10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2006
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period              to            

Commission File No. 000-50697

ARES CAPITAL CORPORATION

(Exact name of Registrant as specified in its charter)

Maryland	33-1089684
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)

280 Park Avenue, 22nd Floor, New York, NY 10017

(Address of principal executive office)   (Zip Code)

(212) 750-7300

(Registrant’s telephone number, including area code)

 N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:  Yes x  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

      Large accelerated filer o               Accelerated filer x                Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at August 8, 2006
Common stock, $0.001 par value	48,988,504

ARES CAPITAL CORPORATION

INDEX

Part I.	Financial Information
Item 1.	Financial Statements.
	Consolidated Balance Sheets as of June 30, 2006 (unaudited) and December 31, 2005
	Consolidated Schedules of Investments as of June 30, 2006 (unaudited) and December 31, 2005
	Consolidated Statement of Operations for the three and six months ended June 30, 2006 (unaudited) and June 30, 2005 (unaudited)
	Consolidated Statement of Stockholders’ Equity for the six months ended June 30, 2006 (unaudited) and June 30, 2005 (unaudited)
	Consolidated Statement of Cash Flows for the six months ended June 30, 2006 (unaudited) and June 30, 2005 (unaudited)
	Notes to Consolidated Financial Statements (unaudited)
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.
Item 4.	Controls and Procedures.
Part II.	Other Information
Item 1.	Legal Proceedings.
Item 1A.	Risk Factors.
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3.	Defaults Upon Senior Securities.
Item 4.	Submission of Matters to a Vote of Security Holders.
Item 5.	Other Information.
Item 6.	Exhibits.

1

PART I  —  FINANCIAL INFORMATION

Item 1.  Financial Statements.

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	As of
	June 30, 2006			December 31, 2005
	(unaudited)
ASSETS
Investments at fair value (amortized cost of $888,483,712 and $581,351,865, respectively)
Non-control/Non-affiliate investments	$	714,898,704		$	515,184,991
Affiliate investments	163,261,927			70,783,384
Total investments at fair value	878,160,631			585,968,375
Cash and cash equivalents	44,844,697			16,613,334
Receivable for open trades	6,962,236			1,581,752
Interest receivable	7,854,038			5,828,098
Other assets	4,608,731			3,653,585
Total assets	$	942,430,333		$	613,645,144
LIABILITIES
Credit facilities payable	$	345,200,000		$	18,000,000
Reimbursed underwriting costs payable to the Investment Adviser	—			2,475,000
Dividend payable	—			12,889,225
Payable for open trades	—			5,500,000
Accounts payable and accrued expenses	7,092,656			1,222,678
Management and incentive fees payable	10,047,596			3,478,034
Interest and facility fees payable	3,105,947			313,930
Interest payable to the Investment Adviser	—			154,078
Total liabilities	365,446,199			44,032,945
Commitments and contingencies (Note 6)
STOCKHOLDERS’ EQUITY
Common stock, par value $.001 per share, 100,000,000 common shares authorized, 38,207,254 and 37,909,484 common shares issued and outstanding, respectively	38,208			37,910
Capital in excess of par value	564,192,430			559,192,554
Accumulated net realized gain on sale of investments	23,076,577			5,765,225
Net unrealized (depreciation) appreciation on investments	(10,323,081		)	4,616,510
Total stockholders’ equity	576,984,134			569,612,199
Total liabilities and stockholders’ equity	$	942,430,333		$	613,645,144
NET ASSETS PER SHARE	$	15.10		$	15.03

See accompanying notes to consolidated financial statements.

2

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS
As of June 30, 2006 (unaudited)

Company {1}	Industry	Investment	Interest {13}	Initial Acquisition Date	Amortized Cost	Fair Value	Fair Value Per Unit			Percentage of Net Assets
Healthcare - Services
American Renal Associates, Inc.	Dialysis provider	Senior secured loan ($3,049,180 par due 12/2010)	9.57% (Libor+ 4.00%/S)	12/14/05	3,049,180	3,049,180	$	1.00
		Senior secured loan ($196,721 par due 12/2010)	9.45% (Libor + 4.00%/Q)	12/14/05	196,721	196,721	$	1.00
		Senior secured loan ($180,328 par due 12/2010)	9.45% (Libor + 4.00%/Q)	12/14/05	180,328	180,328	$	1.00
		Senior secured loan ($5,836,066 par due 12/2011)	10.07% (Libor + 4.50%/S)	12/14/05	5,836,066	5,836,066	$	1.00
		Senior secured loan ($50,820 par due 12/2011)	11.25% (Base Rate+ 3.00%/Q)	12/14/05	50,820	50,820	$	1.00
		Senior secured loan ($655,738 par due 12/2011)	12.57% (Libor + 7.00%/Q)	12/14/05	655,738	655,738	$	1.00
		Senior secured loan ($6,557,377 par due 12/2011)	14.25% (Base Rate + 6.00%/Q)	12/14/05	6,557,377	6,557,377	$	1.00
Capella Healthcare, Inc.	Acute care hospital operator	Junior secured loan ($31,000,000 par due 11/2013)	11.24% (Libor + 6.00%/Q)	12/1/05	31,000,000	31,000,000	$	1.00
DSI Renal, Inc.	Dialysis provider	Senior subordinated note ($72,336,000 par due 4/2014)	12.00% Cash, 2.00% PIK	4/4/06	72,336,000	72,336,000	$	1.00{3	}
OnCURE Medical Corp.	Radiation oncology care provider	Senior secured revolving loan ($100,000 par due 2/2011)	8.69% (Libor + 3.50%/Q)	2/14/06	100,000	100,000	$	1.00
		Senior secured revolving loan ($200,000 par due 2/2011)	8.50% (Libor + 3.50%/S)	2/14/06	200,000	200,000	$	1.00
		Senior secured loan ($4,964,286 par due 2/2012)	9.00% (Libor + 4.00%/S)	2/14/06	4,964,286	4,964,286	$	1.00
		Senior secured loan ($35,714 par due 2/2012)	10.75% (Base Rate + 2.50%/S)	2/14/06	35,714	35,714	$	1.00
		Junior secured loan ($15,080,088 par due 8/2012)	12.00% cash, 1.50% PIK	2/14/06	15,080,088	15,080,088	$	1.00{3	}
PHNS, Inc.	Information technology and business process outsourcing	Senior subordinated loan ($16,000,000 par due 11/2011)	13.50% cash, 2.50% PIK	10/29/04	15,797,902	16,000,000	$	1.00{3	}
Triad Laboratory Alliance, LLC	Laboratory services	Senior subordinated loan ($9,796,981 par due 12/2012)	12.00% cash, 1.75% PIK	12/21/05	9,796,981	9,796,981	$	1.00{3	}
		Senior secured loan ($2,985,000 par due 12/2011)	8.23% (Libor + 3.25%/Q)	12/21/05	2,985,000	2,985,000	$	1.00
					168,822,201	169,024,299				29.29	%
Manufacturing
Arrow Group Industries, Inc.	Residential and outdoor shed manufacturer	Senior secured loan ($6,000,000 par due 4/2010)	10.50% (Libor + 5.00%/M)	3/28/05	6,039,265	6,000,000	$	1.00
		Senior secured loan ($6,000,000 par due 10/2010)	15.00% (Libor + 9.50%/Q)	3/28/05	6,000,000	6,000,000	$	1.00
Emerald Performance Materials, LLC	Polymers and performance materials manufacturer	Senior secured loan ($10,526,316 par due 5/2011)	9.52% (Libor + 4.25%/Q)	5/16/06	10,526,316	10,526,316	$	1.00
		Senior secured loan ($5,263,158 par due 5/2011)	11.27% (Libor + 6.00%/Q)	5/16/06	5,263,158	5,263,158	$	1.00
		Senior secured loan ($4,210,526 par due 5/2011)	13.00%	5/16/06	4,210,526	4,210,526	$	1.00
Qualitor, Inc.	Automotive aftermarket components	Senior secured loan ($1,970,000 par due 12/2011)	9.50% (Libor + 4.00%/Q)	12/29/04	1,970,000	1,970,000	$	1.00{2	}
	supplier	Junior secured loan ($5,000,000 par due 6/2012)	12.50% (Libor + 7.00%/Q)	12/29/04	5,000,000	5,000,000	$	1.00{2	}
Professional Paint, Inc.	Paint manufacturer	Junior secured loan ($16,500,000 par due 5/2013)	11.38% (Libor + 5.75%/S)	5/25/06	16,500,000	16,500,000	$	1.00
Reflexite Corporation {9}	Developer and manufacturer of high visibility reflective products	Senior subordinated loan ($10,458,604 par due 12/2011)	11.00% cash, 3.00% PIK	12/30/04	10,458,604	10,458,604	$	1.00{2}{3	}
		Common Stock (1,729,627 shares)		3/28/06	25,682,891	25,682,891	$	14.85{4	}
Universal Trailer Corporation {5}	Livestock and specialty trailer manufacturer	Common stock (50,000 shares)		10/8/04	6,424,645	3,113,351	$	62.27{4	}
		Warrants to purchase 22,208 shares		10/8/04	1,505,776	1,382,826	$	62.27{4	}
Varel Holdings, Inc.	Drill bit manufacturer	Senior secured loan ($6,643,750 par due 12/2010)	9.15% (Libor + 4.00%/B)	5/18/05	6,643,750	6,643,750	$	1.00{2	}
		Senior secured loan ($1,956,673 par due 12/2010)	9.13% (Libor + 4.00%/Q)	5/18/05	1,956,673	1,956,673	$	1.00{2	}
		Senior secured loan ($3,333,333 par due 12/2011)	13.32% (Libor + 8.00%/Q)	5/18/05	3,333,333	3,333,333	$	1.00{2	}
		Senior secured revolving loan ($333,333 par due 10/2010)	10.50% (Base Rate + 2.25%/D)	5/18/05	333,333	333,333	$	1.00
		Preferred stock (33,245 shares)		5/18/05	1,088,431	1,088,431	$	32.74{3	}
		Common stock (30,451 shares)		5/18/05	3,045	1,011,569	$	33.22{4	}
					112,939,746	110,474,761				19.15	%
Containers-Packaging
Captive Plastics, Inc.	Plastics container manufacturer	Junior secured loan ($16,000,000 par due 2/2012)	12.34% (Libor + 7.25%/Q)	12/19/05	16,000,000	16,000,000	$	1.00
Industrial Container Services, LLC {7}	Industrial container manufacturer, reconditioner and servicer	Senior secured loan ($28,588,315 par due 9/2011)	11.92% (Libor + 6.50%/Q)	9/30/05	28,588,315	28,588,315	$	1.00
		Senior secured loan ($10,000,000 par due 9/2011)	11.92% (Libor + 6.50%/Q)	6/21/06	10,000,000	10,000,000	$	1.00
		Senior secured revolving loan ($826,087 par due 9/2011)	9.79% (Libor + 4.50%/M)	9/30/05	826,087	826,087	$	1.00
		Senior secured revolving loan ($826,087 par due 9/2011)	9.75% (Libor + 4.50%/M)	9/30/05	826,087	826,087	$	1.00
		Senior secured revolving loan ($4,130,435 par due 9/2011)	9.78% (Libor + 4.50%/M)	9/30/05	4,130,435	4,130,435	$	1.00
		Senior secured revolving loan ($826,087 par due 9/2011)	11.25% (Base Rate + 3.00%/Q)	9/30/05	826,087	826,087	$	1.00
		Senior secured revolving loan ($826,087 par due 9/2011)	11.25% (Base Rate + 3.00%/Q)	9/30/05	826,087	826,087	$	1.00

3

		Senior secured revolving loan ($1,652,174 par due 9/2011)	9.85% (Libor + 4.50%/M)	9/30/05	1,652,174	1,652,174	$1.00
		Common stock (1,800,000 shares)		9/29/05	1,800,000	1,800,000	$1.00{4	}
LabelCorp Holdings, Inc.	Consumer product labels manufacturer	Senior subordinated notes ($9,180,470 par due 9/2012)	12.00% cash, 3.00% PIK	3/16/06	9,180,470	9,180,470	$1.00{3	}
					74,655,742	74,655,742			12.94	%
Printing, Publishing and Broadcasting
Canon Communications LLC	Print publications services	Junior secured loan ($23,775,000 par due 11/2011)	12.37% (Libor + 6.75%/S)	5/25/05	23,775,000	23,775,000	$1.00{2	}
Daily Candy, Inc. {10}	Internet publication provider	Senior secured loan ($24,200,000 par due 5/2009)	10.62% (Libor + 5.00%/S)	5/25/06	24,200,000	24,200,000	$1.00
		Senior secured loan ($800,000 par due 5/2009)	10.50% (Libor + 5.00%/Q)	5/25/06	800,000	800,000	$1.00
		Common stock (1,250,000 shares)		5/25/06	2,375,000	2,375,000	$1.90
		Warrants to purchase 1,381,578 shares		5/25/06	2,625,000	2,625,000	$1.90{4	}
National Print Group, Inc.	Printing management services	Senior secured revolving loan ($365,259 par due 3/2012)	10.75% (Base Rate + 2.50%/D)	3/2/06	365,259	365,259	$1.00
		Senior secured revolving loan ($859,062 par due 3/2012)	10.75% (Base Rate + 2.50%/D)	3/2/06	859,062	859,062	$1.00
		Senior secured loan ($11,230,435 par due 3/2012)	9.00% (Libor + 3.50%/Q)	3/2/06	11,230,435	11,230,435	$1.00
		Senior secured loan ($2,739,130 par due 8/2012)	12.32% (Libor + 7.00%/Q)	3/2/06	2,739,130	2,739,130	$1.00
		Senior secured loan ($2,282,609 par due 3/2012)	12.17% (Libor + 7.00%/B)	3/2/06	2,282,609	2,282,609	$1.00
		Preferred stock (9,344 shares)		3/2/06	2,000,000	2,000,000	$214.04{4	}
					73,251,495	73,251,495			12.70	%
Services - Other
Diversified Collection Services, Inc.	Collections services	Senior secured loan ($5,242,026 par due 2/2011)	8.78% (Libor + 4.00%/S)	2/2/05	5,242,026	5,242,026	$1.00{2	}
		Senior secured loan ($8,500,000 par due 8/2011)	10.89% (Libor + 6.00%/S)	2/2/05	8,500,000	8,500,000	$1.00{2	}
		Preferred stock (14,927 shares)		5/18/06	169,123	169,123	$11.33{4	}
		Common stock (114,004 shares)		2/2/05	295,270	295,270	$2.59{4	}
Event Rentals, Inc.	Party rental services	Senior secured loan ($2,277,902 par due 11/2011)	10.77% (Libor+ 5.25%/S)	11/17/05	2,277,902	2,277,902	$1.00
		Senior secured loan ($5,005,581 par due 11/2011)	10.69% (Libor + 5.25%/S)	11/17/05	5,005,581	5,005,581	$1.00
		Senior secured loan ($2,466,518 par due 11/2011)	10.80% (Libor + 5.25%/S)	11/17/05	2,466,518	2,466,518	$1.00
		Senior secured loan ($85,227 par due 11/2011)	12.50% (Base Rate + 4.25%/D)	11/17/05	85,227	85,227	$1.00
		Senior secured loan ($7,968,750 par due 11/2011)	10.77% (Libor + 5.25%/S)	11/17/05	7,968,750	7,968,750	$1.00
GCA Services Group, Inc.	Custodial services	Senior subordinated loan ($33,236,748 par due 1/2010)	12.00% cash, 3.00% PIK	7/25/05	33,236,748	33,236,748	$1.00{3	}
					65,247,145	65,247,145			11.31	%
Consumer Products - Non-Durable
Making Memories Wholesale, Inc. {6}	Scrapbooking branded products manufacturer	Senior secured loan ($7,995,833 par due 3/2011)	10.00% (Libor + 4.50%/Q)	5/5/05	7,995,833	7,995,833	$1.00{2	}
		Senior subordinated loan ($10,100,808 par due 5/2012)	12.50% cash, 2.00% PIK	5/5/05	10,100,808	10,100,808	$1.00{3	}
		Preferred stock (3,500 shares)		5/5/05	3,758,800	1,320,000	$377.14{3	}
Shoes for Crews, LLC	Safety footwear and slip-related mats manufacturer	Senior secured loan ($1,370,173 par due 7/2010)	8.87% (Libor + 3.25%/S)	10/8/04	1,378,236	1,378,236	$1.00{2	}
		Senior secured loan ($60,747 par due 7/2010)	8.75% (Libor + 3.25%/Q)	10/8/04	61,104	61,104	$1.00{2	}
		Senior secured revolving loan ($1,333,333 par due 7/2010)	10.25% (Base Rate + 2.00%/Q)	6/16/06	1,333,333	1,333,333	$1.00
Tumi Holdings, Inc.	Branded luggage designer, marketer and distributor	Senior secured loan ($2,500,000 par due 12/2012)	8.25% (Libor + 2.75%/Q)	5/24/05	2,500,000	2,500,000	$1.00{2	}
		Senior secured loan ($5,000,000 par due 12/2013)	8.75% (Libor + 3.25%/Q)	3/14/05	5,000,000	5,000,000	$1.00{2	}
		Senior subordinated loan ($13,339,711.06 par due 12/2014)	16.50% (Libor + 6.00% cash, 5.00% PIK/Q)	3/14/05	13,339,711	13,339,711	$1.00{2}{3	}
UCG Paper Crafts, Inc.	Scrapbooking materials manufacturer	Senior secured loan ($2,000,000 par due 2/2013)	8.60% (Libor + 3.25%/M)	2/23/06	2,000,000	2,000,000	$1.00
		Junior secured loan ($12,962,500 par due 2/2013)	12.84% (Libor + 7.50%/M)	2/23/06	12,962,500	12,962,500	$1.00
		Junior secured loan ($32,500 par due 2/2013)	14.75% (Base Rate + 6.50%/D)	2/23/06	32,500	32,500	$1.00
					60,462,825	58,024,025			10.06	%
Education
Equinox SMU Partners LLC and	Medical school operator	Senior secured revolving loan ($3,232,342 par due 12/2010)	12.75% (Base Rate + 5.00%/Q)	1/25/06	3,232,342	3,232,342	$1.00
SMU Acquisition Corp. {8}		Senior secured revolving loan ($3,000,000 par due 12/2010)	11.06% (Libor + 6.00%/S)	1/25/06	3,000,000	3,000,000	$1.00
		Senior secured loan ($10,500,000 par due 12/2010)	11.07% (Libor + 6.00%/S)	1/25/06	10,500,000	10,500,000	$1.00
		Senior secured loan ($3,000,000 par due 12/2010)	11.07% (Libor + 6.00%/S)	1/25/06	3,000,000	3,000,000	$1.00
		Limited liability company membership interest (17.39% interest)		1/25/06	4,000,000	4,000,000	{4	}
Lakeland Finance, LLC	Private school operator	Senior secured note ($33,000,000 par due 12/2012)	11.50%	12/13/05	33,000,000	33,000,000	$1.00
					56,732,342	56,732,342			9.83	%
Environmental Services
Mactec, Inc.	Engineering and environmental	Common stock (186 shares)		11/3/04	—	—	$—{4	}
Wastequip, Inc.	Waste management equipment manufacturer	Junior secured loan ($27,000,000 par due 7/2012)	11.00% (Libor + 5.50%/Q)	8/4/05	27,000,000	27,000,000	$1.00
WCA Waste Systems, Inc.	Waste management services	Junior secured loan ($25,000,000 par due 10/2011)	14.25% (Base Rate + 6.00%/D)	4/25/05	25,000,000	25,000,000	$1.00{2	}

4

					52,000,000	52,000,000					9.01	%
Consumer Products - Durable
AWTP, LLC	Water treatment services	Junior secured loan ($13,600,000 par due 12/2012)	13.00% (Libor + 7.50%/Q)	12/21/05	13,600,000	13,600,000		$	1.00
Berkline/Benchcraft Holdings LLC	Furniture manufacturer and distributor	Junior secured loan ($5,000,000 par due 5/2012)	15.00% (Libor + 10.00%/Q)	11/3/04	5,000,000	3,250,000		$	0.65{2	}
		Preferred stock (2,536 shares)		10/8/04	1,046,343	—		$	—{4	}
		Warrants to purchase 483,020 shares		10/8/04	2,752,559	—		$	—{4	}
Singer Sewing Company	Sewing machine manufacturer	Senior secured revolving loan ($583,333 par due 9/2010)	9.20% (Libor + 4.00%/M)	2/9/06	583,333	583,333		$	1.00
		Senior secured revolving loan ($250,000 par due 9/2010)	9.32% (Libor + 4.00%/M)	2/9/06	250,000	250,000		$	1.00
		Senior secured revolving loan ($166,667 par due 9/2010)	9.25% (Libor + 4.00%/M)	2/9/06	166,667	166,667		$	1.00
		Senior secured revolving loan ($166,667 par due 9/2010)	9.14% (Libor + 4.00%/M)	2/9/06	166,667	166,667		$	1.00
		Senior secured revolving loan ($250,000 par due 9/2010)	9.18% (Libor + 4.00%/M)	2/9/06	250,000	250,000		$	1.00
		Senior secured loan ($18,000,000 par due 9/2010)	11.18% (Libor + 6.00%/M)	2/9/06	18,000,000	18,000,000		$	1.00
					41,815,569	36,266,667					6.29	%
Business Services
Investor Group Services, LLC	Financial services	Senior secured loan ($1,500,000 par due 6/2011)	12.00%	6/22/06	1,500,000	1,500,000		$	1.00
		Limited liability company membership interest (10.00% interest)		6/22/06	—	—		{4		}
Miller Heiman, Inc.	Sales consulting services	Senior secured loan ($3,768,072 par due 6/2010)	8.85% (Libor + 3.50%/M)	6/20/05	3,768,072	3,768,072		$	1.00{2	}
		Senior secured loan ($4,037,985 par due 6/2012)	9.50% (Libor + 4.00%/Q)	6/20/05	4,037,985	4,037,985		$	1.00{2	}
MR Processing Holding Corp.	Bankruptcy and foreclosure processing services	Senior subordinated note ($20,103,333 par due 2/2013)	12.00% Cash, 2.00% PIK	3/23/06	20,103,333	20,103,333		$	1.00{3	}
		Senior secured loan ($1,995,000 par due 2/2012)	8.63% (Libor + 3.50%/Q)	3/28/06	1,995,000	1,995,000		$	1.00
		Preferred stock (30,000 shares)		4/11/06	3,000,000	3,000,000		$	100.00{4	}
					34,404,390	34,404,390	`				5.96	%
Restaurants
ADF Capital, Inc. & ADF Restaurant Group, LLC	Restaurant owner and operator	Senior secured revolving loan ($1,200,000 par due 6/2013)	13.75% (Base Rate + 5.50%/D)	6/1/06	1,200,000	1,200,000		$	1.00
		Senior secured loan ($23,000,000 par due 6/2013)	13.75% (Base Rate + 5.50%/D)	6/1/06	23,000,000	23,000,000		$	1.00
		Warrants to purchase 0.882353 units		6/1/06	3,000,000	3,000,000		$	3,399,999.77{4	}
						-
					27,200,000	27,200,000					4.71	%
Aerospace & Defense
ILC Industries, Inc.	Industrial products provider	Junior secured loan ($15,000,000 par due 8/2012)	11.50%	6/27/06	15,000,000	15,000,000		$	1.00{4	}
Thermal Solutions LLC and TSI Group, Inc.	Thermal management and electronics packaging manufacturer	Senior secured loan ($3,241,875 par due 3/2012)	9.07% (Libor + 4.00%/Q)	3/28/05	3,241,875	3,241,875		$	1.00{2	}
		Senior secured loan ($1,703,947 par due 3/2011)	8.57% (Libor + 3.50%/Q)	3/28/05	1,703,947	1,703,947		$	1.00{2	}
		Senior subordinated notes ($3,083,967 par due 9/2012)	11.50% cash, 2.75% PIK	3/28/05	3,091,646	3,083,967		$	1.00{2}{3	}
		Senior subordinated notes ($2,517,188 par due 3/2013)	11.50% cash, 2.50% PIK	3/21/06	2,517,188	2,517,188		$	1.00{2}{3	}
		Preferred stock (53,900 shares)		3/28/05	539,000	539,000		$	10.00{4	}
		Common stock (1,100,000 shares)		3/28/05	11,000	11,000		$	0.01{4	}
					26,104,656	26,096,977					4.52	%
Broadcasting and Cable
Patriot Media & Communications CNJ, LLC	Cable services	Junior secured loan ($5,000,000 par due 10/2013)	10.15% (Libor + 5.00%/M)	10/6/05	5,000,000	5,000,000		$	1.00
Pappas Telecasting Incorporated	Television broadcasting	Senior secured loan ($20,254,608 par due 2/2010)	14.29% (Libor + 4.00% cash, 5.00% PIK/Q)	3/1/06	20,254,608	20,254,608		$	1.00{3	}
		Senior secured loan ($86,335 par due 2/2010)	14.25% (Libor + 4.00% cash, 5.00% PIK/Q)	3/1/06	86,335	86,335		$	1.00{3	}
					25,340,943	25,340,943					4.39	%
Computers and Electronics
Extensity	Software manufacturer	Junior secured loan ($10,000,000 par due 9/2011)	12.51% (Libor + 7.25%/B)	3/13/06	10,000,000	10,000,000		$	1.00
RedPrairie Corporation	Software manufacturer	Junior secured loan ($8,500,000 par due 5/2010)	12.84% (Libor + 7.75%/B)	2/21/06	8,500,000	8,500,000		$	1.00
					18,500,000	18,500,000					3.21	%
Cargo Transport
The Kenan Advantage Group, Inc.	Fuel transportation provider	Senior subordinated notes ($9,038,381 par due 12/2013)	9.50% cash, 3.50% PIK	12/15/05	9,038,381	9,038,381		$	1.00{3	}
		Senior secured loan ($2,487,500 par due 12/2011)	8.50% (Libor + 3.00%/Q)	12/15/05	2,487,500	2,487,500		$	1.00
		Preferred stock (10,984 shares)		12/15/05	1,098,400	1,098,400		$	100.00{4	}
		Common stock (30,575 shares)		12/15/05	30,575	30,575		$	1.00{4	}
					12,654,856	12,654,856					2.19	%

