Coverage Tests and the Reinvestment Target Par Balance, any Repurchased Notes or Surrendered Notes (in each case, unless they are the Highest Ranking Class outstanding at such time) will be considered Outstanding, even if such Notes have been cancelled, until such Class becomes the Highest Ranking Class. Such Repurchased Notes and Surrendered Notes, even if such Notes have been cancelled, shall be deemed for such purposes to have an Aggregate Outstanding Amount equal to the applicable Aggregate Outstanding Amount as of the date of surrender or purchase, as applicable, reduced proportionately with, and to the extent of, any reduction on the Aggregate Outstanding Amount thereafter;

 

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(c)            Notes or, in each case, portions thereof for whose payment or redemption funds in the necessary amount have been irrevocably deposited with the Trustee or any Paying Agent for the Holders of such Notes; provided, that if such Notes or portions thereof are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor reasonably satisfactory to the Trustee has been made;

 

(d)            Notes in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this Indenture, unless proof reasonably satisfactory to the Trustee is presented that any such original Notes are held by a Protected Purchaser;

 

(e)            Notes alleged to have been mutilated, destroyed, lost or stolen for which Replacement Debt has been issued as provided in Section 2.6 of this Indenture unless proof reasonably satisfactory to the Trustee is presented that any such mutilated, destroyed, lost or stolen Notes are held by a Protected Purchaser; and

 

(f)             Notes with respect to which (i) all outstanding principal, premium (if any) and interest (including any Defaulted Interest) has been paid in full and (ii) no further entitlements to receive payments of principal, premium (if any) or interest (or distributions of Principal Proceeds or Interest Proceeds) remain;

 

provided, that in determining whether the Holders of the requisite Aggregate Outstanding Amount have given any request, demand, authorization, direction, notice, consent or waiver hereunder:

 

(i)             Notes owned by the Issuer or any Affiliate of the Issuer shall be disregarded and deemed not to be Outstanding; and

 

(ii)            with respect to any vote in connection with the removal of the Asset Manager pursuant to the Asset Management Agreement or the waiver of "cause" for termination pursuant to the Asset Management Agreement, any Notes held by the Asset Manager, any of its Affiliates or any account managed by the Asset Manager over which it has discretionary voting authority shall be disregarded and deemed not to be Outstanding.

 

In determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes that a Trust Officer of the Trustee has actual knowledge to be owned by the Issuer or the Asset Manager shall be so disregarded; provided, further, that any Notes held by the Asset Manager, any of its Affiliates or any account managed by the Asset Manager over which it has discretionary voting authority shall have voting rights with respect to all other matters as to which the Holders of the Notes are entitled to vote, including any vote in connection with the appointment of a replacement asset manager that is not Affiliated with the Asset Manager in accordance with the Asset Management Agreement and/or any matters relating to a redemption of the Notes in accordance with Article IX; provided, further, that Notes owned by the Asset Manager, its Affiliates or any account managed by the Asset Manager over which it has discretionary voting authority that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Notes and the pledgee is not an Affiliate of the Asset Manager and is Independent of the Asset Manager.

 

"Overcollateralization Ratio": For any Measurement Date, with respect to any specified Class or Classes of Rated Notes, the number (expressed as a percentage) calculated by dividing

 

(a)            the Net Collateral Principal Balance by

 

(b)            (I) the Aggregate Outstanding Amount of the Notes of such Class or Classes of Rated Notes and each Higher Ranking Class as of such Measurement Date plus (II) the excess, if any, of the aggregate Exposure Amount as of such Measurement Date over amounts on deposit in the Variable Funding Account as of such Measurement Date.

 

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"Overcollateralization Test": For so long as any Rated Notes remain Outstanding, a test that will be met on any Measurement Date if the Overcollateralization Ratio on such Measurement Date is equal to or greater than 137.06%. With respect to any specified Class of Rated Notes, the principal amount of the Rated Notes to be redeemed on any Payment Date for which the Overcollateralization Test is not met on the related Determination Date will be the amount that, if it had been paid in reduction of the principal amount of the Rated Notes in accordance with the Priority of Payments before the application of Interest Proceeds or Principal Proceeds to any payments required to be made due to the failure of such Overcollateralization Ratio, would have caused the Overcollateralization Test to be met for the current Determination Date (calculating the amount of Interest Proceeds to divert in the Priority of Interest Payments by assuming Interest Proceeds so diverted reduces the denominator of the Overcollateralization Ratio with no impact on the numerator, and then calculating the amount of Principal Proceeds to divert in the Priority of Principal Payments by assuming Principal Proceeds so diverted reduce both the numerator and the denominator of the Overcollateralization Ratio). Any such payment will be made in accordance with the Priority of Payments.

 

"Partial PIK Loan": A loan that provides for periodic payments of interest thereon in cash no less frequently than semi-annually and permits a portion of such periodic payments of interest to be deferred and capitalized as additional principal thereof; provided, that for purposes of determining compliance with the Interest Coverage Test, Weighted Average Coupon Test and Weighted Average Spread Test, only the portion of interest payable in cash and that cannot be deferred shall be included in the calculation of the Interest Coverage Test, Weighted Average Coupon Test and Weighted Average Spread Test; provided further that such loan shall not constitute a Partial PIK Loan (or a PIK Loan) if the portion of interest required to be paid in cash under the terms of the related Underlying Instruments would result in the outstanding principal amount of such Underlying Asset having an effective rate of PIK Cash-Pay-Interest on the date of determination of greater than 4.0% per annum above its Underlying Asset Benchmark (or the fixed rate equivalent thereof); provided further that such loan shall not constitute a Partial PIK Loan if the portion of interest required to be paid in cash under the terms of the related Underlying Instruments would result in the outstanding principal amount of such Underlying Asset having an effective rate of PIK Cash-Pay-Interest on the date of determination of less than 1.0% per annum above its Underlying Asset Benchmark (or the fixed rate equivalent thereof), and such loan shall constitute a PIK Loan.

 

"Partial Redemption Date": Any Redemption Date on which one or more but not every Class of Rated Notes are the subject of a Refinancing.

 

"Partial Redemption Interest Proceeds": In connection with a Refinancing of one or more (but not all) Classes of the Rated Notes, Interest Proceeds in an amount equal to the accrued interest on the Classes that are subject to the Refinancing.

 

"Participations": Participation interests in a loan that, at the time of acquisition, or the Issuer's commitment to acquire the same, satisfies each of the following criteria: (i) such loan would constitute an Underlying Asset were it acquired directly, (ii) the seller of the participation is the lender on the loan, (iii) the aggregate participation in the loan does not exceed the principal amount or commitment of such loan, (iv) such participation does not grant, in the aggregate, to the participant in such participation a greater interest than the seller holds in the loan or commitment that is the subject of the participation, (v) the entire purchase price for such participation is paid in full at the time of its acquisition (or, in the case of a participation in a Revolving Credit Facility or Delayed-Draw Loan, at the time of the funding of such loan) and (vi) the participation provides the participant all of the economic benefit and risk of the whole or part of the loan or commitment that is the subject of the loan participation. For the avoidance of doubt, a Participation shall not include a sub participation interest in any loan.

 

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"Paying Agent": Any Person authorized by the Issuer to pay the principal of or interest on any Notes on behalf of the Issuer, as specified in Section 7.4.

 

"Payment Account": The account established pursuant to Section 10.1(b) and described in Section 10.3(c).

 

"Payment Date": The 25th day of January, April, July and October of each year, commencing in October 2024, or if any such date is not a Business Day, the immediately following Business Day, any Redemption Date (other than a Partial Redemption Date) and any Liquidation Payment Date; provided that, following the redemption or repayment in full of the Rated Notes, Holders of Subordinated Notes may receive payments (including in respect of an Optional Redemption of the Subordinated Notes) on any dates designated by the Asset Manager (which dates may or may not be the dates stated above) upon seven Business Days' prior written notice to the Trustee (which notice the Trustee will promptly forward to the Holders of the Subordinated Notes) and the Collateral Administrator and such dates will constitute "Payment Dates." The last Payment Date in respect of any Class of Notes will be its Redemption Date, its Stated Maturity or such other Payment Date on which the Aggregate Outstanding Amount of such Class is paid in full or the final distribution in respect thereof is made.

 

"Payment Date Instructions": The meaning specified in Section 10.5(c).

 

"Payment Date Report": Each report containing the information set forth on Schedule H hereto, as the same may be modified and amended by mutual agreement between the Collateral Administrator and the Asset Manager, that is delivered pursuant to Section 10.5(b).

 

"Permitted Offer": An Offer (i) pursuant to the terms of which the offeror offers to acquire a debt obligation (including an Underlying Asset) in exchange for consideration consisting solely of Cash in an amount equal to or greater than the full face amount of such debt obligation plus any accrued and unpaid interest and (ii) as to which the Asset Manager has determined in its reasonable commercial judgment that the offeror has sufficient access to financing to consummate the Offer.

 

"Permitted Use": With respect to (x) any Contribution, (y) all or a portion of the net proceeds from an additional issuance of Junior Mezzanine Notes and/or Subordinated Notes (as directed by the Asset Manager) or (z) at the direction of the Asset Manager, proceeds received with respect to a Restructured Loan purchased solely with Contributions or other amounts that may be applied to a Permitted Use, in each case, received into the Contribution Account, any of the following uses: (i) the transfer of the applicable portion of such amount to the Interest Collection Account for application as Interest Proceeds; (ii) the transfer of the applicable portion of such amount to the Principal Collection Account for application as Principal Proceeds; provided that upon the designation of the applicable portion of such amount as Principal Proceeds, the applicable portion of such amount shall not be subsequently re-designated as Interest Proceeds; (iii) the repurchase of Notes in accordance with this Indenture; (iv) to designate such amount as Refinancing Proceeds for use in connection with a Redemption by Refinancing; (v) the transfer of the applicable portion of such amount to pay any costs or expenses associated with an additional issuance, Refinancing or Re-Pricing; (vi) to make payments in connection with the exercise of an option, warrant, right of conversion, preemptive right, rights offering, credit bid or similar right in connection with a workout, restructuring or similar transaction of an Underlying Asset, in each case subject to the limitations set forth in this Indenture; (vii) the acquisition of Underlying Assets, Restructured Loans, Workout Loans or Specified Equity Securities; and (viii) any other use for which amounts held by the Issuer are permitted to be used in accordance with the terms of this Indenture.

 

"Person": An individual, corporation (including a business trust), partnership (general or limited), limited liability company, joint venture, association, joint stock company, trust (including any beneficiary thereof), bank, unincorporated association or government or any agency or political subdivision thereof or any other entity of similar nature.

 

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"PIK Cash-Pay-Interest": As to any loan that provides for periodic payments of interest thereon in cash and permits a portion of such periodic payments of interest to be deferred and capitalized as additional principal thereof, the portion of interest required to be paid in cash (and not permitted to be added to the balance of such Partial PIK Loan or otherwise deferred and accrued) thereon pursuant to the terms of its Underlying Instruments.

 

"PIK Loan": A loan (other than a Partial PIK Loan or an Underlying Asset that is excluded from the definition of "Partial PIK Loan" by the second proviso thereto) that permits deferral and/or capitalization of any interest or other periodic distribution otherwise due; provided, that for purposes of determining compliance with the Interest Coverage Test, Weighted Average Coupon Test and Weighted Average Spread Test, any interest not payable in cash shall not be included in the calculation of the Interest Coverage Test, Weighted Average Coupon Test and Weighted Average Spread Test.

 

"Plan Asset Regulation": U.S. Department of Labor regulations, 29 C.F.R. § 2510.3-101, as modified by Section 3(42) of ERISA.

 

"Plan Fiduciary": The meaning specified in Section 2.5(m).

 

"Pledged Account": Each of the Payment Account, the Collection Account, the Collateral Account, the Unused Proceeds Account, the Interest Reserve Account, the Expense Reserve Account, the Variable Funding Account, the Contribution Account and the Hedge Counterparty Collateral Account and such other accounts as established by the Trustee pursuant to this Indenture.

 

"Pledged Obligations": On any date of determination, the Underlying Assets, Workout Loans, Restructured Loans, Equity Securities and the Eligible Investments owned by the Issuer that have been Granted to the Trustee hereunder.

 

"Portfolio Criteria": Collectively, the Eligibility Criteria and the criteria set forth in Section 12.2(c)(xxii).

 

"Post-Acceleration Payment Date": Any Payment Date following the occurrence of both an Event of Default and the declaration (or, in the case of any Event of Default specified in Section 5.1(g) or Section 5.1(h), automatic acceleration) of the Notes as due and payable hereunder (unless such Event of Default is no longer continuing and such acceleration of the Notes has been rescinded).

 

"Principal Balance": With respect to any Underlying Asset on any date of determination, the outstanding principal amount of such Underlying Asset on such date; provided, that the Principal Balance of:

 

(a)            a Deferred Interest Asset, PIK Loan or Partial PIK Loan or Underlying Asset that is excluded from the definition of "Partial PIK Loan" by the second proviso thereto shall exclude any deferred or capitalized interest thereon;

 

(b)            any Underlying Asset in which the Trustee does not hold a first priority, perfected security interest shall be deemed to be zero;

 

(c)            any Defaulted Obligation or Deferred Interest Asset that is not sold on or before the third anniversary of its default will be deemed to be zero (which for the avoidance of doubt will not cause the Principal Balance of such Defaulted Obligation or Deferred Interest Asset to be zero on or before the third anniversary of its default), and thereafter its Principal Balance will automatically be deemed to be zero;

 

(d)            any Equity Security or Restructured Loan shall be deemed to be zero;

 

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(e)            any Defaulted Obligation, solely for determining whether the Aggregate Principal Amount of Underlying Assets is greater than or less than the Reinvestment Target Par Balance, shall be deemed to be the Current Market Value of such Defaulted Obligation (not to exceed such Defaulted Obligation's par value), unless as specified otherwise in this Indenture;

 

(f)             any Revolving Credit Facility or Delayed-Draw Loan shall, (x) for purposes of the Weighted Average S&P Recovery Rate and the Portfolio Criteria and (y) for purposes of calculating the Aggregate Principal Amount of the Underlying Assets to be included as part of the Maximum Investment Amount, include the unfunded portion thereof; and

 

(g)            any Workout Loan shall be deemed to be the S&P Collateral Value thereof.

 

"Principal Collection Account": The account established pursuant to Section 10.1(b) and described in Section 10.2(a).

 

"Principal Payments": With respect to any Payment Date, an amount equal to the sum of any payments of principal (including optional or mandatory redemptions or prepayments) received on the Pledged Obligations during the related Due Period, including payments of principal received in respect of Offers and recoveries on Defaulted Obligations, but not including Disposition Proceeds received during the Reinvestment Period.

 

"Principal Proceeds": With respect to any Payment Date, the following amounts, including, without duplication:

 

(a)            all Principal Payments, including Unscheduled Principal Payments, received during the related Due Period on the Pledged Obligations (except to the extent such amounts are included in clause (h) of the definition of "Interest Proceeds");

 

(b)            all payments received and recoveries on any Equity Securities or Defaulted Obligations and proceeds from the sale or other disposition of any Equity Security or Defaulted Obligation (including, in each case, proceeds of Equity Securities and other assets acquired or received by the Issuer in lieu of a current or prior Defaulted Obligation or a portion thereof in connection with a workout, restructuring or similar transaction of the obligor thereof) until such time as the outstanding principal amount the related Underlying Asset at the time of default has been received by the Issuer;

 

(c)            all premiums (including prepayment premiums) received during such Due Period on the Underlying Assets;

 

(d)            any amounts remaining in the Unused Proceeds Account (after the designation of any amounts as Interest Proceeds pursuant to Section 10.3(b)(ii)(C)) at the end of the Initial Investment Period other than Reinvestment Income (which shall be treated as Interest Proceeds);

 

(e)            subject to clause (b) above, Disposition Proceeds received during the related Due Period;

 

(f)             to the extent such amount was not purchased with Interest Proceeds, accrued interest received in connection with any Underlying Asset or Eligible Investment;

 

(g)            any funds in the Contribution Account designated as Principal Proceeds in accordance with Section 10.3(h);

 

(h)            any Contributions that have been irrevocably designated as such and not deposited into the Interest Reserve Account or Collection Account as Interest Proceeds or designated for the repurchase of Notes under Section 7.20 by the Contributor;

 

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(i)             funds in the Expense Reserve Account designated as such by the Asset Manager in accordance with Section 10.3(e) (which, for the avoidance of doubt, once designated as Principal Proceeds shall not be redesignated as Interest Proceeds);

 

(j)             for any Hedge Agreement, payments received by the Issuer in respect of such Payment Date representing (i) any net termination payment received by the Issuer, to the extent not used by the Issuer to enter into a replacement Hedge Agreement, (ii) any up-front payment from the replacement Hedge Counterparty under any replacement Hedge Agreement and (iii) amounts allocated by the Asset Manager to cover any up-front payment previously paid by the Issuer out of Principal Proceeds;

 

(k)            any amounts on deposit in the Variable Funding Account in excess of the Exposure Amounts;

 

(l)             any Deferred Asset Management Fee deferred by the Asset Manager on such Payment Date and designated as Principal Proceeds by the Asset Manager (which, for the avoidance of doubt, once designated as Principal Proceeds shall not be redesignated as Interest Proceeds);

 

(m)            net proceeds from the issuance of Additional Notes since the preceding Payment Date (other than proceeds from an Additional Equity Issuance that have been designated as Interest Proceeds by the Asset Manager); and

 

(n)            any other payments (other than Excluded Property) not included in Interest Proceeds;

 

provided, that any of the foregoing amounts will not be considered Principal Proceeds on such Payment Date to the extent such amounts were previously reinvested in Underlying Assets, are committed to the acquisition of Underlying Assets by the Asset Manager or are otherwise designated for reinvestment by the Asset Manager; provided, further, that (i) notwithstanding anything to the contrary herein, proceeds received with respect to a Restructured Loan (including, without limitation, Disposition Proceeds) acquired with Contributions or other amounts that may be applied to a Permitted Use, may, at the direction of the Asset Manager, be deposited in the Contribution Account to be applied to a Permitted Use and (ii) the classification of proceeds received in respect of Restructured Loans and Workout Loans as Interest Proceeds or Principal Proceeds shall be determined in accordance with the definition of "Interest Proceeds" herein.

 

"Priority of Interest Payments": The meaning specified in Section 11.1(a).

 

"Priority of Liquidation Payments": The meaning specified in Section 11.1(c).

 

"Priority of Partial Redemption Proceeds": The meaning specified in Section 11.1(f).

 

"Priority of Payments": Collectively, the Priority of Interest Payments, the Priority of Principal Payments, the Priority of Liquidation Payments and the Priority of Partial Redemption Proceeds.

 

"Priority of Principal Payments": The meaning specified in Section 11.1(b).

 

"Proceeding": Any suit in equity, action at law or other judicial or administrative proceeding.

 

"Proceeds": Without duplication, (i) any property (including Cash and securities) received as a Distribution on the Collateral or any portion thereof, (ii) any property (including Cash and debt or equity securities or other equity interest) received in connection with the sale, liquidation, exchange or other disposition of the Collateral or any portion thereof, and (iii) all proceeds (as such term is defined in Article 9 of the UCC) of the Collateral or any portion thereof.

 

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"Project Finance Loan": Any loan issued by an obligor for the purpose of financing infrastructure, industrial or public services projects, or any other loan commonly referred to as a "project finance" loan.

 

"Proposed Portfolio": The portfolio (measured by Principal Balance) of Underlying Assets and Principal Proceeds held as Cash and Eligible Investments acquired with Principal Proceeds that would result from the maturation, proposed sale or other disposition of an Underlying Asset or a proposed acquisition of an Underlying Asset, as the case may be.

 

"Protected Purchaser": The meaning specified in Article 8 of the UCC.

 

"Purchase Agreement": That certain note purchase agreement, dated as of the Closing Date, between the Issuer and the Initial Purchaser relating to the purchase of certain Notes, as amended from time to time.

 

"Purchaser": The meaning specified in Section 2.5(h).

 

"Purpose Credit": The meaning specified in Regulation U.

 

"put right": The meaning specified in Section 12.2(e).

 

"QIB/QP": Any Person that, at the time of its acquisition, purported acquisition or proposed acquisition of Notes, is both a Qualified Institutional Buyer and a Qualified Purchaser.

 

"Qualified Institutional Buyer": Any Person that, at the time of its acquisition, purported acquisition or proposed acquisition of Notes, is a qualified institutional buyer as defined in Rule 144A.

 

"Qualified Purchaser": Any Person that, at the time of its acquisition, purported acquisition or proposed acquisition of Notes, is a qualified purchaser for the purposes of Section 3(c)(7) of the Investment Company Act.

 

"Rated Notes": The Class A Notes and the Class B Notes.

 

"Rating Agency": S&P (solely with respect to the Class or Classes of Notes to which it assigns a rating on the Closing Date at the request of the Issuer), or if at any time such agency ceases to provide rating services generally, any other nationally recognized statistical rating organization selected by the Issuer and not rejected by a Majority of the Controlling Class. If a Rating Agency is replaced pursuant to the preceding sentence, defined terms and references herein that incorporate provisions relating to the replaced rating agency shall be deemed to be references to those terms and equivalent categories of such other rating agency. If a Rating Agency withdraws all of such ratings on the Rated Notes or all Classes of Rated Notes rated by a Rating Agency shall no longer be Outstanding, it shall no longer constitute a Rating Agency for purposes of this Indenture, and any provisions of this Indenture that refer to such Rating Agency and any tests or limitations that incorporate the name of such Rating Agency shall have no further effect.

 

"Rating Agency Confirmation": Confirmation in writing (which may be in the form of a press release) from S&P, or such other form of confirmation employed at such time by S&P, that a proposed action or designation will not cause the then current ratings of any Class of Rated Notes then rated by S&P to be reduced or withdrawn. If any Rating Agency (a) makes a public announcement or informs the Issuer, the Asset Manager or the Trustee that (i) it believes Rating Agency Confirmation is not required with respect to an action or (ii) its practice is not to give such confirmations, or (b) no longer constitutes a Rating Agency under this Indenture, the requirement for Rating Agency Confirmation with respect to that Rating Agency will not apply.

 

"Rating Agency Effective Date Report": The meaning specified in Section 3.5(h).

 

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"Record Date": Any Regular Record Date, Redemption Record Date or Special Record Date.

 

"Recurring Revenue Loan" means a Senior Secured Loan that (i) is underwritten to recurring revenue, (ii) requires the obligor to comply with a maximum recurring revenue multiple or minimum recurring revenue financial covenant, (iii) at the time of origination of the Loan, does not include and would not customarily be expected to include (as determined by the Asset Manager) a financial covenant based on "debt to EBITDA", "debt to EBIT" or a similar multiple of debt to operating cash flow and (iv) is not subordinate to a working capital loan.

 

"Redemption": Any Optional Redemption.

 

"Redemption Date": Any (i) Business Day specified for a Redemption of Notes pursuant to Section 9.1 or (ii) Refinancing Date with respect to a Refinancing of each Class of Outstanding Rated Notes.

 

"Redemption Price": With respect to a Redemption of (a) the Rated Notes, an amount equal to (i) the outstanding principal amount of such Notes Outstanding to be redeemed, plus (ii) accrued and unpaid interest (including any Defaulted Interest and any interest thereon); provided that any Holder may elect to receive less than such amount in the case of any redemption or a Refinancing of all of the Rated Notes; and (b) any Subordinated Notes, an amount equal to any remaining Interest Proceeds and Principal Proceeds payable under the Priority of Payments on each Redemption Date for the Subordinated Notes.

 

"Redemption Record Date": With respect to any Redemption of Notes, the date fixed as the record date pursuant to Section 9.1.

 

"Reference Instrument": The indenture, credit agreement or other agreement pursuant to which a security or debt obligation has been issued or created and each other agreement that governs the terms of or secures the obligations represented by such security or debt obligation or of which the holders of such security or debt obligation are the beneficiaries.

 

"Reference Rate Floor Obligation": As of any date of determination, a Floating Rate Underlying Asset (a) the interest in respect of which is paid based on a reference rate corresponding to the Benchmark then applicable to the Floating Rate Notes and (b) that provides that such Benchmark is (in effect) calculated as the greater of (i) a specified "floor" rate per annum and (ii) the value of such Benchmark for the applicable interest period for such Underlying Asset.

 

"Reference Rate Modifier": A modifier, as determined by the Asset Manager, other than the Benchmark Replacement Adjustment, applied to a reference rate to the extent necessary to cause such rate to be comparable to the three-month Term SOFR, which may include an addition to or subtraction from such unadjusted rate.

 

"Reference Time": With respect to any determination of the Benchmark, (1) if the Benchmark is Term SOFR, 6:00 a.m. (New York City time) on the day that is two U.S. Government Securities Business Days preceding the date of such determination, and (2) if the Benchmark is not Term SOFR, the time determined by the Asset Manager in accordance with the Benchmark Replacement Conforming Changes.

 

"Refinancing": The meaning specified in Section 9.1(c).

 

"Refinancing Date": The meaning specified in Section 9.1(c).

 

"Refinancing Proceeds": The meaning specified in Section 9.1(c).

 

"Registered": In registered form for U.S. federal income tax purposes.

 

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"Regular Record Date": The date as of which the Holders of Notes entitled to receive a payment of principal, interest or any other payments (other than in connection with a Redemption of Notes) on the succeeding Payment Date are determined, such date as to any Payment Date being the last Business Day of the month immediately preceding such Payment Date.

 

"Regulation D": Regulation D under the Securities Act.

 

"Regulation S": Regulation S under the Securities Act.

 

"Regulation S Global Notes": One or more permanent global notes for each Class of Notes in definitive, fully registered form without interest coupons.

 

"Regulation U": Regulation U (12 C.F.R. § 221) issued by the Board of Governors of the Federal Reserve System.

 

"Reinvestment Income": Any interest or other earnings on amounts in the Unused Proceeds Account.

 

"Reinvestment Period": The period beginning on the Closing Date and ending on the first to occur of: (i) the Scheduled Reinvestment Period Termination Date; provided that the Scheduled Reinvestment Period Termination Date shall be included as part of the Reinvestment Period; (ii) the end of the Due Period related to the Payment Date immediately following the date on which the Asset Manager, in its sole discretion, notifies the Trustee that, in light of the composition of Underlying Assets, general market conditions and other factors, investment of Principal Proceeds in additional Underlying Assets within the foreseeable future would be either impractical or not beneficial to the holders of the Subordinated Notes; (iii) the end of the Due Period related to the Payment Date on which the entire Aggregate Outstanding Amount of the Rated Notes are redeemed; and (iv) the termination of the Reinvestment Period pursuant to Section 5.2(a) as a result of an acceleration of the Notes following the occurrence and during the continuance of an Event of Default. If the Reinvestment Period is terminated pursuant to clause (ii) above, the Reinvestment Period can be reinstated with the consent of the Asset Manager if no other event that would terminate the Reinvestment Period has occurred and is continuing and if the Reinvestment Period is terminated pursuant to clause (iv) above, the Reinvestment Period can be reinstated (w) with the consent of the Asset Manager, (x) if the acceleration has been rescinded, (y) if no other event that would terminate the Reinvestment Period has occurred and is continuing and (z) if the Default giving rise to such termination occurred as a result of an Event of Default under clause (c) of the definition thereof, with the consent of a Majority of the Controlling Class; provided, that in each case, written notice will be provided to the Rating Agency prior to any such reinstatement of the Reinvestment Period.

 

"Reinvestment Target Par Balance": An amount equal to the Effective Date Target Par Amount minus (i) the amount of any reduction in the Aggregate Outstanding Amount of the Notes through the payment of Principal Proceeds plus (ii) the aggregate amount of Principal Proceeds that result from the issuance of any Additional Notes under and in accordance with this Indenture (after giving effect to such issuance of Additional Notes).

 

"Relevant Governmental Body": The Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York (including, for the avoidance of doubt, the ARRC) or any successor thereto.

 

"Replacement Debt": The meaning specified in Section 9.1(c).

 

"Report Determination Date": The date as of which any Monthly Report is calculated.

 

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"Report Recipients": Collectively, Intex Solutions, Inc., Moody's Analytics, Inc., Bloomberg, LSEG LPC, Kanerai, Valitana, Semeris, Dealscribe, CreditFlux and KopenTech.

 

"Reporting Agent": An entity, other than the Collateral Administrator, that shall be appointed by the Issuer to prepare and/or make available certain reports pursuant to Article 7 of the Securitisation Regulations.

 

"Re-Priced Class": The meaning specified in Section 9.6(a).

 

"Re-Pricing": The meaning specified in Section 9.6(a).

 

"Re-Pricing Confirmation Notice": The meaning specified in Section 9.6(d).

 

"Re-Pricing Date": The meaning specified in Section 9.6(b).

 

"Re-Pricing Eligible Notes": The Class B Notes.

 

"Re-Pricing Intermediary": The meaning specified in Section 9.6(a).

 

"Re-Pricing Notice": The meaning specified in Section 9.6(b).

 

"Re-Pricing Rate": The meaning specified in Section 9.6(b).

 

"Re-Pricing Redemption Price": The meaning specified in Section 9.6(b).

 

"Repurchase and Substitution Limit": The meaning specified in Section 12.4(b).

 

"Repurchased Notes": Any Notes repurchased by the Issuer pursuant to Section 7.20.

 

"Required Hedge Counterparty Ratings": With respect to any Hedge Counterparty or any Hedge Guarantor a long-term rating of at least "A" and a short-term rating of at least "A-1" by S&P or, if it does not have both of these specified ratings by S&P, then a long-term rating of at least "A+" by S&P and in each case such required rating is not then on credit watch for possible downgrade by S&P, except to the extent that S&P provides Rating Agency Confirmation that one or more of such ratings from S&P are not required to be satisfied.

 

"Resolution": A duly passed resolution or written consent of the manager and member of the Issuer.