4

Farming and Agriculture
The GSI Group, Inc.	Agricultural equipment manufacturer	Senior notes ($10,000,000 par due 5/2013)	12.00%	5/11/05	10,000,000		10,000,000		$	1.00
		Common stock (7,500 shares)		5/12/05	750,000		750,000		$	100.00{4	}
					10,750,000		10,750,000					1.86	%
Beverage, Food and Tobacco
Farley’s & Sathers Candy Company, Inc.	Branded candy manufacturer	Junior secured loan ($10,000,000 par due 3/2011)	11.62% (Libor + 6.00%/S)	3/23/06	10,000,000		10,000,000		$	1.00
					10,000,000		10,000,000					1.73	%
Housing - Building Materials
HB&G Building Products	Synthetic and wood product manufacturer	Senior subordinated loan ($8,572,021 par due 3/2011)	13.00% cash, 2.00% PIK	10/8/04	8,566,374		8,572,021		$	1.00{2}{3}
		Common stock (2,743 shares)		10/8/04	752,888		752,888		$	274.48{4	}
		Warrants to purchase 4,464 shares		10/8/04	652,503		652,503		$	146.17{4	}
					9,971,765		9,977,412					1.73	%
Financial
Foxe Basin CLO 2003, Ltd.	Collateralized debt obligation	Preference shares (3,000 shares)		10/8/04	2,682,785		2,682,785		$	894.26{11}{12	}
Hudson Straits CLO 2004, Ltd.	Collateralized debt obligation	Preference shares (5,750 shares)		10/8/04	4,947,252		4,876,792		$	848.14{11}{12	}
					7,630,037		7,559,577					1.31	%
Total					$	888,483,712	$	878,160,631

{1} We do not “Control” any of our portfolio companies, as defined in the Investment Company Act of 1940.  In general, under the 1940 Act, we would “Control” a portfolio company if we owned 25% or more of its voting securities.  All of our portfolio company investments are subject to legal restriction on sales which as of June 30, 2006 represented 152% of the Company’s net assets.

{2} Pledged as collateral for the CP Funding Facility and unless otherwise noted, all other investments are pledged as collateral for the Revolving Credit Facility (see Note 7 to the consolidated financial statements).

{3} Has a payment-in-kind interest feature (see Note 2 to the consolidated financial statements).

{4} Non-income producing at June 30, 2006.

{5} As defined in the 1940 Act, we are an “Affiliate” of this portfolio company because we own more than 5% of the portfolio company’s outstanding voting securities.  For the six months ended June 30, 2006, for this portfolio company there were total purchases of $5,000,000, redemptions of $7,528,880 (cost), sales of $6,054,725 (cost),  interest income of $176,732, other income of $3,125, net realized gains of $47,283 and net unrealized losses of $6,118.

{6} As defined in the 1940 Act, we are an “Affiliate” of this portfolio company because we own more than 5% of the portfolio company’s outstanding voting securities.  For the six months ended June 30, 2006, for this portfolio company there were total redemptions of $1,147,917 (cost), interest income of $1,201,966, other income of $82,724 and net unrealized losses of $2,438,800.

{7} As defined in the 1940 Act, we are an “Affiliate” of this portfolio company because we own more than 5% of the portfolio company’s outstanding voting securities.  For the six months ended June 30, 2006, for this portfolio company there were total purchases of $19,500,391, redemptions of $4,899,870 (cost), interest income of $1,862,243, capital structuring service fees of $350,000 and other income of $71,540.

{8} As defined in the 1940 Act, we are an “Affiliate” of this portfolio company because we own more than 5% of the portfolio company’s outstanding voting securities.  For the six months ended June 30, 2006, for this portfolio company there were total purchases of $28,732,342, redemptions of $5,000,000 (cost), interest income of $980,353, capital structuring service fees of $583,810 and other income of $9,484.

{9} As defined in the 1940 Act, we are an “Affiliate” of this portfolio company because we own more than 5% of the portfolio company’s outstanding voting securities.  For the six months ended June 30, 2006, there were total purchases of $25,682,891 and interest income of $719,946.

{10} As defined in the 1940 Act, we are an “Affiliate” of this portfolio company because we own more than 5% of the portfolio company’s outstanding voting securities.  For the six months ended June 30, 2006, there were total purchases of $30,000,000, interest income of $295,890 and capital structuring service fees of $250,000.

{11} Non-U.S. company or principal place of business outside the U.S.

{12} Non-registered investment company.

{13} A majority of the variable rate loans to our portfolio companies bear interest at a rate that may be determined by reference to either Libor or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), at the borrower’s option, which reset semi-annually (S), quarterly (Q), bi-monthly (B) monthly (M) or daily (D).  For each such loan, we have provided the current interest rate in effect at June 30, 2006.

5

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2005

Company {1}	Industry	Investment	Interest {10}	Initial Acquisition Date	Amortized Cost	Fair Value	Fair Value Per Unit			Percentage of  Net Assets
Healthcare - Services
American Renal Associates, Inc.	Dialysis provider	Senior secured loan ($3,426,230 par due 12/2010)	8.68% (Libor+ 4.00%/Q)	12/14/05	3,426,230	3,426,230	$	1.00
		Senior secured loan ($180,328 par due 12/2010)	8.50% (Libor+ 4.00%/Q)	12/14/05	180,328	180,328	$	1.00
		Senior secured loan ($5,886,885 par due 12/2011)	9.18% (Libor + 4.50%/Q)	12/14/05	5,886,885	5,886,885	$	1.00
		Senior secured loan ($14,754 par due 12/2011)	9.00% (Libor+ 4.50%/Q)	12/14/05	14,754	14,754	$	1.00
		Senior secured loan ($7,213,115 par due 12/2011)	11.68% (Libor + 7.00%/Q)	12/14/05	7,213,115	7,213,115	$	1.00
Capella Healthcare, Inc.	Acute care hospital operator	Junior secured loan ($29,000,000 par due 11/2013)	10.45% (Libor + 6.00%/Q)	12/1/05	29,000,000	29,000,000	$	1.00
PHNS, Inc.	Information technology and business process outsourcing	Senior subordinated loan ($16,000,000 par due 11/2011)	13.50% cash, 2.5% PIK	10/29/04	15,785,661	16,000,000	$	1.00{3	}
Triad Laboratory Alliance, LLC	Laboratory services	Senior subordinated loan ($9,714,888 par due 12/2012)	12.00% cash, 1.75% PIK	12/21/05	9,714,888	9,714,888	$	1.00{3	}
		Senior secured loan ($3,000,000 par due 12/2011)	7.78% (Libor + 3.25%/Q)	12/21/05	3,000,000	3,000,000	$	1.00
					74,221,861	74,436,200				13.07	%
Containers-Packaging
Captive Plastics, Inc.	Plastics container manufacturer	Junior secured loan ($16,000,000 par due 2/2012)	11.62% (Libor + 7.25%/M)	12/19/05	16,000,000	16,000,000	$	1.00
Industrial Container Services, LLC {7}	Industrial container manufacturer, reconditioner and servicer	Senior secured loan ($26,728,663 par due 9/2011)	11.00% (Libor + 6.50%/Q)	9/30/05	26,728,663	26,728,663	$	1.00
		Senior secured loan ($4,643,479 par due 9/2011)	8.88% (Libor + 4.50%/M)	9/30/05	4,643,479	4,643,479	$	1.00
		Senior secured revolving loan ($1,160,870 par due 9/2011)	10.25% (Base Rate + 3.00%/Q)	9/30/05	1,160,870	1,160,870	$	1.00
		Senior secured revolving loan ($541,739 par due 9/2011)	10.25% (Base Rate + 3.00%/Q)	9/30/05	541,739	541,739	$	1.00
		Common stock (1,800,000 shares)		9/29/05	1,800,000	1,800,000	$	1.00{4	}
York Label Holdings, Inc.	Consumer product labels manufacturer	Senior subordinated loan ($10,368,791 par due 2/2010)	10.00% cash, 4.00% PIK	11/3/04	10,362,901	10,368,791	$	1.00{2}{3	}
		Preferred stock (650 shares)	10.00%	11/3/04	3,742,445	3,742,445	$	5,757.61{3	}
		Warrants to purchase 156,000 shares		11/3/04	5,320,409	5,320,408	$	34.11{4	}
					70,300,506	70,306,395				12.34	%
Environmental Services
Mactec, Inc.	Engineering and environmental consulting services	Common stock (186 shares)		11/3/04	—	—	$	0.00{4	}
United Site Services, Inc.	Portable restroom and site services	Senior secured loan ($5,061,957 par due 8/2011)	7.37% (Libor + 3.00%/M)	9/14/05	5,061,957	5,061,957	$	1.00
		Senior secured loan ($3,043,478 par due 8/2011)	7.41% (Libor + 3.00%/Q)	9/14/05	3,043,478	3,043,478	$	1.00
		Senior secured loan ($1,869,565 par due 8/2011)	7.28% (Libor + 3.00%/Q)	9/14/05	1,869,565	1,869,565	$	1.00
		Junior secured loan ($13,461,538 par due 6/2010)	12.44% (Libor + 8.00%/Q)	12/1/04	13,419,063	13,461,538	$	1.00{2	}
		Common stock (216,795 shares)		10/8/04	1,353,851	1,353,851	$	6.24{4	}
Wastequip, Inc.	Waste management equipment manufacturer	Junior secured loan ($15,000,000 par due 7/2012)	10.53% (Libor + 6.00%/Q)	8/4/05	15,000,000	15,000,000	$	1.00
WCA Waste Systems, Inc.	Waste management services	Junior secured loan ($25,000,000 par due 10/2011)	10.53% (Libor + 6.00%/Q)	4/25/05	25,000,000	25,000,000	$	1.00{2	}
					64,747,914	64,790,389				11.37	%
Restaurants
CICQ, LP	Restaurant franchisor, owner and operator	Limited partnership interest (26.5% interest)		8/15/05	53,000,000	62,284,540
					_
					53,000,000	62,284,540				10.93	%
Services - Other
Diversified Collection Services, Inc.	Collections services	Senior secured loan ($6,300,000 par due 2/2011)	8.38% (Libor + 4.00%/M)	2/2/05	6,300,000	6,300,000	$	1.00{2	}
		Senior secured loan ($8,500,000 par due 8/2011)	10.00% (Libor + 6.00%/Q)	2/2/05	8,500,000	8,500,000	$	1.00{2	}
		Preferred stock (114,004 shares)		2/2/05	295,270	295,270	$	2.59{4	}
Event Rentals, Inc.	Party rental services	Senior secured loan ($2,676,136 par due 11/2011)	9.91% (Libor+ 5.25%/S)	11/17/05	2,676,136	2,676,136	$	1.00
		Senior secured loan ($2,897,727 par due 11/2011)	9.92% (Libor + 5.25%Q)	11/17/05	2,897,727	2,897,727	$	1.00
		Senior secured loan ($170,455 par due 11/2011)	11.50% (Base Rate + 4.25%/D)	11/17/05	170,455	170,455	$	1.00
		Senior secured loan ($8,011,363 par due 11/2011)	9.91% (Libor + 5.25%/S)	11/17/05	8,011,363	8,011,363	$	1.00
GCA Services, Inc.	Custodial services	Senior subordinated loan ($32,743,750 par due 1/2010)	12.00% cash, 3.00% PIK	7/25/05	32,743,750	32,743,750	$	1.00{3	}
					61,594,701	61,594,701				10.81	%
Manufacturing
Arrow Group Industries, Inc.	Residential and outdoor shed manufacturer	Senior secured loan ($6,000,000 par due 4/2010)	9.53% (Libor + 5.00%/Q)	3/28/05	6,040,153	6,000,000	$	1.00
		Senior secured loan ($6,000,000 par due 10/2010)	14.03% (Libor + 9.50%/Q)	3/28/05	6,000,000	6,000,000	$	1.00
Qualitor, Inc.	Automotive aftermarket components supplier	Senior secured loan ($827,059 par due 12/2011)	8.27% (Libor + 4.00%/Q)	12/29/04	827,059	827,059	$	1.00{2	}

6

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

As of December 31, 2005

Company {1}	Industry	Investment	Interest {10}	Initial Acquisition Date	Amortized Cost	Fair Value	Fair Value Per Unit			Percentage of Net Assets
		Senior secured loan ($1,152,941 par due 12/2011)	8.53% (Libor + 4.00%/Q)	12/29/04	1,152,941	1,152,941	$	1.00{2	}
		Junior secured loan ($5,000,000 par due 6/2012)	11.53% (Libor + 7.00%/Q)	12/29/04	5,000,000	5,000,000	$	1.00{2	}
Reflexite Corporation	Developer and manufacturer of high visibility reflective products	Senior subordinated loan ($10,304,329 par due 12/2011)	11.00% cash, 3.00% PIK	12/30/04	10,304,329	10,304,329	$	1.00{2}{3	}
Universal Trailer Corporation {5}	Livestock and specialty trailer manufacturer	Senior secured loan ($1,048,960 par due 3/2007)	8.39% (Libor + 4.00%/M)	10/8/04	1,054,725	1,054,725	$	1.01
		Senior subordinated loan ($7,500,000 par due 9/2008)	13.50%	10/8/04	7,522,762	7,528,881	$	1.00
		Common stock (50,000 shares)		10/8/04	6,424,645	3,113,351	$	62.27{4	}
		Warrants to purchase 22,208 shares		10/8/04	1,505,776	1,382,826	$	62.27{4	}
Varel Holdings, Inc.	Drill bit manufacturer	Senior secured loan ($6,643,750 par due 12/2010)	8.58% (Libor + 4.00%/S)	5/18/05	6,643,750	6,643,750	$	1.00{2	}
		Senior secured loan ($2,333,333 par due 12/2010)	8.47% (Libor + 4.00%/Q)	5/18/05	2,333,333	2,333,333	$	1.00{2	}
		Senior secured loan ($3,333,333 par due 12/2011)	12.48% (Libor + 8.00%/Q)	5/18/05	3,333,333	3,333,333	$	1.00{2	}
		Preferred stock (30,451 shares)		5/18/05	1,046,568	1,046,568	$	34.37{3	}
		Common stock (30,451 shares)		5/18/05	3,045	3,045	$	0.10{4	}
					59,192,419	55,724,141				9.78	%
Consumer Products - Non-Durable
Making Memories Wholesale, Inc. {6}	Scrapbooking branded products manufacturer	Senior secured loan ($9,143,750 par due 3/2011)	8.50% (Libor + 4.00%/Q)	5/5/05	9,143,750	9,143,750	$	1.00{2	}
		Senior subordinated loan ($10,000,000 par due 5/2012)	12.00% cash, 2.50% PIK	5/5/05	10,000,000	10,000,000	$	1.00{3	}
		Preferred stock (3,500 shares)		5/5/05	3,685,100	3,685,100	$	1,052.89{3	}
Shoes for Crews, LLC	Safety footwear and slip-related mats manufacturer	Senior secured loan ($1,478,167 par due 7/2010)	9.00% (Base Rate + 1.75%/D)	10/8/04	1,486,865	1,486,865	$	1.01{2	}
		Senior secured loan ($47,247 par due 7/2010)	7.78% (Libor + 3.25%/Q)	10/8/04	47,525	47,525	$	1.01{2	}
Tumi Holdings, Inc.	Branded luggage designer, marketer and distributor	Senior secured loan ($2,500,000 par due 12/2012)	7.28% (Libor + 2.75%/Q)	5/24/05	2,500,000	2,500,000	$	1.00{2	}
		Senior secured loan ($5,000,000 par due 12/2013)	7.78% (Libor + 3.25%/Q)	3/14/05	5,000,000	5,000,000	$	1.00{2	}
		Senior subordinated loan ($13,008,799 par due 12/2014)	15.53% (Libor + 6.00% cash, 5.00% PIK/Q)	3/14/05	13,008,799	13,008,799	$	1.00{2}{3	}
					44,872,039	44,872,039				7.88	%
Education
Lakeland Finance, LLC	Private school operator	Senior secured note ($33,000,000 par due 12/2012)	11.50%	12/13/05	33,000,000	33,000,000	$	1.00
					33,000,000	33,000,000				5.79	%
Consumer Products - Durable
AWTP, LLC	Water treatment services	Junior secured loan ($13,600,000 par due 12/2012)	13.50% (Base Rate + 6.25%/Q)	12/21/05	13,600,000	13,600,000	$	1.00
Berkline/Benchcraft Holdings LLC	Furniture manufacturer and distributor	Junior secured loan ($5,000,000 par due 5/2012)	14.05% (Libor + 10.00%/Q)	11/3/04	5,000,000	4,500,000	$	0.90{2	}
		Preferred stock (2,536 shares)		10/8/04	1,046,343	677,643	$	267.21{4	}
		Warrants to purchase 483,020 shares		10/8/04	2,752,559	1,782,640	$	3.69{4	}
					22,398,902	20,560,283				3.61	%
Financial
Foxe Basin CLO 2003, Ltd.	Collateralized debt obligation	Preference shares (3,000 shares)		10/8/04	2,743,440	2,743,440	$	914.48{8}{9	}
Hudson Straits CLO 2004, Ltd.	Collateralized debt obligation	Preference shares (5,750 shares)		10/8/04	5,217,331	5,143,121	$	894.46{8}{9	}
MINCS-Glace Bay, Ltd.	Collateralized debt obligation	Secured notes ($9,500,000 par due 7/2014)	7.79% (Libor + 3.60%/Q)	10/8/04	9,019,819	9,500,000	$	1.00{8}{9	}
					16,980,590	17,386,561				3.05	%
Printing, Publishing and Broadcasting
Canon Communications LLC	Print publications services	Junior secured loan ($16,250,000 par due 11/2011)	12.03% (Libor + 7.50%/Q)	5/25/05	16,250,000	16,250,000	$	1.00{2	}
					16,250,000	16,250,000				2.85	%
Aerospace & Defense
ILC Industries, Inc.	Industrial products provider	Junior secured loan ($6,500,000 par due 8/2012)	10.28% (Libor + 5.75%/Q)	8/30/05	6,529,232	6,500,000	$	1.00
Thermal Solutions LLC	Thermal management and electronics packaging manufacturer	Senior secured loan ($5,973,529 par due 3/2011)	9.71% (Libor + 5.25%/Q)	3/28/05	5,973,529	5,973,529	$	1.00{2	}
		Senior subordinated loan ($3,062,766 par due 3/2012)	11.50% cash, 2.75% PIK	3/28/05	3,067,225	3,062,766	$	1.00{2}{3	}
		Preferred stock (29,400 shares)		3/28/05	294,000	294,000	$	10.00{4	}
		Common stock (600,000 shares)		3/28/05	6,000	6,000	$	0.01{4	}
					15,869,986	15,836,295				2.78	%

7

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2005

Company	Industry	Investment	Interest{10}	Initial Acquisition Date	Amortized Cost		Fair Value		Fair Value Per Unit			Percentage of Net Assets
Cargo Transport
Kenan Advantage Group, Inc.	Fuel transportation provider	Senior subordinated loan ($8,870,968 par due 12/2013)	13.00%	12/15/05	8,870,968		8,870,968		$	1.00
		Senior secured loan ($2,500,000 par due 12/2011)	7.50% (Libor + 3.00%/Q)	12/15/05	2,500,000		2,500,000		$	1.00
		Preferred stock (10,984 shares)		12/15/05	1,098,400		1,098,400		$	100.00{4	}
		Common stock (30,575 shares)		12/15/05	30,575		30,575		$	1.00{4	}
					12,499,943		12,499,943					2.19	%
Farming and Agriculture
The GSI Group, Inc.	Agricultural equipment manufacturer	Senior notes ($10,000,000 par due 5/2013)	12.00%	5/11/05	10,000,000		10,000,000		$	1.00
		Common stock (7,500 shares)		5/12/05	750,000		750,000		$	100.00{4	}
					10,750,000		10,750,000					1.89	%
Housing - Building Materials
HB&G Building Products	Synthetic and wood product manufacturer	Senior subordinated loan ($8,439,529 par due 3/2011)	13.00% cash, 4.00% PIK	10/8/04	8,435,645		8,439,529		$	1.00{2}{3	}
		Common stock (2,743 shares)		10/8/04	752,888		752,888		$	274.48{4	}
		Warrants to purchase 4,464 shares		10/8/04	652,503		652,503		$	146.17{4	}
					9,841,036		9,844,920					1.73	%
Business Services
Miller Heiman, Inc.	Sales consulting services	Senior secured loan ($4,521,687 par due 6/2010)	8.14% (Libor + 3.75%/M)	6/20/05	4,521,687		4,521,687		$	1.00{2	}
		Senior secured loan ($4,058,379 par due 6/2012)	8.78% (Libor + 4.25%/Q)	6/20/05	4,058,379		4,058,379		$	1.00{2	}
					8,580,066		8,580,066					1.51	%
Cable Television
Patriot Media & Communications CNJ, LLC	Cable services	Junior secured loan ($5,000,000 par due 10/2013)	9.50% (Libor + 5.00%/Q)	10/6/05	5,000,000		5,000,000		$	1.00
					5,000,000		5,000,000					0.88	%
Healthcare - Medical Products
Aircast, Inc.	Manufacturer of orthopedic braces, supports and vascular systems	Senior secured loan ($1,251,902 par due 12/2010)	7.20% (Libor + 2.75%/Q)	12/2/04	1,251,902		1,251,902		$	1.00{2	}
		Junior secured loan ($1,000,000 par due 6/2011)	11.45% (Libor + 7.00%/Q)	12/2/04	1,000,000		1,000,000		$	1.00{2	}
					2,251,902		2,251,902					0.40	%
Total					$	581,351,865	$	585,968,375

{1} We do not “Control” any of our portfolio companies, as defined in the Investment Company Act of 1940.  In general, under the 1940 Act, we would “Control” a portfolio company if we owned 25% or more of its voting securities.  All of our portfolio company investments are subject to legal restriction on sales which as of December 31, 2005 represented 103% of the Company’s net assets.

{2} Pledged as collateral for the credit facility payable (see Note 7 to the consolidated financial statements).

{3} Has a payment-in-kind interest feature (see Note 2 to the consolidated financial statements).

{4} Non-income producing at December 31, 2005.

{5} As defined in the 1940 Act, we are an “Affiliate” of this portfolio company because we own more than 5% of the portfolio company’s outstanding voting securities.  For the year ended December 31, 2005, for this portfolio company there were total purchases of $2,000,000, redemptions of $2,919,939 (cost), interest income of $1,147,137, other income of $143,667, net realized losses of $4,278 and net unrealized losses of $3,429,198.

{6} As defined in the 1940 Act, we are an “Affiliate” of this portfolio company because we own more than 5% of the portfolio company’s outstanding voting securities.  For the year ended December 31, 2005, for this portfolio company there were total purchases of $26,000,000, sales of $3,000,000 (cost), redemptions of $237,500 (cost), interest income of $1,514,431, capital structuring services fees of $862,500 and other income of $2,068.

{7} As defined in the 1940 Act, we are an “Affiliate” of this portfolio company because we own more than 5% of the portfolio company’s outstanding voting securities.  For the year ended December 31, 2005, for this portfolio company there were total purchases of $54,647,808, total sales of $19,000,000 (cost), redemptions of $706,069 (cost), interest income of $943,631, capital structuring services fees of $1,058,750 and other income of $44,426.

{8} Non-U.S. company or principal place of business outside the U.S.

{9} Non-registered investment company.

{10} A majority of the variable rate loans to our portfolio companies bear interest at a rate that may be determined by reference to either Libor or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), at the borrower’s option, which reset semi-annually (S), quarterly (Q), monthly (M) or daily (D).  For each such loan, we have provided the current interest rate in effect at December 31, 2005.

8

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

	For the three			For the three			For the six			For the six
	months ended			months ended			months ended			months ended
	June 30, 2006			June 30, 2005			June 30, 2006			June 30, 2005
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
INVESTMENT INCOME:
From non-control/non-affiliate investments:
Interest from investments	$	20,737,226		$	6,027,175		$	35,788,359		$	10,947,830
Interest from cash & cash equivalents	199,948			565,412			431,177			595,768
Dividend income	1,170,000			744,818			1,170,000			744,818
Capital structuring service fees	4,670,493			631,333			6,416,698			935,083
Other income	244,466			62,765			287,009			122,161
Total investment income from non-control/non-affiliate investments	27,022,133			8,031,503			44,093,243			13,345,660
From affiliate investments:
Interest from investments	2,760,198			700,871			5,237,130			1,011,464
Capital structuring service fees	600,000			862,500			1,183,810			862,500
Other income	107,420			6,741			166,873			132,583
Total investment income from affiliate investments	3,467,618			1,570,112			6,587,813			2,006,547
Total investment income	30,489,751			9,601,615			50,681,056			15,352,207
EXPENSES:
Base management fees	3,107,197			1,027,135			5,650,856			1,841,847
Incentive management fees	6,940,399			1,798,919			9,863,283			2,069,202
Administrative	188,488			256,115			366,025			489,387
Professional fees	676,637			320,800			1,148,088			485,794
Directors fees	73,919			85,643			137,169			157,808
Insurance	198,431			144,400			386,532			287,213
Interest and credit facility fees	4,361,907			62,979			5,684,217			438,269
Interest payable to the Investment Adviser	—			31,814			25,879			83,539
Amortization of debt issuance costs	411,836			65,736			819,147			131,426
Depreciation	49,302			—			49,302			—
Other	217,105			39,940			385,612			69,759
Total expenses	16,225,221			3,833,481			24,516,110			6,054,244
NET INVESTMENT INCOME BEFORE INCOME TAXES	14,264,530			5,768,134			26,164,946			9,297,963
Income tax expense, including excise tax	4,971,635			—			5,180,515			—
NET INVESTMENT INCOME	9,292,895			5,768,134			20,984,431			9,297,963
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gains (losses):
Net realized gains from non-control/non-affiliate investment transactions	23,879,988			6,747,262			24,443,591			7,156,442
Net realized gains (losses) from affiliate investment transactions	—			(1,880		)	47,283			(2,030		)
Net realized gains from investment transactions	23,879,988			6,745,382			24,490,874			7,154,412
Net unrealized gains (losses):
Investment transactions from non-control/non-affiliate investments	(16,480,203		)	(4,910,024		)	(12,494,673		)	(343,793		)
Investment transactions from affiliate investments	—			(1,236		)	(2,444,918		)	(2,420		)
Net unrealized losses from investment transactions	(16,480,203		)	(4,911,260		)	(14,939,591		)	(346,213		)
Net realized and unrealized gain on investments	7,399,785			1,834,122			9,551,283			6,808,199
NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM OPERATIONS	$	16,692,680		$	7,602,256		$	30,535,714		$	16,106,162
BASIC AND DILUTED EARNINGS PER COMMON SHARE (see Note 4)	$	0.44		$	0.33		$	0.80		$	0.91
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING (see Note 4)	38,089,889			23,164,444			38,039,574			17,683,309

See accompanying notes to consolidated financial statements.

9

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
For the Six Months Ended June 30, 2006 (unaudited)

	Common Stock			Capital in Excess of Par		Distributions Less Than (in Excess of) Net Investment			Accumulated Net Realized Gain on Sale of			Net Unrealized Appreciation on			Total Stockholders’
	Shares	Amount		Value		Income			Investments			Investments			Equity
Balance at December 31, 2005	37,909,484	$	37,910	$	559,192,554	$	—		$	5,765,225		$	4,616,510		$	569,612,199
Shares issued in connection with dividend reinvestment plan	297,770	298		4,999,876		—			—			—			5,000,174
Net increase in stockholders’ equity resulting from operations	—	—		—		20,984,431			24,490,874			(14,939,591		)	30,535,714
Dividend declared ($0.74 per share)	—	—		—		(20,984,431		)	(7,179,522		)	—			(28,163,953		)
Balance at June 30, 2006	38,207,254	$	38,208	$	564,192,430	$	—		$	23,076,577		$	(10,323,081	)	$	576,984,134

See accompanying notes to consolidated financial statements.

10

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
For the Six Months Ended June 30, 2005 (unaudited)

	Common Stock			Capital in Excess of Par			Distributions Less Than (in Excess of) Net Investment			Accumulated Net Realized Gain on Sale of			Net Unrealized Appreciation (Depreciation)			Total Stockholders’
	Shares	Amount		Value			Income			Investments			of Investments			Equity
Balance at December 31, 2004	11,066,767	$	11,067	$	159,602,706		$	(136,415	)	$	—		$	230,947		$	159,708,305
Issuance of common stock from add-on offering (net of offering and underwriting costs)	12,075,000	12,075		183,859,340			—			—			—			183,871,415
Reimbursement of underwriting costs paid by the Investment Adviser (see Note 9)	—	—		(2,475,000		)										(2,475,000		)
Shares issued in connection with dividend reinvestment plan	26,828	27		456,506												456,533
Net increase in stockholders’ equity resulting from operations	—	—		—			9,297,963			7,154,412			(346,213		)	16,106,162
Dividend declared ($0.62 per share)	—	—		—			(9,161,548		)	(1,572,927		)	—			(10,734,475		)
Balance at June 30, 2005	23,168,595	$	23,169	$	341,443,552		$	—		$	5,581,485		$	(115,266	)	$	346,932,940

See accompanying notes to consolidated financial statements.

11

ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS

	For the six			For the six
	months ended			months ended
	June 30, 2006			June 30, 2005
	(unaudited)			(unaudited)
OPERATING ACTIVITIES:
Net increase in stockholders’ equity resulting from operations	$	30,535,714		$	16,106,162
Adjustments to reconcile net increase in stockholders’ equity resulting from operations:
Net realized gain on investment transactions	(24,490,874		)	(7,154,412		)
Net unrealized loss on investment transactions	14,939,591			346,213
Net accretion of discount on securities	(20,292		)	625
Increase in accrued payment-in-kind dividends and interest	(2,555,781		)	(1,460,731		)
Amortization of debt issuance costs	819,147			131,426
Depreciation	49,302			—
Proceeds from sale and redemption of investments	165,065,734			63,881,989
Purchases of investments	(456,011,118		)	(167,055,034		)
Changes in operating assets and liabilities:
Interest receivable	(2,025,940		)	(2,239,348		)
Other assets	(1,823,595		)	256,973
Accounts payable and accrued expenses	5,869,978			(549,735		)
Management and incentive fees payable	6,569,562			2,583,939
Interest and facility fees payable	2,792,017			(33,197		)
Interest payable to the Investment Adviser	(154,078		)	83,539
Net cash used in operating activities	(260,440,633		)	(95,101,591		)
FINANCING ACTIVITIES:
Net proceeds from issuance of common stock	—			183,871,415
Borrowings on credit facility payable	374,200,000			23,500,000
Repayments on credit facility payable	(47,000,000		)	(79,000,000		)
Underwriting costs payable to the Investment Adviser	(2,475,000		)	—
Dividends paid in cash	(36,053,004		)	(6,184,023		)
Net cash provided by financing activities	288,671,996			122,187,392
CHANGE IN CASH AND CASH EQUIVALENTS	28,231,363			27,085,801
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	16,613,334			26,806,160
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	44,844,697		$	53,891,961
Supplemental Information:
Interest paid during the period	$	2,571,846		$	385,265
Dividends declared during the period	$	28,163,953		$	10,734,475

See accompanying notes to consolidated financial statements.

12

ARES CAPITAL CORPORATION

	check				Cash	Investments		Receivable for trades		Interest Rec		Other assets		Credit Fac Pay		UW Costs Payable		Payable for trade		Div Pay		A/P	Mgmt pay	Int & Fac Fees Pay		Int pay to Inv Adv		Stockholders’ Equity
STATEMENT OF CASH FLOWS	June 30, 2006		(1	)	44,844,697	878,160,631		6,962,236		7,854,038		4,608,731		345,200,000		0		0		0		7,092,656	10,047,596	3,105,947		0		576,984,134
Six Months Ended	December 31, 2005		1		16,613,334	585,968,375		1,581,752		5,828,098		3,653,585		18,000,000		2,475,000		5,500,000		12,889,225		1,222,678	3,478,034	313,930		154,078		569,612,199
June 30, 2006			(2	)	28,231,363	292,192,256		5,380,483		2,025,940		955,146		327,200,000		(2,475,000	)	(5,500,000	)	(12,889,225	)	5,869,978	6,569,562	2,792,017	)	(154,078		7,371,936
OPERATING ACTIVITIES:
Net increase in stockholders’ equity	30,535,714																											0
Adjustments to reconcile net increase in SHE to net cash provided by operating activities:
Realized gain	(24,490,874	)				(24,490,874	)
Unrealized gain/(loss)	14,939,591					14,939,591
PIK income	(2,555,781	)				(2,555,781	)
Amortization of debt costs	819,147											819,147
Depreciation	49,302											49,302
Accretion income	(20,292	)				(20,292	)
(Increase) decrease in operating assets:
Interest receivable	(2,025,940	)								(2,025,940	)
Escrowed funds receivable	0
Other assets	(1,823,594	)										(1,823,594	)
Increase (decrease) in operating liabilities:
Mgmt fee payable	6,569,562																						6,569,562
Interest payable to the Investment Adviser	(154,078	)																								(154,078	)
Interest and facility fees payable	2,792,017																							2,792,017
Accounts payable and accrued expenses	5,869,978																					5,869,978
Net cash provided by operating activities	30,504,753
INVESTING ACTIVITIES:
Purchase of investments	(456,011,119	)				(450,511,119	)											(5,500,000	)
Sale of investments	165,065,734					170,446,218		(5,380,483	)
Net cash used in investing activities	(290,945,385	)
FINANCING ACTIVITIES:
Borrowings from credit facility	374,200,000													374,200,000
Paydowns on credit facility	(47,000,000	)												(47,000,000	)
Net proceeds from issuance of stock	0																											0
Reinvested dividends (offset against dividend paid)	0																			(5,000,174	)							5,000,174
Underwriting costs payable to the Investment Adviser	(2,475,000	)														(2,475,000	)											0
Credit facility financing costs	0											0
Dividends declared in period	0																			28,163,953								(28,163,953	)
Dividend paid during period	(36,053,005	)																		(36,053,005	)
Net cash provided by financing activities	288,671,995
INCREASE IN CASH AND CASH EQUIVALENTS	28,231,363
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	16,613,334
CASH AND CASH EQUIVALENTS, END OF PERIOD	44,844,697
Difference	0				28,231,363	-1		0		0		0		0				0		-2		0	0	0		0		30,535,714
																										Net Income		30,535,714
																				(11,286,546	)					Difference		(0	)

See accompanying notes to consolidated financial statements.

13

ARES CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2006 (unaudited)

1.             ORGANIZATION

Ares Capital Corporation (the “Company” or “ARCC” or “we”) is a specialty finance company that is a closed-end, non-diversified management investment company incorporated in Maryland that is regulated as a business development company under the Investment Company Act of 1940 (“1940 Act”). We were incorporated on April 16, 2004 and were initially funded on June 23, 2004. On October 8, 2004, we completed our initial public offering (the “IPO”).  On the same date, we commenced substantial investment operations.

The Company has qualified and has elected to be treated for tax purposes as a regulated investment company, or RIC, under the Internal Revenue Code of 1986 (the “Code”), as amended.  The Company expects to continue to qualify and to elect to be treated for tax purposes as a RIC.  Our investment objective is to generate both current income and capital appreciation through debt and equity investments. We invest primarily in first and second lien senior loans and mezzanine debt, which in some cases may include an equity component, and, to a lesser extent, in equity investments in private middle market companies.

We are externally managed by Ares Capital Management LLC (the “Investment Adviser”), an affiliate of Ares Management LLC (“Ares Management”), an independent Los Angeles based firm that manages investment funds.  Ares Technical Administration LLC (“Ares Administration”), an affiliate of Ares Management, provides the administrative services necessary for us to operate.

Interim financial statements are prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying financial statements prepared in accordance with GAAP are omitted. In the opinion of management, all adjustments, consisting solely of normal recurring accruals, considered necessary for the fair presentation of financial statements for the interim period, have been included. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the fiscal year ending December 31, 2006.

2.             SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States, and include the accounts of the Company and its wholly owned subsidiaries. The consolidated financial statements reflect all adjustments and reclassifications which, in the opinion of management, are necessary for the fair presentation of the results of the operations and financial condition for the periods presented. All significant intercompany balances and transactions have been eliminated.

Cash and Cash Equivalents

Cash and cash equivalents include short-term, liquid investments in a money market fund.  Cash and cash equivalents are carried at cost which approximates fair value.

Concentration of Credit Risk

The Company places its cash and cash equivalents with financial institutions and, at times, cash held in money market accounts may exceed the Federal Deposit Insurance Corporation insured limit.

14

Investments

Investment transactions are recorded on the trade date.  Realized gains or losses are computed using the specific identification method.  Investments for which market quotations are readily available are valued at such market quotations.  Debt and equity securities that are not publicly traded or whose market price is not readily available are valued at fair value as determined in good faith by our board of directors based on the input of our investment adviser and audit committee. In addition, the board of directors currently receives input from an independent valuation firm that has been engaged at the direction of the board to value each portfolio security at least once during a trailing 12 month period.  The valuation process is conducted at the end of each fiscal quarter, with approximately a quarter of our portfolio companies subject to valuation by the independent valuation firm each quarter.  The types of factors that the board may take into account in fair value pricing of our investments include, as relevant, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business, comparison to publicly traded securities and other relevant factors.

When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we use the pricing indicated by the external event to corroborate our private equity valuation. Because there is not a readily available market value for most of the investments in our portfolio, we value substantially all of our portfolio investments at fair value as determined in good faith by our board under a valuation policy and a consistently applied valuation process. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a ready market existed for such investments, and the differences could be material.

With respect to investments for which market quotations are not readily available, our board of directors undertakes a multi-step valuation process each quarter, as described below:

·Our quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals responsible for the portfolio investment.

·Preliminary valuation conclusions are then documented and discussed with our senior management.

·The audit committee of our board of directors reviews these preliminary valuations as well as valuations with respect to approximately a quarter of our portfolio companies prepared by an independent valuation firm.

·The board of directors discusses valuations and determines the fair value of each investment in our portfolio in good faith based on the input of our investment adviser and audit committee and the independent valuation firm.

Interest Income Recognition

Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis to the extent that such amounts are expected to be collected.  The Company stops accruing interest on its investments when it is determined that interest is no longer collectible.  If any cash is received after it is determined that interest is no longer collectible, we will treat the cash as payment on the principal balance until the entire principal balance has been repaid, before any interest income is recognized.  Discounts and premiums on securities purchased are accreted/amortized over the life of the respective security using the effective yield method.  The amortized cost of investments represents the original cost adjusted for the accretion of discounts and amortizations of premium on bonds.

Payment in Kind Interest

The Company has loans in its portfolio that contain a payment-in-kind (“PIK”) provision.  The PIK interest, computed at the contractual rate specified in each loan agreement, is added to the principal balance of the loan and recorded as interest income.  To maintain the Company’s status as a RIC, this non-cash source of income must be paid out to stockholders in the form of dividends, even though the Company has not yet collected the cash.  For the three and six months ended June 30, 2006, the Company recorded $1,610,327 and $2,555,781, respectively, in PIK income.  For the three and six months ended June 30, 2005, the Company recorded $771,892 and $1,460,731, respectively, in PIK income.

15

Capital Structuring Service Fees

The Company’s Investment Adviser seeks to provide assistance to the portfolio companies in connection with the Company’s investments and in return the Company may receive fees for capital structuring services. These fees are normally paid at the closing of the investments, are generally non-recurring and are recognized as revenue when earned upon closing of the investment. The services that the Company’s Investment Adviser provides vary by investment, but generally consist of reviewing existing credit facilities, arranging bank financing, arranging equity financing, structuring financing from multiple lenders, structuring financing from equity investors, restructuring existing loans, raising equity and debt capital, and providing general financial advice, which concludes upon closing of the loan.  The Company’s Investment Adviser may also take a seat on the board of directors of a portfolio company, or observe the meetings of the board of directors without taking a formal seat.   Any services of the above nature subsequent to the closing would generally generate a separate fee payable to the Company. In certain instances where the Company is invited to participate as a co-lender in a transaction and in the event that the Company does not provide significant services in connection with the investment, a portion of loan fees paid to the Company in such situations will be deferred and amortized over the estimated life of the loan.

Foreign Currency Translation

The Company’s books and records are maintained in U.S. dollars.  Any foreign currency amounts are translated into U.S. dollars on the following basis:

(1)Market value of investment securities, other assets and liabilities — at the exchange rates prevailing at the end of the day.

(2)Purchases and sales of investment securities, income and expenses — at the rates of exchange prevailing on the respective dates of such transactions.

Although the net assets and the fair values are presented at the foreign exchange rates at the end of the day, the Company does not isolate the portion of the results of the operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in fair value of investments.  Such fluctuations are included with the net realized and unrealized gains or losses from investments.  Foreign security and currency translations may involve certain considerations and risks not typically associated with investing in U.S. companies and U.S. Government securities.  These risks include but are not limited to revaluation of currencies and future adverse political and economic developments which could cause investments in their markets to be less liquid and prices more volatile than those of comparable U.S. companies.

Offering Expenses

The Company’s offering costs were charged against the proceeds from the Add-on Offering (as defined in Note 10) when received.  For the six months ended June 30, 2005, the Company incurred approximately $635,000 of such costs.

Debt Issuance Costs

Debt issuance costs are being amortized over the life of the related credit facility using the straight line method which approximates the interest method.

Federal Income Taxes

The Company has qualified and elected and intends to continue to qualify for the tax treatment applicable to regulated investment companies under Subchapter M of the Code  and, among other things, has made and intends to continue to make the requisite distributions to its stockholders which will relieve the Company from Federal income taxes.  In order to qualify as a RIC, among other factors, the Company is required to timely distribute to its stockholders at least 90% of investment company taxable income, as defined by the Code, for each year.

Depending on the level of taxable income earned in a tax year, we may choose to carry forward taxable income in excess of current year dividend distributions into the next tax year and pay a 4%

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excise tax on such income, as required.  To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned. For the three and six months ended June 30, 2006, the Company recorded a provision of approximately $727,000 and $826,000, respectively,  for Federal excise tax.  As of June 30, 2006, the entire amount was unpaid and included in accounts payable on the accompanying consolidated balance sheet.

Our wholly owned subsidiaries ARCC Cervantes Corporation (“ACC”) and ARCC Cervantes LLC (“ACLLC”) are subject to Federal and state income taxes.  For the three and six months ended June 30, 2006, we recorded a tax provision of approximately $4,244,000 and $4,354,000, respectively, for these subsidiaries.

Dividends

Dividends and distributions to common stockholders are recorded on the record date. The amount to be paid out as a dividend is determined by the board of directors each quarter and is generally based upon the earnings estimated by management. Net realized capital gains, if any, are generally distributed at least annually, although we may decide to retain such capital gains for investment.

We have adopted a dividend reinvestment plan that provides for reinvestment of our distributions on behalf of our stockholders, unless a stockholder elects to receive cash. As a result, if our board of directors authorizes, and we declare, a cash dividend, then our stockholders who have not ‘‘opted out’’ of our dividend reinvestment plan will have their cash dividends automatically reinvested in additional shares of our common stock, rather than receiving the cash dividends.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of actual and contingent assets and liabilities at the date of the financial statements and the reported amounts of income or loss and expenses during the reporting period.  Actual results could differ from those estimates. Significant estimates include the valuation of investments.

Fair Value of Financial Instruments

The carrying value of the Company’s financial instruments approximate fair value.  The carrying value of interest and open trade receivables, accounts payable and accrued expenses, as well as the credit facility payable approximate fair value due to their short maturity.