 

"Restricted Trading Period": Each day during which, both: (A)(x) the S&P rating of the Class A Notes is one or more subcategories below its initial expected rating thereof as set forth in Section 3.1(h) or the S&P rating of the Class A Notes has been withdrawn and not reinstated or (y) the S&P rating of the Class B Notes is two or more subcategories below their applicable initial expected rating as set forth in Section 3.1(h) or the S&P rating of the Class B Notes has been withdrawn and not reinstated, and (B) after giving effect to any sale and reinvestment of the relevant Underlying Assets, the Aggregate Principal Amount of all Underlying Assets (excluding the Underlying Asset being sold) and all Eligible Investments constituting Principal Proceeds (including, without duplication, the net proceeds of such sale) is less than the Reinvestment Target Par Balance, or any Coverage Test is not satisfied; provided that such period will not be a Restricted Trading Period (w) if, after giving effect to any sale and reinvestment of the relevant Underlying Assets, (1) the Aggregate Principal Amount of all Underlying Assets (excluding the Underlying Asset being sold) and all Eligible Investments constituting Principal Proceeds (including, without duplication, the net proceeds of such sale) will be at least equal to the Reinvestment Target Par Balance and (2) each Coverage Test is satisfied, (x) so long as the S&P rating of any Class of Notes has not been further downgraded, withdrawn or put on watch, upon the direction of the Holders of at least a Majority of the Controlling Class or (y) if the ratings on any Class of Notes are withdrawn because such Class of Notes has been paid in full. For the purpose of making any determination pursuant to clause (B) of the foregoing definition, any Defaulted Obligation that has been held by the Issuer for longer than three years after its default date shall be deemed to have a Principal Balance of zero.

 

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"Restructured Loan": A bank loan purchased by the Issuer in connection with the workout, restructuring or a related scheme to mitigate losses with respect to an Underlying Asset, which, in the Asset Manager's judgment exercised in accordance with the Asset Management Agreement, is necessary to collect an increased recovery value of the related Underlying Asset, and for the avoidance of doubt is not a bond or equity security; provided that, the Aggregate Principal Amount of Restructured Loans and Workout Loans may not exceed 5.0% of the Maximum Investment Amount at any time; provided, further that, on any Business Day as of which such Restructured Loan satisfies the definition of "Underlying Asset" (disregarding the exceptions for Workout Loans), the Asset Manager may designate (by written notice to the Issuer, the Trustee and the Collateral Administrator) such Restructured Loan as an "Underlying Asset". For the avoidance of doubt, any Restructured Loan designated as an Underlying Asset in accordance with the terms of this definition (x) shall constitute an Underlying Asset (and not a Restructured Loan), in each case, following such designation and (y) shall not be permitted to be re-designated as a Restructured Loan. The acquisition of Restructured Loans will not be required to satisfy the portfolio Criteria.

 

"Retention Basis Amount": On any date of determination, an amount equal to the Aggregate Principal Amount on such date with the following adjustments: (i) Defaulted Obligations shall be included in the Aggregate Principal Amount and the Principal Balances thereof shall be deemed to equal their respective outstanding principal amounts, and (ii) any Equity Security owned by the Issuer shall be included in the Aggregate Principal Amount with a Principal Balance determined as follows: (a) in the case of a debt obligation or other debt security, the principal amount outstanding of such obligation or security, (b) in the case of an equity security received upon a "debt for equity swap" in relation to a restructuring or other similar event, the principal amount outstanding of the debt which was swapped for the equity security and (c) in the case of any other equity security, the nominal value thereof as determined by the Asset Manager.

 

"Retention Deficiency": The failure of the Retention Holder to hold the EU/UK Retention Interest at the relevant measurement time.

 

"Retention Holder": ARCC, in its respective capacity as retention holder with respect to the EU/UK Retention Requirements and the U.S. Risk Retention Rules.

 

"Retention of Net Economic Interest Letter": The letter relating to the retention of material net economic interest in the securitization from the Retention Holder and addressed to the Issuer, the Trustee and the Initial Purchaser.

 

"Revolving Credit Facility": A loan which provides a borrower with a line of credit against which one or more borrowings may be made up to the stated principal amount of such facility and which provides that such borrowed amount may be repaid and re-borrowed from time to time; provided, that for purposes of the Portfolio Criteria, the principal balance of a Revolving Credit Facility, as of any date of determination, refers to the sum of (i) the outstanding funded amount of such Revolving Credit Facility and (ii) the unfunded portion of such facility.

 

"Rule 144A": Rule 144A under the Securities Act.

 

"Rule 144A Global Note": One or more permanent global notes for each Class of Notes in definitive, fully registered form without interest coupons.

 

"Rule 144A Information": Such information as is specified pursuant to Section (d)(4) of Rule 144A (or any successor provision thereto).

 

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"Rule 17g-5": Rule 17g-5 under the Exchange Act.

 

"Rule 17g-5 Procedures": The meaning specified in Section 14.4(b).

 

"S&P" or "Standard & Poor's": S&P Global Ratings, an S&P Global business, and any successor or successors thereto.

 

"S&P Additional Current Pay Criteria": Criteria satisfied with respect to any Underlying Asset (other than a DIP Loan) if either (i)(A) the issuer of such Underlying Asset has made a Distressed Exchange Offer and such Underlying Asset is subject to the Distressed Exchange Offer or ranks equal to or higher in priority than the obligation subject to the Distressed Exchange Offer, (B) in the case of a Distressed Exchange Offer that is a repurchase of debt for Cash, the repurchased debt will be extinguished and (C) the Issuer does not hold any obligation of the issuer making the Distressed Exchange Offer that ranks lower in priority than the obligation subject to the Distressed Exchange Offer, or (ii) such Underlying Asset has a Current Market Value of at least 80% of its par value.

 

"S&P Collateral Value": As of any date of determination, with respect to any Defaulted Obligation, Deferred Interest Asset, Workout Loan, Restructured Loan and Current Pay Obligation, the lesser of (a) the Standard & Poor's Recovery Amount of such Defaulted Obligation, Deferred Interest Asset, Workout Loan, Restructured Loan or Current Pay Obligation, respectively, as of the relevant date of determination and (b) the Principal Balance of such Defaulted Obligation, such Deferred Interest Asset, such Workout Loan, such Restructured Loan or such Current Pay Obligation as of such date multiplied by the Current Market Value Percentage thereof as of the most recent Measurement Date.

 

"S&P Recovery Rate": The meaning specified in Schedule F.

 

"Scheduled Distribution": With respect to any Pledged Obligation for each Due Date, the Distribution scheduled on such Due Date, determined in accordance with the assumptions specified in Section 1.2.

 

"Scheduled Reinvestment Period Termination Date": The Payment Date in April 2028.

 

"SEC": The United States Securities and Exchange Commission and any successor thereto.

 

"Second Lien Loan": A Loan that is a First-Lien Last-Out Loan or that (i) is not (and by its terms is not permitted to become) subordinate in right of payment to any other debt for borrowed money incurred by the obligor of the Loan, other than a Senior Secured Loan or a Super-Priority Revolving Facility, and (ii) is secured by a valid and perfected security interest or lien on specified collateral (such collateral, together with any other pledged assets, having a value (as reasonably determined by the Asset Manager at the time of acquisition, which determination will not be questioned based on subsequent events) equal to or greater than the principal balance of the Loan) securing the obligor's obligations under the Loan, which security interest or lien is not subordinate to the security interest or lien securing any other debt for borrowed money other than a Senior Secured Loan or a Super-Priority Revolving Facility.

 

"Secured Obligations": The meaning specified in the Granting Clause.

 

"Secured Parties": The Bank and its Affiliates (in all of their capacities hereunder and the other Transaction Documents), the Intermediary, the Holders of the Rated Notes, the Asset Manager, the Hedge Counterparties and the Collateral Administrator. The Holders of Subordinated Notes will not be Secured Parties under this Indenture.

 

"Securities Act": The United States Securities Act of 1933, as amended.

 

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"Securitisation Regulations": Each of the EU Securitisation Regulation and the UK Securitisation Regulation.

 

"Selling Institution": Any institution from which a Participation is acquired by the Issuer.

 

"Selling Institution Defaulted Participation": A participation interest in a loan or other debt obligation (other than a Defaulted Participation Obligation) with respect to which the Selling Institution has defaulted in any material respect in the performance of any of its payment obligations under the related participation agreement.

 

"Senior Administrative Expenses Cap": An amount equal to (i) an annual rate (prorated for the related Interest Accrual Period on the basis of a 360-day year and the actual number of days elapsed) of 0.0225% of the Aggregate Principal Amount of the Collateral Portfolio, measured as of the first day of the Due Period preceding such Payment Date plus (ii) $225,000 (per annum) (prorated for the related Due Period on the basis of a 360-day year consisting of twelve 30-day months) or, with respect to this clause (ii), if an Event of Default has occurred and is continuing, such higher amount as may be agreed between the Trustee and a Majority of the Controlling Class (and as notified by the Asset Manager to the Rating Agency in writing). The Senior Administrative Expenses Cap shall be computed on the basis of the actual number of days elapsed in the applicable period divided by 360.

 

"Senior Asset Management Fee": The Senior Asset Management Fee as defined in the Asset Management Agreement.

 

"Senior Secured Floating Rate Note": Any dollar-denominated senior secured note issued pursuant to an indenture by a corporation, limited liability company, partnership or trust that (i) has a stated coupon that bears a floating rate of interest and (ii) is secured by a valid first priority perfected security interest or lien on specified collateral securing the obligor's obligations under the note, which security interest is subject to customary liens.

 

"Senior Secured Loan": Any assignment of or Participation in a Loan that: (a) is not (and cannot by its terms become) subordinate in right of payment to any other debt for borrowed money incurred by the obligor of the Loan (subject to customary exceptions for Loans secured by a first-priority perfected security interest, including for Super-Priority Revolving Facilities); (b) is secured by a valid first-priority perfected security interest or lien in, to or on specified collateral securing the obligor's obligations under the Loan (subject to customary exceptions for permitted liens, including liens securing Super-Priority Revolving Facilities) and (c) the value of the collateral securing the Loan at the time of acquisition together with other attributes of the obligor (including, without limitation, its general financial condition, ability to generate cash flow available for debt service and other demands for that cash flow) is adequate (in the commercially reasonable judgment of the Asset Manager) to repay the Loan in accordance with its terms and to repay all other Loans of equal or greater seniority secured by a first lien or security interest in the same collateral.

 

"Senior Unsecured Loan": Any unsecured Loan that is not subordinated to any other unsecured indebtedness of the borrower.

 

"SIFMA Website": The internet website of the Securities Industry and Financial Markets Association currently located at https://www.sifma.ord/resources/general/holidayschedule, or such successor website as identified by the Asset Manager to the Trustee and calculation agent.

 

"Similar Law": Any federal, state, local, non-U.S. or other laws or regulations that are similar to Section 406 of ERISA or Section 4975 of the Code.

 

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"SOFR": With respect to any day, the secured overnight financing rate published for such day by the Federal Reserve Bank of New York, as the administrator of the benchmark, (or a successor administrator) on the Federal Reserve Bank of New York's Website.

 

"Special Amortization": The meaning specified in Section 9.5(c).

 

"Special Amortization Amount": The amount designated by the Asset Manager, in its sole discretion, to effect a Special Amortization.

 

"Special Payment Date": The meaning specified in Section 2.7(g).

 

"Special Record Date": The meaning specified in Section 2.7(g).

 

"Specified Amendment": With respect to any Ares Collateral Obligation, any amendment, waiver or modification which would:

 

(a)            modify the amortization schedule with respect to such Ares Collateral Obligation in a manner that (i) reduces the dollar amount of any Scheduled Distribution by more than the greater of (x) 25% and (y) U.S.$250,000, (ii) postpones any Scheduled Distribution by more than two payment periods or (iii) causes the Weighted Average Life of the applicable Ares Collateral Obligation to increase by more than 25%;

 

(b)            reduce or increase the cash interest rate payable by the obligor thereunder by more than 100 basis points (excluding any increase in an interest rate arising by operation of a default or penalty interest clause under an Ares Collateral Obligation or as a result of an increase in the interest rate index for any reason other than such amendment, waiver or modification);

 

(c)            extend the stated maturity date of such Ares Collateral Obligation by more than 24 months or beyond the Stated Maturity;

 

(d)            contractually or structurally subordinate such Ares Collateral Obligation 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) on any of the underlying collateral securing such Ares Collateral Obligation;

 

(e)            release any party from its obligations under such Ares Collateral Obligation, if such release would have a material adverse effect on the Ares Collateral Obligation; or

 

(f)            reduce the principal amount of the applicable Ares Collateral Obligation.

 

"Specified Equity Securities": Any Equity Securities (including any Margin Stock) received (or acquired with amounts permitted to be used in accordance with the definition of "Permitted Use" and/ or amounts on deposit in the Interest Collection Account as set forth in Section 12.6(a)(i)) in connection with the workout, restructuring or similar transaction to mitigate losses with respect to an Underlying Asset. The acquisition of Specified Equity Securities will not be required to satisfy the Portfolio Criteria.

 

"Spread Excess": As of any Measurement Date, a fraction (expressed as a percentage) the numerator of which is the product of (i) the greater of zero and the excess of the Weighted Average Spread for such Measurement Date over the minimum percentage necessary to pass the Weighted Average Spread Test on such Measurement Date and (ii) the Aggregate Principal Amount of all Floating Rate Underlying Assets (excluding any Defaulted Obligations) held by the Issuer as of such Measurement Date, and the denominator of which is the Aggregate Principal Amount of all Fixed Rate Underlying Assets (excluding any Defaulted Obligations) held by the Issuer as of such Measurement Date. In computing the Spread Excess on any Measurement Date, the Weighted Average Spread for the Measurement Date will be computed as if the Fixed Rate Excess were equal to zero.

 

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"STAMP": The Securities Transfer Agents Medallion Program.

 

"Standard & Poor's CDO Monitor": The dynamic, analytical computer model available to each of the Asset Manager and the Collateral Administrator at https://platform.ratings360.spglobal.com, with assumptions to be applied when running such computer model, for the purpose of estimating the default risk of the Underlying Assets, as the same may be modified by S&P from time to time.

 

For purposes of applying the Standard & Poor's CDO Monitor as of any Measurement Date to determine the Class Break-Even Default Rate, (A) the applicable weighted average spread will be the maximum of a spread between 3.0% and 8.0% (in increments of 0.05%) without exceeding the Weighted Average Spread as of such Measurement Date and (B) the applicable weighted average recovery rate with respect to the Highest Ranking Class (disregarding any Class of Notes that is not then rated by S&P) will be the maximum of a spread between 35% and 55% (in increments of 0.05%) without exceeding the Weighted Average S&P Recovery Rate as of such Measurement Date, in the case of either clause (A) or (B), as elected by the Asset Manager, or an applicable weighted average spread or applicable weighted average recovery rate confirmed by S&P. On and after the Effective Date, the Asset Manager will have the right to choose which S&P Recovery Rate Case will be applicable for purposes of both (i) the Standard & Poor's CDO Monitor and (ii) the Weighted Average S&P Recovery Rate Test; provided that each S&P Recovery Rate Case selected by the Asset Manager must be less than or equal to the Weighted Average S&P Recovery Rate at such time; provided, further, that the Weighted Average Spread selected by the Asset Manager for the purposes of the Standard & Poor's CDO Monitor Test must be less than or equal to the Weighted Average Spread as of such date. On ten Business Days' written notice to the Trustee and the Collateral Administrator (or such shorter time as may be acceptable to the Trustee and the Collateral Administrator), the Asset Manager may choose a different S&P Recovery Rate Case; provided that the Underlying Assets must be in compliance with such different S&P Recovery Rate Case and, solely for purposes of this proviso, if the Issuer has entered into a commitment to invest in an Underlying Asset, compliance with newly selected S&P Recovery Rate Case may be determined after giving effect to such investment. For the avoidance of doubt, in no event will the Asset Manager be obligated to choose different S&P Recovery Rate Cases. In the event the Asset Manager fails to choose S&P Recovery Rate Cases prior to the Effective Date, the following S&P Recovery Rate Case will apply:

 

Class  S&P Recovery Rate Case 
Class A Notes   44.00%
      
Class B Notes   50.00%

 

"Standard & Poor's CDO Monitor Test": A test that will be satisfied, on any Measurement Date on or after the Effective Date, with respect to the Highest Ranking Class (disregarding any Class of Notes that is not then rated by S&P), following receipt by the Issuer, the Trustee and the Collateral Administrator of the Standard & Poor's CDO Monitor input files from S&P if, after giving effect to the acquisition of any additional Underlying Asset, as the case may be, the Class Default Differential of the Proposed Portfolio is positive. If the Class Default Differential of the Proposed Portfolio is greater than or equal to the corresponding Class Default Differential of the Current Portfolio, the Standard & Poor's CDO Monitor Test shall be considered to be improved or maintained. If so elected by the Asset Manager by written notice to the Issuer, the Collateral Administrator, the Trustee and S&P, the Standard & Poor's CDO Monitor Test and definitions applicable thereto shall instead be as set forth in Section 2 of Schedule F. An election to change from the use of this definition to those set forth in Section 2 of Schedule F (or, if the definitions in Section 2 of Schedule F were chosen to apply in connection with the Effective Date, to change to the Standard & Poor's CDO Monitor Test as defined in this paragraph) shall only be made once after the Effective Date.

 

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"Standard & Poor's Effective Date Adjustments": In connection with determining whether the Standard & Poor's CDO Monitor Test is satisfied in connection with the Effective Date, the following adjustment shall apply: (x) in calculating the Weighted Average Spread, the amounts determined pursuant to clause (i) of the Weighted Average Spread definition will be calculated without taking into account clause (iv) of the proviso in the definition of "Effective Spread" and (y) in calculating the Standard & Poor's CDO Monitor Adjusted BDR, Principal Proceeds will exclude amounts on deposit in the Unused Proceeds Account permitted to be designated as Interest Proceeds after the Effective Date and prior to the first Payment Date.

 

"Standard & Poor's Effective Date Deemed Rating Confirmation": A condition that is satisfied if (A)(x) the Standard & Poor's CDO Monitor Test is satisfied and (y) the Standard & Poor's Effective Date Adjustments have been made and (B) if by the Determination Date relating to the first Payment Date the Issuer delivers the Effective Date Accountants' Certificate to the Trustee and the Collateral Administrator and causes the Collateral Administrator to make available to S&P the Rating Agency Effective Date Report, and such Effective Date Accountants' Certificate and Rating Agency Effective Date Report confirm satisfaction of the Effective Date Condition.

 

"Standard & Poor's Industry Classification Group": Any of the industry categories established by S&P and set forth in Schedule B hereto, including any such modifications that may be made thereto or such additional categories that may be subsequently established by S&P and provided by the Asset Manager or S&P to the Trustee.

 

"Standard & Poor's Rating": The meaning specified in Schedule F hereto.

 

"Standard & Poor's Recovery Amount": With respect to any Underlying Asset which is a Defaulted Obligation, Workout Loan, Restructured Loan, Current Pay Obligation, a Deferred Interest Asset or a Closing Date Participation, the amount equal to the product of (i) the S&P Recovery Rate for such Underlying Asset for the Highest Ranking Class (disregarding any Class of Notes that is not then rated by S&P) and (ii) the principal balance of such Defaulted Obligation, Restructured Loan, Workout Loan, Current Pay Obligation, Deferred Interest Asset or Closing Date Participation.

 

"Stated Maturity": With respect to (a) any security or debt obligation other than a Note, the date specified in such security or debt obligation as the fixed date on which the final payment of principal of such security or debt obligation is due and payable or (b) the Notes, the Payment Date in April 2036 or, if such date is not a Business Day, the next following Business Day.

 

"Structured Finance Security": Any debt obligation secured directly by, or representing ownership of, a pool of consumer receivables, auto loans, auto leases, equipment leases, home or commercial mortgages, corporate debt or sovereign debt obligations, including collateralized bond obligations, collateralized loan obligations or any similar security or other asset backed security or similar investment or equipment trust certificate or trust certificate of the type generally considered to be a repackaged security.

 

"Subordinate Interests": The meaning specified in Section 13.1(a).

 

"Subordinated Asset Management Fee": The Subordinated Asset Management Fee as defined in the Asset Management Agreement.

 

"Subordinated Loan": A Loan that is (or by its terms is permitted to become) subordinate in right of payment to any other debt for borrowed money incurred by the obligor of such Loan.

 

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"Subordinated Notes": The Subordinated Notes issued pursuant to this Indenture (including any Additional Notes that are designated Subordinated Notes and issued pursuant to Section 2.11) and having the characteristics specified in Section 2.3.

 

"Substitute Collateral Obligation": The meaning specified in Section 12.4(b).

 

"Substitute Collateral Obligations Qualification Conditions": The meaning specified in Section 12.4(c).

 

"Substitution Event": The meaning specified in Section 12.4(a).

 

"Substitution Period": The meaning specified in Section 12.4(g).

 

"Supermajority": With respect to the Notes or any Class thereof, the Holders of more than 66-2/3% of the Aggregate Outstanding Amount of the Notes or such Class, as the case may be.

 

"Super-Priority Revolving Facility": With respect to a Loan, a senior secured revolving facility incurred by the obligor of such Loan that is prior in right of payment to such Loan; provided that the outstanding principal balance and unfunded commitments of such senior secured revolving facility does not exceed 20% of the sum of (x) the outstanding principal balance and unfunded commitments of such revolving facility, plus (y) the outstanding principal balance of the Loan, plus (z) the outstanding principal balance of any other debt for borrowed money incurred by such obligor that is pari passu with such Loan.

 

"Surrendered Notes": Any Notes or beneficial interest in Notes tendered by any Holder or beneficial owner (including the Asset Manager and its Affiliates), respectively, for cancellation by the Trustee without such Holder receiving any payment on the full principal amount outstanding at the time of such surrender (other than any Notes being refinanced in connection with a Refinancing).

 

"Synthetic Letter of Credit": Any letter of credit facility that requires a lender party thereto to fund in full its obligations thereunder, provided, that any such lender (a) shall have no further funding obligation thereunder and (b) shall have a right to be reimbursed or repaid by the borrower its pro rata share of any draws on a letter of credit issued thereunder.

 

"Synthetic Security": Any U.S. Dollar denominated swap transaction, LCDX, structured bond investment, credit linked note or other derivative investment purchased from, or entered into by the Issuer with a counterparty, which investment contains a probability of default, recovery upon default and expected loss characteristics closely correlated to a reference obligation, but which may provide for a different maturity, interest rate or other non-credit characteristics than such reference obligation.

 

"Tax Advantaged Jurisdiction": The Cayman Islands, Bermuda, the British Virgin Islands, the Channel Islands, the Netherlands Antilles or the Bahamas. Any other country may be designated a Tax Advantaged Jurisdiction based on a Rating Agency Confirmation.

 

"Tax Advice": Written advice from tax counsel of nationally recognized standing in the United States experienced in transactions of the type being addressed that (i) is based on facts provided to the person giving the advice relating to all relevant facts and circumstances of the Issuer and transaction and (ii) is intended by the person rendering the advice to be relied upon by the Issuer in determining whether to enter into the transaction.

 

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"Tax Event": An event that occurs if either (i)(A) one or more Underlying Assets that were not subject to withholding tax when the Issuer committed to purchase them have become subject to withholding tax or the rate of withholding has increased on one or more Underlying Assets that were subject to withholding tax when the Issuer committed to purchase them and (B) in any Interest Accrual Period, the aggregate of the payments subject to withholding tax on new withholding tax obligations and the increase in payments subject to withholding tax on increased rate withholding tax obligations, in each case to the extent not "grossed-up" (on an after-tax basis) by the related obligor, represent 5% or more of the aggregate amount of Interest Proceeds that have been received or that is expected to be received for such Interest Accrual Period or (ii) taxes, fees, assessments, or other similar charges (including any liability under Section 1446 of the Code or any comparable law) are imposed on the Issuer in an aggregate amount in any twelve-month period in excess of U.S.$2,000,000, other than any deduction or withholding for or on account of any tax with respect to any payment owing in respect of any obligation that at the time of acquisition, conversion, or exchange does not satisfy the requirements of a Underlying Asset.

 

"Temporary Global Note": Any Rated Note sold outside the United States to non-U.S. Persons in reliance on Regulation S and issued in the form of a temporary global note in definitive, fully registered form without interest coupons.

 

"Term SOFR": For any Interest Accrual Period, the greater of (a) zero and (b) the Term SOFR Reference Rate for the Corresponding Tenor, as such rate is published by the Term SOFR Administrator; provided that Term SOFR for the first Interest Accrual Period shall be determined by interpolating linearly between the rate for the next shorter period of time for which rates are available and the rate for the next longer period of time for which rates are available; provided, further, that if as of 5:00 p.m. (New York City time) on any Interest Determination Date the Term SOFR Reference Rate for the Corresponding Tenor has not been published by the Term SOFR Administrator, then Term SOFR will be (x) the Term SOFR Reference Rate for the Corresponding Tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for the Corresponding Tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than five Business Days prior to such Interest Determination Date or (y) if the Term SOFR Reference Rate cannot be determined in accordance with clause (x) of this proviso, Term SOFR shall be the Term SOFR Reference Rate as determined in the previous Interest Determination Date.

 

"Term SOFR Administrator": CME Group Benchmark Administration Limited, or a successor administrator of the Term SOFR Reference Rate selected by the Asset Manager with notice to the Trustee and the Collateral Administrator.

 

"Term SOFR Reference Rate": The forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.

 

"Third Party Credit Exposure": As of any date of determination, the Principal Balance of each Underlying Asset that consists of a Participation (other than Closing Date Participations).

 

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"Third Party Credit Exposure Limits": The limits that shall be satisfied if the Third Party Credit Exposure of all counterparties that have the S&P credit rating set forth below does not exceed the "Aggregate Percentage Limit" set forth below for such S&P credit rating, and the Third Party Credit Exposure of any single counterparty that has the S&P credit rating set forth below does not exceed the "Individual Percentage Limit" set forth below for such S&P credit rating:

 

S&P's credit rating of Selling
Institution
  Aggregate Percentage Limit   Individual Percentage Limit 
AAA   20%   20%
AA+   10%   10%
AA   10%   10%
AA-   10%   10%
A+   5%   5%
A   5%   5%
A- or below   0%   0%

 

provided that a Selling Institution having an S&P credit rating of "A" must also have a short-term S&P rating of "A-1" otherwise its Aggregate Percentage Limit and Individual Percentage Limit shall be 0%.

 

"Total Redemption Amount": The meaning specified in Section 9.1(b)(i).

 

"Trade Date": The meaning specified in Section 1.2(f).

 

"Trading Plan": The meaning specified in Section 12.2(m).

 

"Transaction Documents": This Indenture, the Asset Management Agreement, the Account Agreement, the Contribution Agreement, the Master Purchase and Sale Agreement, the Master Participation Agreement, the Multilateral Assignment Agreement, the Collateral Administration Agreement, the Purchase Agreement and the Retention of Net Economic Interest Letter, each as may be amended, supplemented or modified from time to time.

 

"Transaction Party": Each of the Issuer, the Asset Manager, the Retention Holder, the Initial Purchaser, the Bank (in each of its capacities under the Transaction Documents) and the Intermediary.

 

"Transfer Agent": The Person or Persons, which may be the Issuer, authorized by the Issuer to exchange or register the transfer of Notes.

 

"Transfer Certificate": A duly executed transfer certificate substantially in the form of Exhibit B or Exhibit C hereto, as applicable.

 

Transfer-Restricted Notes”: The meaning specified in Section 2.12(i).

 

"Transfer Deposit Amount": On any date of determination with respect to any Ares Collateral Obligation, an amount equal to the sum of the outstanding principal balance of such Ares Collateral Obligation, together with accrued interest thereon through such date of determination.

 

"Transparency Reports": The meaning specified in the Collateral Administration Agreement.

 

"Treasury": The United States Department of Treasury.

 

"Trustee": U.S. Bank Trust Company, National Association, a national banking association with trust powers organized under the laws of the United States, in its capacity as trustee for the Secured Parties, unless a successor Person shall have become the Trustee pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Person.

 

"Trust Officer": When used with respect to the Trustee, the Intermediary and the Bank (in each of its capacities under the Transaction Documents), any officer within the Corporate Trust Office, including any director, vice president, assistant vice president, associate or other officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers, or to whom any corporate trust matter is referred at the Corporate Trust Office because of his or her knowledge of and familiarity with the particular subject and having responsibility for the administration of this Indenture.

 

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"UCC": The Uniform Commercial Code as in effect in the State of New York, as amended from time to time.

 

"UK Securitisation Regulation": Regulation (EU) 2017/2402, as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018, and as amended by the Securitisation (Amendment) (EU Exit) Regulations 2019, as amended, varied or substituted from time to time, including (i) any technical standards thereunder as may be effective from time to time and (ii) any guidance relating thereto as may from time to time be published by the United Kingdom Financial Conduct Authority and/or the United Kingdom Prudential Regulation Authority (or, in each case, any successor thereto).

 

"UK Transparency Requirements": The information required under Article 7 of the UK Securitisation Regulation in accordance with the frequency and modalities provided for thereunder.

 

"Unadjusted Benchmark Replacement": The Benchmark Replacement excluding the applicable Benchmark Replacement Adjustment.

 

"Uncertificated Security": The meaning specified in Article 8 of the UCC.

 

"Underlying Asset": Any asset that, as of the date of its acquisition by the Issuer (or, if applicable, as of the date that a binding commitment with respect to the acquisition of such asset is entered into), satisfies each of clauses (a) through (dd) below.

 

(a)            it is a Loan;

 

(b)            it is Dollar-denominated and is not convertible into, or payable in, any other currency;

 

(c)            (x) it is an asset with a Standard & Poor's Rating no lower than "CCC-"; provided that, in the case of a DIP Loan, such asset had a Standard & Poor's Rating before it was withdrawn, in the case of a point-in-time rating assigned within the 12 months preceding the date of such purchase or acquisition, (y) such Standard & Poor's Rating does not include the subscript "f", "p", "t" or "sf" and (z) in the case of an asset with a Moody's rating, such Moody's rating does not include the subscript "sf";

 

(d)            it is not a Defaulted Obligation, a Credit Risk Obligation, a Zero Coupon Bond, a bond, a Senior Secured Floating Rate Note, a bridge loan, a commodity forward contract, an Equity Security or a Deferred Interest Asset;

 

(e)            it is not issued by a sovereign, or by a corporate issuer located in a country, that on the date on which it is acquired by the Issuer imposes foreign exchange controls that effectively limit the availability or use of Dollars to make when due the scheduled payments of principal thereof and interest thereon;

 

(f)            it is not (i) the subject of an Offer of exchange, or tender by its issuer, for Cash, securities or any other type of consideration other than (x) a Permitted Offer or (y) an exchange offer in which a security that is not registered under the Securities Act is exchanged for a security that has substantially identical terms (except for transfer restrictions) but is registered under the Securities Act or a security that would otherwise qualify for acquisition under the Portfolio Criteria described herein or (ii) by its terms convertible into or exchangeable into an Equity Security, but it may have attached warrants;

 

(g)            it is not an asset with an interest rate which steps down or up as a function of time;

 

(h)            it is not a PIK Loan;

 

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(i)            it is Registered;

 

(j)            it is an asset the payments on which are not subject to withholding tax (except for withholding taxes which may be payable with respect to commitment fees, letter of credit fees and other similar fees associated with Underlying Assets constituting Revolving Credit Facilities and Delayed-Draw Loans) if such asset is owned by the Issuer unless "gross-up" payments are made to the Issuer that cover the full amount of any such withholding taxes;

 

(k)           it is an asset, the acquisition of which will not cause the Issuer or the pool of Collateral to be required to register as an investment company under the Investment Company Act;

 

(l)            it is an asset that does not require any commitment from the Issuer to provide further funds to the obligor thereon under the agreement or other instrument pursuant to which such Underlying Asset was created, other than a Revolving Credit Facility or a Delayed-Draw Loan;

 

(m)          it is not a lease, including any Finance Lease;

 

(n)           it is an obligation of a Non-Emerging Market Obligor or an entity organized in the U.S., Canada, a Group I Country, a Group II Country or a Group III Country;

 

(o)           it provides for payment of a fixed principal amount at no less than par, together with interest thereon, in Cash no later than its stated maturity and does not by its terms provide for earlier amortization or prepayment at less than par;

 

(p)           it is not convertible into an Equity Security at the option of the issuer thereof or any other Person other than the Issuer;

 

(q)           it is not a Structured Finance Security or a Synthetic Security and is not, and does not constitute or support, a letter of credit (other than, for the avoidance of doubt, any letter of credit sub-facility that is part of a Revolving Credit Facility where the Issuer does not issue such letter of credit), including, but not limited to, a Synthetic Letter of Credit;

 

(r)            it is property of a type that is subject to Article 8 or 9 of the UCC;

 

(s)           it is not Margin Stock;

 

(t)            it is not an obligation or security of an entity organized in a Tax Advantaged Jurisdiction;

 

(u)           it is not acquired by the Issuer at a price lower than 65.0% of par; provided that no minimum price shall apply to any action taken or asset acquired solely with Interest Proceeds or with the proceeds of any Permitted Use;

 

(v)           it is not subject to substantial non-credit risk as determined by the Asset Manager;

 

(w)          it is eligible to be sold, assigned or participated to the Issuer and pledged to the Trustee;

 

(x)           it is not an obligation of a Controlled Portfolio Company;

 

(y)           it is not issued by an obligor with an EBITDA of less than $5,000,000 at the time of acquisition;

 

(z)           it is not a Long-Dated Asset;

 

(aa)         it is not an ESG Prohibited Obligation;

 

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(bb)        it is not issued by an obligor Domiciled in Greece, Italy, Portugal or Spain;

 

(cc)         it is not a Recurring Revenue Loan; and

 

(dd)        it is not a Project Finance Loan.

 

An obligation which is exchanged for, or results from an amendment, modification or waiver of the terms of, an Underlying Asset pursuant to an Offer shall be deemed to be delivered for purposes hereof as of the effective date of such exchange, amendment, modification or waiver.

 

For the avoidance of doubt, (i) a repayment of an Underlying Asset in circumstances whereby the redemption proceeds are rolled as consideration for a new obligation shall be treated as the acquisition by the Issuer of a new Underlying Asset and not as the acquisition of an asset received in a workout, restructuring or similar transaction, (ii) any Workout Loan designated as an Underlying Asset by the Asset Manager in accordance with the terms specified in the definition of "Workout Loan" shall constitute an Underlying Asset (and not a Workout Loan) following such designation and (iii) any Restructured Loan designated as an Underlying Asset by the Asset Manager in accordance with the terms specified in the definition of "Restructured Loan" shall constitute an Underlying Asset (and not a Restructured Loan) following such designation.

 

"Underlying Asset Benchmark": With respect to any Underlying Asset, the London interbank offered rate or the Term SOFR Reference Rate (or other applicable benchmark rate) determined in accordance with the related Underlying Instrument.

 

"Underlying Instruments": The indenture, credit agreement, assignment agreement, participation agreement, pooling and servicing agreement, trust agreement, instrument or other agreement pursuant to which an Underlying Asset has been issued or created and each other agreement that governs the terms of or secures the obligations represented by such Underlying Asset, or of which the holders of such Underlying Asset are the beneficiaries, and any instrument evidencing or constituting such Underlying Asset (in the case of any Underlying Asset evidenced by or in the form of an instrument).

 

"Unregistered Securities": Securities or debt obligations issued without registration under the Securities Act.

 

"Unsaleable Asset": (a) A Defaulted Obligation, Equity Security, obligation received in connection with an Offer, in a restructuring or plan of reorganization with respect to the obligor, or other exchange or any other security or debt obligation that is part of the Collateral, in respect of which the Issuer has not received a payment in Cash during the preceding 12 months or (b) any Pledged Obligation identified in the certificate of the Asset Manager as having a Current Market Value of less than $1,000, in each case of clauses (a) and (b) with respect to which the Asset Manager certifies to the Trustee that (x) it has made commercially reasonable efforts to dispose of such Pledged Obligation for at least 90 days and (y) in its commercially reasonable business judgment such Pledged Obligation is not expected to be saleable for the foreseeable future.

 

"Unscheduled Principal Payments": All Principal Payments received as a result of prepayments, redemptions, exchange offers, tender offers or other unscheduled payments (but not sales) with respect to an Underlying Asset; provided, that the term "Unscheduled Principal Payments" shall also include any amounts transferred from the Variable Funding Account to the Principal Collection Account for treatment as Unscheduled Principal Payments upon the termination or reduction of the Issuer's funding commitment with respect to a Delayed-Draw Loan or a Revolving Credit Facility.

 

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"Unused Proceeds": That portion of the net proceeds on the Closing Date that was not (i) deposited into the Expense Reserve Account or the Variable Funding Account on the Closing Date, (ii) used to pay the purchase price of the Underlying Assets acquired on or prior to the Closing Date or (iii) used to repay financing incurred by the Issuer prior to the Closing Date in connection with the acquisition of the Collateral, plus, on and after the Determination Date relating to the first Payment Date following the Closing Date, all funds transferred from the Expense Reserve Account to the Unused Proceeds Account or the Interest Reserve Account.

 

"Unused Proceeds Account": The account established pursuant to Section 10.1(b) and described in Section 10.3(b).

 

"U.S. Government Securities Business Day": Any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities as indicated on the SIFMA Website.

 

"U.S. Person": The meaning specified under Regulation S.

 

"U.S. Risk Retention Rules": Any requirement under Section 15G of the Exchange Act and the applicable rules and regulations.

 

"U.S. Tax Person": The meaning specified for "United States person" in section 7701(a)(30) of the Code.

 

"Variable Funding Account": The account established by the Trustee pursuant to Section 10.1(b) and described in Section 10.3(d).

 

"Variable Funding Reserve Amount": An amount (not less than zero) equal to the sum of the aggregate undrawn and outstanding commitment amounts under each Revolving Credit Facility and Delayed-Draw Loan (including, for the avoidance of doubt, any Workout Loan that is a Revolving Credit Facility or Delayed-Draw Loan).

 

"Volcker Rule": Section 13 of the Bank Holding Company Act of 1956, as amended, and any applicable implementing regulations.

 

"Weighted Average Coupon": As of any Measurement Date will equal a fraction (expressed as a percentage) obtained by (i) multiplying the Principal Balance of each Fixed Rate Underlying Asset held by the Issuer as of such Measurement Date by the current per annum rate at which it provides payment of interest in cash, (ii) summing the amounts determined pursuant to clause (i), (iii) dividing the sum determined pursuant to clause (ii) by the Aggregate Principal Amount of all Fixed Rate Underlying Assets held by the Issuer as of such Measurement Date and (iv) if the result obtained in clause (iii) is less than the minimum percentage necessary to pass the Weighted Average Coupon Test, adding to such sum the amount of the Spread Excess, if any, as of such Measurement Date.

 

"Weighted Average Coupon Test": A test that will be satisfied as of any Measurement Date if the Weighted Average Coupon of the Fixed Rate Underlying Assets is equal to or greater than 6.50%.

 

"Weighted Average Life": As of any Measurement Date, the number obtained by (i) for each Underlying Asset (other than Defaulted Obligations), multiplying each Scheduled Distribution of principal by the number of years (rounded to the nearest hundredth) from the Measurement Date until such Scheduled Distribution is scheduled to be paid; (ii) summing all of the products calculated pursuant to clause (i); and (iii) dividing the sum calculated pursuant to clause (ii) by the sum of all Scheduled Distributions of principal due on all the Underlying Assets (excluding Defaulted Obligations) as of such Measurement Date.

 

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"Weighted Average Life Test": A test satisfied, as of any Measurement Date, if the Weighted Average Life is no higher than the relevant weighted average life specified in the table below for the Closing Date or the Payment Date immediately preceding such Measurement Date:

 

Payment Date Falling In
(or the Closing Date)
Maximum Weighted Average
Life
Closing Date 8.00
October 2024 7.50
January 2025 7.25
April 2025 7.00
July 2025 6.75
October 2025 6.50
January 2026 6.25
April 2026 6.00
July 2026 5.75
October 2026 5.50
January 2027 5.25
April 2027 5.00
July 2027 4.75
October 2027 4.50
January 2028 4.25
April 2028 4.00
July 2028 3.75
October 2028 3.50
January 2029 3.25
April 2029 3.00
July 2029 2.75
October 2029 2.50
January 2030 2.25
April 2030 2.00
July 2030 1.75
October 2030 1.50
January 2031 1.25
April 2031 1.00
July 2031 0.75
October 2031 0.50
January 2032 0.25

 

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Payment Date Falling In
(or the Closing Date)
Maximum Weighted Average
Life
April 2032 0.00
July 2032 0.00
October 2032 0.00
January 2033 0.00
April 2033 and thereafter 0.00

 

"Weighted Average S&P Recovery Rate": As of any date of determination, with respect to the Highest Ranking Class (disregarding any Class of Notes that is not then rated by S&P) Outstanding, the fraction (expressed as a percentage) obtained by (a) summing the products obtained by multiplying (i) the Principal Balance of each Underlying Asset by (ii) the S&P Recovery Rate for such Underlying Asset, (b) dividing such sum by the Aggregate Principal Amount of all Underlying Assets and (c) rounding up to the nearest tenth of a percent.

 

"Weighted Average S&P Recovery Rate Test": With respect to the Highest Ranking Class (disregarding any Class of Notes that is not then rated by S&P) Outstanding, a test that will be satisfied as of any Measurement Date if the Weighted Average S&P Recovery Rate equals or exceeds the weighted average recovery rate chosen by the Asset Manager pursuant to Standard & Poor's CDO Monitor.

 

"Weighted Average Spread": As of any Measurement Date will equal a fraction (expressed as a percentage) obtained by (i) multiplying the Principal Balance of each Floating Rate Underlying Asset (and, in the case of any Revolving Credit Facility or Delayed-Draw Loan, the unfunded portion of the commitment thereunder) held by the Issuer as of such Measurement Date by its Effective Spread, (ii) summing the amounts determined pursuant to clause (i) plus the Aggregate Excess Funded Spread, (iii) dividing the sum determined pursuant to clause (ii) by the Aggregate Principal Amount of all Floating Rate Underlying Assets (and the unfunded portions of all Revolving Credit Facilities and Delayed-Draw Loans) held by the Issuer as of such Measurement Date, and (iv) if the result obtained in clause (iii) is less than the minimum percentage necessary to pass the Weighted Average Spread Test, adding to such sum the amount of the Fixed Rate Excess, if any, as of such Measurement Date; provided that solely for the purposes of the Standard & Poor's CDO Monitor and the Standard & Poor's CDO Monitor Test, the Weighted Average Spread shall be determined (A) using an Aggregate Excess Funded Spread deemed to be zero, (B) using a Fixed Rate Excess deemed to be zero and (C) calculating the quotient in clause (iii) using a divisor equal to the Aggregate Principal Amount of all Floating Rate Underlying Assets (and the unfunded portions of all Revolving Credit Facilities and Delayed-Draw Loans) held by the Issuer as of the applicable Measurement Date.

 

"Weighted Average Spread Test": A test that will be satisfied as of any Measurement Date if the Weighted Average Spread of the Floating Rate Underlying Assets as of such Measurement Date is equal to or greater than 2.00%.

 

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"Workout Loan": A Loan purchased by the Issuer in connection with the workout, restructuring or a related scheme to mitigate losses with respect to a related Defaulted Obligation or a related Credit Risk Obligation, as applicable, which Loan, (i) in the Asset Manager's judgment exercised in accordance with the Asset Management Agreement, is necessary to collect an increased recovery value of the related Defaulted Obligation or the related Credit Risk Obligation, as applicable, and (ii) is not a bond or any other security; provided that (a) a Workout Loan shall be required to satisfy the definition of "Underlying Asset" other than clauses (c) (except subclause (c)(y), to the extent such loan has a Standard & Poor's Rating, or subclause (c)(z), to the extent such loan has a Moody's rating), (d) (but solely to the extent that such clause (d) pertains to Defaulted Obligations or Credit Risk Obligations), (g), (h), (l), (u) and (z) thereof; (b) the Aggregate Principal Amount of Workout Loans and Restructured Loans may not exceed 5.0% of the Maximum Investment Amount at any time; (c) the Aggregate Principal Amount of Workout Loans related to any single obligor and its Affiliates may not exceed 1.0% of the Maximum Investment Amount; (d) Principal Proceeds may not be invested in Workout Loans unless the conditions set forth in Section 12.6(b) are satisfied; (e) such loan is senior or pari passu in right of payment to the corresponding Underlying Asset already held by the Issuer; and (f) on any Business Day as of which such Workout Loan satisfies the definition of "Underlying Asset" (without consideration of any exceptions provided in clause (a) above), the Asset Manager may designate (by written notice to the Issuer, the Trustee and the Collateral Administrator) such Workout Loan as an "Underlying Asset". For the avoidance of doubt, any Workout Loan designated as an Underlying Asset in accordance with the terms of this definition (x) shall constitute an Underlying Asset (and not a Workout Loan), in each case, following such designation and (y) shall not be permitted to be re-designated as a Workout Loan.

 

"Zero Coupon Bond": A loan or other debt security or instrument that, based on its terms at the time of determination, does not make periodic payments of interest.

 

Section 1.2         Assumptions as to Underlying Assets.

 

(a)            In connection with all calculations required to be made pursuant to this Indenture with respect to Scheduled Distributions on any Pledged Obligations, or any payments on any other assets included in the Collateral, and with respect to the income that can be earned on Scheduled Distributions on such Pledged Obligations and on any other amounts that may be received for deposit in the Collection Account, the provisions set forth in this Section 1.2 shall be applied.

 

(b)            All calculations with respect to Scheduled Distributions on the Pledged Obligations shall be made on the basis of information as to the terms of each such Pledged Obligation and upon report of payments, if any, received on such Pledged Obligation that are furnished by or on behalf of the issuer of or borrower with respect to such Pledged Obligation and, to the extent they are not manifestly in error, such information or report may be conclusively relied upon in making such calculations.

 

(c)            For each Due Period, the Scheduled Distribution on any Pledged Obligation (other than a Defaulted Obligation to the extent required to be treated as Principal Proceeds hereunder, any security that in accordance with its terms is making payments due thereon entirely "in kind" in lieu of Cash or other Collateral which is expressly assigned a Principal Balance of zero hereunder, in each case, which shall be assumed to have a Scheduled Distribution of zero) shall be the minimum amount, including coupon payments, accrued interest, scheduled Principal Payments, if any, by way of sinking fund payments which are assumed to be on a pro rata basis or other scheduled amortization of principal, return of principal, and redemption premium, if any, and the Cash pay interest portion of any Partial PIK Loan or Underlying Asset that is excluded from the definition of "Partial PIK Loan" by the second proviso thereto, assuming that any index applicable to any payments on a Pledged Obligation that is subject to change is not changed, that, if paid as scheduled, will be available in the Collection Account at the end of the Due Period net of withholding or similar taxes to be withheld from such payments (but taking into account gross-up payments in respect of such taxes).

 

(d)            Each Scheduled Distribution receivable with respect to a Pledged Obligation shall be assumed to be received on the applicable Due Date, and each such Scheduled Distribution shall be assumed to be immediately deposited into the Collection Account and, except as otherwise specified, to earn interest at the greater of (i) zero percent and (ii) Benchmark minus 0.25% per annum. All such funds shall be assumed to continue to earn interest until the date on which they are required to be available in the Collection Account for application, in accordance with the terms hereof, to payments of principal of or interest on the Notes or other amounts payable pursuant to this Indenture.

 

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(e)            If the Issuer has entered into a binding commitment to purchase an Underlying Asset during the Reinvestment Period but such purchase has not settled prior to the end of the Reinvestment Period, such Underlying Asset will be treated as having been purchased by the Issuer prior to the end of the Reinvestment Period for purposes of the Portfolio Criteria. Not later than the Business Day immediately preceding the end of the Reinvestment Period, (i) the Asset Manager shall deliver to the Trustee a schedule of Underlying Assets purchased by the Issuer with respect to which purchases the Trade Date has occurred but the settlement date has not yet occurred and (ii) shall certify to the Trustee that sufficient Principal Proceeds are available (including, for this purpose, cash on deposit in the Principal Collection Account, any scheduled or unscheduled Principal Payments that will be received by the Issuer from Underlying Assets with respect to which the related obligor has already delivered an irrevocable notice of repayment or which are required by the terms of the applicable Underlying Instruments, as well as any Principal Proceeds that will be received by the Issuer from the sale of Underlying Assets for which the Trade Date has already occurred but the settlement date has not yet occurred) to effect the settlement of such Underlying Assets.

 

(f)            All calculations and measurements required to be made and all reports that are to be prepared pursuant to this Indenture with respect to the Pledged Obligations shall be made on the basis of the trade confirmation date after the Issuer makes a binding commitment to purchase or sell an asset (the "Trade Date"), not the settlement date. For the avoidance of doubt, the following will apply:

 

(i)            if the Issuer has previously entered into a binding commitment to acquire an asset, the Issuer shall not be required to comply with any of the Portfolio Criteria on the settlement date of such acquisition if the Issuer complied with each of the Portfolio Criteria on the date on which the Issuer entered into such binding commitment; and

 

(ii)           for purposes of determining the Net Collateral Principal Balance as of any date, assets for which the Issuer (or the Asset Manager on behalf of the Issuer) has entered into a binding commitment with respect to the acquisition or disposition of such asset on or before any date of determination shall be included in the calculation of the Aggregate Principal Amount of the Underlying Assets.

 

(g)            For purposes of calculating the Coverage Tests:

 

(i)            Except as provided in clause (ii) below, the principal amount of the applicable Class of Notes required to be paid to cause any Coverage Test to be satisfied will be the amount that, if it had been paid in reduction of the principal amount of each Class of Notes being tested on the immediately preceding Payment Date, would have caused such test to be satisfied for the current Determination Date.

 

(ii)           Subject to available Interest Proceeds and Principal Proceeds, the principal amount of any Class of Notes subject to mandatory redemption on any Payment Date because the Overcollateralization Test is not satisfied as of the related Determination Date will be the amount that, if it were applied to make payments on such Class of Notes in accordance with the Note Payment Sequence on that Payment Date, would cause such test to be satisfied for the current Determination Date. These amounts will be determined by (a) calculating the amount of Interest Proceeds required for such payments in accordance with the Priority of Interest Payments assuming that any such amount would reduce the denominator of the Overcollateralization Ratio (but would not change the numerator); and (b) then calculating the amount of Principal Proceeds required for such payments in accordance with the Priority of Principal Payments (i) during the Reinvestment Period, assuming that such amount would reduce both the numerator and the denominator of the Overcollateralization Ratio and (ii) after the Reinvestment Period, assuming that (x) such amount would reduce both the numerator and the denominator of the Overcollateralization Ratio and (y) any Principal Proceeds that the Asset Manager has not designated for reinvestment have been applied in accordance with the Note Payment Sequence. For this purpose, calculation of the required amount of (a) Interest Proceeds will give effect to any principal payments to be made on the Rated Notes pursuant to a more senior priority level of the Priority of Interest Payments on that Payment Date and (b) Principal Proceeds will give effect to (i) Interest Proceeds that will be used to make principal payments on the Rated Notes in accordance with the Priority of Payments on that Payment Date and (ii) Principal Proceeds to be applied pursuant to a more senior priority level of the Priority of Principal Payments on that Payment Date.

 

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(h)            References in Section 11.1 to calculations made on a "pro forma basis" shall mean such calculations after giving effect to all payments, in accordance with the Priority of Payments described herein, that precede (in priority of payment) or include the clause in which such calculation is made.

 

(i)             Except where expressly referenced herein for inclusion in such calculations, Defaulted Obligations will not be included in the calculation of the Collateral Quality Tests. For the purposes of calculating compliance with clause (ix) of the Eligibility Criteria, Defaulted Obligations shall not be considered to have a Standard & Poor's Rating of "CCC+" or below. For purposes of determining the percentage of the Maximum Investment Amount of any component of the Eligibility Criteria, Defaulted Obligations will be treated as having a Principal Balance of zero.

 

(j)             Notwithstanding any other provision of this Indenture to the contrary, all monetary calculations under this Indenture shall be in U.S. Dollars.

 

(k)            To the extent there is, in the reasonable determination of an Authorized Officer of the Collateral Administrator, any ambiguity in the interpretation of any definition or term contained in this Indenture or to the extent more than one methodology can be used to make any of the determinations or calculations set forth herein (including with respect to Term SOFR or any other Benchmark), the Collateral Administrator shall request direction from the Asset Manager as to the interpretation and/or methodology to be used, and the Collateral Administrator shall follow such direction, and together with the Trustee, shall be entitled to conclusively rely thereon without any responsibility or liability therefor.

 

(l)             For purposes of calculating compliance with the Portfolio Criteria, solely at the discretion of the Asset Manager, any Eligible Investment representing Principal Proceeds received upon the maturity, redemption, sale or other disposition of any Underlying Asset shall be deemed to have the characteristics of such Underlying Asset until reinvested in an additional Underlying Asset. Such calculations shall be based upon the principal amount of such Underlying Asset, except in the case of Defaulted Obligations and Credit Risk Obligations, in which case the calculations will be based upon the Principal Proceeds received on the disposition or sale of such Defaulted Obligation or Credit Risk Obligation.

 

(m)           Any reference in this Indenture to an amount of the Trustee's or the Collateral Administrator's fees calculated with respect to a period at a per annum rate shall be computed on the basis of a 360-day year and the actual number of days elapsed during the related Interest Accrual Period and shall be based on the Maximum Investment Amount measured as of the last day of the Due Period relating to each Payment Date.

 

(n)            Any direction or Issuer Order required hereunder relating to the purchase, acquisition, sale, disposition, substitution or other transfer of Collateral may be in the form of a trade ticket, trade blotter, confirmation of trade, instruction to post or to commit to the trade, "SWIFT" message, message via Markit Loan Settlement Custodial Services (Markit CIDD) or similar instrument or document or other written instruction (including by e-mail or other electronic communication or file transfer protocol) from the Asset Manager on which the Trustee and the Intermediary may rely.

 

(o)            References in this Indenture to the Issuer's (or on its behalf, the Asset Manager's) "purchase" or "acquisition" of Underlying Asset include references to the Issuer's purchase, receipt by acquisition, receipt by contribution, making or origination of such Underlying Asset.

 

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(p)            All calculations required to be made and all reports that are to be prepared pursuant to this Indenture with respect to the Collateral will be made, unless otherwise agreed to by the Asset Manager, on the basis that any events that occur after 5:00 p.m. (New York time) shall be considered to have occurred on the following day.

 

(q)            Unless otherwise expressly set forth herein, any notice period or other deliverable period set forth herein may be shortened if the Person delivering such notice or other deliverables and each of the recipients thereof (other than the Rating Agency) consent to such shorter period; provided, that if the Rating Agency is a recipient thereof, it shall receive such notice or deliverable subject to the applicable period set forth therein.

 

(r)            All calculations including those related to Maturity Amendments, sales of Underlying Assets, the Portfolio Criteria and any other tests and percentage limitations that would be measured cumulatively from the Closing Date onward will be reset at zero on any future date of any Optional Redemption or Refinancing of the Rated Notes in whole.

 

(s)            Unless otherwise specified herein, any reference to the "purchase price" of a Closing Date Asset (including, without limitation, in the definitions of "Credit Improved Obligation," "Current Market Value," "Deep Discount Obligation," "Investment Criteria Adjusted Balance" and "Net Collateral Principal Balance") shall refer to the Fair Market Value of such asset, as of any date of determination.

 

Section 1.3         Rules of Construction.

 

(a)            All references in this Indenture to designated "Articles," "Sections," "Subsections" and other subdivisions are to the designated Articles, Sections, Subsections and other subdivisions of this Indenture.

 

(b)            The words "herein," "hereof," "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section, Subsection or other subdivision.

 

(c)            The term "including" shall mean "including without limitation."

 

(d)            The word "or" is always used inclusively herein (for example, the phrase "A or B" means "A or B or both," not "either A or B but not both"), unless used in an "either . . . or" construction.

 

(e)            The definitions of terms in Section 1.1 are equally applicable both to the singular and plural forms of such terms and to the masculine, feminine and neuter genders of such terms.

 

(f)             For the avoidance of doubt, any reference to the term "rating" shall not refer to the definition of "Standard & Poor's Rating," and the term "Standard & Poor's Rating" (and the provisions thereof) shall only apply where such terms are expressly used.

 

(g)            When used with respect to payments on the Subordinated Notes, the term "principal amount" shall mean amounts distributable to Holders of Subordinated Notes from Principal Proceeds, and the term "interest" shall mean Interest Proceeds distributable to Holders of Subordinated Notes in accordance with the Priority of Payments.

 

(h)            Except as otherwise specified herein or as the context may otherwise require: (i) references to an agreement or other document are to it as amended, supplemented, restated and otherwise modified from time to time and to any successor document (whether or not already so stated); (ii) references to a statute, regulation or other government rule are to it as amended from time to time and, as applicable, are to corresponding provisions of successor governmental rules (whether or not already so stated); and (iii) references to a Person are references to such Person's successors and assigns (whether or not already so stated).

 

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(i)            Any reference to "execute," "executed," "sign," "signed," "signature" or other like term hereunder shall include execution by electronic signature (including, without limitation, any .pdf file, .jpeg file, or any other electronic or image file, or any "electronic signature" as defined under the U.S. Electronic Signatures in Global and National Commerce Act or the New York Electronic Signatures and Records Act, which includes any electronic signature provided using Orbit, Adobe Fill & Sign, Adobe Sign, DocuSign, or any other similar platform identified by the Issuer and reasonably available at no undue burden or expense to the Trustee), except to the extent the Trustee requests otherwise. Any such electronic signatures shall be valid, effective and legally binding as if such electronic signatures were handwritten signatures and shall be deemed to have been duly and validly delivered for all purposes hereunder.

 

Article II
THE NOTES

 

Section 2.1         Forms Generally. The Notes and the Certificate of Authentication shall be in substantially the forms required by this Article, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon, as may be consistent herewith, determined by the Authorized Officers of the Issuer executing such Notes as evidenced by their execution of such Notes.

 

The Issuer may assign one or more CUSIPs or similar identifying numbers to Notes for administrative convenience or in connection with complying with FATCA.

 

Section 2.2         Forms of Notes and Certificate of Authentication.

 

(a)            The form of the Notes, including the Certificate of Authentication, shall be as set forth in Exhibit A, as applicable.

 

(b)            Rated Notes offered and sold on the Closing Date outside the United States to non-U.S. Persons in reliance on Regulation S that are also Qualified Purchasers will be issued in the form of Temporary Global Notes, and ERISA Restricted Notes in the form of Regulation S Global Notes, in each case duly executed by the Issuer and authenticated by the Trustee as hereinafter provided. On or after the 40th day after the later of the Closing Date and the commencement of the offering of the Notes (the "Exchange Date"), interests in a Temporary Global Note of any Class will be exchangeable for interests in a Regulation S Global Note of the same Class upon certification that the beneficial interests in such Temporary Global Note are owned by Persons who are not U.S. Persons that are also Qualified Purchasers. Upon the exchange of a Temporary Global Note for a Regulation S Global Note, the Regulation S Global Note will be deposited with the Trustee as custodian for the Depository and registered in the name of a nominee of the Depository for the account of Euroclear and Clearstream.

 

(c)            Except as provided in clause (d), Notes offered and sold to Qualified Institutional Buyers in reliance on Rule 144A will be issued initially in the form of a Rule 144A Global Note, duly executed by the Issuer and authenticated by the Trustee as hereinafter provided. Notes sold to purchasers that are Accredited Investors (including Institutional Accredited Investors) that are also Qualified Purchasers will be represented by Definitive Notes.

 

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(d)            Rated Notes will be represented by Global Notes. Subordinated Notes will be issued in the form of Definitive Notes, Rule 144A Global Notes and Regulation S Global Notes. Notwithstanding the foregoing:

 

(i)             No Benefit Plan Investor or Controlling Person (other than a Benefit Plan Investor or Controlling Person purchasing on the Closing Date who has provided a signed investor representation letter delivered to the Initial Purchaser in connection with such acquisition on the Closing Date) may hold Subordinated Notes in the form of a Regulation S Global Note.

 

(ii)            No Benefit Plan Investor, Controlling Person or Accredited Investor (including an Institutional Accredited Investor) (other than a Benefit Plan Investor or Controlling Person purchasing on the Closing Date who has provided a signed investor representation letter delivered to the Initial Purchaser in connection with such acquisition on the Closing Date) may hold Subordinated Notes in the form of a Rule 144A Global Note.

 

(e)            This Section 2.2(e) will apply only to Global Notes deposited with or on behalf of the Depository.