3.             AGREEMENTS

The Company has entered into an investment advisory agreement (the “Advisory Agreement”) with the Investment Adviser under which the Investment Adviser, subject to the overall supervision of our board of directors, provides investment advisory services to ARCC. For providing these services, the Investment Adviser receives a fee from us, consisting of two components—a base management fee and an incentive fee. The base management fee is calculated at an annual rate of 1.5% of our total assets (other than cash or cash equivalents but including assets purchased with borrowed funds).  For services rendered under the Advisory Agreement during the period commencing from October 8, 2004 through and including December 31, 2004, the base management fee is payable monthly in arrears.  For services rendered under the Advisory Agreement after that time, the base management fee is payable quarterly in arrears. The base management fee is calculated based on the average value of our total assets (other than cash or cash equivalents but including assets purchased with borrowed funds) at the end of the two most recently completed calendar quarters.

The incentive fee has two parts.  One part is calculated and payable quarterly in arrears based on our pre-incentive fee net investment income.  Pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive

17

from portfolio companies but excluding fees for providing managerial assistance) accrued during the calendar quarter, minus operating expenses for the quarter (including the base management fee, any expenses payable under the administration agreement, and any interest expense and dividends paid on any outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature such as market discount, debt instruments with payment-in-kind interest, preferred stock with payment-in-kind dividends and zero coupon securities, accrued income that we have not yet received in cash. The Investment Adviser is not under any obligation to reimburse us for any part of the incentive fee it received that was based on accrued income that we never received as a result of a default by an entity on the obligation that resulted in the accrual of such income.

Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets at the end of the immediately preceding calendar quarter, is compared to a fixed “hurdle rate” of 2.00% per quarter.

We pay the Investment Adviser an incentive fee with respect to our pre-incentive fee net investment income in each calendar quarter as follows:

·     no incentive fee in any calendar quarter in which the pre-incentive fee net investment income does not exceed the hurdle rate;

·     100% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.50% in any calendar quarter. We refer to this portion of our pre-incentive fee net investment income (which exceeds the hurdle rate but is less than 2.50%) as the “catch-up” provision. The “catch-up” is meant to provide our Investment Adviser with 20% of the pre-incentive fee net investment income as if a hurdle rate did not apply if this net investment income exceeds 2.50% in any calendar quarter; and

·     20% of the amount of our pre-incentive fee net investment income, if any, that exceeds 2.50% in any calendar quarter.

These calculations are adjusted for any share issuances or repurchases during the quarter.

The second part of the incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Advisory Agreement, as of the termination date), commencing with the calendar year ending on December 31, 2004, and equals 20% of our realized capital gains for the calendar year, if any, computed net of all realized capital losses and unrealized capital depreciation for such year.

We defer cash payment of any incentive fee otherwise earned by the Investment Adviser if during the most recent four full calendar quarter periods ending on or prior to the date such payment is to be made the sum of (a) the aggregate distributions to the stockholders and (b) the change in net assets (defined as total assets less indebtedness) is less than 8.0% of our net assets at the beginning of such period.   These calculations are appropriately pro rated during the first three calendar quarters following October 8, 2004 and are adjusted for any share issuances or repurchases.

For the three and six months ended June 30, 2006, we incurred $3,107,197 and $5,650,856, respectively, in base management fees and $4,083,937 and $7,006,821, respectively, in incentive management fees related to pre-incentive fee net investment income.  For the three and six months ended June 30, 2006, we incurred $2,856,462 in incentive management fees related to realized capital gains.   As of June 30, 2006, $10,047,596 was unpaid and included in management and incentive fees payable in the accompanying consolidated balance sheet.

For the three and six months ended June 30, 2005, we incurred $1,027,135 and $1,841,847, respectively, in base management fees and $633,559 and $871,300, respectively, in incentive

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management fees related to pre-incentive fee net investment income.  For the three and six months ended June 30, 2005, we incurred $1,165,360 and $1,197,902, respectively, in incentive management fees related to realized capital gains.

We also entered into a separate administration agreement (the “Administration Agreement”) with Ares Administration under which Ares Administration furnishes us with office facilities, equipment and clerical, bookkeeping and record keeping services at such facilities. Under the Administration Agreement, Ares Administration also performs or oversees the performance of our required administrative services, which include, among other things, being responsible for the financial records which we are required to maintain and preparing reports to our stockholders and reports filed with the SEC. In addition, Ares Administration assists us in determining and publishing the net asset value, oversees the preparation and filing of our tax returns and the printing and dissemination of reports to our stockholders, and generally oversees the payment of our expenses and the performance of administrative and professional services rendered to us by others. Under the Administration Agreement, Ares Administration also provides on our behalf, managerial assistance to those portfolio companies to which we are required to provide such assistance.  The Administration Agreement may be terminated by either party without penalty upon 60-days’ written notice to the other party.

For the three and six months ended June 30, 2006, we incurred $188,488 and $366,024, respectively, in administrative fees.  As of June 30, 2006, $188,488 was unpaid and included in accounts payable and accrued expenses in the accompanying consolidated balance sheet.

For the three and six months ended June 30, 2005, we incurred $256,115 and $489,387, respectively, in administrative fees.

4.             EARNINGS PER SHARE

The following information sets forth the computation of basic and diluted net increase in stockholders’ equity per share resulting from the three and six months ended June 30, 2006:

	Three months		Six months
	ended		ended
	June 30, 2006		June 30, 2006
Numerator for basic and diluted net increase in stockholders’ equity resulting from operations per share:	$	16,692,680	$	30,535,714
Denominator for basic and diluted net increase in stockholders’ equity resulting from operations per share:	38,089,889		38,039,574
Basic and diluted net increase in stockholders’ equity resulting from operations per share:	$	0.44	$	0.80

The following information sets forth the computation of basic and diluted net increase in stockholders’ equity per share resulting from the three and six months ended June 30, 2005:

	Three months		Six months
	ended		ended
	June 30, 2005		June 30, 2005
Numerator for basic and diluted net increase in stockholders’ equity resulting from operations per share:	$	7,602,256	$	16,106,162
Denominator for basic and diluted net increase in stockholders’ equity resulting from operations per share:	23,164,444		17,683,309
Basic and diluted net increase in stockholders’ equity resulting from operations per share:	$	0.33	$	0.91

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5.             INVESTMENTS

For the six months ended June 30, 2006, the Company purchased (A) $303.8 million aggregate principal amount of senior term debt, (B) $103.6 million aggregate principal amount of senior subordinated debt and (C) $43.1 million of investments in equity securities.

In addition, for the six months ended June 30, 2006, (1) $49.2 million aggregate principal amount of senior term debt and (2) $17.9 million aggregate principal amount of senior subordinated debt were redeemed. Additionally, (A) $63.4 million of investments in equity securities and (B) $6.1 million aggregate principal amount of senior term debt were sold.

As of June 30, 2006, investments and cash and cash equivalents consisted of the following:

	Amortized Cost		Fair Value
Cash and cash equivalents	$	44,844,697	$	44,844,697
Senior term debt	587,928,282		586,139,016
Senior notes	10,000,000		10,000,000
Senior subordinated debt	217,564,146		217,764,213
Collateralized debt obligations	7,630,037		7,559,577
Equity securities	65,361,247		56,697,825
Total	$	933,328,409	$	923,005,328

As of December 31, 2005, investments and cash and cash equivalents consisted of the following:

	Amortized Cost		Fair Value
Cash and cash equivalents	$	16,613,334	$	16,613,334
Senior term debt	338,993,970		338,467,061
Senior notes	10,000,000		10,000,000
Senior subordinated debt	129,816,927		130,042,698
Collateralized debt obligations	16,980,590		17,386,561
Equity securities	85,560,378		90,072,055
Total	$	597,965,199	$	602,581,709

The amortized cost represents the original cost adjusted for the accretion of discounts and amortization of premiums on debt using the effective interest method.

The industry and geographic compositions of the portfolio at fair value at June 30, 2006 and December 31, 2005 were as follows:

Industry	June 30, 2006		December 31, 2005
Health Care	19.3	%	13.1	%
Manufacturing	12.6		9.5
Consumer Products	10.7		11.2
Containers/Packaging	8.5		12.0
Printing/Publishing	8.3		2.8
Other Services	7.5		10.5
Education	6.5		5.6
Environmental Services	5.9		11.0
Business Services	3.9		1.5
Restaurants	3.1		10.6
Aerospace and Defense	3.0		2.7
Broadcasting/Cable	2.9		0.9
Computers/Electronics	2.1		0.0
Cargo Transport	1.4		2.1
Farming and Agriculture	1.2		1.8
Beverage/Food/Tobacco	1.1		0.0
Homebuilding	1.1		1.7
Financial	0.9		3.0
Total	100.0	%	100.0	%

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Geographic Region	June 30, 2006		December 31, 2005
West	28.0	%	38.9	%
Southeast	24.0		10.2
Mid-Atlantic	23.9		24.3
Midwest	13.0		12.3
Northeast	8.0		11.3
International	3.1		3.0
Total	100.0	%	100.0	%

6.             COMMITMENTS AND CONTINGENCIES

As of June 30, 2006, the Company had committed to make a total of approximately $84.0 million of investments in various revolving senior secured loans.  As of June 30, 2006, $50.4 million was unfunded.  Included within the $84.0 million commitment in revolving secured loans is a commitment to issue up to $3.8 million in standby letters of credit through a financial intermediary on behalf of certain portfolio companies.  Under these arrangements, the Company would be required to make payments to third-party beneficiaries if the portfolio companies were to default on their related payment obligations.  As of June 30, 2006, the Company had $2.8 million in standby letters of credit issued and outstanding on behalf of the portfolio companies, of which no amounts were recorded as a liability.   Of these letters of credit, $2.3 million expire on September 30, 2006 and $500,000 expire on July 31, 2007.  These letters of credit may be extended under substantially similar terms for additional one-year terms at the Company’s option until the revolving line of credit, under which the letters of credit were issued, matures on September 30, 2011.

As of June 30, 2006, the Company was subject to a subscription agreement to fund up to $10.0 million of equity commitments in a private equity investment partnership.  As of June 30, 2006, there were no amounts funded in this partnership.

As of December 31, 2005, the Company had committed to make a total of approximately $43.0 million of investments in various revolving senior secured loans.  As of December 31, 2005, $28.8 million was unfunded.  Included within the $43.0 million commitment in revolving secured loans is a commitment to issue up to $3.2 million in standby letters of credit through a financial intermediary on behalf of a portfolio company.  Under these arrangements, the Company would be required to make payments to third-party beneficiaries if the portfolio company was to default on its related payment obligations.  As of December 31, 2005, the Company had $2.2 million in standby letters of credit issued and outstanding on behalf of the portfolio company, of which no amounts were recorded as a liability.

7.             CREDIT FACILITIES PAYABLE

In accordance with the 1940 Act, with certain limited exceptions, we are only allowed to borrow amounts such that our asset coverage, as defined in the 1940 Act, is at least 200% after such borrowing.  On October 29, 2004, we formed Ares Capital CP Funding LLC (“Ares Capital CP”), a wholly owned subsidiary of the Company, through which we established a revolving credit facility (the “CP Funding Facility”).  On November 3, 2004, we entered into the CP Funding Facility that, as amended, allows Ares Capital CP to issue up to $350.0 million of variable funding certificates (“VFC”).  As part of the CP Funding Facility, we are subject to limitations as to how borrowed funds may be used including restrictions on geographic concentrations, sector

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concentrations, loan size, payment frequency and status, average life, collateral interests and investment ratings as well as regulatory restrictions on leverage which may affect the amount of VFC that we may issue from time to time.  There are also certain requirements relating to portfolio performance, including required minimum portfolio yield and limitations on delinquencies and charge-offs, violation of which could result in the early amortization of the CP Funding Facility and limit further advances under the CP Funding Facility and in some cases could be an event of default.  Such limitations, requirements, and associated defined terms are as provided for in the documents governing the CP Funding Facility.   As of June 30, 2006, there was $101.2 million outstanding under the CP Funding Facility and the Company continues to be in compliance with all of the limitations and requirements of the CP Funding Facility.  As of December 31, 2005 there was $18.0 million outstanding under the CP Funding Facility.

The CP Funding Facility expires on November 1, 2006. If the CP Funding Facility is not extended beyond November 1, 2006, any principal amounts then outstanding will be amortized over a 24-month period from the termination date.  Under the terms of the CP Funding Facility, we are required to pay a renewal fee of 0.375% of the total amount available for borrowing on or around each November 3.

The interest charged on the VFC is based on the commercial paper rate plus 0.75%. The interest charged on the VFC is payable quarterly.  As of June 30, 2006 the commercial paper rate was 5.2085% and as of December 31, 2005 the commercial paper rate was 4.3223%.   For the three and six months ended June 30, 2006, the average interest rate (i.e. commercial paper rate plus the spread) was 5.73% and 5.50%, respectively.  For the three and six months ended June 30, 2005, the average interest rate (i.e. commercial paper rate plus the spread) was 4.27% and 4.02%, respectively.  For the three and six months ended June 30, 2006, the average outstanding balance was $87,749,451 and $78,145,856, respectively.  There was no balance outstanding during the three months ended June 30, 2005.  For the six months ended June 30, 2005 the average outstanding balance was $17,127,072.  For the three and six months ended June 30, 2006 the interest expense incurred was $1,265,069 and $2,190,906, respectively.  For the three months ended June 30, 2005, no interest expense was incurred.  For the six months ended June 30, 2005 the interest expense incurred was $324,734.  Cash paid for interest expense during the six months ended June 30, 2006 and June 30, 2005 was $1,147,470 and $385,265, respectively.

The Company is also required to pay a commitment fee for any unused portion of the CP Funding Facility.  Initially, the commitment fee was 0.175% per annum.  On April 8, 2005 the Company entered into an amendment to the CP Funding Facility and in connection therewith, the commitment fee was temporarily reduced to 0.11% per annum until the earlier of (a) the date the total borrowings outstanding exceed $150.0 million or (b) October 3, 2005, after which the commitment fee was 0.175% per annum.  On November 14, 2005 the Company entered into an amendment to the CP Funding Facility and in connection therewith, the commitment fee was reduced to 0.10% per annum prior to the first time that the borrowings outstanding under the CP Funding Facility equal or exceed $200.0 million and 0.125% per annum on and after the first time that the borrowings outstanding under the CP Funding Facility exceed $200.0 million.  For the three months and six months ended June 30, 2006, the commitment fee incurred was $66,313 and $136,451, respectively.  For the three and six months ended June 30, 2005, the commitment fee incurred was $62,979 and $113,535, respectively.

In December 2005, we entered into a senior secured revolving credit facility (the “Revolving Credit Facility”) under which the lenders have agreed to extend credit to the Company in an initial aggregate principal amount not exceeding $250 million at any one time outstanding.  The Revolving Credit Facility expires on December 28, 2010 and with certain exceptions is secured by substantially all of the assets in our portfolio (other than investments held by Ares Capital CP under the CP Funding Facility).  Under the Revolving Credit Facility, we have made certain representations and warranties and are required to comply with various covenants, reporting requirements and other customary requirements for similar revolving credit facilities, including, without limitation, covenants related to: (a) limitations on the incurrence of additional indebtedness and liens, (b) limitations on certain investments, (c) limitations on certain restricted payments, (d) maintaining a certain minimum stockholders’ equity, (e) maintaining a ratio of total

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assets (less total liabilities) to total indebtedness, of the Company and its subsidiaries, of not less than 2.0:1.0, (f) maintaining minimum liquidity, and (g) limitations on the creation or existence of agreements that prohibit liens on certain properties of the Company and its subsidiaries.

In addition to the asset coverage ratio described above, borrowings under the Revolving Credit Facility (and the incurrence of certain other permitted debt) will be subject to compliance with a borrowing base that will apply different advance rates to different types of assets in our portfolio. The Revolving Credit Facility also includes an “accordion” feature that allows us to increase the size of the Revolving Credit Facility to a maximum of $500 million under certain circumstances. The Revolving Credit Facility also includes usual and customary events of default for senior secured revolving credit facilities of this nature.  As of June 30, 2006, there was $244.0 million outstanding under the Revolving Credit Facility and the Company continues to be in compliance with all of the limitations and requirements of the Revolving Credit Facility.  As of December 31, 2005, there were no amounts outstanding under the Revolving Credit Facility.

The interest charged under the Revolving Credit Facility is based on LIBOR (one, two, three or six month) plus 1.00%, generally.  As of June 30, 2006, the one, two, three and six month LIBOR were 5.33%, 5.42%, 5.48% and 5.59%, respectively.  For the three and six months ended June 30, 2006, the average interest rate was 6.73% and 6.69%, respectively.  For the three and six months ended June 30, 2006, the average outstanding balance was $177,934,066 and $96,154,696, respectively.  For the three and six months ended June 30, 2006, the interest expense incurred was $2,985,726 and $3,189,986, respectively. Cash paid for interest expense during the six months ended June 30, 2006 was $1,424,375.  As of December 31, 2005, the one, two, three and six month LIBOR were 4.39%, 4.48%, 4.54% and 4.70%, respectively.   The Company is also required to pay a commitment fee of 0.20% for any unused portion of the Revolving Credit Facility.  For the three and six months ended June 30, 2006, the commitment fee incurred was $34,710 and $149,288, respectively.

As of June 30, 2006, the Company had $3.7 million in standby letters of credit issued through the Revolving Credit Facility.

8.             DERIVATIVE INSTRUMENTS

In 2005, we entered into a costless collar agreement in order to manage the exposure to changing interest rates related to the Company’s fixed rate investments.  The costless collar agreement is for a notional amount of $20 million, has a cap of 6.5%, a floor of 2.72% and matures in 2008.  The costless collar agreement allows us to receive an interest payment for any quarterly period when the 3-month LIBOR exceeds 6.5%, and requires us to pay an interest payment for any quarterly period when the 3-month LIBOR is less than 2.72%. The costless collar resets quarterly based on the 3-month LIBOR.  As of June 30, 2006, the 3-month LIBOR was 5.48%.  As of June 30, 2006 these derivatives had no fair value.

9.             RELATED PARTY TRANSACTIONS

Gross underwriting costs related to the IPO were $7,425,000 or $0.675 per share.  As a part of the IPO, the Investment Adviser, on our behalf, agreed to pay the underwriters $0.225 of the $0.675 per share in underwriting discount and commissions for a total of approximately $2.5 million.  We were obligated to repay this amount, together with accrued interest  (charged at the 3-month LIBOR plus 2% starting on October 8, 2004) (a) if during any four calendar quarter period ending on or after October 8, 2005 the sum of (i) the aggregate distributions, including return of capital, if any,  to the stockholders and (ii) the change in net assets (defined as total assets less indebtedness) equals or exceeds 7.0% of the net assets at the beginning of such period (as adjusted for any share issuances or repurchases) or (b) upon the Company’s liquidation.  On March 8, 2005, the Company’s board of directors approved entering into an amended and restated agreement with the Investment Adviser whereby the Company would be obligated to repay the Investment Adviser for the approximate $2.5 million only if the conditions for repayment referred to above were met before the third anniversary of the IPO.  If one or more such events did not occur on or before October 8, 2007, we would not be obligated to repay this amount to the Investment Adviser.  For

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the year ended December 31, 2005, the sum of our aggregate distributions to our stockholders and our change in net assets exceeded 7.0% of net assets as of December 31, 2004 (as adjusted for any share issuances).  As a result, in February 2006 we repaid this amount together with accrued interest.

In accordance with the Advisory Agreement, we bear all costs and expenses of the operation of the Company and reimburse the Investment Adviser for all such costs and expenses incurred in the operation of the Company.  For the three and six months ended June 30, 2006, the Investment Adviser incurred such expenses totaling $93,862 and $230,727, respectively.  Accordingly, the Company has recorded a liability at June 30, 2006 to the Investment Adviser for the entire amount not yet reimbursed.  As of June 30, 2006, $93,862 was payable to the Investment Adviser and such payable is included in accounts payable and accrued expenses in the accompanying consolidated balance sheet.  For the three and six months ended June 30, 2005, the Investment Adviser incurred such expenses totaling $31,220 and $41,912, respectively.

As of June 30, 2006, Ares Management LLC, of which the Investment Adviser is a wholly owned subsidiary, owned 666,667 shares of the Company’s common stock representing approximately 1.7% of the total shares outstanding as of June 30, 2006.

See Note 3 for a description of other related party transactions.

10.          STOCKHOLDERS’ EQUITY

On March 23, 2005, we completed a public add-on offering (the “Add-on Offering”) of 12,075,000 shares of common stock (including the underwriters’ overallotment of 1,575,000 shares) at $16.00 per share, less an underwriting discount and commissions totaling $0.72 per share.  Total proceeds received from the Add-on Offering, net of the underwriters’ discount and offering costs, were $183.9 million.

11.          DIVIDEND

For the three months ended June 30, 2006, the Company declared a dividend on May 8, 2006 of $0.38 per share for a total of $14,481,380.  The record date was June 15, 2006 and the dividend was distributed on June 30, 2006.  For the three months ended March 31, 2006, the Company declared a dividend on February 28, 2006 of $0.36 per share for a total of $13,682,573.  The record date was March 24, 2006 and the dividend was distributed on April 14, 2006.

For the three months ended June 30, 2005, the Company declared a dividend on June 20, 2005 of $0.32 per share for a total of $7,413,951.  The record date was June 30, 2005 and the dividend was distributed on July 15, 2005.   For the three months ended March 31, 2005, the Company declared a dividend on February 23, 2005 of $0.30 per share for a total of $3,320,524.  The record date was March 7, 2005 and the dividend was distributed on April 15, 2005.

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12.          FINANCIAL HIGHLIGHTS

The following is a schedule of financial highlights for the six months ended June 30, 2006 and for the six months ended June 30, 2005:

Per Share Data:

	For the six			For the six
	months ended			months ended
	June 30, 2006			June 30, 2005
Net asset value, beginning of period (1)	$	15.03		$	14.43
Issuance of common stock	0.01			0.42
Effect of dilution	—			(0.03		)
Underwriting costs paid by the Investment Adviser (see Note 9) (2)	—			(0.14		)
Net investment income for period (2)	0.55			0.53
Net realized and unrealized gains for period (2)	0.25			0.38
Net increase in stockholders’ equity	0.80			1.16
Distributions from net investment income	(0.55		)	(0.53		)
Distributions from net realized capital gains on securities	(0.19		)	(0.09		)
Total distributions to stockholders	(0.74		)	(0.62		)
Net asset value at end of period (1)	$	15.10		$	14.97
Per share market value at end of period	$	16.93		$	17.83
Total return based on market value (3)	9.96		%	(5.04		)%
Total return based on net asset value (4)	5.33		%	6.18		%
Shares outstanding at end of period	38,207,254			23,168,595
Ratio/Supplemental Data:
Net assets at end of period	$	576,984,134		$	346,932,940
Ratio of operating expenses to average net assets (5) (6)	8.55		%	4.55		%
Ratio of net investment income to average net assets (5) (7)	8.78		%	6.98		%
Portfolio turnover rate (5)	40		%	43		%

(1)The net assets used equals the total stockholders’ equity on the consolidated balance sheets.

(2)Weighted average basic per share data.

(3)For the six months ended June 30, 2006, the total return based on market value equals the increase of the ending market value at June 30, 2006 of $16.93 per share over the ending market value at December 31, 2005 of $16.07, plus the declared dividend of $0.38 per share for holders of record on June 15, 2006 and the declared dividend of $0.36 per share for holders of record on March 24, 2006, divided by the market value at December 31, 2005.  For the six months ended June 30, 2005, the total return based on market value equals the decrease of the ending market value at June 30, 2005 of $17.83 per share over the ending market value at December 31, 2004 of $19.43, plus the declared dividend of $0.30 per share for holders of record on March 7, 2005 and the declared dividend of $0.32 per share for holders of record on June 30, 2005, divided by the market value at December 31, 2004.  Total return based on market value is not annualized.  The Company’s shares fluctuate in value.  The Company’s performance changes over time and currently may be different than that shown.  Past performance is no guarantee of future results.