 

(i)            The Issuer shall execute and the Trustee shall, in accordance with this Section 2.2(e), authenticate and deliver initially one or more Global Notes per Class, as applicable, that (i) shall be registered in the name of the Depository for such Global Note or Global Notes or the nominee of such Depository and (ii) shall be delivered by the Trustee to such Depository or pursuant to such Depository's instructions or held by the Trustee, as custodian for the Depository.

 

(ii)            The aggregate principal amount of the Global Notes of a Class may from time to time be increased or decreased by adjustments made on the records of the Trustee or the Depository or its nominee, as the case may be, as hereinafter provided.

 

(iii)           Agent Members shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depository or under the Global Note, and the Depository may be treated by the Issuer, the Trustee, and any agent of the Issuer or the Trustee as the absolute owner of such Global Note for all purposes whatsoever (except to the extent otherwise provided herein). Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the Trustee, or any agent of the Issuer or the Trustee, from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Note.

 

(f)            Except as provided in Section 2.2(e) and Section 2.10, owners of beneficial interests in Global Notes shall not be entitled to receive physical delivery of Definitive Notes.

 

Section 2.3         Authorized Amount; Note Interest Rate; Stated Maturity; Denominations.

 

(a)            Subject to the provisions set forth below, the aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is limited to $701,600,000, except for (i) Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes pursuant to Section 2.5 or Section 2.6 of this Indenture, (ii) additional issuances of Notes pursuant to Section 2.11 and (iii) any Replacement Debt issued in connection with a Refinancing.

 

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Such Notes will be divided into the Classes having designations, original principal amounts, Note Interest Rates and Stated Maturities as follows:

 

   Original Principal
Amount ($)
  

Note Interest
Rate1, 2, 3

  Stated
Maturity
(Payment Date in)
Class A Notes  $406,000,000   Benchmark + 1.80%  April 2036
Class B Notes  $70,000,000   Benchmark + 2.20%  April 2036
Subordinated Notes  $225,600,000   N/A5  April 2036

 

 

1            If any Class of Re-Pricing Eligible Notes becomes subject to a Re-Pricing, the spread over the Benchmark (or, in the case of the Fixed Rate Notes (if any), the stated rate of interest) with respect to such Class will be the Re-Pricing Rate thereafter.

 

2            The initial Benchmark will be Term SOFR. Term SOFR will be determined as described in the definition of "Term SOFR"; provided that Term SOFR for the first Interest Accrual Period will be as set forth in the definition of the term "Term SOFR". The Benchmark may be changed from Term SOFR to an Alternative Reference Rate, in accordance with this Indenture.

 

3            The Benchmark is subject to a minimum floor of 0%.

 

5            Interest payable on the Subordinated Notes on each Payment Date will consist solely of excess Interest Proceeds in accordance with the Priority of Payments.

 

(b)            Interest accrued with respect to each Class of Floating Rate Notes shall be computed on the basis of the actual number of days elapsed in the applicable Interest Accrual Period divided by 360. Interest accrued with respect to each Class of Fixed Rate Notes will be computed on the basis of a 360-day year consisting of twelve 30-day months.

 

(c)            The Notes (or any beneficial interest therein if a Global Note) shall be issuable only in Authorized Denominations.

 

Section 2.4         Execution, Authentication, Delivery and Dating. The Notes shall be executed on behalf of the Issuer by one of the Authorized Officers of the Issuer. The signature of such Authorized Officer on the Notes may be manual, electronic or facsimile.

 

Notes bearing the manual, electronic or facsimile signatures of individuals who were at any time of execution the Authorized Officers of the Issuer shall bind the Issuer, notwithstanding the fact that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of issuance of such Notes.

 

At any time and from time to time after the execution and delivery of this Indenture, the Issuer may deliver Notes executed by the Issuer to the Trustee or the Authenticating Agent for authentication, and the Trustee or the Authenticating Agent, upon Issuer Order (which Issuer Order shall, in connection with a transfer of Notes hereunder, be deemed to have been provided upon the delivery of an executed Note to the Trustee), shall authenticate and deliver such Notes as provided in this Indenture and not otherwise.

 

Each Note authenticated and delivered by the Trustee or the Authenticating Agent upon Issuer Order on the Closing Date shall be dated as of the Closing Date. All Notes that are authenticated after the Closing Date for any other purpose under this Indenture shall be dated the date of their authentication.

 

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Notes issued upon transfer, exchange or replacement of other Notes shall be issued in Authorized Denominations reflecting the original aggregate principal amount of the Notes so transferred, exchanged or replaced, but shall represent only the current outstanding principal amount of the Notes so transferred, exchanged or replaced. If any Note is divided into more than one Note in accordance with this Article II, the original principal amount of such Note shall be proportionately divided among the Notes delivered in exchange therefor and shall be deemed to be the original aggregate principal amount of such subsequently issued Notes.

 

No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Note a Certificate of Authentication, substantially in the form provided for herein, executed by the Trustee or by the Authenticating Agent by the manual signature of one of their authorized signatories, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder.

 

Section 2.5         Registration, Registration of Transfer and Exchange.

 

(a)            The Issuer shall cause to be kept the Note Register in which, subject to such reasonable regulations as it may prescribe, the Issuer shall provide for the registration of Notes and the registration of transfers of Notes. The Trustee is hereby initially appointed as agent of the Issuer to act as "Notes Registrar" for the purpose of registering and recording in the Note Register the Notes and transfers of such Notes as herein provided. Upon any resignation or removal of the Notes Registrar, the Issuer shall promptly appoint a successor.

 

If a Person other than the Trustee is appointed by the Issuer as Notes Registrar, the Issuer shall give the Trustee prompt written notice of the appointment of a Notes Registrar and of the location, and any change in the location, of the Notes Registrar, and the Trustee shall have the right to inspect the Register at all reasonable times and to obtain copies thereof and the Trustee shall have the right to rely upon a certificate executed on behalf of the Notes Registrar by an Officer thereof as to the names and addresses of the Holders of the Notes and the principal amounts of such Notes. Upon request at any time the Notes Registrar will provide to the Issuer, the Asset Manager or the Initial Purchaser a current list of Holders as reflected in the Note Register.

 

Subject to this Section 2.5, upon surrender for registration of transfer of any Notes at the office designated by the Trustee, the Surrendered Notes shall be cancelled and destroyed by the Trustee in accordance with its standard policy and the Issuer shall execute, and the Trustee or the Authenticating Agent, as the case may be, shall authenticate and deliver in the name of the designated transferee or transferees, one or more new Notes of any Authorized Denomination and of a like aggregate principal amount.

 

The Issuer or the Asset Manager, as applicable, shall notify the Trustee in writing of any Note beneficially owned by or pledged to the Issuer or the Asset Manager or any of their respective Affiliates promptly upon its knowledge of the acquisition thereof or the creation of such pledge.

 

At the option of a Holder, Notes may be exchanged for Notes of like terms, in any Authorized Denominations and of like aggregate principal amount, upon surrender of the Notes to be exchanged at such office or agency, and in the case of Definitive Notes, at the office designated by the Trustee. Whenever any Note is surrendered for exchange, the Issuer shall execute and the Trustee shall authenticate and deliver the Notes that the Holder making the exchange is entitled to receive.

 

All Notes issued and authenticated upon any registration of transfer or exchange of Notes shall be the valid obligations of the Issuer evidencing the same debt or rights to payment, and entitled to the same benefits under this Indenture, as the Notes surrendered upon such registration of transfer or exchange.

 

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Any Note and the rights to payments evidenced thereby may be assigned or otherwise transferred in whole or in part pursuant to the terms of this Section 2.5 only by the registration of such assignment and transfer of such Note on the Note Register (and each Note shall so expressly provide). Any assignment or transfer of all or part of Definitive Note shall be registered on the Note Register only upon presentment or surrender for registration of transfer or exchange of the Note duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Notes Registrar and the Issuer duly executed by the Holder thereof or his attorney duly authorized in writing with such signature guaranteed by an "eligible guarantor institution" meeting the requirements of the Notes Registrar, which requirements include membership or participation in STAMP or such other "signature guarantee program" as may be determined by the Notes Registrar in addition to, or in substitution for, STAMP, all in accordance with the Exchange Act.

 

No service charge shall be made to a Holder for the registration of any transfer or exchange of Notes, but the Trustee may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any exchange of Notes.

 

(b)            The Issuer or the Trustee, as applicable, shall not be required (i) to issue, register the transfer of or exchange any Note during a period beginning at the opening of business 15 days before any selection of Notes to be redeemed and ending at the close of business on the day of the mailing of the relevant notice of redemption, or (ii) to register the transfer of or exchange any Note so selected for redemption.

 

(c)            No Note may be sold or transferred (including by pledge or hypothecation) unless such sale or transfer is exempt from the registration requirements of the Securities Act and is exempt from the registration requirements under applicable state securities laws and will not cause the Issuer or the pool of Collateral to become subject to the requirement that it register as an investment company under the Investment Company Act.

 

(d)            Upon final payment due on the Maturity of a Definitive Note, the Holder thereof shall present and surrender such Definitive Note at the office designated by the Trustee on or prior to such Maturity; provided, however, that if there is delivered to the Issuer and the Trustee such security or indemnity as may be required by them to save each of them harmless and an undertaking thereafter to surrender such certificate, then, in the absence of notice to the Issuer or the Trustee that the applicable Definitive Note has been acquired by a Protected Purchaser, such final payment shall be made without presentation or surrender.

 

(e)            So long as a Global Note remains Outstanding, transfers of a Global Note, in whole or in part, shall only be made in accordance with Section 2.2, Section 2.4, this Section 2.5(e) and Section 2.12.

 

(i)             Subject to clauses (ii), (iii) and (iv) of this Section 2.5(e) transfers of a Global Note shall be limited to transfers of such Global Note in whole, but not in part, to nominees of the Depository or to a successor of the Depository or such successor's nominee.

 

(ii)            Rule 144A Global Note to Regulation S Global Note. If a holder of a beneficial interest in a Rule 144A Global Note wishes at any time to exchange its interest in such Rule 144A Global Note for an interest in a Regulation S Global Note of the same Class, or to transfer its interest in such Rule 144A Global Note to a Person who wishes to take delivery thereof in the form of an interest in a Regulation S Global Note of the same Class, such holder may, subject to the rules and procedures of the Depository, exchange or transfer, or cause the exchange or transfer of, such interest for an equivalent beneficial interest in the Regulation S Global Note. Upon receipt by the Trustee, as Notes Registrar, of:

 

(A)            instructions given in accordance with the Depository's procedures from an Agent Member directing the Trustee, as Notes Registrar, to cause to be credited a beneficial interest in a Regulation S Global Note of the same Class in an amount equal to the beneficial interest in such Rule 144A Global Note, in an Authorized Denomination, to be exchanged or transferred,

 

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(B)            a written order given in accordance with the Depository's procedures containing information regarding the participant account of the Depository and, in the case of an exchange or transfer pursuant to and in accordance with Regulation S, the Euroclear or Clearstream account to be credited with such increase, and

 

(C)            a Transfer Certificate given by the holder of such beneficial interest stating that the exchange or transfer of such interest has been made in compliance with the transfer restrictions applicable to the Global Notes including that the holder or the transferee, as applicable, is not a U.S. Person, and is obtaining such beneficial interest in a transaction pursuant to and in accordance with Regulation S,

 

the Trustee, as Notes Registrar, will confirm the instructions at the Depository to reduce the principal amount of the applicable Rule 144A Global Note and to increase the principal amount of the Regulation S Global Note of the same Class by the aggregate principal amount of the beneficial interest in the Rule 144A Global Note to be exchanged or transferred, and to credit or cause to be credited to the securities account of the Person specified in such instructions a beneficial interest in the Regulation S Global Note equal to the reduction in the principal amount of the Rule 144A Global Note.

 

(iii)            Regulation S Global Note to Rule 144A Global Note. If a holder of a beneficial interest in a Regulation S Global Note wishes at any time to exchange its interest in such Regulation S Global Note to a Person who wishes to take delivery thereof in the form of an interest in a Rule 144A Global Note of the same Class, or to transfer its interest in such Regulation S Global Note for an interest in a Rule 144A Global Note of the same Class, such holder may, subject to the rules and procedures of Euroclear, Clearstream or the Depository, as the case may be, exchange or transfer or cause the exchange or transfer of such interest for an equivalent beneficial interest in a Rule 144A Global Note. Upon receipt by the Trustee, as Notes Registrar, of:

 

(A)            instructions from Euroclear, Clearstream or the Depository, as the case may be, directing the Trustee, as Notes Registrar, to cause to be credited a beneficial interest in a Rule 144A Global Note in an amount equal to the beneficial interest in such Regulation S Global Note, in an Authorized Denomination, to be exchanged or transferred, such instructions to contain information regarding the participant account with the Depository to be credited with such increase, and

 

(B)            a Transfer Certificate given by the holder of such beneficial interest and stating, among other things, that, in the case of a transfer, the Person transferring such interest in such Regulation S Global Note reasonably believes that the Person acquiring such interest in a Rule 144A Global Note is a Qualified Institutional Buyer, is obtaining such beneficial interest in a transaction meeting the requirements of Rule 144A and in accordance with any applicable securities laws of any state of the United States or any other jurisdiction, and is also a Qualified Purchaser,

 

the Trustee, as Notes Registrar, as the case may be, will confirm the instructions at the Depository to reduce the aggregate principal amount of the applicable Regulation S Global Note and to increase the aggregate principal amount of such Rule 144A Global Note by the beneficial interest in such Regulation S Global Note to be transferred or exchanged and the Trustee, as Notes Registrar, shall instruct the Depository, concurrently with such reduction, to credit or cause to be credited to the securities account of the Person specified in such instructions a beneficial interest in the Rule 144A Global Note equal to the reduction in the principal amount of the Regulation S Global Note.

 

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(iv)            Rule 144A Global Note or Regulation S Global Note to Definitive Note. If a holder of a beneficial interest in a Rule 144A Global Note or a Regulation S Global Note wishes at any time to transfer its interest in such Note to a Person that is required to take delivery thereof in the form of a Definitive Note of the same Class, as applicable, such holder may, or shall be subject to the rules and procedures of Euroclear, Clearstream or the Depository, as the case may be, transfer or cause the transfer of such interest for an equivalent beneficial interest in one or more such Definitive Notes of the same Class as described below. Upon receipt by the Trustee, as Notes Registrar, of:

 

(A)            instructions given in accordance with the Depository's procedures from an Agent Member, or instructions from Euroclear, Clearstream or the Depository, as the case may be, directing the Trustee to deliver one or more such Definitive Notes, designating the registered name or names, address, payment instructions, the Class and the number and principal amounts of the Definitive Notes to be executed and delivered (the Class and the aggregate principal amounts of such Definitive Notes being equal to the aggregate principal amount of the Global Note to be transferred), in an Authorized Denomination,

 

(B)            a Transfer Certificate given by the transferee of such beneficial interest, and

 

(C)            if such transferee is an Institutional Accredited Investor, an opinion of counsel reasonably satisfactory to the Trustee that such transfer is being conducted pursuant to an exemption from registration under the Securities Act,

 

the Trustee, as Notes Registrar, will confirm the instructions at Euroclear, Clearstream or the Depository, as the case may be, to reduce the applicable Global Note by the aggregate principal amount of the beneficial interest in such Global Note to be transferred and the Trustee, as Notes Registrar, shall record the transfer in the Note Register and shall notify the Issuer, who shall execute the Definitive Notes and the Trustee shall authenticate and deliver the Definitive Notes of the appropriate Class registered in the names specified in the Transfer Certificate in principal amounts designated by the transferee (the aggregate of such amounts being equal to the beneficial interest in the Global Notes to be transferred) and an Authorized Denomination. Any purported transfer in violation of the foregoing requirements shall be null and void ab initio and of no force and effect, and the Trustee shall not register any such purported transfer and shall not authenticate and deliver such Definitive Notes.

 

(v)            If a holder of a beneficial interest in Subordinated Notes represented by a Global Note wishes at any time to exchange such interest for an interest in one or more Definitive Notes, such holder may exchange or cause the exchange of such interest for an equivalent beneficial interest in one or more such Definitive Notes as provided below. Upon receipt by the Trustee, as Notes Registrar, of:

 

(A)            instructions given in accordance with the Depository's procedures from an Agent Member, or instructions from Euroclear, Clearstream or the Depository, as the case may be, directing the Trustee to deliver one or more Definitive Notes, and

 

(B)            written instructions from such holder designating the registered name or names, address, payment instructions, the Class and the number and principal amounts of the applicable Definitive Notes to be executed and delivered (the Class and the aggregate principal amounts of such Definitive Notes being the same as the beneficial interest in the Global Note to be exchanged),

 

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the Trustee, as Notes Registrar, will confirm the instructions at Euroclear, Clearstream or the Depository, as the case may be, to reduce the Global Note by the aggregate principal amount of the beneficial interest in the Global Note to be exchanged, shall record the exchange in the Note Register and shall notify the Issuer who shall execute the Definitive Notes and the Trustee shall authenticate and deliver the Definitive Notes of the appropriate Class registered as specified in the instructions described in clause (B) above, in an Authorized Denomination. Any purported exchange in violation of the foregoing requirements shall be null and void ab initio and of no force and effect, and the Trustee shall not register any such purported exchange and shall not authenticate and deliver such Definitive Notes.

 

(vi)            Other Exchanges. In the event that a Global Note is sought to be exchanged for Definitive Notes pursuant to Section 2.5(e)(iv), such Notes may be exchanged for one another only in accordance with such procedures as are substantially consistent with the provisions above or in Section 2.5(f)(iii) as applicable, and as may be from time to time adopted by the Issuer and the Trustee.

 

(vii)           Restrictions on U.S. Transfers. Transfers of interests in Regulation S Global Notes to U.S. Persons shall be restricted. Transfers may only be made pursuant to the provisions of Section 2.5(e)(iii), (iv) or (v) and Section 2.12 from a Regulation S Global Note to a Rule 144A Global Note or a Definitive Note. Prior to the Exchange Date, Temporary Global Notes may not be transferred to Persons taking delivery of a Rule 144A Global Note (in the case of Rated Notes) or a Definitive Note.

 

(viii)         The Subordinated Notes may not be transferred.

 

(f)            So long as a Definitive Note remains outstanding, transfers and exchanges of a Definitive Note, in whole or in part, shall only be made in accordance with Section 2.2, Section 2.4, this Section 2.5(f) and Section 2.12.

 

(i)              Definitive Note to Global Note. If a holder of a beneficial interest in one or more Definitive Notes wishes (and is eligible) at any time to exchange its interest in such Definitive Note for an interest in a Global Note of the same Class, or to transfer its interest in such Definitive Note to a Person who wishes (and is eligible) to take delivery thereof in the form of an interest in a Global Note of the same Class, such holder may exchange or transfer or cause the exchange or transfer of such interest for an equivalent beneficial interest in the Rule 144A Global Note or Regulation S Global Note, as applicable, of the same Class. Upon receipt by the Trustee, as Notes Registrar, of:

 

(A)            such Definitive Note properly endorsed for such transfer and written instructions from such holder directing the Trustee, as Notes Registrar, to cause to be credited a beneficial interest in a Global Note of the same Class in an amount equal to the beneficial interest in the Definitive Note and in an Authorized Denomination, to be exchanged or transferred,

 

(B)            a written order containing information regarding the Euroclear, Clearstream or Depository account to be credited with such increase, and

 

(C)            a Transfer Certificate by the transferor of such beneficial interest stating that the exchange or transfer of such interest has been made in compliance with the transfer restrictions applicable to the Global Notes,

 

the Trustee, as Notes Registrar, shall cancel such Definitive Note in accordance with Section 2.9, record the transfer in the Note Register in accordance with Section 2.5(a) and will confirm the instructions at Euroclear, Clearstream or the Depository, as the case may be, to increase the principal amount of the Rule 144A Global Note or Regulation S Global Note, as applicable, by the aggregate principal amount of the beneficial interest in the Definitive Note to be exchanged or transferred, and to credit or cause to be credited to the securities account of the Person specified in such instructions a beneficial interest in such Global Note equal to the amount specified in the instructions received pursuant to clause (A) above.

 

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(ii)            Definitive Notes to Definitive Notes. If a holder of a beneficial interest in a Definitive Note wishes at any time to transfer its interest in such Definitive Note to a Person who wishes to take delivery thereof in the form of one or more Definitive Notes of the same Class, such holder may transfer or cause the transfer of such interest for an equivalent beneficial interest in one or more such Definitive Notes of the same Class as provided below. Upon receipt by the Issuer and the Trustee, as Notes Registrar, of:

 

(A)            such holder's Definitive Note properly endorsed for assignment to the transferee,

 

(B)            a Transfer Certificate given by the transferee of such beneficial interest, and

 

(C)            if such transferee is an Institutional Accredited Investor, an opinion of counsel reasonably satisfactory to the Trustee that such transfer is being conducted pursuant to an exemption from registration under the Securities Act,

 

the Trustee, as Notes Registrar, shall cancel such Definitive Note in accordance with Section 2.9, record the transfer in the Note Register in accordance with Section 2.5(a) and shall notify the Issuer, who shall execute one or more Definitive Notes and the Trustee shall authenticate and deliver Definitive Notes bearing the same designation as the Definitive Note of the appropriate Class endorsed for transfer, registered in the names specified in the Transfer Certificate, in principal amounts designated by the transferee (the Class and the aggregate of such amounts being the same as the beneficial interest in the Definitive Note surrendered by the transferor), and in an Authorized Denomination. Any purported transfer in violation of the foregoing requirements shall be null and void ab initio and of no force and effect, and the Trustee shall not register any such purported transfer and shall not authenticate and deliver such Definitive Notes.

 

(iii)            Exchange of Definitive Notes. If a holder of a beneficial interest in one or more Definitive Notes wishes at any time to exchange such Definitive Notes for one or more such Definitive Notes in the same Class, such holder may exchange or cause the exchange of such interest for an equivalent beneficial interest in the Definitive Notes of the same Class bearing the same designation as the Definitive Notes endorsed for exchange as provided below. Upon receipt by the Trustee, as Notes Registrar, of:

 

(A)            such holder's Definitive Notes properly endorsed for such exchange, and

 

(B)            written instructions from such holder designating the number and principal amounts of the applicable Definitive Notes to be issued (the Class and the aggregate principal amounts of such Definitive Notes being the same as the Definitive Notes surrendered for exchange),

 

the Trustee, as Notes Registrar, shall cancel such Definitive Notes in accordance with Section 2.9, record the exchange in the Note Register in accordance with Section 2.5(a) and shall notify the Issuer, who shall execute the Definitive Notes and the Trustee shall authenticate and deliver one or more Definitive Notes of the same Class bearing the same designation as the Definitive Notes endorsed for exchange, registered in the same names as the Definitive Notes surrendered by such holder or such different names as are specified in the endorsement described in clause (A) above, in different principal amounts designated by such holder (the Class and the aggregate principal amounts being the same as the beneficial interest in the Definitive Notes surrendered by such holder), and in an Authorized Denomination.

 

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(g)            If Notes are issued upon the transfer, exchange or replacement of Notes bearing the Applicable Legends, and if a request is made to remove such Applicable Legend on such Notes, the Notes so issued shall bear such legend, or such legend shall not be removed unless there is delivered to the Trustee and the Issuer such satisfactory evidence, which may include an Opinion of Counsel, as may be reasonably required by the Issuer to the effect that neither such Applicable Legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereof comply with the provisions of Rule 144A, Section 4(a)(2) of the Securities Act or Regulation S, as applicable, or the Investment Company Act. Upon provision of such satisfactory evidence, the Trustee, at the direction of the Issuer, shall authenticate and deliver Notes that do not bear such legend.

 

(h)            Each purchaser (including transferees and each beneficial owner of an account on whose behalf Notes are being purchased) (each, a "Purchaser") of a beneficial interest in a Global Note or of a Definitive Note will be deemed to have made each of the representations and agreements set forth in Annex I hereto applicable to it. Each Purchaser of a Definitive Note will also be required to make such representations in writing either on the Closing Date or in the applicable Transfer Certificate upon the purchase of such Definitive Note, as applicable.

 

(i)             Any purported transfer of a Note not in accordance with this Section 2.5 shall be null and void ab initio and of no force or effect and shall not be given effect for any purpose hereunder.

 

(j)             Notwithstanding anything contained herein to the contrary, neither the Trustee nor the Notes Registrar shall be responsible for ascertaining whether any transfer complies with the registration provisions of or exemptions from the Securities Act, applicable state securities laws, the rules of any Depository, ERISA, the Code or the Investment Company Act; provided that if a certificate is specifically required by the express terms of this Section 2.5 to be delivered to the Trustee or the Notes Registrar as a result of a purchase or transfer of a Note, the Trustee or the Notes Registrar, as the case may be, shall be under a duty to receive and examine the same to determine whether the certificate thereby substantially complies on its face with the express terms of this Indenture and shall promptly notify the party delivering the same if such certificate does not comply with such terms.

 

(k)            A Purchaser or transferee of interests in any Notes in the form of interests in a Definitive Note after the Closing Date (including by way of a transfer of an interest in a Global Note to a transferee acquiring Definitive Notes), will not have such purchase or transfer be recorded or otherwise recognized unless such purchaser or transferor provided the Issuer and the Trustee with a Transfer Certificate.

 

(l)             With respect to ERISA Restricted Notes that are Global Notes, unless otherwise specified in a signed investor representation letter delivered to the Initial Purchaser in connection with an acquisition on the Closing Date, the Purchaser or transferee is not, and is not acting on behalf of or with any assets of, and for so long as it holds such ERISA Restricted Notes or interest therein, will not be and will not be acting on behalf of, a Benefit Plan Investor and is not a Controlling Person. With respect to ERISA Restricted Notes that are Definitive Notes, each Purchaser or transferee of such Note will be required in a signed representation letter or Transfer Certificate, respectively, to represent and warrant whether or not, for so long as it holds such Note or interest therein, it is, or is acting on behalf of or with any assets of, a Benefit Plan Investor and whether or not it is a Controlling Person. Any Purchaser or transferee that is a Benefit Plan Investor or a plan that is subject to Similar Law will be required or deemed to represent and warrant that its acquisition, holding and disposition of Notes will not constitute or result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or a non-exempt violation of Similar Law. With respect to ERISA Restricted Notes, the Purchaser or transferee is not, and for so long as it holds such ERISA Restricted Note or interest there will not be, subject to any federal, state, local or other law or regulation that could cause the underlying assets of the Issuer to be treated as assets of an investor in such ERISA Restricted Note (or interest therein) by virtue of its interest and thereby subject the Issuer or the Asset Manager (or other persons responsible for the investment and operation of the Issuer's assets) to any Similar Law. Each holder of an ERISA Restricted Note understands that if any ERISA-related representation becomes untrue or there is any change in the holder's status as a Benefit Plan Investor or Controlling Person, the holder shall immediately notify the Issuer and the Trustee.

 

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(m)           Each prospective purchaser or transferee of Notes that is a Benefit Plan Investor will be deemed to have represented by its investment in the Notes that (a) none of the Transaction Parties has provided any investment recommendation or investment advice to the Benefit Plan Investor, or any fiduciary or other person investing on behalf of the Benefit Plan Investor or who otherwise has discretion or control over the investment and management of "plan assets" (a "Plan Fiduciary"), on which either the Benefit Plan Investor or Plan Fiduciary has relied in connection with the decision to invest in the Notes and (b) the Plan Fiduciary is exercising its own independent judgement in evaluating the transaction.

 

Section 2.6         Mutilated, Destroyed, Lost or Stolen Notes. If (i) any mutilated Note is surrendered to a Transfer Agent, or (ii) there shall be delivered to the Issuer, the Trustee and the relevant Transfer Agent evidence to their reasonable satisfaction of the destruction, loss or theft of any Note, and there is delivered to the Issuer, the Trustee and such Transfer Agent such security or indemnity as may be required by them to save each of them and any agent of any of them harmless, then, in the absence of notice to the Issuer, the Trustee or such Transfer Agent that such Note has been acquired by a Protected Purchaser, the Issuer shall execute and, upon Issuer Request (which Issuer Request shall be deemed to have been provided upon the delivery of an executed Note to the Trustee), the Trustee shall authenticate and deliver, in lieu of any such mutilated, destroyed, lost or stolen Note, a new Note of the same tenor and principal amount, and bearing a number not contemporaneously outstanding.

 

If, after delivery of such new Note, a Protected Purchaser of the predecessor Note presents for payment, transfer or exchange such predecessor Note, the Issuer, the Transfer Agent and the Trustee shall be entitled to recover such new Note from the Person to whom it was delivered or any Person taking therefrom, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Issuer, the Trustee and the Transfer Agent in connection therewith.

 

In case any such destroyed, lost or stolen Note has become due and payable, the Issuer in its discretion may, instead of issuing a new Note, pay such Note without requiring surrender thereof.

 

Upon the issuance of any new Note under this Section 2.6, the Issuer, the Trustee or a Transfer Agent may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

 

Every new Note issued pursuant to this Section 2.6 in lieu of any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Issuer and such new Note shall be entitled, subject to the second paragraph of this Section 2.6, to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder.

 

The provisions of this Section 2.6 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.

 

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Section 2.7         Payment of Principal, Interest and Other Distributions; Principal and Interest Rights Preserved.

 

(a)            The Rated Notes shall accrue interest during each Interest Accrual Period at the applicable Note Interest Rate on the Aggregate Outstanding Amount thereof. Interest on the Rated Notes shall be due and payable in arrears on each Payment Date immediately following the related Interest Accrual Period in accordance with the Priority of Payments; provided, however, that payments of interest on each Class will be subordinated on each Payment Date to payments of interest on each Higher Ranking Class in accordance with the Priority of Payments.

 

Subordinated Notes will receive distributions of Interest Proceeds on each Payment Date in accordance with the Priority of Interest Payments, which amounts, if available to be paid on such Payment Date, will be due and payable on such Payment Date. Any payment of Interest Proceeds to the Subordinated Notes that is not available to be paid on a Payment Date in accordance with the Priority of Payments shall not be payable on such Payment Date or any date and shall not be considered "due and payable" for purposes of Section 5.1(a) (and the failure to pay such interest shall not be an Event of Default).

 

(b)            The principal of the Rated Notes matures at par and shall be due and payable on the Stated Maturity thereof unless the unpaid principal of such Notes becomes due and payable at an earlier date by declaration of acceleration, Redemption, Refinancing or otherwise; provided, that (1) unless otherwise provided herein, the payment of principal on any Class of Notes (x) may only occur after each Higher Ranking Class is no longer Outstanding and (y) is subordinated to the payment on each Payment Date of principal due and payable on each Higher Ranking Class and other amounts, in each case, in accordance with the Priority of Payments; and (2) any payment of principal that is not paid on any Class of Notes in accordance with the Priority of Payments on any Payment Date shall not be considered "due and payable" for purposes of Section 5.1(b) until the Stated Maturity (or, if earlier, the Payment Date on which such funds are available for such payments in accordance with the Priority of Payments).

 

Principal Proceeds will be due and payable on the Subordinated Notes on the Stated Maturity in accordance with the Priority of Payments. Any payment of Principal Proceeds to the Subordinated Notes that is not paid, in accordance with the Priority of Payments, on any Payment Date prior to the Stated Maturity, shall not be considered "due and payable" for purposes of Section 5.1(b) until the Stated Maturity.

 

(c)            As a condition to the payment of principal of and interest on any Note, the Issuer shall require certification acceptable to each of them (including, without limitation, the delivery of a properly completed and executed Internal Revenue Service Form W-9 (or applicable successor form) in the case of a Person that is a U.S. Tax Person or the applicable Internal Revenue Service Form W-8 (or applicable successor form) in the case of a Person that is not a U.S. Tax Person to enable the Issuer, the Trustee and any Paying Agent to determine their duties and liabilities with respect to any taxes or other charges that they may be required to deduct or withhold from payments in respect of such Note under any present or future law or regulation of the United States or any present or future law or regulation of any political subdivision thereof or taxing authority therein or to comply with any reporting or other requirements under any such law or regulation.

 

Should any Holder fail for any reason to obtain and provide the Issuer and the Trustee with accurate or complete information or documentation described in the paragraph above or to the extent necessary or helpful (in the sole determination of the Issuer or the Trustee or their agents, as applicable) to achieve compliance with FATCA, or to update or correct such information or documentation, the Issuer shall have the right to withhold on interest payments, principal and any other amounts payable in respect of the Notes.

 

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(d)            Payments due on any Payment Date on the Notes shall be payable by wire transfer in immediately available funds to the Holder (which in the case of Global Notes, will be DTC) so long as wiring instructions have been provided to the Trustee. If appropriate instructions for any such wire transfer are not received by the related Regular Record Date, then such payment shall be made by check drawn on a U.S. bank . In the case of a check, such check shall be mailed to the Person entitled thereto at the address that appears in the Note Register and, in the case of a wire transfer, such wire transfer shall be sent in accordance with written instructions provided by such Person. Upon final payment due on the Maturity of a Note represented by a Definitive Note, the Holder thereof shall present and surrender such Note at the office designated by the Trustee upon payment at or prior to such Maturity; provided, however, that if there is delivered to the Issuer and the Trustee such security or indemnity as may be required by them to save each of them harmless and an undertaking thereafter to surrender such certificate, then, in the absence of notice to the Issuer or the Trustee that the applicable Note has been acquired by a Protected Purchaser, such final payment shall be made without presentation or surrender. In the case where any final payment of principal, interest or other payments is to be made on any Notes (other than at the Stated Maturity thereof) the Issuer or, upon Issuer Request, the Trustee, in the name and at the expense of the Issuer shall, not more than 30 nor less than three days prior to the date on which such payment is to be made, provide notice to Holders of Definitive Notes of the date on which such payment will be made and the place where such Notes may be presented and surrendered for such payment.

 

(e)            Subject to the provisions of Section 2.7(a) and (b), the Holders of Notes as of the Regular Record Date in respect of a Payment Date shall be entitled to the interest accrued and payable in accordance with the Priority of Payments and principal payable in accordance with the Priority of Payments on such Payment Date. All such payments that are mailed or wired and returned to the Corporate Trust Office of the Trustee or at the office of any Paying Agent shall be held for payment as herein provided by the Trustee for the benefit of such Holder.

 

(f)             Payments on any Note that is payable, and are punctually paid or duly provided for, on any Payment Date shall be paid to the Person in whose name that Note (or one or more predecessor Notes) is registered at the close of business on the Record Date for such payment. Payments of principal to Holders of the Notes of each Class shall be made in the proportion that the Aggregate Outstanding Amount of the Notes of such Class registered in the name of each such Holder on such Record Date bears to the Aggregate Outstanding Amount of all Notes of such Class on such Record Date.

 

(g)            Subject to Section 2.7(a), following any Payment Date giving rise to any Defaulted Interest with respect to the Notes, the Trustee shall make payment of such Defaulted Interest and any accrued and unpaid interest thereon on such date that is not more than three Business Days after sufficient funds are available therefor in the Collection Account (a "Special Payment Date"). The special record date (a "Special Record Date") for the payment of such Defaulted Interest shall be three Business Days prior to the Special Payment Date as fixed by the Trustee. The Trustee shall notify the Issuer and the applicable Holders of such Special Payment Date and the Special Record Date at least two Business Days prior to the Special Payment Date. Defaulted Interest shall be paid on such Special Payment Date pro rata based on the Aggregate Outstanding Amount to the Holders of the applicable Notes as of the close of business on such Special Record Date in accordance with the priorities set forth in the Priority of Interest Payments.

 

Notwithstanding the foregoing, payment of any Defaulted Interest may be made in any other lawful manner in accordance with the priorities set forth in the Priority of Interest Payments if notice of such payment is given by the Trustee to the Issuer and the Holders of the Notes entitled to receive such Defaulted Interest, and such manner of payment shall be deemed practicable by the Trustee.

 

(h)            All reductions in the principal amount of a Note (or one or more predecessor Notes) effected by payments of principal made on any Payment Date or Redemption Date shall be binding upon all future Holders of such Note and of any Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, whether or not such payment is noted on such Note.

 

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(i)             Notwithstanding any other provision of this Indenture, the obligations under this Indenture and the Notes are limited recourse obligations of the Issuer payable solely from the Collateral in accordance with the terms of this Indenture. Once the Collateral has been realized and applied in accordance with the Priority of Payments or otherwise as required hereunder, any outstanding obligations of and any claims against, the Issuer under the Notes, this Indenture shall be extinguished and shall not thereafter revive. No recourse shall be had for the payment of any amount owing in respect of the Notes or this Indenture against any officer, director, employee, administrator, partner, shareholder, member, manager or incorporator of the Issuer or any successors or assigns thereof for any amounts payable under the Notes or this Indenture. It is understood that the foregoing provisions of this clause (i) shall not (x) prevent recourse to the Collateral for the sums due or to become due under any security, instrument or agreement which is part of the Collateral, or (y) constitute a waiver, release or discharge of any indebtedness or obligation evidenced by the Notes or secured by this Indenture, until such Collateral has been realized and proceeds distributed in accordance with the Priority of Payments, whereupon any outstanding indebtedness or obligation shall be extinguished. It is further understood that the foregoing provisions of this clause (i) shall not limit the right of any Person to name the Issuer as a party defendant in any action or suit or in the exercise of any other remedy under the Notes or this Indenture, so long as no judgment in the nature of a deficiency judgment or seeking personal liability shall be asked for or (if obtained) enforced against any such Person.

 

(j)             Subject to the foregoing provisions of this Section 2.7, each Note delivered under this Indenture and upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights of unpaid interest, principal and other payments that were carried by such other Note.

 

(k)            Notwithstanding any of the foregoing provisions with respect to payments of principal of and interest on the Rated Notes and payments on the Subordinated Notes, if any Notes have become or been declared due and payable following an Event of Default and such acceleration of Maturity and its consequences have not been rescinded and annulled and the provisions of Section 5.5 are not applicable, then payments of principal of and interest on such Rated Notes and payments on such Subordinated Notes shall be made in accordance with Section 5.7.

 

(l)             Subject to Article V and Section 13.1, on each Payment Date, available Interest Proceeds and Principal Proceeds shall be paid to Holders of the Subordinated Notes in accordance with the Priority of Payments.

 

Section 2.8         Persons Deemed Owners. The Issuer, the Trustee and any agent of the Issuer, or the Trustee may treat the Person in whose name any Note is registered in the Note Register on the applicable Record Date as the owner of such Note for the purpose of receiving payments of principal, interest or other payments on such Note and on any other date for all other purposes whatsoever (whether or not such Note is overdue), and none of the Issuer or the Trustee, or any agent of the Issuer or the Trustee shall be affected by notice to the contrary.

 

Section 2.9         Cancellation.

 

(a)            All Notes delivered for cancellation or surrendered for payment, registration of transfer, exchange or redemption, or deemed lost or stolen, shall, if surrendered to any Person (including the Issuer) other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. No Notes shall be authenticated in lieu of or in exchange for any Notes cancelled as provided in this Section 2.9, except as expressly permitted by this Indenture. All Repurchased Notes and Surrendered Notes submitted to the Issuer for delivery to the Trustee or directly to the Trustee for cancellation will be promptly cancelled by the Trustee. All cancelled Notes held by the Trustee shall be destroyed or held by the Trustee in accordance with its standard policy unless the Issuer shall direct by an Issuer Order prior to cancellation that they be returned to the Issuer.

 

(b)            Any Repurchased Notes (including beneficial interests in Global Notes) delivered to the Trustee for cancellation and any Surrendered Notes (including beneficial interests in Global Notes) surrendered to the Trustee for cancellation will be promptly cancelled by the Trustee; provided, that such Notes will be deemed to be Outstanding to the extent provided in clause (b) of the definition of "Outstanding."

 

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Section 2.10         Global Notes; Temporary Notes.

 

(a)            Subject to Section 2.5(e), a Global Note deposited with the Depository pursuant to Section 2.2 shall be transferred to the beneficial owners thereof only if such transfer complies with Section 2.5 of this Indenture and the Depository notifies the Issuer that it is unwilling or unable to continue as Depository for such Global Note or if at any time such Depository ceases to be a Clearing Agency and a successor depository is not appointed by the Issuer within 90 days of such notice.

 

(b)            Any Global Note that is transferable to the beneficial owners thereof pursuant to this Section 2.10 shall be surrendered by the Depository to the Trustee, to be so transferred, in whole or from time to time in part, without charge, and the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Note, an equal aggregate original principal amount of the Notes, as applicable, of Authorized Denominations. Any portion of a Rule 144A Global Note or a Regulation S Global Note transferred pursuant to this Section 2.10 shall be executed, authenticated and delivered only in Authorized Denominations.

 

(c)            Subject to the provisions of Section 2.10(b) above, the registered Holder of a Global Note may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes.

 

(d)            Upon receipt of notice from the Depository of the occurrence of either of the events specified in Section 2.10(a), the Issuer shall use its commercially reasonable efforts to make arrangements with the Depository for the exchange of interests in the Global Notes for individual Definitive Notes and cause the requested individual Definitive Notes to be executed and delivered to the Notes Registrar in sufficient quantities and authenticated by or on behalf of the Trustee for delivery to Holders.

 

Pending the preparation of certificates for such Class of Notes, pursuant to this Section 2.10, the Issuer may execute, and upon Issuer Order the Trustee shall authenticate and deliver, temporary certificates for such Class of Notes, that are printed, photocopied or otherwise reproduced, in any Authorized Denomination, substantially of the tenor of the definitive certificates in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the Officers executing such temporary certificates may determine, as conclusively evidenced by their execution of such certificates.

 

If temporary certificates for a Class of Notes are issued, the Issuer shall cause such Notes to be prepared without unreasonable delay. The definitive certificates shall be printed, lithographed or engraved, or provided by any combination thereof, or in any other manner permitted by the rules and regulations of any applicable securities exchange, all as determined by the Officers executing such definitive certificates. After the preparation of definitive certificates, the temporary certificates shall be exchangeable for definitive certificates upon surrender of the temporary certificates at the office designated by the Trustee without charge to the Holder. Upon surrender for cancellation of any one or more temporary certificates, the Issuer shall execute, and the Trustee shall authenticate and deliver, in exchange therefor the same aggregate original principal amount of definitive certificates of Authorized Denominations. Until so exchanged, the temporary certificates shall in all respects be entitled to the same benefits under this Indenture as definitive certificates.

 

Persons exchanging interests in a Global Note for individual Definitive Notes shall be required to provide to the Trustee, through the Depository, (i) written instructions and other information required by the Issuer and the Trustee to complete, execute and deliver such individual Definitive Notes, (ii) in the case of an exchange of an interest in a Rule 144A Global Note, such certification as to QIB/QP status (or with respect to transferees of the Subordinated Notes only, (i) IAI/QP status or (ii) AI/QP status, as applicable) as the Issuer and the Trustee shall require and (iii) in the case of an exchange of an interest in a Regulation S Global Note, such certification as the Issuer shall require. In all cases, individual Definitive Notes delivered in exchange for any Global Note or beneficial interests therein will be registered in the names, and issued in any Authorized Denominations, requested by the Depository.

 

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Neither the Trustee nor the Notes Registrar shall be liable for any delay in the delivery of directions from the Depository and may conclusively rely on, and shall be fully protected in relying on, such direction as to the names of the owners in whose names such Definitive Notes shall be registered or as to delivery instructions for such Definitive Notes.

 

Section 2.11         Additional Issuances of Notes.

 

(a)            At any time during the Reinvestment Period (or, in the case of an issuance solely of additional Subordinated Notes or additional Junior Mezzanine Notes, at any time), pursuant to a supplemental indenture in accordance with Article VIII and subject to Section 3.3, the Asset Manager, in its sole discretion, may direct the Issuer to issue or incur (y) additional notes under this Indenture of each existing Class (on a pro rata basis across all Classes of Notes (based on the Aggregate Outstanding Amount of each Class of Notes immediately prior to such issuance)) and/or (z) additional Subordinated Notes and/or new Junior Mezzanine Notes (such additional notes described in clauses (y) and (z), collectively, "Additional Notes") and (I) use the net proceeds to acquire Underlying Assets, (II) in the case of an additional issuance of Subordinated Notes, apply all or a portion of the net proceeds from such additional issuance to any Permitted Use (as directed by the Asset Manager) or (III) for any other purpose permitted hereunder; provided that with respect to any issuance of Additional Notes the following conditions are met:

 

(i)             (x) unless only additional Subordinated Notes or additional Junior Mezzanine Notes are being issued, Rating Agency Confirmation has been received in respect of such additional issuance and (y) if only additional Subordinated Notes or additional Junior Mezzanine Notes are being issued, the Rating Agency has been notified of such additional issuance;

 

(ii)            such issue is approved by the Asset Manager and, if additional Class A Notes or Additional Notes ranking pari passu with the existing Class A Notes are included in the additional issuance, a Majority of the Class A Notes;

 

(iii)            in the case of any Rated Notes, such issue does not exceed 100% of the original issue amount of each applicable Class of Rated Notes;

 

(iv)           except for an issuance of new Junior Mezzanine Notes, the terms of the Additional Notes issued are identical to the respective terms of previously issued Notes of each applicable Class except for the terms related to the issuance price, the date of issuance, interest rate in the case of Rated Notes, date on which interest begins to accrue and the first Payment Date for such Additional Notes; provided, that the interest rate on such Additional Notes may not exceed the Note Interest Rate on the corresponding, existing Class of Notes; provided, further, such Additional Notes must be issued at a Cash sales price equal to or greater than the principal amount of the corresponding, existing Class of Notes;

 

(v)            except for an additional issuance of Subordinated Notes to the Retention Holder, an Opinion of Counsel must be delivered to the Trustee to the effect that any additional Class A Notes or Class B Notes will be treated as indebtedness for U.S. federal income tax purposes; provided, however, that the opinion described above will not be required with respect to any additional Notes that bear a different securities identifier from the Notes of the same Class that are Outstanding at the time of the additional issuance;

 

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(vi)           the expenses in connection with such additional issuance have been paid out of the gross proceeds of such issuance or, if not so paid, shall be adequately provided for as Administrative Expenses;

 

(vii)          except for an additional issuance of Subordinated Notes to the Retention Holder, each Holder of a Class of previously issued Notes of which Additional Notes are a part is given at least 30 days prior notice of the issuance and has been offered an opportunity to purchase Additional Notes such that its proportional ownership of such Class prior to the additional issuance is maintained following the additional issuance;

 

(viii)         the proceeds of the issuance of any Additional Notes (net of fees and expenses incurred in connection with such issuance) will be treated as Principal Proceeds;

 

(ix)            such additional issuance will be accomplished in a manner that allows the Issuer to accurately provide (or cause to be provided) any tax information relating to original issue discount required under this Indenture to be provided to the Holders of the Notes (including the Additional Notes);

 

(x)             any additional Subordinated Notes shall be issued only to the Retention Holder; and

 

(xi)            the Overcollateralization Ratio with respect to each Class of Notes is not reduced after giving effect to such issuance.

 

(b)            At any time the Issuer may, at the direction or with the written consent of the Asset Manager, issue Additional Notes of one or more new classes that will be subordinate in right of payment of principal and interest to all existing Classes of Notes other than the Subordinated Notes (an "Additional Equity Issuance"), pursuant to a supplemental indenture in accordance with Article VIII and apply the net proceeds from such additional issuance to any Permitted Use (as directed by the Asset Manager, unless designated as Interest Proceeds pursuant to the definition thereof); provided that (i) the Issuer shall issue an authentication order for the Additional Notes; (ii) if such class is rated by any Rating Agency, such rating has been assigned; (iii) the expenses in connection with such additional issuance have been paid or adequately provided for as Administrative Expenses; (iv) require each Additional Equity Issuance to yield net proceeds to the Issuer in an amount not less than $1,000,000 (unless the proceeds will be used to acquire Workout Loans or Restructured Loans); and (v) each Holder of Subordinated Notes is given at least 30 days prior notice of the issuance and offered an opportunity to purchase Additional Notes such that its proportional ownership of such Additional Notes is no less than its proportional interest of Subordinated Notes prior to the additional issuance. The proceeds of each Additional Equity Issuance shall be treated as Interest Proceeds and/or Principal Proceeds at the reasonable discretion of the Asset Manager (on behalf of the Issuer) and may be used to cure the failure to satisfy any Coverage Tests, acquire additional Underlying Assets and Eligible Investments, enter into Hedge Agreements and pay expenses related to such issuance.

 

(c)            For the avoidance of doubt, the Issuer may, at any time pursuant to a supplemental indenture in accordance with Article VIII, issue Replacement Debt in the form of Additional Notes in connection with a Refinancing for the Class or Classes being refinanced.

 

(d)            At any time, pursuant to a supplemental indenture in accordance with Article VIII, the Issuer may, at the direction or with the consent of the Asset Manager issue a subordinated funding note to receive payments that would otherwise be payable as the Subordinated Asset Management Fee and/or the Incentive Asset Management Fee.

 

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(e)            Any Additional Notes issued pursuant to Section 2.11(a) or (b) that constitutes Notes shall be subject to the terms of this Indenture as if such Notes had been issued on the date hereof. In connection with the issuance of any Additional Notes of an existing Class, the Issuer shall, to the extent required by the rules thereof, provide any stock exchange then listing such Class with a listing circular or an offering memorandum supplement relating to such Additional Notes.

 

(f)             Notice and execution copies of the supplemental indenture related to each issuance of Additional Notes will be provided as required under Article VIII and to the extent Rating Agency Confirmation is required under clause (a) above, the Trustee will provide notice to Holders that such Rating Agency Confirmation has been received (which may be by forwarding the letter or press release issued by such Rating Agency).

 

Section 2.12         Tax Treatment; Tax Certifications.

 

(a)            Each Holder (including, for purposes of this Section 2.12, any beneficial owner of Notes) will treat (1) the Issuer and the Rated Notes as described in the "Certain U.S. Federal Income Tax Considerations" section of the Final Offering Memorandum and (2) the Subordinated Note as equity, in each case, for all U.S. federal, state and local income tax purposes and will take no action inconsistent with such treatment unless required by law.

 

(b)            Each Holder will timely furnish the Issuer or its agents any tax forms or certifications (such as, in the case of the Rated Notes only, an applicable IRS Form W-8 (together with appropriate attachments), IRS Form W-9, or any successors to such IRS forms) that the Issuer or its agents reasonably request in order to (A) make payments to it without, or at a reduced rate of withholding, (B) qualify for a reduced rate of withholding in any jurisdiction from or through which the Issuer or its agents receive payments, and (C) satisfy reporting and other obligations under the Code and Treasury regulations or under any other applicable law, and shall update or replace such tax forms or certifications as appropriate or in accordance with their terms or subsequent amendments. Each Holder acknowledges that the failure to provide, update or replace any such tax forms or certifications may result in the imposition of withholding or back up withholding upon payments to such Holder, or to the Issuer. Amounts withheld pursuant to applicable tax laws by the Issuer or its agents will be treated as having been paid to such Holder by the Issuer.

 

(c)            [Reserved].

 

(d)            Each Holder of a Rated Note, if it is not a United States person for U.S. federal income tax purposes: (a) is: (1) not a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business (within the meaning of Section 881(c)(3)(A) of the Code); (2) not a "10-percent shareholder" with respect to the holder or any beneficial owners of the Subordinated Notes within the meaning of Section 871(h)(3) or Section 881(c)(3)(B) of the Code; and (3) not a "controlled foreign corporation" that is related to the holder or any beneficial owners of the Subordinated Notes within the meaning of Section 881(c)(3)(C) of the Code; (b) has provided an IRS Form W-8ECI representing that all payments received or to be received by it from the Issuer are effectively connected with its conduct of a trade or business in the United States and includible in its gross income; or (c) is eligible for the benefits under an income tax treaty with the United States that eliminates U.S. federal income taxation of payments on the Notes.

 

(e)            Each holder of the Notes will provide the Issuer and any relevant intermediary with any information or documentation that is required under FATCA or that the Issuer or relevant intermediary deems appropriate to enable the Issuer or relevant intermediary to determine their duties and liabilities with respect to any taxes they may be required to withhold pursuant to FATCA in respect of such Notes or the holder of such Notes or beneficial interest therein. In addition, each holder of a Note will acknowledge that the Issuer has the right under the Indenture to withhold on any holder or any beneficial owner of an interest in a Note that fails to comply with FATCA.

 

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(f)             Each Holder of a Note represents that, if it is a United States person for U.S. federal income tax purposes, it is not a member of an "expanded group" (within the meaning of the regulations issued under Section 385 of the Code) that includes a domestic corporation (as determined for U.S. federal income tax purposes) if such domestic corporation directly or indirectly (through one or more entities that are treated for U.S. federal income tax purposes as partnerships, disregarded entities, or grantor trusts) owns Subordinated Notes.

 

(g)            The failure to provide the Issuer and the Trustee (and any of their agents) with the properly completed and signed tax certifications (generally, in the case of U.S. federal income tax, an IRS Form W-9 (or applicable successor form) in the case of a person that is a "United States person" within the meaning of Section 7701(a)(30) of the Code or, with respect to the Notes other than the Subordinated Notes, the appropriate IRS Form W-8 (or applicable successor form) (together with all appropriate attachments) or otherwise qualify for full exemption from withholding tax imposed by the United States in the case of a person that is not a "United States person" within the meaning of Section 7701(a)(30) of the Code)) may result in withholding from payments in respect of such Note, including U.S. federal withholding or back-up withholding.

 

(h)            Each holder of the Subordinated Notes (and any interest therein) will be required to represent and warrant that it is a "United States person" as defined in Section 7701(a)(30) of the Code and will be required to provide the Issuer and the Trustee (and any of their agents) with a correct, complete and properly executed IRS Form W-9 (or applicable successor form). If any holder of such Notes (and any interest therein) fails to provide the Issuer and the Trustee (and any of their agents) with the properly completed and signed tax certifications specified above, the acquisition of its interest in such Notes shall be void ab initio.

 

(i)            The Subordinated Notes and any other Class of Notes issued or reissued (or treated as reissued) without an opinion of tax counsel of nationally recognized standing in the United States experienced in such matters, in form and substance satisfactory to the Asset Manager, to the effect that such Class of Notes will be treated as indebtedness for U.S. federal income tax purposes (the "Transfer-Restricted Notes") may be issued, sold or transferred only if the following conditions are met: (1) after the issuance, sale or transfer, the number of beneficial owners of any Transfer-Restricted Notes and any interests in the Issuer that could reasonably be classified as equity interests of the Issuer will not exceed 90 partners as determined under Treasury Regulations Section 1.7704-1(h), as determined by the Issuer (the "Ninety-Partner Limitation"), and (2) if such transferee is, for U.S. federal income tax purposes, a partnership, grantor trust or S corporation, then less than 40% of the value of any beneficial owner's interest in the transferee will be attributable to such transferee's equity interests in the Issuer, and a principal purpose of the use of such transferee is not to enable the beneficial owners of the Issuer to satisfy the Ninety-Partner Limitation. No transfer or sale of Transfer-Restricted Notes shall be made on an "established securities market" within the meaning of Treasury Regulations Section 1.7704-1(b) or in an offering required to be registered under the Securities Act of 1933. No holder of any Transfer-Restricted Notes (or any interest therein) will participate in the creation or other transfer of any financial instrument or contract the value of which is determined in whole or in part by reference to the Issuer (including the amount of distributions by the Issuer, the value of the Issuer’s assets, or the results of the Issuer’s operations) or the Transfer-Restricted Notes. Any transfers in violation of the foregoing will be void ab initio. The Issuer shall notify the Trustee and the Registrar in writing if it becomes aware of any affiliate of the Issuer purchasing any Class of Notes after the Closing Date. To the extent any Class of Notes are held by an affiliate of the Issuer at any time, such Notes will be considered Transfer-Restricted Notes, unless there is the receipt by the Registrar on the date of transfer of such Note by such affiliate to someone that is not an affiliate of the Issuer of an opinion of nationally recognized tax counsel knowledgeable in the tax aspects of securitization to the effect that at the time of such sale or transfer (1) such Note will be treated as indebtedness for U.S. federal income tax purposes and (2) such sale or transfer will not cause the Issuer to be treated as an association that is taxable as a corporation or a publicly traded partnership that is taxable as a corporation.

 

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(j)            Each purchaser and subsequent transferee of the Transfer-Restricted Notes (or any interest therein) acknowledges and agrees that any transfer of the Transfer-Restricted Notes (or any interest therein) that would violate any of the preceding paragraph or otherwise cause the Issuer to be unable to rely on the "private placement" safe harbor of Treasury Regulations Section 1.7704-1(h) will be void and of no force or effect, and it will not transfer any interest in the Transfer-Restricted Notes to any Person that does not agree to be bound by the preceding four paragraphs or by this paragraph.

 

(k)            Each holder of the Transfer-Restricted Notes will be deemed to have agreed to provide (i) any transferee of its Transfer-Restricted Notes a certification that it is a "United States person" as defined in Section 7701(a)(30) of the Code in accordance with Section 1446(f)(2) of the Code and any applicable Treasury Regulations thereunder such that the transferee will not be obligated to withhold under Section 1446(f)(1) of the Code, and (ii) such forms, documentation, proof of payment or other certifications as reasonably required by the Issuer or the Trustee to determine that such transferee has complied with Section 1446(f) of the Code (ignoring for this purpose Section 1446(f)(4) of the Code), and any similar provision of state, local or non-U.S. law. It agrees that the Issuer or the Trustee may provide such information and any other information concerning its investment in the Transfer-Restricted Notes to the IRS.

 

Section 2.13         No Gross Up. The Issuer shall not be obligated to pay any additional amounts to the Holders or beneficial owners of the Notes as a result of any withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges.

 

Section 2.14         Non-Permitted Holders; Compulsory Sale.

 

(a)            Notwithstanding anything to the contrary elsewhere in this Indenture, any transfer of a beneficial interest in any Global Note or Definitive Note to a Non-Permitted Holder shall be null and void ab initio and of no force and effect and any such purported transfer of which the Issuer or the Trustee shall have notice shall be disregarded by the Issuer and the Trustee for all purposes.

 

(b)            If any Non-Permitted Holder becomes the beneficial owner of any Global Note or Definitive Note, the Issuer shall, promptly after becoming aware that such Person is a Non-Permitted Holder, send notice to such Non-Permitted Holder demanding that such Non-Permitted Holder transfer its interest to a Person that is not a Non-Permitted Holder that is otherwise authorized to be a Holder of such Notes within 30 days or, in the case of a Person who is a Non-Permitted Holder for ERISA-related reasons, 10 days of the date of such notice. If such Non-Permitted Holder fails to transfer its Notes, the Issuer shall have the right, without further notice to the Non-Permitted Holder, to sell such Notes or interest in such Notes to a purchaser selected by the Issuer that is not a Non-Permitted Holder on such terms as the Issuer may choose. The Issuer, or the Asset Manager acting on behalf of the Issuer, may select the purchaser by soliciting one or more bids from one or more brokers or other market professionals that regularly deal in securities similar to the Notes, and selling such Notes to the highest such bidder; provided, however, that the Issuer or the Asset Manager may select a purchaser by any other means determined by the Issuer in its sole discretion. The Holder of each Note, the Non-Permitted Holder and each other Person in the chain of title from the Holder to the Non-Permitted Holder, by its acceptance of an interest in the Notes, agrees to cooperate with the Issuer, the Asset Manager and the Trustee to effect such transfers. The proceeds of such sale, net of any commissions, expenses and taxes due in connection with such sale, shall be remitted to the Non-Permitted Holder. The terms and conditions of any sale under this subsection shall be determined in the sole discretion of the Issuer, and none of the Issuer, the Asset Manager or the Trustee shall be liable to any Person having an interest in the Notes sold as a result of any such sale or the exercise of such discretion.