(4)For the six months ended June 30, 2006, the total return based on net asset value equals the change in net asset value during the period plus the declared dividend of $0.38 per share for holders of record on June 15, 2006 and the declared dividend of $0.36 per share for holders of record on March 24, 2006, divided by the beginning net asset value during the period.  The calculation was adjusted for shares issued in connection with dividend reinvestment plan.  For the six months ended June 30, 2005, the total return based on net asset value equals the change in net asset value during the period plus the declared dividend of $0.30 per share for holders of record on March 7, 2005 and the declared dividend of $0.32 per share for holders of record on June 30, 2005, divided by the beginning net asset value during the period.  Total return based on net asset value is not annualized.  The Company’s performance changes over time and currently may be different than that shown.  Past performance is no guarantee of future results.

(5)The ratios reflect an annualized amount.

(6)For the six months ended June 30, 2006, the ratio of operating expenses to average net assets consisted of 1.97% of base management fees, 3.44% of incentive management fees, 2.27% of the cost of borrowing and other operating expenses of 0.87%. For the six months ended June 30, 2005, the ratio of operating expenses to average net assets consisted of 1.38% of base management fees, 1.55% of incentive management fees, 0.43% of the cost of borrowing and other operating expenses of 1.18%.  These ratios reflect annualized amounts.

(7)The ratio of net investment income to average net assets excludes income taxes related to realized gains.

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13.          IMPACT OF NEW ACCOUNTING STANDARDS

In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (“SFAS”) 123R, “Share Based Payment,” which requires companies to recognize in the statement of operations the grant date fair value of stock options and other equity based compensation issued to employees.  SFAS 123R is effective for annual periods beginning after June 15, 2005.  As the Company does not have any options or equity based compensation plans, there was no impact from the adoption of SFAS 123R.

14.          SUBSEQUENT EVENTS

On July 7, 2006, through our newly formed, wholly owned Delaware subsidiary, ARCC CLO 2006 LLC (“ARCC CLO”), we completed a $400.0 million debt securitization where approximately $314.0 million principal amount of asset-backed notes (including $50.0 million revolving notes that have not been drawn down as of the date of this report) (the ”Offered Notes”) were issued to third parties and secured by a pool of middle market loans that have been purchased or originated by the Company. We retained approximately $86.0 million of certain BBB and non-rated securities in the debt securitization. The blended pricing of the Offered Notes, excluding fees, is approximately 3 month LIBOR plus 34 basis points. The securitization is an on-balance-sheet financing for the Company.

              The classes, amounts, ratings and interest rates (expressed as a spread to LIBOR) of the Offered Notes are:

Class	Amount (millions)			Rating (S&P/Moody’s)	LIBOR Spread (basis points)
A-1A	$	75		AAA/Aaa	25
A-1A VFN	$	50	(1)	AAA/Aaa	28
A-1B	$	14		AAA/Aaa	37
A-2A	$	75		AAA/Aaa	22
A-2B	$	33		AAA/Aaa	35
B	$	23		AA/Aa2	43
C	$	44		A/A2	70
Total	$	314

(1)Revolving class, none of which was drawn down as of the date of this report.

During the first five years from the closing date, principal collections received on the underlying collateral may be used to purchase new collateral, allowing us to maintain the initial leverage in the securitization for the entire five-year period. Under the terms of the securitization, up to 15% of the collateral may be subordinated loans that are neither first nor second lien loans.

The Class A-1A VFN Notes are a revolving class of secured notes and allow us to borrow and repay AAA/Aaa financing over the initial five-year period thereby providing more efficiency in funding costs. All of the notes are secured by the assets of ARCC Commercial Loan Trust 2006, including commercial loans currently totaling $308.1 million as of the closing date, which were sold to the trust by the Company, the originator and servicer of the assets. Additional commercial loans will be purchased by the trust from the Company primarily using the proceeds from the Class A-1A VFN Notes. The pool of commercial loans in the trust must meet certain requirements, including, but not limited to, asset mix and concentration, collateral coverage, term, agency rating, minimum coupon, minimum spread and sector diversity requirements.

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Approximately $243.0 million of the total proceeds from the sale of the Offered Notes (not including the revolving notes that have not yet been drawn down) were used to pay down amounts outstanding under the CP Funding Facility and the Revolving Credit Facility.

On July 18, 2006, we completed a public add-on offering of 10,781,250 shares of common stock (including the underwriters’ overallotment of 1,406,250 shares) at $15.67 per share, less an underwriting discount and commissions totaling $0.58 per share.  Total proceeds received from the add-on offering, net of the underwriters’ discount and offering costs, were approximately $162.2 million.

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The information contained in this section should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this quarterly report.  In addition, some of the statements in this report constitute forward-looking statements, which relate to future events or the future performance or financial condition of Ares Capital Corporation (the “Company,” “ARCC,” “we,” “us” and “our”). The forward-looking statements contained in this report involve risks and uncertainties, including statements as to:

·              our future operating results;

·              our business prospects and the prospects of our portfolio companies;

·              the impact of investments that we expect to make;

·              our contractual arrangements and relationships with third parties;

·              the dependence of our future success on the general economy and its impact on the industries in which we invest;

·              the ability of our portfolio companies to achieve their objectives;

·              our expected financings and investments;

·              the adequacy of our cash resources and working capital;

·              the timing of cash flows, if any, from the operations of our portfolio companies; and

·              the ability of our investment adviser to locate suitable investments for us and to monitor and administer our investments.

We use words such as “anticipates,” “believes,” “expects,” “intends,” “will,” “should,” “may” and similar expressions to identify forward-looking statements. Our actual results could differ materially from those projected in the forward-looking statements for any reason.  We have based the forward-looking statements included in this report on information available to us on the date of this report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

OVERVIEW

We are a specialty finance company that is a closed-end, non-diversified management investment company incorporated in Maryland that is regulated as a business development company (a “BDC”) under the Investment Company Act of 1940 (“1940 Act”). We were founded on April 16, 2004 and were initially funded on June 23, 2004 and on October 8, 2004, completed our initial public offering (the “IPO”).

Our investment objective is to generate both current income and capital appreciation through debt and equity investments. We invest primarily in first and second lien senior loans and long-term mezzanine debt, which in some cases may include an equity component, and, to a lesser extent, in equity investments in private U.S. middle market companies.

We are externally managed by Ares Capital Management LLC (the “Investment Adviser”), an affiliate of Ares Management LLC, an independent Los Angeles based firm that manages investment funds.  Ares Technical Administration LLC (“Ares Administration”), an affiliate of Ares Management LLC, provides the administrative services necessary for us to operate.

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As a BDC, we are required to comply with certain regulatory requirements.  For instance, we generally have to invest at least 70% of our total assets in “qualifying assets,” including securities of private U.S. companies, cash, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less.

We have elected to be treated as a regulated investment company, or a RIC, under Subchapter M of the Internal Revenue Code of 1986, as amended.  To qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements.  Pursuant to these elections, we generally will not have to pay corporate-level taxes on any income that we distribute to our stockholders.

PORTFOLIO AND INVESTMENT ACTIVITY

For the three months ended June 30, 2006, we issued 16 new commitments in an aggregate amount of $267.5 million ($194.0 million to new portfolio companies and $73.5 million to existing portfolio companies) compared to nine new commitments in an aggregate amount of $114.8 million ($105.6 million to new portfolio companies and $9.2 million to existing portfolio companies) for the three months ended June 30, 2005. During the three months ended June 30, 2006, we funded $240.7 million of such commitments ($167.2 million to new portfolio companies and $73.5 million to existing portfolio companies) compared to $110.3 million of commitments ($101.1 million to new portfolio companies and $9.2 million to existing portfolio companies) for the three months ended June 30, 2005.  We have remaining contractual obligations for $26.8 million with respect to commitments funded as of June 30, 2006. The weighted average yield of new income producing equity securities and debt funded in connection with investments purchased during the three months ended June 30, 2006 and June 30, 2005 was approximately 12.25% and 9.71%, respectively (computed as (a) annual stated interest rate yield earned plus the net annual amortization of original issue discount and market discount earned on accruing debt divided by (b) total income producing equity securities and debt at fair value).

For the three months ended June 30, 2006, the Company purchased (A) $152.3 million aggregate principal amount of senior term debt, (B) $72.0 million aggregate principal amount of senior subordinated debt and (C) $30.8 million of investments in equity securities.  For the three months ended June 30, 2005, the Company purchased (1) $82.9 million aggregate principal amount of senior term debt, (2) $10.0 million aggregate principal amount of senior subordinated debt, (3) $12.2 million aggregate principal amount of senior notes and (4) $5.2 million of investments in equity securities.

During the three months ended June 30, 2006, (A) $45.7 million aggregate principal amount of senior term debt and (B) $9.0 million aggregate principal amount of collateralized debt obligation notes were redeemed, and (C) $54.4 million of investments in equity securities were sold.  As of June 30, 2006, the Company held investments in 50 portfolio companies as compared to 38 portfolio companies as of December 31, 2005.  During the three months ended June 30, 2005, (1) $27.6 million aggregate principal amount of senior term debt and (2) $5.3 million aggregate principal amount of senior subordinated debt were redeemed, and (3) $3.2 million of investments in equity securities were sold.

The Investment Adviser employs an investment rating system to categorize our investments.  In addition to various risk management and monitoring tools, we grade all loans on a scale of 1 to 4 no less frequently than quarterly. This system is intended to reflect the performance of the borrower’s business, the collateral coverage of the loans and other factors considered relevant.   Under this system, loans with a grade of 4 involve the least amount of risk in our portfolio.  The borrower is performing above expectations and the trends and risk factors are generally favorable. Loans graded 3 involve a level of risk that is similar to the risk at the time of origination. The borrower is performing as expected and the risk factors are neutral to favorable. All new loans are initially graded 3. Loans graded 2 involve a borrower performing below expectations and indicates that the loan’s risk has increased materially since origination. The borrower is generally out of compliance with debt covenants, however, loan payments are generally not more than 120 days past due. For loans graded 2, we increase procedures to monitor the borrower. A loan grade of 1 indicates that the borrower is performing materially below expectations and that the loan risk has substantially increased since origination. Most or all of the debt covenants are out of compliance and payments are substantially delinquent. Loans graded 1 are not anticipated to be repaid in full.

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We believe that as of June 30, 2006, the weighted average investment grade of the debt in our portfolio is 3.0 and the weighted average yield of such debt and income producing equity securities is approximately 12.42% (computed as (a) annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount earned on accruing debt, divided by (b) total income producing equity securities and debt at fair value).    As of June 30, 2006, the weighted average yield on our entire portfolio was 11.63%.  The weighted average yield on our senior term debt, senior subordinated debt and income producing equity securities was 11.67%, 14.51% and 10.57%, respectively.  Of the senior term debt, the weighted average yield attributable to first lien senior term debt and second lien senior term debt was 11.10% and 12.32%, respectively.

As of December 31, 2005, the weighted average investment grade of the debt in our portfolio was 3.1 and the weighted average yield of such debt and income producing equity securities was approximately 11.25% (computed as (a) annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount earned on accruing debt, divided by (b) total income producing equity securities and debt at fair value).    As of December 31, 2005, the weighted average yield on our entire portfolio was 10.88%.  The weighted average yield on our senior term debt, senior subordinated debt and income producing equity securities was 10.56%, 14.71% and 8.82%, respectively.  Of the senior term debt, the weighted average yield attributable to first lien senior term debt and second lien senior term debt was 9.38% and 11.49%, respectively.

RESULTS OF OPERATIONS

For the three and six months ended June 30, 2006 and June 30, 2005

 Operating results for the three and six months ended June 30, 2006 and June 30, 2005 are as follows:

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2006			2005			2006			2005
Total Investment Income	$	30,489,751		$	9,601,615		$	50,681,056		$	15,352,207
Total Expenses	16,225,221			3,833,481			24,516,110			6,054,244
Net Investment Income Before Income Taxes	14,264,530			5,768,134			26,164,946			9,297,963
Income Tax Expense, Including Excise Tax	4,971,635			—			5,180,515			—
Net Investment Income	9,292,895			5,768,134			20,984,431			9,297,963
Net Realized Gain	23,879,988			6,745,382			24,490,874			7,154,412
Net Unrealized Loss	(16,480,203		)	(4,911,260		)	(14,939,591		)	(346,213		)
Net Increase in Stockholders’ Equity Resulting From Operations	$	16,692,680		$	7,602,256		$	30,535,714		$	16,106,162

Investment Income

For the three months ended June 30, 2006, total investment income increased $20.9 million, or 218%, over the three months ended June 30, 2005.   For the three months ended June 30, 2006, total investment income consisted of $23.5 million in interest income from investments, $1.2 million in dividend income, $5.3 million in capital structuring service fees, $352,000 in other income and $200,000 in interest income from cash and cash equivalents.  Interest income from investments increased $16.8 million, or 249%, to $23.5 million for the three months ended June 30, 2006 from $6.7 million for the comparable period in 2005.  The increase in interest income from investments was primarily due to the increase in the size of the portfolio.  The average investments, at fair value, for the quarter increased from $259.2 million in the three months ended June 30, 2005 to $818.1 million in the comparable period in 2006.  Capital structuring service fees increased $3.8 million, or 253%, to $5.3 million for the three months ended June 30, 2006 from $1.5 million for the comparable period in 2005.  The increase in capital structuring service fees was primarily due to the increased number of originations.  The number of funded

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commitments increased from nine during the three months ended June 30, 2005 to 15 during the comparable period in 2006.

For the six months ended June 30, 2006, total investment income increased $35.3 million, or 230%, over the six months ended June 30, 2005.   For the six months ended June 30, 2006, total investment income consisted of $41.0 million in interest income from investments, $7.6 million in capital structuring service fees, $454,000 in other income and $431,000 in interest income from cash and cash equivalents.  Interest income from investments increased $29.1 million, or 243%, to $41.0 million for the six months ended June 30, 2006 from $12.0 million for the comparable period in 2005.  The increase in interest income from investments was primarily due to the increase in the size of the portfolio.  The average investments, at fair value, for the period increased from $227.7 million in the six months ended June 30, 2005 to $730.5 million in the comparable period in 2006.  Capital structuring service fees increased $5.8 million, or 323%, to $7.6 million for the six months ended June 30, 2006 from $1.8 million for the comparable period in 2005.  The increase in capital structuring service fees was primarily due to the increased number of originations.  The number of funded commitments increased from 14 during the six months ended June 30, 2005 to 28 during the comparable period in 2006.

Expenses

For the three months ended June 30, 2006, total expenses increased $12.4 million, or 323%, over the three months ended June 30, 2005.  Base management fees increased $2.1 million, or 203%, to $3.1 million for the three months ended June 30, 2006 from $1.0 million for the comparable period in 2005, primarily due to the increase in the size of the portfolio.  Incentive fees related to pre-incentive fee net investment income increased $3.5 million, or 544%, to $4.1 million for the three months ended June 30, 2006 from $634,000 for the comparable period in 2005, primarily due to the increase in the size of the portfolio and the related increase in net investment income.  Incentive fees related to realized gains increased $1.7 million, or 145%, to $2.9 million for the three months ended June 30, 2006 from $1.2 million for the comparable period in 2005, primarily due to higher net realized gains recognized during the three months ended June 30, 2006 as compared to the three months ended June 30, 2005.  Net realized gains for the three months ended June 30, 2006 increased from $6.7 million during the three months ended June 30, 2005 to $23.9 million during the three months ended June 30, 2006.  For the three months ended June 30, 2006, the net realized gains of $23.9 million were offset by $4.2 million in income tax expense related to realized gains and $3.7 million in unrealized depreciation in determining the incentive fees related to realized gains for the period.  Interest expense and credit facility fees increased $4.3 million, or 6,826%, to $4.4 million for the three months ended June 30, 2006 from $63,000 for the comparable period in 2005, primarily due to the significant increase in the borrowings outstanding.  There were no outstanding borrowings during the three months ended June 30, 2005 compared to average outstanding borrowings of $265.7 million in the comparable period in 2006.  Amortization of debt issuance costs increased $346,000, or 527%, to $412,000 for the three months ended June 30, 2006 from $66,000 for the comparable period in 2005, primarily due to the additional debt issuance costs capitalized during the end of 2005 as a result of entering into the Revolving Credit Facility and increasing the borrowing capacity of the CP Funding Facility.

For the six months ended June 30, 2006, total expenses increased $18.5 million, or 305%, over the six months ended June 30, 2005.  Base management fees increased $3.8 million, or 207%, to $5.6 million for the six months ended June 30, 2006 from $1.8 million for the comparable period in 2005, primarily due to the increase in the size of the portfolio.  Incentive fees related to pre-incentive fee net investment income increased $6.1 million, or 704%, to $7.0 million for the six months ended June 30, 2006 from $871,000 for the comparable period in 2005, primarily due to the increase in the size of the portfolio and the related increase in net investment income.  Incentive fees related to realized gains increased $1.7 million, or 139%, to $2.9 million for the six months ended June 30, 2006 from $1.2 million for the comparable period in 2005, primarily due to higher net realized gains recognized during the six months ended June 30, 2006 as compared to the six months ended June 30, 2005.  Interest expense and credit facility fees increased $5.6 million, or 6,704%, to $5.7 million for the six months ended June 30, 2006 from $84,000 for the comparable period in 2005, primarily due to the significant increase in the borrowings outstanding.  The average outstanding borrowings during the six months ended June 30, 2005 were $17.1 million compared to average outstanding borrowings of $171.6 million in the comparable period in 2006.  Amortization of debt issuance costs increased $688,000, or 523%, to $819,000 for the six months ended June 30, 2006 from $131,000 for the comparable period in 2005, primarily due to the additional debt issuance costs capitalized during the end of 2005 as a result of entering into the Revolving Credit Facility and increasing the borrowing capacity of the CP Funding Facility.

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Income Tax Expense, Including Excise Tax

The Company has qualified and elected and intends to continue to qualify and elect for the tax treatment applicable to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986 (the “Code”), as amended, and, among other things, has made and intends to continue to make the requisite distributions to its stockholders which will relieve the Company from Federal income taxes.

Depending on the level of taxable income earned in a tax year, we may choose to carry forward taxable income in excess of current year dividend distributions into the next tax year and pay a 4% excise tax on such income, as required.  To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned. For the three and six months ended June 30, 2006, a provision of approximately $727,000 and $826,000, respectively, was recorded for Federal excise tax.

 Our wholly owned subsidiaries ACC and ACLLC are subject to Federal and state income taxes.  For the three and six months ended June 30, 2006, we recorded a tax provision of approximately $4.2 million and $4.4 million, respectively, for these subsidiaries.

Net Unrealized Appreciation on Investments

For the three months ended June 30, 2006, the Company’s investments had a decrease in net unrealized appreciation of $16.5 million, which primarily related to the reversal of the prior period unrealized appreciation of $13.3 million for the investment in CICQ, LP, which was realized during the period, and the increase in unrealized depreciation of $3.7 million for the investment in Berkline/Benchcraft Holdings LLC, offset by the increase in unrealized appreciation in Varel Holdings, Inc of $1.0 million.  For the three months ended June 30, 2005, the Company’s investments had a decrease in net unrealized appreciation of $4.9 million primarily related to the reversal of the prior period unrealized appreciation of $4.6 million for the investment in Reef Holdings, Inc., which was realized during the period.

For the six months ended June 30, 2006, the Company’s investments had a decrease in net unrealized appreciation of $14.9 million, which primarily related to the reversal of the prior period unrealized appreciation of $9.3 million for the investment in CICQ, LP, which was realized during the period, and the increase in unrealized depreciation of $6.1 million for the investments in Making Memories Wholesale, Inc. and Berkline/Benchcraft Holdings LLC.  For the six months ended June 30, 2005, the Company’s investments had a decrease in net unrealized appreciation of $346,000.

Net Realized Gains/Losses

During the three months ended June 30, 2006, the Company had $133.1 million of sales and repayments resulting in $23.9 million of net realized gains.  The most significant realized gains during the three months ended June 30, 2006 were the sales of the investments in CICQ, LP and United Site Services, Inc. of $18.6 million and $4.7 million, respectively.   During the three months ended June 30, 2005, the Company had $45.8 million of sales and repayments resulting in $6.7 million of net realized gains.  The most significant realized gains during the three months ended June 30, 2005 were the sales of the investments in Reef Holdings, Inc. and Billing Concepts, Inc. of $4.8 million and $1.9 million, respectively.

During the six months ended June 30, 2006, the Company had $170.4 million of sales and repayments resulting in $24.5 million of net realized gains.  During the six months ended June 30, 2005, the Company had $55.6 million of sales and repayments resulting in $7.2 million of net realized gains.

Net Increase in Stockholders’ Equity Resulting From Operations

Net increase in stockholders’ equity resulting from operations for the three and six months ended June 30, 2006 was approximately $16.7 million and $30.5 million, respectively.  Based on the weighted average shares outstanding during the three and six months ended June 30, 2006, our net increase in stockholders’ equity resulting from operations per common share was $0.44 and $0.80, respectively.

Net increase in stockholders’ equity resulting from operations for the three and six months ended June 30, 2005 was approximately $7.6 million and $16.1 million, respectively.  Based on the weighted average shares outstanding during the three and six months ended June 30, 2005, our net increase in stockholders’ equity resulting from operations per common share was $0.33 and $0.91, respectively.

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FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

The Company’s liquidity and capital resources were generated primarily from the remaining net proceeds of its initial public offering and subsequent add-on public offerings, advances from the CP Funding Facility and the Revolving Credit Facility, as well as cash flows from operations.  We received approximately $156.4 million in proceeds net of underwriting and offering costs (net of $2.5 million in underwriting costs originally paid by the Investment Adviser and subsequently reimbursed by the Company in 2006) from our October 8, 2004 initial public offering, approximately $183.9 million in proceeds net of underwriting and offering costs from our March 23, 2005 add-on public offering,  $213.5 million in proceeds net of underwriting and offering costs from our October 18, 2005 add-on public offering and $162.2 million in proceeds net of underwriting and offering costs from our July 18, 2006 add-on public offering.

On July 7, 2006, through our newly formed, wholly owned Delaware subsidiary, ARCC CLO 2006 LLC (“ARCC CLO”), we completed a $400.0 million debt securitization where approximately $314.0 million principal amount of asset-backed notes (including $50.0 million revolving notes that have not been drawn down as of the date of this report) (the ”Offered Notes”) were issued to third parties and secured by a pool of middle market loans that have been purchased or originated by the Company. We retained approximately $86.0 million of certain BBB and non-rated securities in the debt securitization. The blended pricing of the Offered Notes, excluding fees, is approximately 3 month LIBOR plus 34 basis points. The securitization is an on-balance-sheet financing for the Company.

A portion of the proceeds from our public offerings and the securitization were used to repay outstanding indebtedness under the CP Funding Facility and the Revolving Credit Facility. The remaining unused portion of the proceeds from our public offerings has been used to fund investments in portfolio companies in accordance with our investment objectives and strategies.