 

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Article III
CONDITIONS PRECEDENT; CERTAIN PROVISIONS
RELATING TO COLLATERAL

 

Section 3.1         General Provisions. The Notes to be issued on the Closing Date may be executed by the Issuer and delivered to the Trustee for authentication and thereupon the same shall be authenticated and delivered by the Trustee upon Issuer Request, upon compliance with Section 3.2 and upon receipt by the Trustee of the following:

 

(a)            an Officer's Certificate of the Issuer: (A) evidencing the authorization by the Issuer of the execution and delivery of the Transaction Documents to which it is a party, and the execution, authentication and delivery of the Notes, and specifying the principal amount of each Class of Notes to be authenticated and delivered; and (B) certifying that (1) the attached copy of the Resolution of the Issuer is a true and complete copy thereof, (2) such resolutions have not been rescinded and are in full force and effect on and as of the Closing Date and (3) the Officers authorized to execute and deliver such documents hold the positions and have the signatures indicated thereon; and

 

(b)            either (A) a certificate of the Issuer or other official document evidencing the due authorization, approval or consent of any governmental body or bodies, at the time having jurisdiction in the premises, together with an Opinion of Counsel to the Trustee that the Trustee is entitled to rely thereon and that no other authorization, approval or consent of any governmental body is required for the valid issuance of the Notes; or (B) an Opinion of Counsel of the Issuer to the Trustee that no such authorization, approval or consent of any governmental body is required for the valid issuance of the Notes, except as may have been given for the purposes of the foregoing;

 

(c)            opinions of Latham & Watkins LLP, U.S. counsel to the Issuer, dated the Closing Date;

 

(d)            opinions of Richards, Layton & Finger, P.A., Delaware counsel to the Issuer, dated the Closing Date;

 

(e)            an opinion of Latham & Watkins LLP, counsel to the Asset Manager, dated the Closing Date;

 

(f)            an opinion of Nixon Peabody LLP, counsel to the Trustee, dated the Closing Date;

 

(g)            an Officer's Certificate stating that the Issuer is not in Default under this Indenture and that the issuance of the Notes will not result in a breach of any of the terms, conditions or provisions of, or constitute a default under, its Organizational Documents, any indenture or other agreement or instrument to which the Issuer is a party or by which it is bound, or any order of any court or administrative agency entered in any Proceeding to which the Issuer is a party or by which it may be bound or to which it may be subject; and that all conditions precedent provided in this Indenture relating to the authentication and delivery of the Notes have been complied with;

 

(h)            evidence that ratings were assigned by the Rating Agency no lower than the following:

 

Class of Notes Rating by S&P
Class A Notes AAA (sf)
Class B Notes AA (sf)

 

(i)            an executed copy of the Asset Management Agreement, the Retention of Net Economic Interest Letter, the Organizational Documents and the Collateral Administration Agreement and such other documents as the Trustee may reasonably require; provided, that nothing in this clause shall imply or impose a duty on the Trustee to require such other documents.

 

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Section 3.2     Security for the Notes. Notes to be issued on the Closing Date may be executed by the Issuer and delivered to the Trustee for authentication, and thereupon the same shall be authenticated by the Trustee and delivered as directed by the Issuer upon Issuer Order upon receipt by the Trustee of the following:

 

(a)            Grant of Underlying Assets. Fully executed copies of this Indenture and copies of any other instrument or document, fully executed (as applicable), necessary to consummate and perfect the Grant set forth in the Granting Clause of this Indenture of a perfected security interest that is of first priority, free of any adverse claim or the legal equivalent thereof (except as expressly permitted hereunder) in favor of the Trustee on behalf of the Secured Parties in all of the Issuer's right, title and interest in and to the Underlying Assets and any Deposit pledged to the Trustee for inclusion in the Collateral on the Closing Date, including compliance with the provisions of Section 3.4.

 

(b)            Certificate of the Issuer. A certificate of an Authorized Officer of the Issuer, dated as of the Closing Date, to the effect that, in the case of each Underlying Asset pledged to the Trustee for inclusion in the Collateral on the Closing Date and immediately prior to the delivery thereof on the Closing Date:

 

(i)            the Issuer is the owner of such Underlying Asset free and clear of any liens, claims or encumbrances of any nature whatsoever except for those that are being released on the Closing Date and except for those Granted pursuant to or permitted by this Indenture and encumbrances arising from due bills, if any, with respect to interest, or a portion thereof, accrued on such Underlying Asset prior to the first payment date and owed by the Issuer to the seller of such Underlying Asset;

 

(ii)           the Issuer has acquired its ownership in such Underlying Asset in good faith without notice of any adverse claim as defined in Article 8 of the UCC, except as described in clause (i) above;

 

(iii)          the Issuer has not assigned, pledged or otherwise encumbered any interest in such Underlying Asset (or, if any such interest has been assigned, pledged or otherwise encumbered, it has been released) other than interests Granted pursuant to or permitted by this Indenture;

 

(iv)          the Issuer has full right to Grant a security interest in and assign and pledge all of its right, title and interest in such Underlying Asset to the Trustee;

 

(v)           as of the date of the Issuer's commitment to purchase such Underlying Asset, it satisfied the requirements of the definition of "Underlying Asset";

 

(vi)          such Underlying Asset has been Delivered to the Trustee as required by Section 3.2(a); and

 

(vii)         upon Grant by the Issuer, the Trustee has a first priority perfected security interest in such Underlying Asset (assuming that any Clearing Corporation, Intermediary or other entity not within the control of the Issuer involved in the Delivery of Collateral takes the actions required of it for perfection of that interest).

 

(c)            Deposits to the Pledged Accounts. On the Closing Date, the Issuer (or the Asset Manager on its behalf) shall have delivered an Issuer Order and the Deposit to the Trustee and the Trustee shall have deposited such portion of the Deposit into the Unused Proceeds Account and Interest Reserve Account as directed by the Issuer or the Asset Manager on its behalf pursuant to such Issuer Order. The amount deposited into the Expense Reserve Account on the Closing Date shall be the amount designated by the Issuer (or the Asset Manager on its behalf) for the payment of organizational and other expenses incurred in connection with the issuance of the Notes but unpaid as of the Closing Date. The amount deposited into the Unused Proceeds Account and Interest Reserve Account on the Closing Date shall be 100% of the Unused Proceeds.

 

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(d)            Pledged Accounts. Evidence of the establishment (and funding, if applicable) of the Expense Reserve Account, Interest Reserve Account and the Unused Proceeds Account required to be established on or prior to the Closing Date.

 

(e)            Issuer's Requests. A request from the Issuer directing the Trustee to authenticate the Notes in the amounts set forth therein.

 

Section 3.3     Additional Notes – General Provisions. Additional Notes of any Class which are issued after the Closing Date pursuant to Section 2.11(a) may be executed by the Issuer and delivered to the Trustee for authentication, and thereupon the same shall be authenticated by the Trustee and delivered as directed by the Issuer upon Issuer Order, upon compliance with clauses (a), (b) and (e) of Section 3.2 (with all references therein to the Closing Date being deemed to be the date of any such issuance) and upon receipt by the Trustee of the following:

 

(a)            an Officer's Certificate of the Issuer (A) evidencing the authorization by Resolution of the Issuer of the execution, authentication and delivery of the Additional Notes and specifying the principal amount of each such Notes to be authenticated and delivered; and (B) certifying that (1) the attached copy of the Resolution of the Issuer is a true and complete copy thereof, (2) such resolutions have not been rescinded and are in full force and effect on and as of the date of issuance and (3) the Officers authorized to execute and deliver such documents hold the offices and have the signatures indicated thereon; and

 

(b)           (i)            either (A) a certificate of the Issuer or other official document evidencing the due authorization, approval or consent of any governmental body or bodies, at the time having jurisdiction in the premises, together with an Opinion of Counsel to the Trustee that the Trustee is entitled to rely thereon and that no other authorization, approval or consent of any governmental body is required for the valid issuance of the Additional Notes, or (B) an Opinion of Counsel of the Issuer to the Trustee that no such authorization, approval or consent of any governmental body is required for the valid issuance of such Additional Notes except as may have been given for the purposes of the foregoing;

 

(ii)           opinions of counsel to the Issuer (other than with respect to the security interest granted herein) substantially in the form delivered on the Closing Date; and

 

(iii)           an opinion of Delaware counsel to the Issuer, substantially in the form delivered on the Closing Date;

 

(c)            an Officer's Certificate stating that the Issuer is not in Default under this Indenture and that the issuance of the Additional Notes will not result in a breach of any of the terms, conditions or provisions of, or constitute a default under, its Organizational Documents, any indenture or other agreement or instrument to which the Issuer is a party or by which it is bound, or any order of any court or administrative agency entered in any Proceeding to which the Issuer is a party or by which it may be bound or to which it may be subject; and that all conditions precedent provided in this Indenture relating to the authentication and delivery of the Additional Notes have been complied with; and

 

(d)            evidence that Rating Agency Confirmation has been obtained in connection with such Additional Notes if required by Section 2.11.

 

Section 3.4     Delivery of Underlying Assets and Eligible Investments.

 

(a)            Subject to the limited right to remove or transfer Pledged Obligations set forth in Section 7.7(b) and to substitute Pledged Obligations as set forth in Section 12.4, the Trustee (or the Intermediary on its behalf) shall hold all Pledged Obligations (other than any "general intangibles" within the meaning of the applicable Uniform Commercial Code and any instruments evidencing debt underlying a Participation) purchased in accordance with this Indenture in the relevant Pledged Account established and maintained pursuant to Article X, as to which in each case the Trustee shall have entered into an Account Agreement, providing, inter alia, that the establishment and maintenance of such Pledged Account will be governed by the laws of the State of New York or another jurisdiction satisfactory to the Issuer and the Trustee.

 

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(b)            Each time that the Issuer, or the Asset Manager on behalf of the Issuer, shall direct or cause the acquisition of any Underlying Asset, Equity Security, Restructured Loan, Workout Loan or Eligible Investment, the Issuer or the Asset Manager on behalf of the Issuer shall, if such Underlying Asset, Equity Security, Restructured Loan, Workout Loan or Eligible Investment has not already been transferred to the relevant Pledged Account, cause such Underlying Asset, Equity Security, Restructured Loan, Workout Loan or Eligible Investment to be Delivered. The security interest of the Trustee in the funds or other property utilized in connection with such acquisition shall, immediately and without further action on the part of the Trustee, be released. The security interest of the Trustee shall nevertheless come into existence and continue in such Underlying Asset, Equity Security, Restructured Loan, Workout Loan or Eligible Investment so acquired, including all rights of the Issuer in and to any contracts related to and proceeds of such Underlying Asset, Equity Security, Restructured Loan, Workout Loan or Eligible Investment.

 

(c)            The Issuer hereby authorizes the filing of any financing statements, continuation statements or amendments to financing statements, in any jurisdictions and with any filing offices as are necessary or advisable to perfect the security interest granted to the Trustee in connection herewith. Such financing statements may describe the Collateral, in the same manner as described in this Indenture in connection herewith or may contain an indication or description of collateral that describes such property in any other manner to ensure the perfection of the security interest in the Collateral, granted to the Trustee in connection herewith, including, describing such property as "all assets" whether now owned or hereafter acquired, wherever located, and all proceeds thereof.

 

Section 3.5     Purchase and Delivery of Underlying Assets and Other Actions During the Initial Investment Period.

 

(a)            The Asset Manager on behalf of the Issuer shall use all commercially reasonable efforts to acquire (or enter into binding agreements to acquire), by the Effective Date, Underlying Assets such that the sum of (without duplication) (1) the Aggregate Principal Amount of the Underlying Assets (provided that for purposes of this clause (1), any Closing Date Participations shall be treated as having a Principal Balance equal to its Applicable Recovery Amount), (2) the Eligible Investments constituting Principal Proceeds (for the avoidance of doubt, prior to the end of the Initial Investment Period, not to include amounts in the Unused Proceeds Account, Expense Reserve Account and Variable Funding Account) and (3) the aggregate amount of any prepayment or amortization payment on any Underlying Asset that has not yet been reinvested in other Underlying Assets or Eligible Investments (for the avoidance of doubt, without duplication of any amounts that have been allocated to the settlement of the acquisition of Underlying Assets) is equal to at least $700,000,000 (the "Effective Date Target Par Amount").

 

(b)            Subject to the provisions of this Section 3.5, funds may be applied prior to the Effective Date to purchase an Underlying Asset or one or more Eligible Investments for inclusion in the Collateral upon receipt by the Trustee of an Issuer Order with respect thereto directing the Trustee to pay out the amount specified therein against delivery of the Underlying Asset or Eligible Investment specified therein.

 

(c)            Any portion of the Deposit that has not been invested in Underlying Assets by 5:00 p.m., New York City time, on any Business Day during the Initial Investment Period shall, on the next succeeding Business Day or as soon as practicable thereafter, be invested in Eligible Investments which shall mature not later than the Effective Date as directed by the Asset Manager (which may be by standing instructions).

 

(d)            If at any time during the Initial Investment Period, the Asset Manager determines that the purchase by the Issuer of any Underlying Asset on a given day has resulted in the Issuer not being in compliance with the Collateral Quality Tests if prior to such purchase the Collateral Quality Tests were satisfied, the Asset Manager shall so notify the Trustee, together with a proposal for achieving compliance with such criteria, and the Trustee shall forward such notice to the Issuer, the Initial Purchaser and the Rating Agency.

 

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(e)            Declaration of Effective Date. On the Business Day following any Business Day on which the Effective Date Condition has been satisfied, the Asset Manager may, upon written notice to the Trustee, the Issuer, the Initial Purchaser and the Rating Agency, declare that the Effective Date will occur on the date specified in such notice (which shall be on or before September 25, 2024), subject to the delivery of all schedules, certificates, opinions and documents required by Section 3.5(e) through (f) or otherwise required pursuant hereto on the Effective Date, and request Effective Date Ratings Confirmation.

 

(f)            Schedule of Underlying Assets. The Issuer (or the Asset Manager on behalf of the Issuer) shall cause to be delivered to the Trustee and the Rating Agency on the Effective Date a schedule of Underlying Assets listing all Underlying Assets purchased on or prior to the Effective Date, including all Underlying Assets the Issuer has committed to purchase but that have not been settled as of the Effective Date.

 

(g)            Accountants' Certificate. The Issuer (or the Asset Manager on behalf of the Issuer) shall cause to be delivered to the Trustee and the Collateral Administrator on or prior to the 20th Business Day after the Effective Date (provided that if the Effective Date is on or after the fifth Business Day before the Determination Date related to the first Payment Date, then such delivery must be within 15 Business Days after the Effective Date) Accountants' Certificates, dated as of the Effective Date, (i) comparing and agreeing the information with respect to each Underlying Asset set forth in Section 3.5(h)(i) and Section 3.5(h)(ii) by reference to such sources as shall be specified therein (such certificate the "Effective Date Accountants' Comparison Certificate"), (ii) recalculating and comparing as of the Effective Date each item described in the definition of "Effective Date Condition," including the Coverage Tests, the Collateral Quality Tests and the Eligibility Criteria (such certificate the "Effective Date Accountants' Recalculation Certificate" and, together with the Effective Date Accountants' Comparison Certificate, the "Effective Date Accountants' Certificate") and (iii) specifying the procedures undertaken by them to review data and computations relating to such information. For the avoidance of doubt, the Trustee and the Collateral Administrator shall not disclose to any Person (including a Holder) any information, documents or reports provided to it by such firm of Independent accountants, other than as required by a court of competent jurisdiction or as otherwise required by applicable legal or regulatory process.

 

(h)            Rating Agency Effective Date Report. The Issuer shall cause the Collateral Administrator to compile and deliver to the Rating Agency on or prior to the 20th Business Day after the Effective Date (provided that if the Effective Date is on or after the fifth Business Day before the Determination Date related to the first Payment Date, then such delivery must be within 15 Business Days after the Effective Date) a report (the "Rating Agency Effective Date Report"), dated as of the Effective Date, containing (i) at least the information that would be included if such a report was a Monthly Report, (ii) a list of all Closing Date Participations held by the Issuer as of the Effective Date and (iii) a calculation with respect to whether the Effective Date Condition is satisfied.

 

(i)            Effective Date Ratings Confirmation Failure. Following the occurrence of an Effective Date Ratings Confirmation Failure, the Issuer (or the Asset Manager on the Issuer's behalf) shall, in accordance with the Priority of Interest Payments and at the Asset Manager's discretion, instruct the Trustee to re-designate Interest Proceeds as Principal Proceeds (for the avoidance of doubt, only to the extent that there are sufficient Interest Proceeds remaining after giving effect to such re-designation to make the payments described in clauses (i) through (viii) of the Priority of Interest Payments on the relevant Payment Date) and (A) pay principal of the Rated Notes in accordance with the Note Payment Sequence as provided in Section 9.5(b) and/or (B) purchase additional Underlying Assets with such Principal Proceeds or deposit such Principal Proceeds into the Collection Account for investment in Eligible Investments pending the purchase of Underlying Assets at a later date, until such ratings are confirmed (provided such confirmation is not required if the Standard & Poor's Effective Date Deemed Rating Confirmation has been satisfied) or, if not confirmed (and the Standard & Poor's Effective Date Deemed Rating Confirmation has not been satisfied), until the Rated Notes have been paid in full. The Issuer may take such other action permitted herein to obtain rating confirmation.

 

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(j)            Notwithstanding anything to the contrary in this Indenture, the occurrence of an Effective Date Ratings Confirmation Failure shall not constitute a Default or an Event of Default hereunder.

 

Section 3.6     Representations Regarding Collateral.

 

The Issuer represents and warrants on the Closing Date (which representations and warranties shall (except as otherwise provided) survive the execution of this Indenture and be deemed to be repeated on each date on which Collateral is Delivered as if made at and as of that time and may be waived only with Rating Agency Confirmation from S&P) that:

 

(a)            This Indenture creates valid and continuing security interests (as defined in the applicable Uniform Commercial Code) in the Collateral in favor of the Trustee for the benefit of the Secured Parties, which security interest is prior to all other liens, claims and encumbrances and is enforceable as such as against creditors of and purchasers from the Issuer, except as otherwise permitted under this Indenture.

 

(b)            The Issuer owns the Collateral free and clear of any lien, claim or encumbrance of any Person, other than the security interests created or permitted under this Indenture.

 

(c)            The Issuer has received all consents and approvals required by the terms of any item of Collateral to the transfer to the Trustee of its interest and rights in the Collateral hereunder.

 

(d)            All Collateral other than the Pledged Accounts has been credited to one or more Pledged Accounts (other than (i) any "general intangibles" within the meaning of the applicable Uniform Commercial Code and (ii) any instruments evidencing debt underlying a Participation).

 

(e)            The Intermediary for each Pledged Account has agreed to treat all assets credited to each Pledged Account as "financial assets" within the meaning of the applicable Uniform Commercial Code.

 

(f)            The Issuer has taken all steps necessary to cause the Intermediary to identify in its records the Trustee as the entitlement holder of each of the Pledged Accounts. The Pledged Accounts are not in the name of any person other than the Issuer or the Trustee. The Issuer has not consented for the Intermediary of any Pledged Account to comply with entitlement orders of any person other than the Trustee.

 

(g)            None of the promissory notes that constitute or evidence the Collateral has any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than to the Trustee.

 

(h)            The Issuer has caused or will have caused, within ten days of the Closing Date, the filing of all appropriate financing statements in the proper filing offices in the appropriate jurisdictions under applicable law in order to perfect the security interest in the Collateral Granted to the Trustee hereunder.

 

(i)            Other than as expressly permitted under this Indenture, the Issuer has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Collateral. The Issuer has not authorized the filing of and is not aware of any financing statements against the Issuer other than any financing statement relating to the security interest granted to the Trustee under this Indenture (or any such financing statement has been terminated on or before the Closing Date). The Issuer is not aware of any judgment, tax lien filing or Pension Benefit Guaranty Corporation lien filing against the Issuer.

 

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(j)            The Issuer will provide notice to S&P of any breach of any of the representations under this Section 3.6.

 

Article IV
SATISFACTION AND DISCHARGE

 

Section 4.1     Satisfaction and Discharge of Indenture.

 

(a)            This Indenture shall cease to be of further effect with respect to the Notes except as to (i) rights of registration of transfer and exchange, (ii) substitution of mutilated, destroyed, lost or stolen Notes, (iii) rights of Holders to receive payments of principal thereof and interest and/or payments thereon, as provided herein, (iv) the rights, obligations and immunities of the Trustee hereunder, (v) the rights, obligations and immunities of the Asset Manager hereunder and under the Asset Management Agreement, (vi) the rights, obligations and immunities of the Collateral Administrator hereunder and under the Collateral Administration Agreement, and (vii) the rights of Holders as beneficiaries hereof with respect to the property deposited with the Trustee and payable to all or any of them, and the Trustee, at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture (including, without limitation, notice of such satisfaction and discharge to the Holders), when:

 

(i)

 

(A)            all amounts due and payable with respect to the Notes hereunder have been paid in accordance herewith or defeased or, after the Rated Notes are redeemed or retired in full, as otherwise consented to by a Majority of the Subordinated Notes in connection with an Optional Redemption;

 

(B)            the Issuer has delivered to the Trustee a certificate stating that (A) there is no Collateral that remains subject to the lien of this Indenture unless, after the Rated Notes are redeemed in full, a Majority of the Subordinated Notes either (1) has entered into an agreement with a financial institution to transfer the remaining Collateral to a custodial account for the benefit of the Subordinated Notes or (2) has directed the Trustee to take such other actions with respect to the remaining Collateral and to release the lien of this Indenture on such remaining Collateral, (B) all Hedge Agreements have been terminated; and (C) all funds on deposit in the Pledged Accounts have been distributed in accordance with the terms of this Indenture or have otherwise been irrevocably deposited with the Trustee for such purpose; or

 

(C)            the Issuer certifies to the Trustee that it has not entered into any agreements after the Closing Date unless such agreements included a provision limiting recourse in respect of its obligations thereunder to the Collateral and providing in substance that upon exhaustion of the Collateral and application of the proceeds thereof pursuant to this Indenture, any remaining financial obligations of the Issuer will be extinguished, and the Trustee certifies to the Issuer that:

 

(1)            all Underlying Assets, Equity Securities, Eligible Investments and all other Collateral (other than the Asset Management Agreement, the Collateral Administration Agreement, any Account Agreement, the Limited Liability Company Agreement and the Retention of Net Economic Interest Letter) (1) have matured, (2) have been sold, assigned, terminated or otherwise disposed of or (3) have otherwise been converted into Cash;

 

(2)            all Cash that constitutes Collateral or the proceeds of Collateral has been distributed pursuant to this Indenture (except for Cash placed in a reserve account to cover Dissolution Expenses); and

 

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(3)            no assets (other than Excluded Property) are on deposit in or to the credit of any Pledged Account; and

 

(ii)            the Issuer has delivered to the Trustee Officers' Certificates, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.

 

(b)            In connection with any certifications by the Issuer as described above, the Trustee shall, upon request, provide to the Issuer in writing (i) with the assistance of the Asset Manager, a list of all Collateral (if any) in the possession of the Trustee (or a statement that no Collateral is in its possession), (ii) the Balance (if any) in each Pledged Account (or a statement that there are no such balances) and (iii) a list of the nature and type of any expenses (and the amount thereof, if known) for which the Issuer is liable and of which the Trustee is aware and has actual knowledge.

 

(c)            Upon the discharge of this Indenture, the Trustee shall provide such certifications to the Issuer as may be based upon information reasonably available to the Trustee and as is reasonably required by the Issuer in order for the liquidation of the Issuer to be completed.

 

(d)            Notwithstanding the satisfaction and discharge of this Indenture, the rights and obligations of the Issuer, the Trustee and, if applicable, the Holders, as the case may be, under Sections 2.5, 2.6, 2.7, 4.1(b), 4.2, 5.4(d), 5.9, 5.18, 6.1, 6.3, 6.4, 6.6, 6.7, 7.1 and 7.5, and Article XI, Article XIII and Article XIV shall survive the satisfaction and discharge of this Indenture.

 

Section 4.2     Repayment of Monies Held by Paying Agent. In connection with the satisfaction and discharge of this Indenture, all monies then held by any Paying Agent (other than the Trustee) under the provisions of this Indenture shall, upon demand of the Issuer or the Trustee, be paid to the Trustee to be held and applied pursuant to this Indenture, and thereupon such Paying Agent shall be released from all further liability with respect to such monies.

 

Article V
REMEDIES

 

Section 5.1     Events of Default.

 

"Event of Default" means any of the following events:

 

(a)            a default in the payment of any interest on the Rated Notes or, if no Rated Notes are Outstanding, on the Subordinated Notes when the same becomes due and payable, which default continues for a period of five or more Business Days (or, in the case of a default in payment resulting solely from an administrative error or omission by the Trustee, any Paying Agent or the Notes Registrar, such default continues for a period of seven or more Business Days after the Trustee receives written notice or has actual knowledge of such administrative error or omission);

 

(b)            a default in the payment of principal of any Rated Notes, when the same becomes due and payable, at its Stated Maturity or on any Redemption Date (or in the case of a default in payment resulting solely from an administrative error or omission by the Trustee, any Paying Agent, or the Notes Registrar, only to the extent that such default continues for seven or more Business Days after the Trustee receives written notice or has actual knowledge of such administrative error or omission);

 

(c)            the failure of the Event of Default Par Ratio to be at least 102.5% on any Measurement Date;

 

(d)            any of the Issuer or the pool of Collateral becomes an investment company required to be registered under the Investment Company Act (and such status continues for 45 days);

 

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(e)            a default in the performance, or breach, of any other covenant, representation, warranty or other agreement of the Issuer under this Indenture (it being understood that a failure of any Portfolio Criteria, Collateral Quality Test or Coverage Test shall not be a default or breach) or in any certificate or writing delivered by the Issuer pursuant to this Indenture or any representation or warranty of the Issuer made in this Indenture or in any certificate or writing delivered by the Issuer pursuant hereto fails to be correct in any respect when made, which default, breach or failure has a material adverse effect on the Holders of the Notes and continues for a period of 30 or more days after notice thereof shall have been given to the Issuer and the Asset Manager by the Trustee or to the Trustee (who shall forward it to the Issuer and the Asset Manager) by the Holders of at least a Majority of the Controlling Class, specifying such default, breach or failure and requiring it to be remedied and stating that such notice is a "Notice of Default";

 

(f)            the failure on any Payment Date to disburse amounts in the Payment Account in excess of $100,000 in accordance with the Priority of Payments, which default continues for a period of seven or more Business Days;

 

(g)            the entry of a decree or order by a court having competent jurisdiction adjudging the Issuer as bankrupt or insolvent or granting an order for relief or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Issuer under the Bankruptcy Code or any other applicable law, or appointing a receiver, liquidator, assignee, or sequestrator (or other similar official) of the Issuer or of any substantial part of its property, or ordering the winding up or liquidation of its affairs; or an involuntary case or Proceeding shall be commenced against the Issuer seeking any of the foregoing and such case or Proceeding shall continue in effect for a period of 60 consecutive days; or

 

(h)            the institution by the Issuer of Proceedings to be adjudicated as bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency Proceedings against it or the passing of a resolution for it to be voluntarily wound up, or the filing by the Issuer of a petition or answer or consent seeking reorganization or relief under the Bankruptcy Code or any other applicable law, or the consent by it to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee or sequestrator (or other similar official) of the Issuer or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of any action by the Issuer in furtherance of any such action.

 

If at any time the sum of (i) Eligible Investments, and (ii) amounts reasonably expected to be received by the Issuer in Cash during the current Due Period (as certified by the Asset Manager in its reasonable judgment) is less than the Dissolution Expenses, then notwithstanding any other provision of this Indenture, the Issuer shall no longer be required to obtain annual opinions under Section 7.8 or accountants reports under Section 10.5 and Section 10.7, and failure to obtain such opinions or reports shall not constitute a Default or Event of Default under clause (e).

 

Upon the occurrence of or receipt of written notice or actual knowledge of the occurrence of an Event of Default, each of (i) the Issuer, (ii) the Trustee and (iii) the Asset Manager shall notify each other in writing, which may be by facsimile or electronic mail, and the Trustee on behalf of the Issuer shall promptly notify any Hedge Counterparty, the Holders, each Paying Agent, the Depository and the Rating Agency in writing.

 

Section 5.2     Acceleration of Maturity; Rescission and Annulment.

 

(a)            If an Event of Default occurs and is continuing (other than an Event of Default specified in Section 5.1(g) or Section 5.1(h)), (i) the Trustee, with the consent of a Majority of the Controlling Class, by written notice to the Issuer, or (ii) a Majority of the Controlling Class, by written notice to the Issuer, the Asset Manager and the Trustee (and the Trustee shall in turn forward such notice to the Holders of all Notes then Outstanding), may declare the principal of all the Notes to be immediately due and payable, and upon any such declaration, such principal, together with all accrued and unpaid interest thereon, and other amounts payable hereunder, shall become immediately due and payable and the Reinvestment Period will terminate. If an Event of Default specified in Section 5.1(g) or Section 5.1(h) occurs, all unpaid principal, together with any accrued and unpaid interest thereon, of all the Notes, and other amounts payable hereunder, shall automatically become due and payable, without any declaration or other act on the part of the Trustee or any Holder of Notes.

 

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(b)            At any time after such a declaration of acceleration of Maturity has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter provided in this Article V, a Majority of the Controlling Class, by written notice to the Issuer and the Trustee and S&P, may rescind and annul such declaration and its consequences if:

 

(i)            The Issuer has paid or deposited with the Trustee a sum sufficient to pay, and shall pay:

 

(A)            all overdue installments of interest on and principal of the Rated Notes then due (other than amounts due solely as a result of such acceleration);

 

(B)            to the extent that payment of such interest is lawful, interest on any Defaulted Interest at the applicable Note Interest Rates;

 

(C)            all unpaid taxes and Administrative Expenses and sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents and counsel; and

 

(ii)            the Trustee has determined that all Events of Default, other than the nonpayment of the interest on or principal of Notes that have become due solely by such acceleration, have been cured and a Majority of the Controlling Class by written notice to the Trustee has agreed with such determination or has waived such Event of Default as provided in Section 5.14.

 

The Notes may be accelerated pursuant to the first paragraph of this Section 5.2, notwithstanding any previous rescission and annulment of a declaration of acceleration pursuant to this paragraph.

 

No such rescission shall affect any subsequent Default or impair any right consequent thereon.

 

(c)            Notwithstanding anything in this Section 5.2 to the contrary, the Notes will not be subject to acceleration by a Majority of the Controlling Class solely as a result of the failure to pay any amount due on the Notes that are not the then Highest Ranking Class.

 

Section 5.3     Collection of Indebtedness and Suits for Enforcement by Trustee.