As of June 30, 2006 and December 31, 2005, the fair value of investments and cash and cash equivalents, and the outstanding borrowings under the CP Funding Facility and the Revolving Credit Facility were as follows:

	June 30, 2006		December 31, 2005
Cash and cash equivalents	$	44,844,697	$	16,613,334
Senior term debt	586,139,016		338,467,061
Senior notes	10,000,000		10,000,000
Senior subordinated debt	217,764,213		130,042,698
Collateralized debt obligations	7,559,577		17,386,561
Equity securities	56,697,825		90,072,055
Total	$	923,005,328	$	602,581,709
Outstanding borrowings	$	345,200,000	$	18,000,000

The available amount for borrowing under the CP Funding Facility is $350.0 million (see Note 7 to the consolidated financial statements for more detail of the CP Funding Facility arrangement).  As of June 30, 2006, there was $101.2 million outstanding under the CP Funding Facility.  The CP Funding Facility expires on November 1, 2006 unless extended prior to such date with the consent of the lenders.  The available amount for borrowing under the Revolving Credit Facility is $250 million (see Note 7 to the consolidated financial statements for more detail of the Revolving Credit Facility arrangement).  As of June 30, 2006, there was $244.0 million outstanding under the Revolving Credit Facility.  The Revolving Credit Facility expires on December 28, 2010.

For the six months ending June 30, 2006, average total assets was $766.6 million.

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OFF BALANCE SHEET ARRANGEMENTS

As of June 30, 2006, the Company had committed to make a total of approximately $84.0 million of investments in various revolving senior secured loans.  As of June 30, 2006, $50.4 million was unfunded.  Included within the $84.0 million commitment in revolving secured loans is a commitment to issue up to $3.8 million in standby letters of credit through a financial intermediary on behalf of certain portfolio companies.  Under these arrangements, the Company would be required to make payments to third-party beneficiaries if the portfolio companies were to default on their related payment obligations.  As of June 30, 2006, the Company had $2.8 million in standby letters of credit issued and outstanding on behalf of the portfolio companies, of which no amounts were recorded as a liability.   Of these letters of credit, $2.3 million expire on September 30, 2006 and $500,000 expire on July 31, 2007.  These letters of credit may be extended under substantially similar terms for additional one-year terms at the Company’s option until the revolving line of credit, under which the letters of credit were issued, matures on September 30, 2011.

As of June 30, 2006, the Company was subject to a subscription agreement to fund up to $10.0 million of equity commitments in a private equity investment partnership.  As of June 30, 2006, there were no amounts funded in this partnership.

As of December 31, 2005, the Company had committed to make a total of approximately $43.0 million of investments in various revolving senior secured loans.  As of December 31, 2005, $28.8 million was unfunded.  Included within the $43.0 million commitment in revolving secured loans is a commitment to issue up to $3.2 million in standby letters of credit through a financial intermediary on behalf of a portfolio company.  Under these arrangements, the Company would be required to make payments to third-party beneficiaries if the portfolio company was to default on its related payment obligations.  As of December 31, 2005, the Company had $2.2 million in standby letters of credit issued and outstanding on behalf of the portfolio company, of which no amounts were recorded as a liability.

Item 3.Quantitative and Qualitative Disclosures about Market Risk.

We are subject to financial market risks, including changes in interest rates and the valuations of our investment portfolio.

Interest Rate Risk

As of June 30, 2006, approximately 32% of the investments at fair value in our portfolio were at fixed rates while approximately 60% were at variable rates. In addition, the CP Funding Facility and the Revolving Credit Facility are variable rate borrowing facilities.

To illustrate the potential impact of changes in interest rates, we have performed the following analysis based on our June 30, 2006 balance sheet and assuming no changes in our investment and borrowing structure. Under this analysis, a 100 basis point increase in the various base rates would result in an increase in interest income of approximately $5,400,000 and an increase in interest expense of $3,452,000 over the next 12 months. A 100 basis point decrease in the various base rates would result in a decrease in interest income of approximately $5,400,000 and a decrease in interest expense of $3,452,000 over the next 12 months.

On January 7, 2005, we entered into a costless collar agreement in order to manage the exposure to changing interest rates related to the Company’s fixed rate investments. The costless collar agreement was for a notional amount of $20 million, has a cap of 6.5%, a floor of 2.72% and matures in 2008. The costless collar agreement allows us to receive an interest payment when the 3-month LIBOR exceeds 6.5% and obligates us to pay an interest payment when the 3-month LIBOR is less than 2.72%. The costless collar resets quarterly based on the 3-month LIBOR. As of June 30, 2006, the 3-month LIBOR was 5.48%. As of June 30, 2006, these derivatives had no fair value.

While hedging activities may mitigate our exposure to adverse fluctuations in interest rates, certain hedging transactions that we may enter into in the future, such as interest rate swap agreements, may also limit our ability to participate in the benefits of lower interest rates with respect to our portfolio investments.

34

Portfolio Valuation

Investments for which market quotations are readily available are valued at such market quotations. Debt and equity securities that are not publicly traded or whose market price is not readily available are valued at fair value as determined in good faith by our board of directors based on the input of our investment adviser and audit committee. In addition, the board of directors currently receives input from an independent valuation firm that has been engaged at the direction of the board to value each portfolio security at least once during a trailing 12 month period.  The valuation process is conducted at the end of each fiscal quarter, with approximately a quarter of our portfolio companies subject to valuation by the independent valuation firm each quarter.  The types of factors that the board may take into account in fair value pricing of our investments include, as relevant, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business, comparison to publicly traded securities and other relevant factors.

When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we use the pricing indicated by the external event to corroborate our private equity valuation. Because there is not a readily available market value for most of the investments in our portfolio, we value substantially all of our portfolio investments at fair value as determined in good faith by our board under a valuation policy and a consistently applied valuation process. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a ready market existed for such investments, and the differences could be material.

In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the valuations currently assigned.

Item 4.Controls and Procedures.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15 of the Securities Exchange Act of 1934).  Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our current disclosure controls and procedures are effective in timely alerting them of material information relating to the Company that is required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934.

There have been no changes in our internal control over financial reporting that occurred during the three months ended June 30, 2006 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

35

PART II  —  OTHER INFORMATION

Item 1.Legal Proceedings.

We are not a defendant in any pending legal proceeding, and no such proceedings are known to be contemplated.

Ite m 1A.Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2005, which could materially affect our business, financial condition or future results.  The risks described in our Annual Report on Form 10-K are not the only risks facing our Company.  Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.

We did not sell any securities during the period covered in this report that were not registered under the Securities Act.

We did not repurchase any shares issued during the period covered in this report.

Item 3.Defaults Upon Senior Securities.

Not applicable.

Item 4.Submission of Matters to a Vote of Security Holders.

On May 30, 2006, we held our Annual Meeting of Stockholders in Los Angeles, California.  Stockholders voted on three matters; the substance of these matters and the results of the voting of each such matter are described below.

1.  Election of Directors: Stockholders elected two Class II directors of the Company, who will each serve for three years, or until his successor is elected and qualified.  Votes were cast as follows:

	For	Withheld
Robert L. Rosen	25,438,258	1,023,959
Bennett Rosenthal	25,198,779	1,263,438

The following directors are continuing as directors of the Company for their respective terms — Douglas E. Coltharp, Frank E. O’Bryan and Eric B. Siegel.

2.  Ratification of the selection of KPMG LLP to serve as independent registered public accounting firm for the year ending December 31, 2006.  Votes were cast as follows:

For	Against	Withheld
25,888,408	441,467	132,342

3.  Approval of an amended and restated investment advisory and management agreement between the Company and the Investment Adviser.  Brokers cast 6,973,644 non-votes.  The remaining votes were cast as follows:

For	Against	Withheld
18,706,821	547,694	234,058

Item 5.Other Information.

None.

Item 6.Exhibits.

36

EXHIBIT INDEX

Number	Description
3.1	Articles of Amendment and Restatement (1)
3.2	Amended and Restated Bylaws (1)
4.1	Form of Stock Certificate (2)
10.1	Amended and Restated Investment Advisory and Management Agreement between Ares Capital Corporation and Ares Capital Management LLC (3)
10.2	Sale and Servicing Agreement, dated as of July 7, 2006, among ARCC Commercial Loan Trust 2006, as issuer, ARCC CLO 2006 LLC, as trust depositor, Ares Capital Corporation, as originator and as servicer, U.S. Bank National Association, as trustee and as collateral administrator, Lyon Financial Services, Inc. (d/b/a U.S. Bank Portfolio Services), as backup servicer, and Wilmington Trust Company, as owner trustee*
10.3	Commercial Loan Sale Agreement, dated as of July 7, 2006, between Ares Capital Corporation and ARCC CLO 2006 LLC*
10.4	Indenture, dated as of July 7, 2006, between ARCC Commercial Loan Trust 2006 and U.S. Bank National Association*
10.5	Amended and Restated Trust Agreement, dated as of July 7, 2006, among ARCC CLO 2006 LLC, Wilmington Trust Company and U.S. Bank National Association*
10.6	Collateral Administration Agreement, dated as of July 7, 2006, among ARCC Commercial Loan Trust 2006, Ares Capital Corporation and U.S. Bank National Association*
10.7	Master Participation Agreement, dated as of July 7, 2006, between Ares Capital CP Funding LLC and Ares Capital Corporation*
10.8	Class A-1A VFN Purchase Agreement, dated as of July 7, 2006, among ARCC Commercial Loan Trust 2006, U.S. Bank National Association and the other Class A-1A VFN noteholders party thereto*
31.1	Certification by President pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
31.2	Certification by Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32.1	Certification by President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

* Filed herewith.

(1)Previously filed with the Registrant’s pre-effective Amendment No. 1 to the Registration Statement under the Securities Act of 1933, as amended, on Form N-2, filed on September 17, 2004.

(2)Previously filed with the Registrant’s pre-effective Amendment No. 2 to the Registration Statement under the Securities Act of 1933, as amended, on Form N-2, filed on September 28, 2004.

(3)Previously filed with the Registrant’s Form 8-K, filed on June 2, 2006.

37

SIGNATURE

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, thereunto duly authorized.

	ARES CAPITAL CORPORATION
Dated: August 9, 2006	By	/s/ Michael J. Arougheti
		Michael J. Arougheti
		President
	By	/s/ Daniel F. Nguyen
		Daniel F. Nguyen
		Chief Financial Officer

38

EX-10.2

Exhibit 10.2

SALE AND SERVICING AGREEMENT

by and among

ARCC COMMERCIAL LOAN TRUST 2006,
as the Issuer,

ARCC CLO 2006 LLC,
as the Trust Depositor,

ARES CAPITAL CORPORATION,
as the Originator and as the Servicer,

U.S. BANK NATIONAL ASSOCIATION,
as the Trustee and as the Collateral Administrator,

LYON FINANCIAL SERVICES, INC. (d/b/a U.S. BANK PORTFOLIO SERVICES),
as the Backup Servicer,

and

WILMINGTON TRUST COMPANY,
as the Owner Trustee

Dated as of July 7, 2006

ARCC Commercial Loan Trust 2006 Notes, Series 2006
Class A-1A, Class A-1A VFN, Class A-1B, Class A-2A, Class A-2B,
Class B, Class C, Class D and Class E Notes

TABLE OF CONTENTS

		Page
ARTICLE I	DEFINITIONS	2
Section 1.01.	Definitions	2
Section 1.02.	Usage of Terms	71
Section 1.03.	Section References	72
Section 1.04.	Calculations	72
Section 1.05.	Accounting Terms	72
ARTICLE II	ESTABLISHMENT OF ISSUER; TRANSFER OF LOAN ASSETS	72
Section 2.01.	Creation and Funding of Issuer; Transfer of Loan Assets	72
Section 2.02.	Conditions to Transfer of Initial Loan Assets to Issuer	74
Section 2.03.	Issuance of the Notes	75
Section 2.04.	[Reserved.]	75
Section 2.05.	Sales of Loans	75
Section 2.06.	Conveyance of Additional Loans; Effective Date Ratings Confirmation	76
Section 2.07.	Release of Excluded Amounts	79
Section 2.08.	Delivery of Documents in the Loan File	79
Section 2.09.	[Reserved]	79
Section 2.10.	Certification by Trustee; Possession of Loan Files	79
ARTICLE III	REPRESENTATIONS AND WARRANTIES	81
Section 3.01.	Representations and Warranties Regarding the Trust Depositor	81
Section 3.02.	Representations and Warranties Regarding Each Loan and as to Certain Loans in the Aggregate	88
Section 3.03.	[Reserved]	89
Section 3.04.	Representations and Warranties Regarding the Required Loan Documents
Section 3.05.	[Reserved]	89
Section 3.06.	Representations and Warranties Regarding the Servicer	89
Section 3.07.	Representations and Warranties of the Backup Servicer	90
ARTICLE IV	PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS	91
Section 4.01.	Custody of Loans	91
Section 4.02.	Filing	92
Section 4.03.	Changes in Name, Corporate Structure or Location	92
Section 4.04.	Costs and Expenses	92
Section 4.05.	Sale Treatment	93
Section 4.06.	Separateness from Trust Depositor	93

i

ARTICLE V	SERVICING OF LOANS	93
Section 5.01.	Appointment and Acceptance	93
Section 5.02.	Duties of the Servicer	93
Section 5.03.	Liquidation of Loans	100
Section 5.04.	[Reserved]	101
Section 5.05.	[Reserved]	101
Section 5.06.	Collection of Certain Loan Payments	101
Section 5.07.	Access to Certain Documentation and Information Regarding the Loans	101
Section 5.08.	Satisfaction of Collateral and Release of Loan Files	101
Section 5.09.	Scheduled Payment Advances; Servicing Advances and Nonrecoverable Advances	103
Section 5.10.	Title, Management and Disposition of Foreclosed Property	104
Section 5.11.	Servicing Compensation	105
Section 5.12.	Assignment; Resignation	105
Section 5.13.	Merger or Consolidation of Servicer	106
Section 5.14.	Limitation on Liability of the Servicer and Others	106
Section 5.15.	The Backup Servicer	107
Section 5.16.	Covenants of the Backup Servicer	109
ARTICLE VI	COVENANTS OF THE TRUST DEPOSITOR	110
Section 6.01.	Legal Existence	110
Section 6.02.	Loans Not to Be Evidenced by Promissory Notes	110
Section 6.03.	Security Interests	110
Section 6.04.	Delivery of Principal Collections and Interest Collections	111
Section 6.05.	Regulatory Filings	111
Section 6.06.	Compliance with Law	111
Section 6.07.	Activities; Transfers of Notes or Certificates by Trust Depositor	111
Section 6.08.	Indebtedness	111
Section 6.09.	Guarantees	112
Section 6.10.	Investments	112
Section 6.11.	Merger; Sales	112
Section 6.12.	Distributions	112
Section 6.13.	Other Agreements	112
Section 6.14.	Separate Legal Existence	113
Section 6.15.	Location; Records	113
Section 6.16.	Liability of Trust Depositor	113
Section 6.17.	Bankruptcy Limitations	113
Section 6.18.	Limitation on Liability of Trust Depositor and Others	114
Section 6.19.	Insurance Policies	114
Section 6.20.	Payments from Obligors	114

ii

ARTICLE VII	ESTABLISHMENT OF ACCOUNTS; DISTRIBUTIONS; RESERVE FUND	114
Section 7.01.	Note Distribution Account, Certificate Account, Class A-1A VFN Funding Account and Reserve Fund	114
Section 7.02.	[Reserved]	116
Section 7.03.	Principal and Interest Account	116
Section 7.04.	Securityholder Distributions	119
Section 7.05.	Allocations and Distributions	119
Section 7.06.	Determination of LIBOR	126
ARTICLE VIII	SERVICER DEFAULT; SERVICER TRANSFER	127
Section 8.01.	Servicer Default	127
Section 8.02.	Servicer Transfer	128
Section 8.03.	Appointment of Successor Servicer; Reconveyance; Successor Servicer to Act	129
Section 8.04.	Notification to Securityholders	131
Section 8.05.	Effect of Transfer	132
Section 8.06.	Database File	132
Section 8.07.	Waiver of Defaults	132
Section 8.08.	Responsibilities of the Successor Servicer	132
Section 8.09.	Rating Agency Condition for Servicer Transfer	133
Section 8.10.	Appointment of Successor Backup Servicer; Successor Backup
	Servicer to Act	133
ARTICLE IX	REPORTS	134
Section 9.01.	Quarterly Reports	134
Section 9.02.	Officer’s Certificate	135
Section 9.03.	Other Data; Obligor Financial Information	135
Section 9.04.	Annual Report of Accountants	136
Section 9.05.	Annual Statement of Compliance from Servicer	136
Section 9.06.	[Reserved]	137
Section 9.07.	Notices of Event of Default or Servicer Default	137
Section 9.08.	Trustee’s Right to Examine Servicer Records, Audit Operations and Deliver Information to Noteholders	137
ARTICLE X	TERMINATION	137
Section 10.01.	Optional Repurchase and Refinancing of Notes	137
Section 10.02.	Termination	138

iii

ARTICLE XI	REMEDIES UPON MISREPRESENTATION	138
Section 11.01.	Repurchases of, or Substitution for, Loans for Breach of Representations and Warranties	138
Section 11.02.	Reassignment of Repurchased or Substituted Loans	141
ARTICLE XII	INDEMNITIES	142
Section 12.01.	Indemnification by Servicer	142
Section 12.02.	Indemnification by Trust Depositor	142
ARTICLE XIII	MISCELLANEOUS	143
Section 13.01.	Amendment	143
Section 13.02.	Reserved	145
Section 13.03.	Governing Law	145
Section 13.04.	Notices	145
Section 13.05.	Severability of Provisions	149
Section 13.06.	Third Party Beneficiaries	149
Section 13.07.	Counterparts	149
Section 13.08.	Headings	149
Section 13.09.	No Bankruptcy Petition; Disclaimer	149
Section 13.10.	Jurisdiction	150
Section 13.11.	Tax Characterization	150
Section 13.12.	Prohibited Transactions with Respect to the Issuer	151
Section 13.13.	Limitation of Liability of Owner Trustee	151
Section 13.14.	Reserved	152
Section 13.15.	No Partnership	152
Section 13.16.	Successors and Assigns	152
Section 13.17.	Acts of Holders	152
Section 13.18.	Duration of Agreement	152
Section 13.19.	Limited Recourse	152
Section 13.20.	Confidentiality	152
Section 13.21.	Non-Confidentiality of Tax Treatment	153
Section 13.22.	Temporary Subparticipation and Elevation	153

iv

EXHIBITS, SCHEDULES AND APPENDIX

Exhibit A	Form of Assignment	A-1A
Exhibit B	Form of Closing Certificate of Trust Depositor	B-1
Exhibit C	Form of Closing Certificate of Servicer/Originator	C-1
Exhibit D	Form of Liquidation Report	D-1
Exhibit E	Form of Principal and Interest Account Letter Agreement	E-1
Exhibit F	Form of Loan Asset Certificate	F-1
Exhibit G	List of Loans	G-1
Exhibit H	[Reserved]	H-1
Exhibit I	[Reserved]	I-1
Exhibit J	[Reserved]	J-1
Exhibit K	Credit and Collection Policy	K-1
Exhibit L-1	Form of Initial Certification	L-1
Exhibit L-2	Form of Final Certification	L-2
Exhibit M	Form of Request For Release Of Documents	M-1
Schedule I	[Reserved]	Schedule I
Schedule II	Interim Tests	Schedule II
Annex A	Diversity Score Calculation	Annex A
Annex B	Moody’s RiskCalc Calculation	Annex B

v

SALE AND SERVICING AGREEMENT

THIS SALE AND SERVICING AGREEMENT, dated as of July 7, 2006 (this “Agreement”), is by and among:

(1)ARCC COMMERCIAL LOAN TRUST 2006, a statutory trust created and existing under the laws of the State of Delaware, as the issuer (together with its successors and assigns, the “Issuer”);

(2)ARCC CLO 2006 LLC, a Delaware limited liability company, as the trust depositor (together with its successor and assigns, in such capacity, the “Trust Depositor”);

(3)ARES CAPITAL CORPORATION, a Maryland corporation (together with its successors and assigns, “Ares Capital”), as the servicer (together with its successor and assigns, in such capacity, the “Servicer”), and as the originator (together with its successor and assigns, in such capacity, the “Originator”);

(4)U.S. BANK NATIONAL ASSOCIATION (together with its successors and assigns, “U.S. Bank”), not in its individual capacity, but as the trustee (together with its successors and assigns, in such capacity, the “Trustee”), and as the collateral administrator (together with its successor and assigns, in such capacity, the “Collateral Administrator”);

(5)LYON FINANCIAL SERVICES, INC. (d/b/a U.S. Bank Portfolio Services) (together with its successors and assigns, “Lyon”), not in its individual capacity but as the backup servicer (together with its successors and assigns, in such capacity, the “Backup Servicer”); and

(6)WILMINGTON TRUST COMPANY (together with its successors and assigns, “Wilmington Trust”), not in its individual capacity but as the owner trustee (together with its successors and assigns, in such capacity, the “Owner Trustee”).

R E C I T A L S

WHEREAS, in the regular course of its business, the Originator originates and/or otherwise acquires Loans;

WHEREAS, the Trust Depositor acquired the Initial Loans from the Originator and may acquire from time to time thereafter certain Substitute Loans;

WHEREAS, during the Ramp-Up Period and the Replenishment Period, the Issuer intends to acquire Additional Loans from the Trust Depositor from time to time using the proceeds of Draws under the Class A-1A VFN Notes, amounts on deposit in the Class A-1A VFN Funding Account and Principal Collections with respect to the Loan Assets; and the Trust Depositor wishes to convey any such Additional Loans to the Issuer;

WHEREAS, it is a condition to the Trust Depositor’s acquisition of the Initial Loans, any Additional Loans and any Substitute Loans from the Originator that the Originator make certain representations and warranties regarding the Loan Assets for the benefit of the Trust Depositor as well as the Issuer;

WHEREAS, on the Closing Date, the Trust Depositor will fund the Issuer by selling, conveying and assigning all its right, title and interest in the Initial Loan Assets and certain other assets to the Issuer;

WHEREAS, the Issuer is willing to purchase and accept assignment of the Loan Assets from the Trust Depositor pursuant to the terms hereof; and

WHEREAS, the Servicer is willing to service the Loan Assets for the benefit and account of the Issuer pursuant to the terms hereof.

NOW, THEREFORE, based upon the above recitals, the mutual premises and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I.

DEFINITIONS

Section 1.01.        Definitions

Whenever used in this Agreement, the following words and phrases, unless the context otherwise requires, shall have the following meanings:

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

“Accountants’ Effective Date Certificate” shall have the meaning provided in Section 2.06(g).

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

“Additional Loan” means any Loan, other than an Initial Loan, acquired by the Issuer from the Trust Depositor for inclusion in the Collateral and having a Cut-Off Date during the Ramp-Up Period or the Replenishment Period.

“Additional Loan Assets” means any assets acquired by the Trust Depositor from the Originator and by the Issuer from the Trust Depositor during the Ramp-Up Period and the Replenishment Period pursuant to Section 2.06(a), which assets shall include the Trust Depositor’s (or Originator’s, as applicable) right, title and interest in the following:

(i)            the Additional Loans listed in the related Subsequent List of Loans, all payments paid in respect thereof and all monies due, to become due or paid in respect thereof

2

accruing on and after the applicable Cut-Off Date and all Liquidation Proceeds and recoveries thereon, in each case as they arise after the applicable Cut-Off Date;

(ii)           all security interests and Liens and Related Property subject thereto from time to time purporting to secure payment by Obligors under such Loans;

(iii)          all guaranties, indemnities and warranties, Asset Specific Swaps, and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Loans;

(iv)          all collections and records (including Computer Records) with respect to the foregoing;

(v)           all documents relating to the applicable Loan Files; and

(vi)          all income, payments, proceeds and other benefits of any and all of the foregoing, including but not limited to, all accounts, cash and currency, chattel paper, electronic chattel paper, tangible chattel paper, copyrights, copyright licenses, equipment, fixtures, general intangibles, instruments, commercial tort claims, deposit accounts, inventory, investment property, letter of credit rights, software, supporting obligations, accessions, and other property consisting of, arising out of, or related to the foregoing, but excluding any Excluded Amount with respect thereto.