 

If an Event of Default has occurred and is continuing and the Notes have been declared due and payable and such declaration and its consequences have not been rescinded and annulled, or at any time on or after the Stated Maturity of the Notes, the Trustee may in its discretion after written notice to the Holders of the Notes, and shall upon written direction of a Majority of the Controlling Class, proceed to protect and enforce its rights and the rights of the Holders of the Notes by such appropriate Proceedings, in its own name and as trustee of an express trust, as the Trustee shall deem most effective (if no direction by a Majority of the Controlling Class is received by the Trustee) or as the Trustee may be directed by a Majority of the Controlling Class, to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy or legal or equitable right vested in the Trustee by this Indenture or by law. Unless the Stated Maturity has occurred, this Section 5.3 shall be subject to Section 5.5.

 

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If there are any pending Proceedings relative to the Issuer or any other obligor upon the Notes under the Bankruptcy Code, the bankruptcy or insolvency laws of the State of Delaware or any other applicable bankruptcy, insolvency or other similar law, or in case a receiver, assignee or Trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Issuer or its respective property or such other obligor or its property, or in case of any other comparable Proceedings relative to the Issuer or the creditors or property of the Issuer or such other obligor, the Trustee, regardless of whether the principal of any Notes shall then be due and payable as therein expressed or by declaration or otherwise and regardless of whether the Trustee shall have made any demand pursuant to the provisions of this Section 5.3, shall be entitled and empowered, by intervention in such Proceedings or otherwise:

 

(a)            to file and prove a claim or claims for the whole amount of principal, interest or payments owing and unpaid in respect of each of the Notes and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for reasonable compensation to the Trustee and each predecessor Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee) and of the Holders of the Notes allowed in any Proceedings relative to the Issuer or other obligor upon the Notes or to the creditors or property of the Issuer or such other obligor;

 

(b)            unless prohibited by applicable law and regulations, to vote on behalf of the Holders of the Notes in any election of a trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency Proceedings or a Person performing similar functions in comparable Proceedings; and

 

(c)            to collect and receive any monies or other property payable to or deliverable on any such claims, and to distribute all amounts received with respect to the claims of the Holders of the Notes and of the Trustee on their behalf; and any Trustee, receiver or liquidator, custodian or other similar official is hereby authorized by each of the Holders of the Notes to make payments to the Trustee, and, in the event that the Trustee shall consent to the making of payments directly to the Holders of the Notes, to pay to the Trustee such amounts as shall be sufficient to provide reasonable compensation to the Trustee, each predecessor Trustee and their respective agents, attorneys and counsel, and all other reasonable expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee, except as a result of its negligence or bad faith.

 

Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such Proceeding except to vote for the election of a trustee in bankruptcy or similar Person.

 

In any Proceedings brought by the Trustee on behalf of the Holders of the Notes (and any such Proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party), the Trustee shall be held to represent all the Holders of the Notes.

 

Section 5.4     Remedies.

 

(a)            Subject to Section 5.5, if an Event of Default shall have occurred and be continuing, and the Notes have been declared due and payable and such declaration and its consequences have not been rescinded and annulled, the Issuer agrees that the Trustee may (and shall, subject to Section 5.13, upon direction by a Majority of the Controlling Class), to the extent permitted by applicable law, exercise one or more of the following rights, privileges and remedies:

 

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(i)            institute Proceedings for the collection of all amounts then payable on the Notes or otherwise payable under this Indenture, whether by declaration or otherwise, enforce any judgment obtained, and collect from the Collateral monies adjudged due;

 

(ii)            sell all or a portion of the Collateral or rights of interest therein, at one or more public or private sales called and conducted in any manner permitted by law and in accordance with Section 5.17;

 

(iii)           institute Proceedings from time to time for the complete or partial foreclosure of this Indenture with respect to the Collateral;

 

(iv)          exercise any remedies of a secured party under the UCC and take any other appropriate action to protect and enforce the rights and remedies of the Secured Parties hereunder; and

 

(v)           to the extent not inconsistent with clauses (i) through (iv), exercise any other rights and remedies that may be available at law or in equity;

 

provided, however, that the Trustee may not sell or liquidate the Collateral or institute Proceedings in furtherance thereof pursuant to this Section 5.4 unless either of the conditions specified in Section 5.5(a) is met.

 

The Trustee is entitled to obtain and rely upon an opinion of an Independent investment banking firm of national reputation as to the feasibility of any action proposed to be taken in accordance with this Section 5.4 and as to the sufficiency of the Proceeds and other amounts receivable with respect to the Collateral, to make the required payments of principal and interest on any Class of Notes, which opinion shall be conclusive evidence as to such feasibility or sufficiency.

 

(b)            If an Event of Default as described in Section 5.1(e) shall have occurred and be continuing the Trustee may, and at the request of the Holders of not less than 25% of the Controlling Class shall, institute a Proceeding solely to compel performance of the covenant or agreement or to cure the representation or warranty, the breach of which gave rise to the Event of Default under Section 5.1(e), and enforce any equitable decree or order arising from such Proceeding.

 

(c)            Upon any sale, whether made under the power of sale hereby given or by virtue of judicial proceedings, any Secured Party may bid for and purchase the Collateral or any part thereof and, upon compliance with the terms of sale, may hold, retain, possess or dispose of such property in its or their own absolute right without accountability; and any purchaser at any such sale may, in paying the purchase money, deliver to the Trustee any of the Notes in lieu of Cash equal to the amount which shall, upon distribution of the net proceeds of such sale, be payable on such Notes so delivered (taking into account the Class of such Notes and the Priority of Payments). If the amounts payable on such Notes shall be less than the amount due thereon, such Notes shall be returned to the Holders thereof after proper notation has been made thereon to show partial payment of such amount.

 

Upon any sale, whether made under the power of sale hereby given or by virtue of judicial proceedings, the receipt of the Trustee, or of the officer making a sale under judicial proceedings, shall be a sufficient discharge to the purchaser or purchasers at any sale for its or their purchase money, and such purchaser or purchasers shall not have any obligation with respect to the application thereof.

 

Any such sale, whether under any power of sale hereby given or by virtue of judicial proceedings, shall bind the Issuer, the Trustee and the Secured Parties, shall operate to divest all right, title and interest whatsoever, either at law or in equity, of each of them in and to the property sold, and shall be a perpetual bar, both at law and in equity, against each of them and their successors and assigns, and against any and all Persons claiming through or under them.

 

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(d)            Notwithstanding any other provision of this Indenture, none of (i) the Trustee, in its own capacity, or on behalf of any Holder of a Note, (ii) the Holders of the Notes and each holder of a beneficial interest therein, (iii) the Asset Manager or (iv) any other Secured Parties or third party beneficiaries of this Indenture, may, prior to the date which is one year (or, if longer, the applicable preference period) plus one day after the payment in full of all Notes, institute against, or join any other Person in instituting against, the Issuer any bankruptcy, reorganization, arrangement, insolvency, winding up, moratorium or liquidation proceedings, or other proceedings under U.S. federal or state bankruptcy or similar laws. Nothing in this Section 5.4 shall preclude, or be deemed to estop, the Trustee or the Asset Manager (i) from taking any action prior to the expiration of the aforementioned one year and one day (or longer) period in (A) any case or proceeding voluntarily filed or commenced by the Issuer or (B) any involuntary insolvency proceeding filed or commenced by a Person other than the Trustee, the Asset Manager or their respective Affiliates, as applicable, or (ii) from commencing against the Issuer or any of its properties any legal action which is not a bankruptcy, reorganization, arrangement, insolvency, moratorium or liquidation proceeding.

 

(e)            In the event one or more Holders or beneficial owners of Notes cause the filing of a petition in bankruptcy against the Issuer in violation of the prohibition described in Section 5.4(d) above, such Holder(s) or beneficial owner(s) will be deemed to acknowledge and agree that any claim that such Holder(s) or beneficial owner(s) have against the Issuer or with respect to any Collateral (including any proceeds thereof) shall, notwithstanding anything to the contrary in the Priority of Payments, be fully subordinate in right of payment to the claims of each Holder and beneficial owner of any Rated Notes that does not seek to cause any such filing, with such subordination being effective until the Rated Notes held by each Holder or beneficial owners of any Rated Notes that does not seek to cause any such filing are paid in full in accordance with the Priority of Payments (after giving effect to such subordination). The terms described in the immediately preceding sentence are referred to herein as the "Bankruptcy Subordination Agreement". The Bankruptcy Subordination Agreement will constitute a "subordination agreement" within the meaning of Section 510(a) of the Bankruptcy Code (Title 11 of the United States Code, as amended from time to time (or any successor statute)). The Trustee shall be entitled to rely upon an Issuer Order from the Issuer with respect to the payment of amounts payable to Holders, which amounts are subordinated pursuant to this Section 5.4(e).

 

Section 5.5     Optional Preservation of Collateral.

 

(a)            Notwithstanding Section 5.4, if an Event of Default shall have occurred and be continuing, the Trustee shall not liquidate or sell the Collateral (provided, however, that the Issuer may continue to sell assets to the extent provided in Sections 12.1(b), (c), (d), (e), (f) and (g)), and the Trustee shall collect and cause the collection of the proceeds thereof and make and apply all payments and deposits and maintain all accounts hereunder in accordance with the provisions of Article X, Article XI, Article XII and Article XIII unless the Notes have been accelerated and either:

 

(i)            the Trustee determines that the anticipated proceeds of a sale or liquidation of the Collateral (after deducting the expenses of such sale or liquidation) would be sufficient to pay in full the sum of (A) the principal and accrued interest with respect to all the Outstanding Rated Notes, and (B)(1) all Administrative Expenses and (2) all other items senior in right of payment under the Priority of Liquidation Payments to distributions on the Subordinated Notes and a Majority of the Controlling Class agrees with such determination; or

 

(ii)            each of (A) a Majority of the Controlling Class and (B) a Majority of each other Class of Rated Notes for which the Overcollateralization Ratio with respect to such Class is greater than 100.00% as of the most recent Measurement Date on or prior to the date of the direction, voting separately, direct the sale or liquidation of the Collateral.

 

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(b)            Regardless of whether the conditions set forth in Section 5.5(a)(i) or (ii) have been satisfied, (i) the Asset Manager may direct the Trustee to (and the Trustee shall) complete the acquisition of assets that are the subject of a binding commitment entered into by the Issuer prior to such Event of Default (including a commitment with respect to which the principal amount has not yet been allocated) and to accept any Offer or tender offer made to all holders of any Underlying Asset at a price equal to or greater than its par amount plus accrued interest, and (ii) the Issuer shall continue to hold funds on deposit in the Variable Funding Account to the extent required to meet the Issuer's obligations with respect to the Variable Funding Reserve Amount on any Revolving Credit Facility or Delayed-Draw Loan. The Trustee shall give written notice of its determination to liquidate or sell the Collateral to S&P and to the Issuer. So long as such Event of Default is continuing, any such determination may be made at any time when the conditions specified in clause (i) or (ii) exist.

 

(c)            If either of the conditions set forth in Section 5.5(a) are satisfied, the Trustee shall sell the Collateral in accordance with Section 5.17. Nothing contained in Section 5.5(a) shall be construed to require the Trustee to sell the Collateral if the conditions set forth in Section 5.5(a) are not satisfied. Nothing contained in Section 5.5(a) shall be construed to require the Trustee to preserve the Collateral if prohibited by applicable law or if the Trustee is directed to liquidate the Collateral pursuant to Section 5.5(a)(ii).

 

(d)            In determining whether the condition specified in Section 5.5(a)(i) is satisfied, the Trustee, in consultation with the Asset Manager, shall obtain bid prices with respect to each Pledged Obligation from at least two nationally recognized dealers as specified by the Asset Manager in writing, that at the time makes a market in such Pledged Obligation (or if there is only one such dealer or market maker, or failing that, bidder, then the Trustee shall obtain a bid price from that dealer, market maker or bidder, or if there are no nationally recognized dealers, then the Trustee shall obtain quotes from a pricing source) and shall compute (in consultation with the Asset Manager) the anticipated proceeds of sale or liquidation on the basis of the lower of such bid prices for each such Pledged Obligation. In addition, in determining issues relating to whether the condition specified in Section 5.5(a)(i) is satisfied, the Trustee may retain and rely on an opinion of an Independent investment banking firm of national reputation.

 

(e)            The Trustee shall make the determinations required by Section 5.5(a)(i) only at the request of a Majority of the Controlling Class at any time during which the Trustee retains the Collateral pursuant to Section 5.5(a) and the obligation to make any such determination will be subject to Section 6.3(c). In the case of each calculation made by the Trustee pursuant to Section 5.5(a)(i), the Trustee shall obtain a report (an "Accountants' Report") of an Independent certified public accountant of national reputation re-computing the computations of the Trustee and certifying their conformity to the requirements of this Indenture. In determining whether the Holders of the requisite Aggregate Outstanding Amount of any of the Notes have given any direction or notice pursuant to Section 5.5(a), a Holder of any Class of Notes that is also a Holder of any other Class of Notes shall be counted as a Holder of each such Class of Notes for all purposes. The Trustee shall promptly deliver to the Holders of the Notes a report stating the results of any determination made pursuant to Section 5.5(a)(i), which, for the avoidance of doubt, shall not include a copy of the Accountants' Report.

 

Section 5.6     Trustee May Enforce Claims Without Possession of Notes. All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any Proceeding relating thereto, and any such Proceeding instituted by the Trustee shall be brought in its own name as Trustee of an express trust, and any recovery or judgment, subject to the payment of the reasonable expenses, disbursements in compensation of the Trustee, each predecessor Trustee and its agents and attorneys in counsel, shall be applied as set forth in Section 5.7.

 

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Section 5.7     Application of Money Collected.

 

(a)            If any Event of Default has occurred and acceleration has not occurred, payments will be made on each Payment Date in accordance with the Priority of Interest Payments and Priority of Principal Payments.

 

(b)            Upon receipt of a direction to liquidate pursuant to this Article V, the Trustee shall suspend all payments pursuant to this Indenture until the Liquidation Payment Date. The application of any money collected by the Trustee (net of expenses incurred in connection with such sale, including reasonable fees and expenses of its attorneys and agents) pursuant to this Article V and any funds that may then be held or thereafter received by the Trustee shall be applied on the Liquidation Payment Date, in accordance with the Priority of Liquidation Payments.

 

(c)            If any Event of Default has occurred and has not been cured or waived and acceleration has occurred, but the Trustee has not received a direction to liquidate pursuant to this Article V, payments will be made on each Payment Date in accordance with the Priority of Liquidation Payments.

 

Section 5.8     Limitation on Suits. No Holder of any Note shall have any right to institute any Proceedings, judicial or otherwise, with respect to this Indenture or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:

 

(a)            such Holder has previously given written notice to the Trustee of a continuing Event of Default;

 

(b)            except as otherwise provided in Section 5.9, the Holders of at least 25% of the Aggregate Outstanding Amount of the Controlling Class shall have made written request to the Trustee to institute Proceedings in respect of such Event of Default in its own name as the Trustee hereunder;

 

(c)            such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;

 

(d)            the Trustee for 30 days after its receipt of such notice, request and offer of indemnity has failed to institute any such Proceeding; and

 

(e)            no direction inconsistent with such written request has been given to the Trustee during such 30-day period by a Majority of the Rated Notes of each Class (voting separately);

 

it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of the Notes of the same Class or to obtain or to seek to obtain priority or preference over any other Holders of the Notes of the same Class or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders of the Notes of the same Class, subject to and in accordance with the Priority of Payments. In addition, any action taken by any one or more Holders of the Notes shall be subject to the restrictions of Section 5.4(d).

 

If direction from less than a Majority of the Rated Notes of any Class is required under this Section 5.8 and the Trustee shall receive conflicting or inconsistent requests and indemnity from two or more groups of Holders of the Rated Notes of such Class, each representing less than a Majority of the Rated Notes of such Class, the Trustee shall take the action requested by the Holders of the largest percentage in Aggregate Outstanding Amount of the Rated Notes of such Class, notwithstanding any other provisions of this Indenture.

 

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Section 5.9     Unconditional Rights of Holders to Receive Principal and Interest.

 

(a)            Notwithstanding any provision in this Indenture other than Section 2.7(h) and Section 2.7(i), the Holder of each Class of Rated Notes shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest on such Notes as such principal and interest becomes due and payable hereunder, in accordance with the Priority of Payments, and subject to the provisions of Section 5.4(d) and Section 5.8, to institute Proceedings for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder.

 

(b)            Holders of the Notes of a Lower Ranking Class shall have no right to institute Proceedings for the enforcement of any such payment until such time as no Higher Ranking Class remains Outstanding, which right shall be subject to the provisions of Section 5.4(d) and Section 5.8, and shall not be impaired without the consent of any such Holder. For so long as any Higher Ranking Class is Outstanding, no Lower Ranking Class shall be entitled to any payment on a claim against the Issuer unless there are sufficient funds to make payments on such Class in accordance with the Priority of Payments.

 

Section 5.10     Restoration of Rights and Remedies. If the Trustee or any Holder of the Notes has instituted any Proceeding to enforce any right or remedy under this Indenture and such Proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder of the Notes, then and in every such case the Issuer, the Trustee and the Holder of the Notes shall, subject to any determination in such Proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Holders of the Notes shall continue as though no such Proceeding had been instituted.

 

Section 5.11     Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Trustee or to the Holders of the Notes is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing by law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

 

Section 5.12     Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy conferred by this Article V or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

 

Section 5.13     Control by Holders. A Majority of the Controlling Class shall have the right to cause the institution of and direct the time, method and place of conducting any Proceeding for any remedy available to the Trustee or exercising any trust, right, remedy or power conferred on the Trustee; provided, that:

 

(a)            such direction shall not be in conflict with any rule of law or with this Indenture;

 

(b)            the Trustee may take any other action deemed proper by it that is not inconsistent with such direction; provided, however, that, subject to Section 6.1, it need not take any action that it determines might involve it in liability;

 

(c)            the Trustee shall have been provided with indemnity satisfactory to it; and

 

(d)            any direction to the Trustee to undertake a sale of the Collateral shall be by the Holders of the Notes secured thereby representing the percentage of the Aggregate Outstanding Amount of Notes specified in Section 5.4 or Section 5.5, as applicable.

 

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Section 5.14     Waiver of Past Defaults.

 

(a)            Prior to the time a judgment or decree for payment of the money due has been obtained by the Trustee as provided in this Article V, a Majority of the Controlling Class by notice to the Trustee may on behalf of the Holders of all the Notes waive any Default or Event of Default and its consequences, except a Default or Event of Default: (i) constituting a default under Section 5.1(a) or Section 5.1(b), which can be waived solely by 100% of the Holders of each affected Class; or (ii) in respect of a covenant or provision hereof that under Section 8.2 cannot be modified or amended without the consent of each Holder of each Class of Notes materially adversely affected thereby.

 

In the case of any such waiver, the Issuer, the Trustee and the Holders shall be restored to their former positions and rights hereunder, respectively, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto. The Trustee shall promptly give notice of any such waiver to the Asset Manager and to each of the Rating Agencies.

 

Upon any such waiver, such Default or Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto except in accordance with clause (b) below.

 

(b)            Any waiver pursuant to Section 5.14(a) above shall only apply to past Defaults or Events of Default unless the Holders providing such waiver expressly specify that such waiver shall apply to future occurrences of Defaults or Events of Default of the same type until a specific date or until a Majority of the Controlling Class have notified the Trustee that such waiver of future occurrences of such Defaults or Events of Default has been revoked, and until such specific date or such revocation, each subsequent Default or Events of Default shall be deemed waived upon its occurrence.

 

Section 5.15     Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Note by its acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder of the Notes, or group of Holders of the Notes, holding in the aggregate more than 10% of the Aggregate Outstanding Amount of the Rated Notes of each Class (voting separately), or to any suit instituted by any Holder of the Notes for the enforcement of the payment of the principal of or interest or distribution on any Notes of the Controlling Class, on or after the Stated Maturity applicable to such Note (or, in the case of redemption, on or after the applicable Redemption Date).

 

Section 5.16     Waiver of Stay or Extension Laws. The Issuer covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants, the performance of or any remedies under this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenant that it shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted.

 

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Section 5.17     Sale of Collateral.

 

(a)            The power to effect any sale of any portion of the Collateral pursuant to Section 5.4 and Section 5.5 shall not be exhausted by any one or more sales as to any portion of such Collateral remaining unsold, but shall continue unimpaired until the entire Collateral shall have been sold or all amounts secured by the Collateral shall have been paid. The Trustee may, and shall upon direction of a Majority of the Controlling Class, from time to time postpone any sale by public announcement made at the time and place of such sale. The Trustee hereby expressly waives its rights to any amount fixed by law as compensation for any sale; provided, that the Trustee shall be authorized to deduct the reasonable costs, charges and expenses (including the fees and expenses of its attorneys and agents) incurred by it in connection with such sale from the proceeds thereof notwithstanding the provisions of Section 6.7.

 

(b)            The Trustee may bid for and acquire any portion of the Collateral in connection with a public sale thereof. The Trustee may hold, lease, operate, manage or otherwise deal with any property so acquired in any manner permitted by law in accordance with this Indenture.

 

(c)            If any portion of the Collateral consists of Unregistered Securities, the Asset Manager may seek an Opinion of Counsel or, if no such Opinion of Counsel can be obtained and with the consent of a Majority of the Controlling Class, seek a no-action position from the SEC or any other relevant federal or state regulatory authorities, regarding the legality of a public or private sale of such Unregistered Securities.

 

(d)            The Trustee shall execute and deliver an appropriate instrument of conveyance transferring its interest in any portion of the Collateral in connection with a sale thereof. In addition, the Trustee is hereby irrevocably appointed the agent and attorney-in-fact of the Issuer to transfer and convey its interest in any portion of the Collateral in connection with a sale thereof, and to take all action necessary to effect such sale. No purchaser or transferee at such a sale shall be bound to ascertain the Trustee's authority, to inquire into the satisfaction of any conditions precedent or see to the application of any monies.

 

Section 5.18     Action on the Notes. The Trustee's right to seek and recover judgment on the Notes or under this Indenture shall not be affected by the seeking or obtaining of or application for any other relief under or with respect to this Indenture. Neither the lien of this Indenture nor any rights or remedies of the Trustee or the Holders of the Notes shall be impaired by the recovery of any judgment by the Trustee against the Issuer or by the levy of any execution under such judgment upon any portion of the Collateral or upon any of the assets of the Issuer.

 

Article VI
THE TRUSTEE

 

Section 6.1     Certain Duties and Responsibilities.

 

(a)            Except during the continuance of an Event of Default:

 

(i)            the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

 

(ii)            in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; provided, however, that in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they substantially conform on their face to the requirements of this Indenture and shall promptly notify the party delivering the same if such certificate or opinion does not conform. Other than in the case of a form provided by a Holder, if a corrected form shall not have been delivered to the Trustee within 15 days after such notice from the Trustee, the Trustee shall so notify the Holders of the Notes.

 

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(b)            In case an Event of Default known to the Trustee has occurred and is continuing, the Trustee shall, prior to the receipt of directions, if any, from a Majority of the Controlling Class (or as permitted under this Indenture by the Asset Manager or the Issuer, including, without limitation, pursuant to Section 10.6 and Section 7.9), exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs.

 

(c)            No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

 

(i)            this subsection shall not be construed to limit the effect of clause (a) of this Section 6.1;

 

(ii)           the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it shall be proven that the Trustee was negligent in ascertaining the pertinent facts;

 

(iii)          the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the or the Asset Manager and/or a Majority (or such other percentage as may be required by the terms hereof) of the Controlling Class or any other required Classes, as applicable, relating to the time, method and place of conducting any Proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture; and

 

(iv)          no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it unless such risk or liability relates to its ordinary services to be performed under this Indenture.

 

(d)           For all purposes under this Indenture, the Trustee shall not be deemed to have notice or knowledge of any Default or Event of Default described in Sections 5.1(d) through (g) unless a Trust Officer assigned to and working in the Corporate Trust Office has actual knowledge thereof or unless written notice of any event which is in fact such an Event of Default or Default is received by the Trustee at the Corporate Trust Office, and such notice references the Notes generally, the Issuer or this Indenture. For purposes of determining the Trustee's responsibility and liability hereunder, whenever reference is made in this Indenture to such an Event of Default or a Default, such reference shall be construed to refer only to such an Event of Default or Default of which the Trustee is deemed to have notice as described in this Section 6.1.

 

(e)            Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 6.1 and Section 6.3.

 

(f)            The Trustee shall be permitted to act in accordance with any proxy granted to a third party by a Holder of record in connection with any action under the Notes or the Transaction Documents or any vote on or consent to any waiver, amendment, modification or other actions (including any Act of Holders) with respect to the Notes or the Transaction Documents to the extent of the Notes held by such Holder upon receipt of instructions from such third party accompanied by evidence of such proxy in a form reasonably satisfactory to the Trustee. Any reference to a vote by a Holder hereunder shall not be deemed to require a Holder to vote all its interests in the Notes consistently, but rather a Holder may vote such proportion of its Notes (or not vote such proportion) as it may determine. In such instance, a Holder shall inform the Trustee the proportion of the Notes in the vote assigned thereto.

 

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(g)            The Trustee shall, upon reasonable (but in no case fewer than two Business Days) prior written notice to the Trustee, permit any representative of a Holder of a Note, during the Trustee's normal business hours, to examine all books of account, records, reports and other papers of the Trustee relating to the Notes, to make copies and extracts therefrom (the reasonable out-of-pocket expenses incurred in making any such copies or extracts to be reimbursed to the Trustee by such Holder) and to discuss the Trustee's actions, as such actions relate to the Trustee's duties with respect to the Notes, with the Trustee's officers and employees responsible for carrying out the Trustee's duties with respect to the Notes.

 

(h)            The Trustee will forward to Holders any written request from the Asset Manager to such Holders for information identified by the Asset Manager or its Affiliates as required in connection with the Asset Manager's or its Affiliates' compliance with applicable law, rule or regulation, including any such information identified by the Asset Manager as required to complete a Form ADV, Form PF or any other form required by the SEC or any information required to comply with any requirement of the Dodd-Frank Wall Street Reform and Consumer Protection Act applicable to the Asset Manager or its parent or Affiliates.

 

Section 6.2     Notice of Event of Default. Promptly (and in no event later than two Business Days) after the occurrence of any Event of Default known to the Trustee or after any declaration of acceleration has been made or delivered to the Trustee pursuant to Section 5.2, the Trustee shall provide notice in accordance with Section 14.3 and Section 14.4 to each of the Rating Agencies, the Asset Manager, the Issuer and the Holders and each Certifying Person, notice of all Events of Default hereunder known to the Trustee (unless such Event of Default shall have been cured or waived) and notice of acceleration. Notwithstanding the foregoing, the Trustee may withhold from Holders notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal, premium or interest) if the Trustee determines that withholding notice is in the interest of the Holders.

 

Section 6.3     Certain Rights of Trustee. Except as otherwise provided in Section 6.1:

 

(a)            the Trustee may rely conclusively and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, note or other paper, electronic communication or document (including the Payment Date Report) reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties. Any electronically signed document delivered via electronic mail or other transmission method from a person purporting to be an Authorized Officer shall be considered signed or executed by such Authorized Officer on behalf of the applicable Person. The Trustee shall have no duty to inquire into or investigate the authenticity or authorization of any such electronic signature and shall be entitled to conclusively rely on any such electronic signature without any liability with respect thereto;

 

(b)            any request or direction of the Issuer mentioned herein shall be sufficiently evidenced by an Issuer Request or Issuer Order, as the case may be;

 

(c)            whenever in the administration of this Indenture the Trustee shall (i) deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officer's Certificate or Issuer Order or (ii) be required to determine the value of any Collateral or funds hereunder or the cash flows projected to be received therefrom, the Trustee may, in the absence of bad faith on its part, rely on reports of nationally recognized accountants, investment bankers or other Persons qualified to provide the information required to make such determination, including nationally recognized dealers in securities of the type being valued and securities quotation services;

 

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(d)            as a condition to the taking or omitting of any action by it hereunder, the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or omitted by it hereunder in good faith and in reliance thereon;

 

(e)            the Trustee shall be under no obligation to exercise or to honor any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to it against all costs, expenses and liabilities which might reasonably be incurred by it in compliance with such request or direction;

 

(f)            the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, note or other paper, electronic communication or documents, but the Trustee, in its discretion, may and, upon the written direction of a Majority of the Controlling Class, shall make such further inquiry or investigation into such facts or matters as it may see fit or as it shall be directed, and the Trustee shall be entitled to receive copies of the books and records of the Asset Manager relating to the Notes, the Collateral, and on reasonable prior notice to the Issuer, to examine the books and records relating to the Notes, the Collateral and the premises of the Issuer personally or by agent or attorney during the Issuer's normal business hours; provided, that (1) the Trustee shall, and shall cause its agents, to hold in confidence all such information, except (i) to the extent disclosure may be required by law or by any regulatory or administrative authority and (ii) except to the extent that the Trustee in its sole judgment, may determine that such disclosure is consistent with its obligations hereunder; and (2) the Trustee may disclose on a confidential basis any such information to its agents, attorneys and auditors retained by the Trustee in connection with the performance of its responsibilities hereunder (for the avoidance of doubt, such information shall not include any Accountants' Certificate, Accountants' Report or Accountants' Payment Date Report);

 

(g)            the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys; provided, that the Trustee shall not be responsible for any actions or omissions on the part of any agent or attorney appointed with due care by it hereunder;

 

(h)            the Trustee shall not be liable for any action it takes or omits to take in good faith that it reasonably and, after the occurrence and during the continuance of an Event of Default, subject to Section 6.1(b), prudently believes to be authorized or within its rights or powers hereunder;

 

(i)            the permissive right of the Trustee to take or refrain from taking any actions enumerated in this Indenture shall not be construed as a duty;

 

(j)            the Trustee shall not be responsible or liable for any inaccuracies in the records of the Asset Manager, any Clearing Agency, DTC, Euroclear, Clearstream or any other Intermediary, transfer agents, calculation agent, paying agent (other than the Bank in its individual or other capacities hereunder), or for the actions or omissions of any such Person hereunder or under any document executed in connection herewith;

 

(k)            to the extent permitted by applicable law, the Trustee shall not be required to give any bond or surety in respect of the execution of this Indenture or otherwise;

 

(l)            the Trustee shall not be deemed to have notice or knowledge of any matter unless a Trust Officer has actual knowledge thereof or unless written notice thereof is received by the Trustee at the Corporate Trust Office and such notice references the Notes generally, the Issuer or this Indenture;

 

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(m)            nothing herein shall be construed to impose an obligation on the part of the Trustee to recalculate, evaluate or verify or independently determine the accuracy of any report, certificate or information received from the Issuer or Asset Manager (unless and except to the extent otherwise expressly set forth herein);

 

(n)            the Trustee shall be under no obligation to (i) confirm or verify whether the conditions to the Delivery of Collateral has been satisfied or to determine whether or not an Underlying Asset is eligible for purchase hereunder or meets the criteria in the definition thereof or (ii)evaluate the sufficiency of the documents or instruments delivered to it by or on behalf of the Issuer in connection with the Grant by the Issuer to the Trustee of any item constituting the Collateral or otherwise, or in that regard to examine any Underlying Instruments, in order to determine compliance with applicable requirements of and restrictions on transfer of an Underlying Asset;

 

(o)            the Trustee shall not be liable for the actions or omissions of the Asset Manager; and without limiting the foregoing, nothing herein shall be construed to impose an obligation on the part of the Trustee to monitor, calculate, evaluate or verify any report, certificate or information received from the Issuer or the Asset Manager (unless and except to the extent otherwise expressly set forth herein, and provided that nothing in this clause (o) supersedes or modifies the responsibilities and duties of the Collateral Administrator under the Collateral Administration Agreement), including, without limitation, with respect to the determination of Term SOFR, any Alternative Reference Rate, or other Benchmark or replacement rate;

 

(p)            to the extent any defined term hereunder, or any calculation required to be made or determined by the Trustee hereunder, is dependent upon or defined by reference to generally accepted accounting principles (as in effect in the United States) ("GAAP"), the Trustee shall be entitled to request and receive (and rely upon) instruction from the Issuer or the accountants appointed pursuant to Section 10.7 (and in the absence of its receipt of timely instruction therefrom, shall be entitled to obtain from an Independent accountant at the expense of the Issuer) as to the application of GAAP in such connection, in any instance;

 

(q)            in making or disposing of any investment permitted by this Indenture, the Trustee is authorized to deal with itself (in its individual capacity) or with any one or more of its Affiliates, whether it or such Affiliate is acting as a subagent of the Trustee or for any third person or dealing as principal for its own account. If otherwise qualified, obligations of the Bank or any of its Affiliates shall qualify as Eligible Investments hereunder;

 

(r)            the Trustee or its Affiliates are permitted to receive additional compensation that could be deemed to be in the Trustee's economic self-interest for (i) serving as investment adviser, administrator, shareholder, servicing agent, custodian or sub-custodian with respect to certain of the Eligible Investments, (ii) using Affiliates to effect transactions in certain Eligible Investments and (iii) effecting transactions in certain Eligible Investments;

 

(s)            in the event that U.S. Bank National Association or the Bank is also acting in the capacity of Paying Agent, Transfer Agent, Intermediary, custodian, Calculation Agent, Collateral Administrator or securities intermediary, the rights, protections, immunities and indemnities afforded to the Trustee pursuant to this Article VI shall also be afforded to U.S. Bank National Association or the Bank acting in such capacities; provided, that such rights, protections, benefits, immunities and indemnities shall be in addition to any rights, immunities and indemnities provided in the Account Agreement, Collateral Administration Agreement, or any other documents to which U.S. Bank National Association, the Bank in such capacity is a party; provided further that the foregoing shall not be construed to impose upon the Paying Agent, Collateral Administrator, Transfer Agent, custodian, Calculation Agent, Notes Registrar or Intermediary any of the duties or standards of care (including without limitation any duties of a prudent person) of the Trustee;

 

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(t)            the Trustee shall not be responsible for delays or failures in performance resulting from acts beyond its control. Such acts include but are not limited to acts of God, strikes, lockouts, riots and acts of war, any act or provision of any present or future law or regulation or governmental authority, terrorism, accidents, labor disputes, disease, epidemic, pandemic, quarantine, national emergency, loss or malfunction of utilities or computer software or hardware, or the unavailability of the Federal Reserve Bank wire or telex or other wire or communication facility;

 

(u)            the Trustee shall not be liable for special, indirect, punitive 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; and

 

(v)            in order to comply with laws, rules and regulations applicable to banking institutions, including those relating to the funding of terrorist activities and money laundering, the Trustee is required to obtain, verify and record certain information relating to individuals and entities which maintain a business relationship with the Trustee. Accordingly, each of the parties hereto agrees to provide to the Trustee upon its request from time to time such party's complete name, address, tax identification number and such other identifying information together with copies of such party's constituting documentation, securities disclosure documentation and such other identifying documentation as may be available for such party.

 

Section 6.4     Not Responsible for Recitals or Issuance of Notes. The recitals contained herein and in the Notes, other than the Certificate of Authentication thereon with respect to the Trustee, shall be taken as the statements of the Issuer and the Trustee assumes no responsibility for their correctness. The Trustee makes no representation as to the validity or sufficiency of this Indenture (except as may be made with respect to the validity of the Trustee's obligations hereunder), of the Collateral or of the Notes. The Trustee shall not be accountable for the use or application by the Issuer of the Notes or the Proceeds thereof or any money paid to the Issuer pursuant to the provisions hereof. In entering into this Indenture, the Trustee shall be entitled to the benefit of every provision of this Indenture relating to the conduct of or affecting the liability of or affording protection to the Trustee.

 

Section 6.5     May Hold Notes, Etc.

 

(a)            The Trustee, any Paying Agent, Notes Registrar or any other agent of the Issuer, in its individual or any other capacity, may become the owner or pledgee of Notes and, may otherwise deal with the Issuer or any of their Affiliates, with the same rights it would have if it were not Trustee, Paying Agent, Notes Registrar or such other agent.

 

(b)            The Trustee and its Affiliates may for their own account invest in obligations or securities that would be appropriate for inclusion in the Issuer's assets as Underlying Assets, and the Trustee in making such investments has no duty to act in a way that is favorable to the Issuer or the Holders of the Notes. The Trustee's Affiliates currently serve, and may in the future serve, as investment adviser for other issuers of collateralized debt obligations.

 

(c)            The Trustee and its Affiliates are permitted to receive additional compensation that could be deemed to be in the Trustee's economic self-interest for (i) serving as investment adviser, administrator, shareholder, servicing agent, custodian or sub-custodian with respect to certain Eligible Investments, (ii) using Affiliates to effect transactions in certain Eligible Investments and (iii) effecting transactions in certain Eligible Investments. Such compensation shall not be an amount that is reimbursable or payable pursuant to this Indenture.

 

Section 6.6     Money Held for the Benefit of Applicable Parties. Money held by the Trustee hereunder shall be held for the benefit of an applicable party to the extent required herein. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed upon in writing with the Issuer and except to the extent of income or other gain on investments which are deposits in or certificates of deposit of either of the Bank in its commercial capacity and income or other gain actually received by the Trustee on Eligible Investments.

 

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Section 6.7     Compensation and Reimbursement.

 

(a)            The Issuer agrees:

 

(i)            to pay the Trustee, the Bank in each of its other capacities under the Transaction Documents and U.S. Bank National Association as the Intermediary under the Account Agreement on each Payment Date in accordance with the Priority of Payments reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a Trustee of an express trust as separately agreed between the Issuer and the Trustee) as set forth in the fee letter between the Trustee and the Asset Manager dated on or prior to the Closing Date (the "Fee Letter") as the same may be amended, restated, supplemented or otherwise modified form time to time in accordance with its terms;

 

(ii)            except as otherwise expressly provided herein, to reimburse the Trustee (subject to any written agreement between the Issuer and the Trustee) in a timely manner upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture, relating to the maintenance and administration of the Collateral or in the enforcement of any provisions hereof (including securities transaction charges and the reasonable compensation and expenses and disbursements of its agents and legal counsel and of any accounting firm or investment banking firm employed by the Trustee pursuant to Section 5.4, Section 5.5, Section 10.5 or Section 10.7, except (a) any such expense, disbursement or advance as may be attributable to its negligence, willful misconduct or bad faith and (b) any securities transaction charges that have been waived due to the Trustee's receipt of a payment from a financial institution with respect to certain Eligible Investments as specified by the Asset Manager);

 

(iii)           to indemnify the Trustee and its officers, directors, employees and agents for, and to hold them harmless against, any loss, liability or expense incurred without negligence, willful misconduct or bad faith on their part, arising out of or in connection with the acceptance or administration of this Indenture and the transactions contemplated hereby, including the costs and expenses of defending themselves (including reasonable fees and costs of experts, agents and attorneys) against any claim or liability (whether brought by the Issuer or any other third party) in connection with the exercise or performance of any of its powers or duties hereunder and under any other Transaction Document or in the enforcement of the Transaction Documents and any indemnification rights thereunder; and

 

(iv)          to pay the Trustee reasonable additional compensation together with its expenses (including reasonable counsel fees) for any collection or enforcement action taken pursuant to Section 6.13 or in respect of the exercise or enforcement of remedies pursuant to Article V.

 

(b)            The Issuer may remit payment for such fees and expenses to the Trustee or, in the absence thereof, the Trustee may from time to time deduct payment of its fees and expenses hereunder pursuant to Section 11.1(d).

 

(c)            Without limiting Section 5.4, the Trustee hereby agrees not to cause the filing of a petition in bankruptcy against the Issuer on its own behalf or on behalf of the Secured Parties until at least one year (or, if longer, the applicable preference period) plus one day after the payment in full of all of the Notes.

 

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(d)            The amounts payable to the Trustee on any Payment Date are subject to the Priority of Payments, and the Trustee shall have a lien ranking senior to that of the Holders upon all property and funds held or collected as part of the Collateral to secure payment of amounts payable to the Trustee under this Section 6.7; provided, that (1) the Trustee shall not institute any Proceeding for the enforcement of such lien except in connection with an action pursuant to Section 5.3 for the enforcement of the lien of this Indenture for the benefit of the Secured Parties; and (2) the Trustee may only enforce such a lien in conjunction with the enforcement of the rights of Holders in the manner set forth in Section 5.4.

 

(e)            The Issuer's obligations to the Trustee under this Section 6.7 shall be secured by the lien of this Indenture payable in accordance with the Priority of Payments, and shall survive the discharge of this Indenture and/or the resignation or removal of the Trustee.

 

Fees applicable to periods shorter or longer than a calendar quarterly period will be prorated based on the number of days within such period. The Trustee shall apply amounts pursuant to Section 5.7 and the Priority of Payments only to the extent that the payment thereof will not result in an Event of Default and the failure to pay such amounts to the Trustee will not, by itself, constitute an Event of Default. Subject to Section 6.9, the Trustee shall continue to serve as Trustee under this Indenture notwithstanding the fact that the Trustee shall not have received amounts due it. No direction by a Majority of the Controlling Class shall affect the right of the Trustee to collect amounts owed to it under this Indenture.

 

If, on any date when an amount shall be payable to the Trustee pursuant to this Indenture, insufficient funds are available for the payment thereof, any portion of such amount not so paid shall be deferred and payable, together with compensatory interest thereon (at a rate not to exceed the federal funds rate), on such later date on which such amount shall be payable and sufficient funds are available therefor.

 

Section 6.8     Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder that is an Eligible Institution authorized under the laws of the United States of America or of any state thereof to exercise corporate trust powers. If such corporation or association publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section 6.8, the combined capital and surplus of such corporation or association shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 6.8, it shall resign immediately in the manner and with the effect hereinafter specified in this Article VI.

 

Section 6.9     Resignation and Removal; Appointment of Successor.

 

(a)            No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article VI shall become effective until the acceptance of appointment by the successor Trustee under Section 6.10.

 

(b)            The Trustee may resign at any time by providing not less than 30 Business Days' written notice thereof to the Issuer, the Asset Manager, the Holders of the Notes and each of the Rating Agencies.

 

(c)            The Trustee may be removed at any time upon 30 Business Days' prior notice by Act of a Majority of the Notes voting together as a single class, or may be removed at any time when an Event of Default shall have occurred and be continuing, by Act of a Majority of the Controlling Class, delivered to the Trustee and to the Issuer.

 

(d)            If at any time:

 

(i)            the Trustee shall cease to be an Eligible Institution and shall fail to resign after written request therefor by the Issuer or by any Holder; or

 

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(ii)            the Trustee shall become incapable of acting or shall be adjudged as bankrupt or insolvent or a receiver or liquidator of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation;

 

then, in any such case (subject to Section 6.9(a)), (A) the Issuer, by Issuer Order, may remove the Trustee, or (B) subject to Section 5.15, any Holder may, on behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

 

(e)            Upon (i) receiving any notice of resignation of the Trustee, (ii) any determination that the Trustee be removed, or (iii) any vacancy in the position of Trustee, then the Issuer shall promptly appoint a successor Trustee or Trustees by written instrument, in duplicate, executed by an Authorized Officer of the Issuer, one copy of which shall be delivered to the Trustee so resigning and one copy to the successor Trustee or Trustees; provided, that such successor Trustee shall be appointed only upon the written consent of a Majority of the Controlling Class and be an Eligible Institution. If the Issuer shall fail to appoint a successor Trustee within 30 days after such notice of resignation, determination of removal or the occurrence of a vacancy, a successor Trustee may be appointed by Act of a Majority of the Controlling Class. 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 60 days after the giving of such notice of resignation, determination of removal or the occurrence of a vacancy, then the Trustee to be replaced, or any Holder, on behalf of itself and all others similarly situated, may petition any court of competent jurisdiction for the appointment of a successor Trustee. Notwithstanding the foregoing, at any time that an Event of Default shall have occurred and be continuing, a Majority of the Controlling Class shall have in lieu of the Issuer's rights to appoint a successor Trustee, such rights to be exercised by notice delivered to the Issuer and the retiring Trustee. Any successor Trustee shall, forthwith upon its acceptance of such appointment in accordance with Section 6.10, become the successor Trustee and supersede any successor Trustee.

 

(f)            The Issuer shall give prompt notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to the Rating Agency and the Holders of the Notes. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. If the Issuer fails to mail any such notice within ten days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be given at the expense of the Issuer. The rights of the Trustee to compensation and reimbursement (including indemnification, subject to the terms of the Fee Letter) under Section 6.7 with respect to the period during which it served as trustee shall survive the resignation or removal of the Trustee and the appointment of a successor.

 

Section 6.10     Acceptance of Appointment by Successor. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Issuer and the retiring Trustee an instrument accepting such appointment. Upon delivery of the required instruments, the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts, duties and obligations of the retiring Trustee; but, on request of the Issuer or a Majority of the Controlling Class or the successor Trustee, such retiring Trustee shall, upon payment of its charges then unpaid, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee, and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder, subject nevertheless to its lien, if any, provided for in Section 6.7(d). Upon request of any such successor Trustee, the Issuer shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts.

 

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Section 6.11     Merger, Conversion, Consolidation or Succession to Business of Trustee. Any entity or organization into which the Trustee may be merged or converted or with which it may be consolidated, or any entity or organization resulting from any merger, conversion or consolidation to which the Trustee (which for purposes of this Section 6.11 shall be deemed to be the Trustee) shall be a party, or any entity or organization succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder (provided such entity or organization shall be otherwise qualified and eligible under this Article VI) without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any of the Notes have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes.

 

Section 6.12     Co-Trustee.

 

(a)            At any time or times, for the purpose of meeting the legal requirements of any jurisdiction in which any part of the Collateral may at the time be located, the Issuer and the Trustee (which for purposes of this Section 6.12 shall be deemed to be the Trustee) shall have power to appoint one or more Persons to act as co-trustee (subject to each such Person being an Eligible Institution) jointly with the Trustee of all or any part of the Collateral, with the power to file such proofs of claim and take such other actions pursuant to Section 5.4 herein and to make such claims and enforce such rights of action on behalf of the Holders as such Holders themselves may have the right to do, subject to the other provisions of this Section.

 

(b)            The Issuer shall join with the Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to appoint a co-trustee. If the Issuer does not join in such appointment within 15 days after the receipt by them of a request to do so, the Trustee shall have power to make such appointment.

 

(c)            Should any written instrument from the Issuer be required by any co-trustee so appointed for more fully confirming to such co-trustee such property, title, right or power, any and all such instruments shall, on request, be executed, acknowledged and delivered by the Issuer. The Issuer agrees to pay as Administrative Expenses for any reasonable fees and expenses in connection with such appointment.

 

(d)            The Trustee shall deliver notice to S&P of any co-trustee appointed under this Section 6.12.

 

(e)            Every co-trustee shall, to the extent permitted by law, but to such extent only, be appointed subject to the following terms:

 

(i)            the Notes shall be authenticated and delivered by, and all rights, powers, duties and obligations hereunder in respect of the custody of securities, Cash and other personal property held by, or required to be deposited or pledged with, the Trustee hereunder, shall be exercised solely by, the Trustee;

 

(ii)           the rights, powers, duties and obligations hereby conferred or imposed upon the Trustee in respect of any property covered by the appointment of a co-trustee shall be conferred or imposed upon and exercised or performed by the Trustee or by the Trustee and such co-trustee jointly in the case of the appointment of a co-trustee, except to the extent that under any law of any jurisdiction in which any particular act is to be performed, the Trustee shall be incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations shall be exercised and performed by a co-trustee;

 

(iii)          the Trustee at any time, by an instrument in writing executed by it, with the concurrence of the Issuer evidenced by an Issuer Order, may accept the resignation of or remove any co-trustee appointed under this Section 6.12, and in case an Event of Default has occurred and is continuing, the Trustee shall have the power to accept the resignation of, or remove, any such co-trustee without the concurrence of the Issuer. A successor to any co-trustee so resigned or removed may be appointed in the manner provided in this Section 6.12;

 

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(iv)           no co-trustee hereunder shall be personally liable by reason of any act or omission of the Trustee or any other co-trustee hereunder;

 

(v)           the Trustee shall not be liable by reason of any act or omission of a co-trustee; and

 

(vi)          any Act of Holders delivered to the Trustee shall be deemed to have been delivered to each co-trustee.

 

Section 6.13     Certain Duties of Trustee Related to Delayed Payment of Proceeds. In the event that in any month the Trustee shall not have received a payment with respect to any Pledged Obligation on its Due Date, (a) the Trustee shall promptly notify the Issuer and the Asset Manager in writing and (b) unless within three Business Days (or the end of the applicable grace period for such payment, if longer) after such notice such payment shall have been received by the Trustee, or the Trustee has received notice from the Asset Manager that it is taking action in respect of such payment, the Trustee shall request the issuer of such Pledged Obligation, the trustee under the related Reference Instrument or paying agent designated by either of them, as the case may be, to make such payment as soon as practicable after such request but in no event later than three Business Days after the date of such request. In the event that such payment is not made within such time period, the Trustee, subject to the provisions of clause (iv) of Section 6.1(c), shall take such action as the Asset Manager shall direct in writing; provided that any expenses incurred or to be incurred in taking such action shall be deemed not to be performance of ordinary services for purposes of clause (iv) of Section 6.1(c). Any such action shall be without prejudice to any right to claim a Default or Event of Default under this Indenture. In the event that the Issuer or the Asset Manager requests a release of a Pledged Obligation in connection with any such action under the Asset Management Agreement, such release shall be subject to Section 10.6 and Article XII of this Indenture, as the case may be. Notwithstanding any other provision hereof, the Trustee shall deliver to the Issuer or its designee any payment with respect to any Pledged Obligation received after the Due Date thereof to the extent the Issuer previously made provisions for such payment satisfactory to the Trustee in accordance with this Section 6.13 and such payment shall not be deemed part of the Collateral.

 

Section 6.14     Representations and Warranties of the Trustee. The Trustee represents and warrants that: (a) the Trustee is a national banking association with trust powers under the laws of the United States of America, with corporate power and authority to execute, deliver and perform its obligations under this Indenture, and is duly eligible and qualified to act as Trustee under this Indenture; (b) this Indenture has been duly authorized, executed and delivered by the Trustee and constitutes the valid and binding obligation of the Trustee, enforceable against it in accordance with its terms except (i) as limited by bankruptcy, fraudulent conveyance, fraudulent transfer, insolvency, reorganization, liquidation, receivership, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and by general equitable principles, regardless of whether considered in a proceeding in equity or at law, and (ii) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought; and (c) neither the execution or delivery by the Trustee of this Indenture nor performance by the Trustee of its obligations under this Indenture requires the consent or approval of, the giving of notice to or the registration or filing with, any governmental authority or agency under any existing law of the United States of America governing the banking or trust powers of the Trustee.

 

Section 6.15     Authenticating Agents. Upon the request of the Issuer, the Trustee shall, and if the Trustee so chooses the Trustee may, appoint one or more Authenticating Agents with power to act on its behalf and subject to its direction in the authentication of Notes in connection with issuances, transfers and exchanges under Sections 2.4, 2.5 and 2.6, as fully to all intents and purposes as though each such Authenticating Agent had been expressly authorized by those Sections to authenticate such Notes. For all purposes of this Indenture, the authentication of Notes by an Authenticating Agent pursuant to this Section 6.15 shall be deemed to be the authentication of Notes by the Trustee.

 

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Any entity or organization into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any entity or organization resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any entity or organization succeeding to the corporate trust business of any Authenticating Agent, shall be the successor of such Authenticating Agent hereunder, without the execution or filing of any further act on the part of the parties hereto or such Authenticating Agent or such successor corporation.

 

Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and the Issuer. The Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and the Issuer. Upon receiving such notice of resignation or upon such a termination, the Trustee shall promptly appoint a successor Authenticating Agent and shall give written notice of such appointment to the Issuer if the resigning or terminated Authenticating Agent was originally appointed at the request of the Issuer.

 

The Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services, and reimbursement for its reasonable expenses relating thereto and the Trustee shall be entitled to be reimbursed for such payments, subject to Section 6.7. The provisions of Sections 2.9, 6.4 and 6.5 shall be applicable to any Authenticating Agent.

 

Section 6.16     Representative for Holders Only; Agent for all other Secured Parties. With respect to the security interests created hereunder, the pledge of any item of Collateral to the Trustee is to the Trustee as representative of the Holders and agent for each of the other Secured Parties; in furtherance of the foregoing, the possession by the Trustee of any item of Collateral, the endorsement to or registration in the name of the Trustee of any item of Collateral (including as entitlement holder of the Pledged Accounts) are all undertaken by the Trustee in its capacity as representative of the Holders and agent for each of the other Secured Parties. The Trustee shall have no fiduciary duties to any of the other Secured Parties, including, but not limited to, the Asset Manager; provided, that the foregoing shall not limit any of the express obligations of the Trustee under this Indenture.

 

Section 6.17     Withholding. If any withholding tax is imposed on the Issuer's payments under the Notes to any Holder, such tax shall reduce the amount otherwise distributable to such Holder. The Trustee or any Paying Agent is hereby authorized and directed to retain from amounts otherwise distributable to any Holder sufficient funds for the payment of any tax, including pursuant to FATCA (but such authorization shall not prevent the Trustee or such Paying Agent from contesting any such tax in appropriate proceedings and withholding payment of such tax, if permitted by law, pending the outcome of such proceedings). The amount of any withholding tax imposed with respect to any Holder shall be treated as cash distributed to such Holder at the time it is withheld by the Trustee or any Paying Agent and remitted to the appropriate taxing authority. If there is a possibility that withholding tax is payable with respect to a distribution and the Trustee or any Paying Agent has not received documentation from such Holder showing an exemption from withholding, the Trustee or such Paying Agent shall withhold such amounts in accordance with this Section 6.17. If any Holder wishes to apply for a refund of any such withholding tax, the Trustee or such Paying Agent shall reasonably cooperate with such Holder in making such claim so long as such Holder agrees to reimburse the Trustee or such Paying Agent for any out of pocket expenses incurred. Nothing herein shall impose an obligation on the part of the Trustee or any Paying Agent to determine the amount of any tax or withholding obligation on the part of the Issuer or in respect of the Notes.

 

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Article VII
COVENANTS

 

Section 7.1     Payments on the Notes. The Issuer shall duly and punctually pay the principal of and interest on the Rated Notes and make distributions on the Subordinated Notes in accordance with the terms of the Notes and this Indenture. Amounts properly withheld under the Code by any Person from a payment to any Holder of the Notes of interest and/or principal and/or payments shall be considered as having been paid by the Issuer to such Holder for all purposes of this Indenture.

 

Amounts properly withheld under the Code or other applicable law by any Person from a payment under any Note shall be considered as having been paid by the Issuer to the relevant Holder for all purposes of this Indenture.

 

Section 7.2     Compliance With Laws. The Issuer shall comply in all material respects with applicable laws, rules, regulations, writs, judgments, injunctions, decrees, awards and orders with respect to them, their business and their properties and the Issuer shall comply in all respects with Regulation U, T or X as promulgated by the Board of Governors of the Federal Reserve System.

 

Section 7.3     Maintenance of Books and Records. The Issuer shall maintain and implement administrative and operating procedures reasonably necessary in the performance of its obligations hereunder and the Issuer shall keep and maintain at all times in the State of Delaware, all documents, books, records, accounts and other information as are required under the laws of the State of Delaware.

 

Section 7.4     Maintenance of Office or Agency. The Issuer hereby appoints the Trustee as a Paying Agent for the payment of principal, interest and any other payments on the Notes and as a Transfer Agent. Notes may be surrendered for registration of transfer or exchange at U.S. Bank Trust Company, National Association, Global Corporate Trust Services, EP-MN-WS2N, 111 Fillmore Avenue East, St. Paul, Minnesota 55107, Attention: Bondholder Services—EP-MN-WS2N, Ref: Ares Direct Lending CLO 1 LLC or such other address designated by the Trustee. The Trustee shall always maintain an office or agency in the United States where Notes may be presented or surrendered for transfer and exchange.

 

The Issuer may at any time vary or terminate the appointment of any such agent or appoint any additional agents for any or all of such purposes; provided that (1) the Issuer shall maintain in the United States an office or agency where notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be served and subject to any laws or regulations applicable thereto; and (2) the Issuer shall not appoint any Paying Agent in a jurisdiction which subjects payments on the Notes to withholding tax. The Issuer shall at all times maintain a Note Register. The Issuer shall give prompt written notice to the Trustee, the Rating Agencies and the Holders of the appointment or termination of any such agent and of the location and any change in the location of any such office or agency.

 

The Issuer shall maintain an Issuer's Notice Agent at all times. If at any time the Issuer fails to maintain any such required office or agency in the United States, or fail to furnish the Trustee with the address thereof, notices and demands may be served on the Issuer. For the avoidance of doubt, notices to the Issuer under the Transaction Documents shall be delivered in accordance with Section 14.3.

 

Section 7.5     Money for Security Payments to be Held for the Benefit of the Secured Parties.

 

(a)            All payments of amounts due and payable with respect to any Notes that are to be made from amounts withdrawn from the Payment Account shall be made on behalf of the Issuer.

 

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(b)            When the Issuer shall have a Paying Agent that is not also the Notes Registrar, they shall furnish, or cause the Notes Registrar to furnish, no later than the fifth calendar day after each Regular Record Date and Special Record Date, a list, in such form as such Paying Agent may reasonably request, of the names and addresses of the Holders and of the certificate numbers of individual Notes held by each such Holder.

 

(c)            Whenever the Issuer shall have a Paying Agent other than the Trustee, they shall, on or before the Business Day preceding each Payment Date, Redemption Date or Special Payment Date, as the case may be, direct the Trustee to deposit on such Payment Date with such Paying Agent, if necessary, an aggregate sum sufficient to pay the amounts then becoming due (to the extent funds are then available for such purpose in the Payment Account), such sum to be held for the benefit of the Persons entitled thereto and (unless such Paying Agent is the Trustee) the Issuer shall promptly notify the Trustee of its action or failure so to act. Any moneys deposited with a Paying Agent (other than the Trustee) in excess of an amount sufficient to pay the amounts then becoming due on the Notes with respect to which such deposit was made shall be paid over by such Paying Agent to the Trustee for application in accordance with Article X.

 

(d)            The initial Paying Agents shall be as set forth in Section 7.4. Any additional or successor Paying Agents shall be Eligible Institutions appointed by Issuer Order with written notice thereof to the Trustee. The Issuer shall not appoint any Paying Agent (other than an initial Paying Agent) that is not, at the time of such appointment, a depository institution or trust company subject to supervision and examination by federal, state or national banking authorities. The Issuer shall cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee (and if the Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of this Section 7.5, that such Paying Agent shall:

 

(i)            allocate all sums received for payment to the Holders of the Notes for which it acts as Paying Agent on each Payment Date, Redemption Date and Special Payment Date among such Holders in the proportion specified in the applicable report or statement in accordance herewith, in each case to the extent permitted by applicable law;

 

(ii)           hold all sums held by it for the payment of amounts due with respect to the Notes for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided and pay such sums to such Persons as herein provided;

 

(iii)          if such Paying Agent is not the Trustee, immediately resign as a Paying Agent and forthwith pay to the Trustee all sums held by it in trust for the payment of Notes if at any time it ceases to meet the standards set forth above required to be met by a Paying Agent at the time of its appointment; and

 

(iv)          if such Paying Agent is not the Trustee, at any time during the continuance of any such Default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent.

 

(e)            The Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Issuer Order direct any Paying Agent to pay, to the Trustee all sums held by the Issuer or such Paying Agent, such sums to be held by the Trustee upon the same terms as those upon which such sums were held by the Issuer or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.

 

(f)            Any money deposited with a Paying Agent and not previously returned that remains unclaimed for 20 Business Days shall be returned to the Trustee. Except as otherwise required by applicable law, any money deposited with the Trustee or any Paying Agent for the payment of the principal of or interest or distribution on any Notes and remaining unclaimed for two years after such principal, interest or distribution has become due and payable shall be paid to the Issuer; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Issuer for payment of such amounts, and all liability of the Trustee or such Paying Agent with respect to such money (but only to the extent of the amounts so paid to the Issuer) shall thereupon cease. The Trustee or such Paying Agent, before being required to make any such release of payment, may, but shall not be required to, adopt and employ, at the expense of the Issuer, any reasonable means of notification of such release of payment, including, but not limited to, mailing notice of such release to Holders whose Notes have been called but have not been surrendered for redemption or whose right to or interest in monies due and payable but not claimed is determinable from the records of any Paying Agent, at the last address of record of each such Holder.

 

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