“Additional Principal Amount” means with respect to any Distribution Date, an amount equal to the excess, if any, of the Cumulative Charged-Off Amount over the Cumulative Additional Principal Amount.

“Administrative Expenses” means fees and expenses (excluding amounts related to indemnification) due or accrued with respect to any Distribution Date and payable by the Issuer as provided for in the relevant fee letter:

(a)           to the Trustee, (i) any quarterly fees to be paid to it pursuant to the Transaction Documents, (ii) any additional fees, expenses or other amounts and (iii) if a Successor Servicer is being appointed, any Servicing Transfer Costs incurred by the Trustee;

(b)           to the Owner Trustee, (i) any quarterly fees to be paid to it pursuant to the Transaction Documents and (ii) any additional fees, expenses or other amounts;

(c)           to the Backup Servicer, (i) any quarterly fees to be paid to it pursuant to the Transaction Documents, (ii) any additional fees, expenses or other amounts and (iii) if a Successor Servicer is being appointed, any Servicing Transfer Costs incurred by the Backup Servicer;

(d)           the independent accountants, agents and counsel of the Issuer for fees and expenses including, but not limited to, audit fees and expenses;

(e)           the Class A-1A VFN Agent under the Class A-1A VFN Purchase Agreements for expenses of the Class A-1A VFN Agent;

3

(f)            any other Person in respect of any governmental fee, charge or tax in relation to the Issuer;

(g)           to the Trustee, for unpaid fees and expenses (including fees and expenses of its agents and counsel) incurred in the exercise of its rights and remedies on behalf of the Securityholders pursuant to Article V of the Indenture;

(h)           to S&P and Moody’s, for their respective ongoing surveillance fees;

(i)            to the Persons entitled thereto, any amounts due in respect of listing the Listed Notes on the Irish Stock Exchange; and

(j)            to the Collateral Administrator under the Collateral Administration Agreement for expenses of the Collateral Administrator.

provided that (x) amounts payable as Administrative Expenses pursuant to clauses (a)(ii), b(ii), c(ii), (d), (e), (f) , (g), (i) and (j) above shall in no event exceed $100,000 in the aggregate for any 12-month period, except that in the case of a Distribution Date after the occurrence of an Event of Default, amounts payable as Administrative Expenses pursuant to clause (g) above may be paid in an amount up to $20,000 and (y) Administrative Expenses will not include (A) any amounts due or accrued with respect to the actions taken on or in connection with the Closing Date, (B) any principal of, interest or commitment fee on, any Notes, (C) Class A-1A VFN Increased Costs and Class A-1A VFN Breakage Costs or (D) amounts payable to Trustee, the Backup Servicer and the Owner Trustee in respect of indemnification.

“Affiliate” of any specified Person means any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such Person, or is a director or officer of such Person; provided that for purposes of determining whether any Loan is an Eligible Loan or any Obligor is an Eligible Obligor, the term Affiliate shall not include any Affiliate relationship which may exist solely as a result of direct or indirect ownership of, or control by, a common Person, including any Subsidiary of such Person, whose principal business activity is acquiring, holding and selling investments (including controlling interests) in otherwise unrelated companies that each are distinct legal entities with separate management, books and records and bank accounts, whose operations are not integrated with one another and whose financial condition and creditworthiness are independent of the other companies in which such Person acquires, holds or sells investments. For the purposes of this definition, “control” (including the terms “controlling”, “controlled by” and “under common control with”) when used with respect to any specified Person means the possession, direct or indirect, of the power to vote 20% or more of the voting securities of such Person or to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. Each of the Trustee and the Owner Trustee may conclusively presume that a Person is not an Affiliate of another Person unless a Responsible Officer of such trustee has actual knowledge to the contrary.

“Agented Loans” means, with respect to any Loan, (a) the Loan is originated or purchased by the Originator in accordance with the Credit and Collection Policy and the Servicing Standard as a part of a syndicated loan transaction that has been fully consummated prior to such Loan

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becoming part of the Collateral, (b) upon the sale of the Loan under this Agreement to the Issuer, the Required Loan Documents with respect thereto shall have been provided to the Trustee, as applicable, (c) the Issuer, as assignee of the Loan, has all of the rights and obligations of the Originator (other than the Originator’s obligations as lead agent, collateral agent or paying agent or in similar capacities with respect to such Loan) with respect to such Loan and the Originator’s right, title and interest in and to the Related Property, (d) the Loan is secured by an undivided interest in the Related Property that also secures and is shared by, on a pro rata basis, all other holders of such Obligor’s notes of equal priority issued in such syndicated loan transaction and (e) the Originator (or a wholly owned subsidiary of the Originator) is the lead agent, collateral agent and paying agent for all lenders in such syndicated loan transaction and receives payment directly from the Obligor thereof on behalf of such lenders.

“Aggregate Outstanding Loan Balance” means, as of any date, the sum of the Outstanding Loan Balance for each Loan included as part of the Collateral on such date, minus the Outstanding Loan Balance of any Charged-Off Loans; provided that for purposes of calculating the Aggregate Outstanding Loan Balance, the Outstanding Loan Balance of each Revolving Loan and each Delayed Draw Term Loan shall be deemed to be the maximum permissible principal balance thereof under the Underlying Loan Agreements with respect to such Loan.

“Aggregate Outstanding Principal Balance” means, as of any date of determination, the sum of the Outstanding Principal Balances of each Class of Notes outstanding on such date.

“Applicable Law” means for any Person or property of such Person, all existing and future applicable laws, rules, regulations (including proposed, temporary and final income tax regulations), statutes, treaties, codes ordinances, permits, certificates, orders and licenses of and interpretations by any Governmental Authority (including, without limitation, usury laws, the Federal Truth in Lending Act, and Regulation Z and Regulation B of the Board of Governors of the Federal Reserve System), and applicable judgments, decrees, injunctions, writs, awards or orders of any court, arbitrator or other administrative, judicial, or quasi-judicial tribunal or agency of competent jurisdiction.

“Ares Capital CP Funding LLC” means Ares Capital CP Funding LLC, a Delaware limited liability company and a wholly owned subsidiary of Ares Capital.

“Ares Capital Prime Rate” means an annual rate of interest payable at the applicable prime rate established by the Servicer with respect to each Scheduled Payment Advance and each Servicing Advance.

“Asset Specific Swap” means an interest rate exchange agreement with respect to a particular Loan, entered into by the Originator with a Swap Counterparty, and assigned by the Originator, directly or indirectly, to the Issuer, which entitles the Issuer to exchange scheduled fixed rate interest payable in respect of such Loan for LIBOR payments and satisfies the following conditions:

(i)            the notional balance of such Asset Specific Swap shall be equal to the scheduled principal amount of the related Loan;

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(ii)           such Asset Specific Swap shall amortize according to the same schedule as, and terminate no earlier than the maturity date of, the related Loan;

(iii)          payments under such Asset Specific Swap shall be due on each date on which a Scheduled Payment is to be made under the related Loan;

(iv)          such Asset Specific Swap by its terms shall provide for termination upon (i) the related Loan becoming a Charged-Off Loan or a Delinquent Loan or (ii) prepayment of the related Loan in full;

(v)           such Asset Specific Swap contains appropriate limited recourse and non-petition provisions equivalent (mutatis mutandis) to those contained in this Agreement and the Indenture; and

(vi)          all of the Originator’s rights and obligations (other than its obligation to make payments to the Swap Counterparty in connection with the termination, transfer, reduction or amendment of such Asset Specific Swap, or any portion thereof) with respect to such Asset Specific Swap have been assigned to the Issuer.

“Assignment” means each assignment, substantially in the form of Exhibit A, relating to an assignment, transfer and conveyance of the Loans and the Related Property by the Trust Depositor to the Issuer.

“Average Life” means, on any Measurement Date with respect to any Loan, the number (rounded to the nearest one tenth) obtained by dividing (a) the sum of the products of (i) the number of years from such Measurement Date to the respective dates of each successive Scheduled Payment of principal of such Loan and (ii) the respective amounts of principal of such Scheduled Payments by (b) the sum of all future Scheduled Payments of principal on such Loan.

“B Excess Amount” means an amount equal to $0.

“BB Excess Amount” means an amount equal to $0.

“Backup Servicer” means the Person acting as Backup Servicer hereunder, its successors in interest and any Successor Backup Servicer hereunder.

“Backup Servicer Fee Letter” means the fee letter, dated as of the date hereof, between the Issuer and the Backup Servicer.

“Backup Servicer Termination Notice” shall have the meaning provided in Section 8.10(a).

“Backup Servicer Transfer” shall have the meaning provided in Section 8.10(b).

“Backup Servicing Fee” shall have the meaning provided in the Backup Servicer Fee Letter.

“Bankruptcy Code” means the United States Bankruptcy Reform Act of 1978 (11 U.S.C. § 101, et seq.), as amended from time to time.

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“BIF” means the Bank Insurance Fund, or any successor thereto.

“Broadly Syndicated Loan” means any Loan to an Obligor issued as part of a loan facility with an original loan size (including any first and second lien loans included in such facility) greater than $250,000,000, including for purposes of this definition the maximum available amount of commitments under any Revolving Loans and Delayed Draw Term Loans.

“Business Day” means any day other than (a) a Saturday or Sunday, or (b) a day on which banking institutions in the city of New York, New York, and the city in which the corporate trust office of the Trustee is located are authorized or obligated by law or executive order to be closed; provided that if any action is required of the Ireland Paying Agent or the Backup Servicer, then, for purposes of determining when such Ireland Paying Agent or Backup Servicer action is required, Dublin, Ireland and Marshall, Minnesota, respectively will be considered in determining “Business Day”.

“CCC Excess Amount” means, as of any date of determination, an amount equal to the greater of: (i) 50% of the excess of (a) the sum of the Outstanding Loan Balances of all Loans included in the Collateral that have an S&P Rating of “CCC+” or lower over (b) the product of (x) the Expected Aggregate Outstanding Loan Balance times (y) 25%, and (ii) zero.

“CCC Excess Condition” means, as of any date of determination, a condition that is satisfied if the CCC Excess Amount is equal to or less than 13.50% of the Expected Aggregate Outstanding Loan Balance.

“CCC Excess Failure” means the failure to satisfy the CCC Excess Condition within a period of ten Business Days following the discovery by the Servicer of the failure to satisfy such condition.

“Certificate” means the ARCC Commercial Loan Trust 2006 Certificate representing a beneficial equity interest in the Issuer and issued pursuant to the Trust Agreement.

“Certificate Account” shall have the meaning provided in Section 5.01 of the Trust Agreement.

“Certificateholder” means each registered Holder of a fractional undivided ownership interest in the Certificate.

“Certificate Register” shall have the meaning provided in the Trust Agreement.

“Charged-Off Loan” means a Loan in the Collateral (other than a Current Pay Loan) with respect to which there has occurred one or more of the following:

(i)            the occurrence of both (a) any portion of a payment of interest on or principal of such Loan is not paid when due (without giving effect to any grace period or any Scheduled Payment Advance made in respect of such payment of interest or principal) or would be so delinquent but for any amendment or modification made to such Loan resulting from the Obligor’s inability to pay such Loan in accordance with its terms and (b) within 120 days of when such delinquent payment was first due, all delinquencies have not been cured;

(ii)           an Insolvency Event has occurred with respect to the related Obligor;

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(iii)          the related Obligor has suffered any material adverse change that materially affects its viability as a going concern, as determined by Servicer in its sole discretion in accordance with the Credit and Collection Policy;

(iv)          the Servicer has determined, in its sole discretion, in accordance with the Credit and Collection Policy, that all or a portion of such Loan is not collectible;

(v)           any portion of the proceeds used to make payments of principal of or interest on such Loan have come from a new loan by the Originator or an entity controlled by the Originator to the Obligor or any of its Affiliates, which new loan was made to the Obligor due to the Obligor’s inability to make such payments of principal or interest; or

(vi)          the related Obligor is rated “D” or “SD” by S&P.

“Class” means any group of Notes identified herein, as applicable, as the Class A-1A Notes, the Class A-1A VFN Notes, the Class A-1B Notes, the Class A-2A Notes, the Class A-2B Notes, the Class B Notes, the Class C Notes, the Class D Notes, and the Class E Notes.

“Class A Noteholder” means a Holder of Class A-1 Notes or Class A-2 Notes.

“Class A Notes” means the Class A-1 Notes and the Class A-2 Notes.

“Class A-1 Noteholder” means a Holder of Class A-1A Notes, Class A-1A VFN Notes or Class A-1B Notes.

“Class A-1 Notes” means, collectively, the Class A-1A Notes, the Class A-1A VFN Notes and the Class A-1B Notes.

“Class A-1A Interest Amount” means, for each Interest Period, the product of (i) the Note Interest Rate applicable to the Class A-1A Notes for such Interest Period, (ii) the Outstanding Principal Balance of the Class A-1A Notes as of the first day of such Interest Period (after giving effect to all distributions made on such day) and (iii) a fraction, the numerator of which is the number of days in such Interest Period and the denominator of which is 360.

“Class A-1A Interest Shortfall” means the Interest Shortfall with respect to the Class A-1A Notes.

“Class A-1A Note Interest Rate” means the annual rate of interest payable with respect to the Class A-1A Notes, which shall be equal to LIBOR plus 0.25% per annum.

“Class A-1A Noteholder” means a Holder of Class A-1A Notes.

“Class A-1A Notes” means the ARCC Commercial Loan Trust 2006 Notes, Series 2006, Class A-1A Notes, issued pursuant to the Indenture.

“Class A-1A VFN Agent” means U.S. Bank National Association, in its capacity as Class A-1A VFN Agent under the Class A-1A VFN Purchase Agreement, together with its successors in such capacity.

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“Class A-1A VFN Breakage Costs” means, with respect to any Due Period, “breakage costs”, if any, incurred by Class A-1A VFN Noteholders as a result of (i) a prepayment of amounts under the Class A-1A VFN Notes on a day other than a Permitted Prepayment Date and calculated as provided in the Class A-1A VFN Purchase Agreement or (ii) a failure by the Issuer to effect a Draw on the scheduled date therefor after having submitted a request for a Draw to the Class A-1A VFN Agent in accordance with the provisions of the Class A-1A VFN Purchase Agreement (unless such failure is due to the failure of the Class A-1A VFN Noteholders to fund such Draw).

“Class A-1A VFN Commitment” means, with respect to any Class A-1A VFN Note at any time, the maximum aggregate outstanding principal amount of advances, whether at the time funded or unfunded, that the Class A-1A VFN Noteholder (or any Liquidity Providers with respect to such Noteholder) is obligated from time to time under the Class A-1A VFN Purchase Agreement to make to the Issuer; provided that the aggregate Class A-1A VFN Commitments in effect at any time shall not exceed the Maximum Class A-1A VFN Commitment.

“Class A-1A VFN Commitment Fee” means the fee payable in respect of the undrawn amount of the Class A-1A VFN Notes (and on the amount of any Draw funded by a Class A-1A VFN Noteholder in connection with such Noteholder’s failure to satisfy the Rating Criteria) until the Commitment Termination Date at the Class A-1A VFN Commitment Fee Rate, payable quarterly in arrears on each Distribution Date and calculated on the basis of a 360-day year and the actual number of days elapsed.

“Class A-1A VFN Commitment Fee Rate” means a rate per annum of 0.175%.

“Class A-1A VFN Funding Account” means the trust account so designated and established and maintained in accordance with Section 7.01 and the Indenture.

“Class A-1A VFN Funding Test” means a test that will be satisfied as of any date of determination (a) prior to the Commitment Termination Date, if (i) the sum of (x) the undrawn amount of the Class A-1A VFN Commitments (excluding the Class A-1A VFN Commitment of any Class A-1A VFN Noteholder which has been required to fund a Draw in the amount of the unused portion of such Noteholder’s Class A-1A VFN Commitment in connection with its failure to satisfy the Rating Criteria) plus (y) the amount standing to the credit of the Class A-1A VFN Funding Account equals or exceeds (ii) the aggregate Exposure Amount of Revolving Loans and Delayed Draw Term Loans then included in the Collateral, (b) on and after a Commitment Termination Date of the type specified in clause (i) or (ii) of the definition thereof, if the amount standing to the credit of the Class A-1A VFN Funding Account equals or exceeds the aggregate Exposure Amount of Revolving Loans and Delayed Draw Term Loans then included in the Collateral and (c) on and after a Commitment Termination Date of the type specified in clause (iii) of the definition thereof shall be deemed satisfied.

“Class A-1A VFN Increased Costs” means, with respect to any Distribution Date, the amount as set forth in a certificate of a Class A-1A VFN Noteholder delivered to the Issuer and the Trustee on or prior to the related Determination Date, necessary to compensate such Class A-1A VFN Noteholder or any Funding Entity for (a) any increase in cost to such Class A-1A VFN Noteholder or Funding Entity of making or maintaining any loan or asset purchase under the Class A-1A VFN Purchase Agreement or such Liquidity Facility (or maintaining its obligation to

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make any such loan or asset purchase) resulting from a change in law applicable to such Class A-1A VFN Noteholder or Funding Entity, (b) any reduction in any amount received or receivable by a Class A-1A VFN Noteholder or Funding Entity under the Class A-1A VFN Purchase Agreement or such Liquidity Facility resulting from a change in law applicable to such Class A-1A VFN Noteholder or Funding Entity or (c) any reduction in the rate of return on the capital of a Class A-1A VFN Noteholder or Funding Entity or its parent/holding company resulting from a change in law applicable to such Class A-1A VFN Noteholder or Funding Entity or parent/holding company to a level below that which such Class A-1A VFN Noteholder or Funding Entity or parent/holding company could have achieved but for such change in law.

“Class A-1A VFN Interest Allocation Percentage” means, for each Interest Period and with respect to each Class A-1A VFN Noteholder, a fraction, expressed as a percentage, (a) the numerator of which is the average Outstanding Principal Balance of the Class A-1A VFN Note of such Holder during such Interest Period, and (b) the denominator of which is the average Outstanding Principal Balance of all Class A-1A VFN Notes during such Interest Period (excluding the amount of any Draw funded by a Class A-1A VFN Noteholder in connection with its failure to satisfy the Rating Criteria).

“Class A-1A VFN Interest Amount” means, for each Interest Period, the product of (i) the Note Interest Rate applicable to the Class A-1A VFN Notes for such Interest Period, (ii) the weighted average Outstanding Principal Balance of the Class A-1A VFN Notes during such Interest Period (excluding the amount of any Draw funded by a Class A-1A VFN Noteholder in connection with its failure to satisfy the Rating Criteria) and (iii) a fraction, the numerator of which is the number of days in such Interest Period and the denominator of which is 360, such product to be remitted to each Class A-1A VFN Noteholder pursuant to the Priority of Payments in accordance with such Class A-1A VFN Noteholder’s Class A-1A VFN Interest Allocation Percentage.

“Class A-1A VFN Interest Shortfall” means the Interest Shortfall with respect to the Class A-1A VFN Notes.

“Class A-1A VFN Note Interest Rate” means the annual rate of interest payable with respect to the Class A-1A VFN Notes, which shall be equal to LIBOR plus 0.28% per annum.

“Class A-1A VFN Noteholder” means a Holder of Class A-1A VFN Notes.

“Class A-1A VFN Notes” means the ARCC Commercial Loan Trust 2006 Notes, Series 2006, Class A-1A VFN Notes, issued pursuant to the Indenture.

“Class A-1A VFN Prepayment” means any payment of principal of the Class A-1A VFN Notes occurring prior to the Stated Maturity Date.

“Class A-1A VFN Purchase Agreement” means the Class A-1A VFN Purchase Agreement, dated as of the Closing Date, among the Issuer, the Class A-1A VFN Agent and the respective Holders of the Class A-1A VFN Notes, as such agreement may be amended, modified, restated, waived or supplemented and in effect from time to time.

“Class A-1B Interest Amount” means, for each Interest Period, the product of (i) the Note Interest Rate applicable to the Class A-1B Notes for such Interest Period, (ii) the Outstanding

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Principal Balance of the Class A-1B Notes as of the first day of such Interest Period (after giving effect to all distributions made on such day) and (iii) a fraction, the numerator of which is the number of days in such Interest Period and the denominator of which is 360.

“Class A-1B Interest Shortfall” means the Interest Shortfall with respect to the Class A-1B Notes.

“Class A-1B Note Interest Rate” means the annual rate of interest payable with respect to the Class A-1B Notes, which shall be equal to LIBOR plus 0.37% per annum.

“Class A-1B Noteholder” means a Holder of Class A-1B Notes.

“Class A-1B Notes” means the ARCC Commercial Loan Trust 2006 Notes, Series 2006, Class A-1B Notes, issued pursuant to the Indenture.

“Class A-2A Interest Amount” means, for each Interest Period, the product of (a) the Note Interest Rate applicable to the Class A-2A Notes for such Interest Period, (b) the Outstanding Principal Balance of the Class A-2A Notes as of the first day of such Interest Period (after giving effect to all distributions made on such day) and (c) a fraction, the numerator of which is the number of days in such Interest Period and the denominator of which is 360.

“Class A-2A Interest Shortfall” means the Interest Shortfall with respect to the Class A-2A Notes.

“Class A-2A Note Interest Rate” means the annual rate of interest payable with respect to the Class A-2A Notes, which shall be equal to LIBOR plus 0.22% per annum.

“Class A-2A Noteholder” means a Holder of Class A-2A Notes.

“Class A-2A Notes” means the ARCC Commercial Loan Trust 2006 Notes, Series 2006, Class A-2A Floating Rate Notes, issued pursuant to the Indenture.

“Class A-2B Interest Amount” means, for each Interest Period, the product of (a) the Note Interest Rate applicable to the Class A-2B Notes for such Interest Period, (b) the Outstanding Principal Balance of the Class A-2B Notes as of the first day of such Interest Period (after giving effect to all distributions made on such day) and (c) a fraction, the numerator of which is the number of days in such Interest Period and the denominator of which is 360.

“Class A-2B Interest Shortfall” means the Interest Shortfall with respect to the Class A-2B Notes.

“Class A-2B Note Interest Rate” means the annual rate of interest payable with respect to the Class A-2B Notes, which shall be equal to LIBOR plus 0.35% per annum.

“Class A-2B Noteholder” means a Holder of Class A-2B Notes.

“Class A-2B Notes” means the ARCC Commercial Loan Trust 2006 Notes, Series 2006, Class A-2B Floating Rate Notes, issued pursuant to the Indenture.

“Class A-2 Noteholder” means a Holder of Class A-2A Notes or Class A-2B Notes.

“Class A-2 Notes” means the Class A-2A Notes and the Class A-2B Notes.

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“Class B Accrued Payable” means, for any Distribution Date with respect to which the Class B Interest Amount is calculated using clause (ii)(b) of the definition thereof, the excess, if any, of (i) the amount that would have been calculated as the Class B Interest Amount on such Distribution Date if the calculation was made using clause (ii)(a) of the definition of Class B Interest Amount and not clause (ii)(b) of such definition over (ii) the amount calculated as the Class B Interest Amount on such Distribution Date, together with the unpaid portion of any such excess from prior Distribution Dates (and interest accrued thereon at the Class B Note Interest Rate).

“Class B Interest Amount” means, for each Interest Period, the product of (i) the Note Interest Rate applicable to the Class B for such Interest Period, (ii) the lesser of (a) the Outstanding Principal Balance of the Class B Notes as of the first day of such Interest Period (after giving effect to all distributions made on such day) and (b) the excess, if any, of (1) the Aggregate Outstanding Loan Balance as of the last day of the Due Period immediately preceding the start of such Interest Period over (2) the Outstanding Principal Balance of the Class A Notes as of the first day of such Interest Period (after giving effect to all distributions made on such day), and (iii) a fraction, the numerator of which is the number of days in such Interest Period and the denominator of which is 360.

“Class B Interest Shortfall” means the Interest Shortfall with respect to the Class B Notes.

“Class B Note Interest Rate” means the annual rate of interest payable with respect to the Class B Notes, which shall be equal to LIBOR plus 0.43% per annum.

“Class B Noteholder” means a Holder of Class B Notes.

“Class B Notes” means the ARCC Commercial Loan Trust 2006 Notes, Series 2006, Class B Floating Rate Deferrable Interest Notes, issued pursuant to the Indenture.

“Class C Accrued Payable” means, for any Distribution Date with respect to which the Class C Interest Amount is calculated using clause (ii)(b) of the definition thereof, an amount equal to the excess, if any, of (i) the amount that would have been calculated as the Class C Interest Amount on such Distribution Date if the calculation was made using clause (ii)(a) of the definition of Class C Interest Amount and not clause (ii)(b) of such definition over (ii) the amount calculated as the Class C Interest Amount on such Distribution Date, together with the unpaid portion of any such excess from prior Distribution Dates (and interest accrued thereon at the Class C Note Interest Rate).

“Class C Interest Amount” means, for each Interest Period, the product of (i) the Class C Note Interest Rate for such Interest Period, (ii) the lesser of (a) the Outstanding Principal Balance of the Class C Notes as of the first day of such Interest Period (after giving effect to all distributions made on such day) and (b) the excess, if any, of (1) the Aggregate Outstanding Loan Balance as of the last day of the Due Period immediately preceding the start of such Interest Period over (2) the Outstanding Principal Balance of the Class A Notes and the Class B Notes as of the first day of such Interest Period (after giving effect to all distributions made on such day), and (iii) a fraction, the numerator of which is the number of days in such Interest Period and the denominator of which is 360.

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“Class C Interest Shortfall” means the Interest Shortfall with respect to the Class C Notes.

“Class C Note Interest Rate” means the annual rate of interest payable with respect to the Class C Notes, which shall be equal to LIBOR plus 0.70% per annum.

“Class C Noteholder” means a Holder of Class C Notes.

“Class C Notes” means the ARCC Commercial Loan Trust 2006 Notes, Series 2006, Class C Floating Rate Deferrable Interest Notes, issued pursuant to the Indenture.

“Class D Accrued Payable” means, for any Distribution Date with respect to which the Class D Interest Amount is calculated using clause (ii)(b) of the definition thereof, the excess, if any, of (i) the amount that would have been calculated as the Class D Interest Amount on such Distribution Date if the calculation was made using clause (ii)(a) of the definition of Class D Interest Amount and not clause (ii)(b) of such definition over (ii) the amount calculated as the Class D Interest Amount on such Distribution Date, together with the unpaid portion of any such excess from prior Distribution Dates (and interest accrued thereon at the Class D Note Interest Rate).

“Class D Interest Amount” means, for each Interest Period, the product of (i) the Note Interest Rate applicable to the Class D Notes for such Interest Period, (ii) the lesser of (a) the Outstanding Principal Balance of the Class D Notes as of the first day of such Interest Period (after giving effect to all distributions made on such day) and (b) the excess, if any, of (1) the Aggregate Outstanding Loan Balance as of the last day of the Due Period immediately preceding the start of such Interest Period over (2) the Outstanding Principal Balance of the Class A Notes, the Class B Notes and the Class C Notes as of the first day of such Interest Period (after giving effect to all distributions made on such day) and (iii) a fraction, the numerator of which is the number of days in such Interest Period and the denominator of which is 360.

“Class D Interest Shortfall” means the Interest Shortfall with respect to the Class D Notes.

“Class D Note Interest Rate” means the annual rate of interest payable with respect to the Class D Notes, which shall be equal to LIBOR plus 1.35% per annum.

“Class D Noteholder” means a Holder of Class D Notes.

“Class D Notes” means the ARCC Commercial Loan Trust 2006 Notes, Series 2006, Class D Floating Rate Deferrable Interest Notes, issued pursuant to the Indenture.

“Class E Noteholder” means a Holder of Class E Notes.

“Class E Notes” means the ARCC Commercial Loan Trust 2006 Notes, Series 2006, Class E Principal Only Notes, issued pursuant to the Indenture.

“Class Scenario Loss Rate” means, with respect to any Class rated by S&P, at any time, an estimate of the cumulative default rate for the Current Portfolio or the Proposed Portfolio, as applicable, consistent with S&P’s rating of such Class on the Closing Date, determined by application of the S&P CDO Monitor at such time.

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“Closing Date” means July 7, 2006.

“Code” means the Internal Revenue Code of 1986, as amended, or any successor legislation thereto.

“Collateral” means, as of any date, the “Indenture Collateral,” as such term is defined in the Indenture.

“Collateral Administration Agreement” means the Collateral Administration Agreement, dated as of the Closing Date, among the Issuer, the Servicer and the Collateral Administrator.

“Collateral Administrator” means U.S. Bank National Association, solely in its capacity as Collateral Administrator under the Collateral Administration Agreement, until a successor Person shall have become the Collateral Administrator pursuant to the applicable provisions of the Collateral Administration Agreement, and thereafter “Collateral Administrator” shall mean such successor Person.

“Collateral Quality Table” means, as set forth below, the table that shall be used in determining, for the Loans included in the Collateral as of any date of determination after the Effective Date, compliance with the Weighted Average Spread Test, the Diversity Test and the Moody’s Weighted Average Rating Factor Test:

Weighted Average		Weighted Average
Spread	Diversity Score	Rating Factor
5.25%	28	3690
5.00%	28	3600
4.75%	28	3510
5.25%	25	3555
5.00%	25	3500
4.75%	25	3410
5.25%	22	3385
5.00%	22	3340
4.75%	22	3270

“Collections” means the aggregate of Interest Collections and Principal Collections.

“Commission” means the United States Securities and Exchange Commission.

“Commitment Fee Amount” means, with respect to the Class A-1A VFN Notes as of any Distribution Date, the sum of (a) the amount determined for the related Interest Period by multiplying (i) the Class A-1A VFN Commitment Fee Rate, (ii) the excess, if any, of (x) the weighted average aggregate Class A-1A VFN Commitments during such Interest Period over (y) the weighted average Outstanding Principal Balance of the Class A-1A VFN Notes during such Interest Period (excluding the amount of any Draw funded by a Class A-1A VFN Noteholder in connection with its failure to satisfy the Rating Criteria) and (iii) a fraction, the numerator of which is the number of days in such Interest Period and the denominator of which is 360, plus (b) any unpaid Commitment Fee Amount due in respect of any prior Distribution Date, plus (c)

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interest at the Note Interest Rate applicable to the Class A-1A VFN Notes on any accrued and unpaid Commitment Fee Amount due in respect of any prior Distribution Date from the date such unpaid Commitment Fee Amount was originally due and payable.

“Commitment Termination Date” means the date on which any of the following first occurs: (i) the last day of the Replenishment Period; (ii) the date on which the Class A-1A VFN Commitments are declared terminated following an Event of Default described in Sections 5.01(vi), (vii) and (ix) of the Indenture; or (iii) the Repurchase Date.

“Compliance Plan” means a plan intended to result in compliance by the Issuer with the Portfolio Criteria as of the Effective Date.

“Computer Records” means the computer records generated by the Servicer that provide information relating to the Loans and that were used by the Originator in selecting the Loans conveyed to the Trust Depositor pursuant to Section 2.01 (and any Additional Loans and any Substitute Loans conveyed to the Trust Depositor pursuant to Section 2.06 and Section 11.01, respectively).

“Contractual Obligation” means, with respect to any Person, any provision of any securities issued by such Person or any indenture, mortgage, deed of trust, contract, undertaking, agreement, instrument or other document to which such Person is a party or by which it or any of its property is bound or is subject.

“Corporate Trust Office” means, with respect to the Trustee or Owner Trustee, as applicable, the office of the Trustee or Owner Trustee at which at any particular time its corporate trust business shall be principally administered, which offices at the date of the execution of this Agreement are located at the addresses set forth in Section 13.04.

“Credit and Collection Policy” means the written credit policy and procedures manual (which covers credit, collection and servicing policies and procedures) of the Originator and the Servicer in effect on the Closing Date (a copy of which is attached as Exhibit K), as amended or supplemented from time to time in accordance with Section 5.02(l), a copy of which has been provided to the Trust Depositor, the Issuer, the Owner Trustee and the Trustee; and with respect to any Successor Servicer, the written collection policies and procedures of such Person at the time such Person becomes a Successor Servicer.

“Credit Impaired Criteria” with respect to any Loan, the occurrence of any of the following:

(i)            such Loan has been downgraded or placed on watch list for possible downgrade by Moody’s since the date on which such Loan was purchased by the Issuer; or

(ii)           (a) the spread for such Loan has been increased since the date of purchase by (1) 0.25% or more (in the case of a Loan with a spread over the applicable reference rate selected by the Servicer in the exercise of its reasonable business judgment (prior to such increase) less than or equal to 2.0%), (2) 0.375% or more (in the case of a Loan with a spread over the applicable reference rate selected by the Servicer in the exercise of its reasonable business judgment (prior to such increase) greater than 2.0% but less than or equal to 4.0%) or (3) 0.5% or more (in the case of a Loan with a spread over the applicable reference rate selected by the

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Servicer in the exercise of its reasonable business judgment (prior to such increase) greater than 4.0%) due, in each case, to a deterioration in the related borrower’s financial ratio or financial results in accordance with the underlying Loan or (b) other than in case of any Fixed Rate Loan, the Market Value of such Loan has decreased by at least 1.0% of the price paid by the Issuer for such Loan due to a deterioration in the related Obligor’s financial ratio or financial results with respect to such Loan.

“Credit Impaired Loan” means any Loan in the Collateral that is not a Charged-Off Loan but which, in the Servicer’s reasonable business judgment, has a significant risk of declining in credit quality or becoming a Charged-Off Loan; provided that, if the rating of the Class A Notes or Class B Notes has been reduced by one or more rating subcategories from that in effect on the Closing Date or withdrawn by Moody’s or S&P (unless it has been reinstated to the rating assigned on the Closing Date), or the rating of the Class C Notes or the Class D Notes has been reduced by two or more rating subcategories from that in effect on the Closing Date or withdrawn by Moody’s (unless it has been reinstated to the rating assigned on the Closing Date), then such Loan shall not be considered a Credit Impaired Loan unless it satisfies the Credit Impaired Criteria.

“Cumulative Additional Principal Amount” means, (a) as of the initial Distribution Date, an amount equal to zero, or (b) as of any Distribution Date after the initial Distribution Date, an amount equal to the aggregate of amounts applied as Additional Principal Amounts on prior Distribution Dates.

“Cumulative Charged-Off Amount” means, as of any Distribution Date, an amount equal to the sum of (i) the sum of the Outstanding Loan Balances of all Loans which have become Charged-Off Loans minus the sum of the Recovery Value of all Loans which have become Charged-Off Loans and (ii) the sum, for all Loans (other than Charged-Off Loans) which have been sold pursuant to this Agreement, of the excess, if any, of the Outstanding Loan Balance of each such Loan at the time of sale over the applicable Sale Proceeds (exclusive of accrued interest and of any amount reimbursable to the Servicer therefrom pursuant to this Agreement) received with respect to such Loan, in each case during the period from the Closing Date or the Cut-Off Date, as applicable, to and including the last day of the Due Period immediately preceding such Distribution Date.

“Current Pay Loan” means a Loan in the Collateral (other than a DIP Loan) that would be a Charged-Off Loan but for the exclusion of Current Pay Loans from the definition thereof and:

(i)            as to which all interest and principal payments due (other than any principal payments due solely as a result of the commencement of an Insolvency Proceeding) have been paid in cash and the Servicer has documented and certified its assessment that it reasonably expects that the remaining scheduled interest and principal payments due will be paid in cash when due;

(ii)           (a) such Loan has a Moody’s Rating of either (1) at least “Caa1” (and if rated “Caa1”, such rating is not on “Watch List” for downgrade) and the Market Value of such Loan is at least 80% of par, or (2) at least “Caa2” (or “Caa1” and on “Watch List” for downgrade) and the Market Value of such Loan is at least 85% of par and, in the case of a rating of “Caa2”, such

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rating is not on “Watch List” for downgrade, provided that if the Moody’s Rating of such Loan has been withdrawn, then, solely for the purposes of this definition, the rating of such Loan shall be deemed to be the Moody’s Rating of such Loan immediately prior to the withdrawal of such rating; and (b) if the Obligor is the subject of a bankruptcy proceeding an order of the bankruptcy court shall have been entered that permits such Obligor to make the scheduled interest payments on such Loan; and

(iii)          the S&P Rating Condition shall have been satisfied with respect to the classification of such Loan as a Current Pay Loan;

provided that not more than 7.5% of the Aggregate Outstanding Loan Balance as of the last day of any Due Period may consist of Current Pay Loans, and, to the extent that the aggregate Outstanding Loan Balance of Current Pay Loans included in the Collateral exceeds 7.5% of the Aggregate Outstanding Loan Balance as of any such day, the Current Pay Loans representing such excess Outstanding Loan Balance shall constitute Charged-Off Loans and not Current Pay Loans.

“Current Portfolio” means the portfolio (measured by the outstanding principal balance and treating Revolving Loans and Delayed Draw Term Loans as fully funded) of (a) the Loans, (b) Principal Collections held as cash and (c) Permitted Investments purchased with Principal Collections existing immediately prior to the applicable Measurement Date.

“Curtailment” means, with respect to a Loan, any payment of principal received by the Issuer during a Due Period as part of a payment allocable to a Loan that is in excess of the principal portion of the Scheduled Payment due for such Due Period and which is not intended to satisfy the Loan in full, nor is intended to cure a delinquency, including any accelerated amortization due to structural features of the related Loan.

“Cut-Off Date” means each date after the Closing Date on which an Additional Loan or Substitute Loan is transferred to the Issuer.

“Delaware Statutory Trust Act” means Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. §§ 3801 et seq., as the same may be amended from time to time.

“Delayed Draw Term Loan” means a Loan that is fully committed on the initial funding date thereof and is required by its terms to be fully funded in one or more installments on draw dates to occur within three years after the closing date thereof but which, once fully funded, has the characteristics of a Term Loan; provided that, once fully funded, such Loan will cease to be a Delayed Draw Term Loan.

“Delinquent Loan” means a Loan (that is not a Charged Off Loan) in the Collateral as to which there has occurred one or more of the following:

(a)in the case of a Loan which is neither publicly rated by Moody’s nor publicly rated by S&P, any portion of a payment of interest on or principal of such Loan is not paid when due (after giving effect to any applicable grace period (subject in all cases to a maximum grace period of five Business Days) but without giving effect to any Scheduled Payment Advance made in respect of such payment of

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interest or principal); provided that, if the Servicer reasonably believes all delinquencies will be cured within 60 calendar days of when such delinquent payment was first due, such Loan shall only be deemed a Delinquent Loan if all such delinquencies are not cured within such 60 day period; provided further that the Servicer’s option described in the foregoing proviso shall at any time extend only to the lesser of (1) three Loans and (2) five percent of the Aggregate Outstanding Loan Balance;

(b)in the case of a Loan which is publicly rated by Moody’s or S&P, any portion of a payment of interest on or principal of such Loan is not paid when due (after giving effect to any applicable grace period (subject in all cases to a maximum grace period of five Business Days) but without giving effect to any Scheduled Payment Advance made in respect of such payment of interest or principal);

(c)consistent with the Credit and Collection Policy such Loan would be classified as delinquent by the Servicer or the Originator;

(d)the Loan shall have been amended or modified due to the Obligor’s inability to make payments of principal or interest under such Loan in a manner that would reduce the interest rate payable by the Obligor thereunder;

(e)the Loan shall have been amended or modified in a manner other than as specified in clause (d) above due to the Obligor’s inability to make any portion of a payment of interest on or principal of such Loan when due (after giving effect to any applicable grace period, subject in all cases to a maximum grace period of five Business Days);

(f)the Loan shall have been subject to a modification of the type described in clause (e) of the definition of Specified Amendment;

(g)the Loan shall have been subject to a modification of the type specified in clauses (a) through (d) of the definition of Specified Amendment and within 60 days after the effective date of the relevant Specified Amendment the Servicer has not delivered notice to S&P of such modification; or

(h)any Additional Loan or Substitute Loan which, within 60 days after the related Cut Off Date, the Servicer has not submitted to each Rating Agency for rating; provided that such Loan shall not be deemed a Delinquent Loan by reason of the Servicer’s failure to present such Loan to Moody’s if such Loan has a Moody’s Rating determined in accordance with clause (e) of the definition thereof;

provided that if any Loan to an Obligor is a Delinquent Loan, or if any Loan to an Obligor from the Originator or any entity controlled by the Originator would be a Delinquent Loan if owned by the Issuer, then all Loans to that Obligor ranked equally with, or subordinated in right of payment to, such Delinquent Loans shall be deemed to be Delinquent Loans; provided further that such Loan or Loans shall cease to be deemed delinquent as of the date that each Loan which caused any other Loan to be deemed delinquent in accordance with the preceding proviso has become a performing Loan and maintained such status for a period of 12 consecutive months.

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“Determination Date” means, with respect to a Distribution Date, the close of business on the fifth Business Day prior to such Distribution Date.

“DIP Loan” means a loan to an Obligor that is a “debtor-in-possession” as defined under the Bankruptcy Code, the terms of which have been approved by an order of the United States Bankruptcy Court, the United States District Court or any other court of competent jurisdiction, the enforceability of which order is not subject to any pending contested matter or proceeding (as such terms are defined in the Federal Rules of Bankruptcy Procedure) and which order provides that: (i)(a) such DIP Loan is fully secured by liens on the debtor’s otherwise unencumbered assets pursuant to §364(c)(2) of the Bankruptcy Code or any other applicable bankruptcy or insolvency law, or (b) such DIP Loan is secured by liens of equal or senior priority on property of such debtor’s estate that is otherwise subject to a lien pursuant to §364(d) of the Bankruptcy Code or any other applicable bankruptcy or insolvency law, and (ii) such DIP Loan is fully secured based upon a current valuation or appraisal report. Notwithstanding the foregoing, such a Loan shall not be deemed to be a DIP Loan following the emergence of the related debtor-in-possession from bankruptcy protection under Chapter 11 of the Bankruptcy Code.

“Distribution Date” means each 20th day of each December, March, June and September commencing on December 20, 2006 and ending on the Stated Maturity Date; provided that, if any such date is not a Business Day, the date of payment will be the next succeeding Business Day.

“Diversity Score” means the single number that indicates collateral concentration for Loans in terms of both Obligor and industry concentration, which is calculated as described in Annex A.

“Diversity Test” means a test that will be satisfied, as of any date of determination, if the Diversity Score equals or exceeds the Diversity Score set forth in the Collateral Quality Table in the appropriate column opposite the then-current Reference Spread, in each case as of such date of determination.

“Dollar” and “$” means the lawful currency of the United States.

“Downgrade Event” means the reduction or withdrawal of the rating issued by either of Moody’s or S&P on the Closing Date with respect to any outstanding class of Offered Notes and the Class D Notes.

“Draw” means a borrowing made by the Issuer (at the direction of the Servicer) in accordance with the Class A-1A VFN Purchase Agreement under the Class A-1A VFN Notes on any Business Day prior to the Commitment Termination Date.

“Draw Date” means the date of any Draw.

“Due Period” means, with respect to the first Distribution Date, the period from and including the Closing Date to but excluding the 5th day of the calendar month in which the first Distribution Date occurs, and for any Distribution Date thereafter, the period from and including the 5th day of the calendar month in which the prior Distribution Date occurred to but excluding the 5th day of the calendar month in which such Distribution Date occurs.

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“Effective Date” means the earlier of (a) the date which is fifteen Business Days prior to the Distribution Date occurring in June, 2007 and (b) the date on which the Servicer certifies to the Trustee that the Aggregate Outstanding Loan Balance of the Loans purchased by the Issuer for inclusion in the Collateral, together with any Principal Collections, equals the Expected Aggregate Outstanding Loan Balance.

“Effective Date Ratings Confirmation” shall have the meaning provided in Section 2.06(g).

“Elevation” shall have the meaning provided in Section 13.22.

“Elevation Date” shall have the meaning provided in Section 13.22.

“Eligible Asset” shall have the meaning provided in Rule 3a-7 under the 1940 Act.

“Eligible Deposit Account” means either (a) a segregated account with a Qualified Institution, or (b) a segregated trust account with the corporate trust department of a depository institution organized under the laws of the United States or any one of the states thereof, including the District of Columbia (or any domestic branch of a foreign bank), and acting as a trustee for funds deposited in such account, so long as any of the securities of such depository institution shall have, in the case of Moody’s, a short-term credit rating of “P-1” and in the case of S&P a commercial paper short-term debt rating of “A-1+” and a long-term unsecured debt rating of at least “AA–”.

“Eligible Loan” means, on and as of the Closing Date (or, in the case of a Participation described in clause (ix) below, the date that is 60 days after the Closing Date) in the case of the Initial Loans and as of the related Cut-Off Date in the case of any Additional Loans or Substitute Loans, a Loan as to which each of the following is true; provided that any Loan which has an S&P Rating shall not include a “p”, “pi”, “q”, “r” or “t” subscript:

(i)            the Loan is a Large Middle Market Loan, Traditional Middle Market Loan, Broadly Syndicated Loan (and including, for a period of 60 calendar days after the Closing Date, Participations therein) or a Qualified Participated Loan;

(ii)           the Loan is an Eligible Asset;

(iii)          the Loan is Registered;

(iv)          the Obligor with respect to the Loan is an Eligible Obligor;

(v)           the Loan is denominated and payable only in U.S. Dollars and does not permit the currency in which or country in which the Loan is payable to be changed;

(vi)          the Obligor with respect to the Loan or, if such Loan is an Agented Loan, the paying agent with respect thereto, has been directed to make all Scheduled Payments to the Principal and Interest Account;

(vii)         the Loan does not contravene any Applicable Laws (including, without limitation, laws, rules and regulations, if applicable, relating to usury, truth in lending, fair credit

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billing, fair credit reporting, equal credit opportunity, fair debt collection practices, licensing and privacy) and no part thereof is in violation of Applicable Law;

(viii)        all material consents, licenses, approvals or authorizations of, or registrations or declarations with, any Governmental Authority or any other Person required to be obtained, effected or given in connection with the making, acquisition, transfer or performance of the Loan have been duly obtained, effected or given and are in full force and effect;

(ix)           the Loan is eligible under the Underlying Loan Agreement to be sold, assigned or transferred to the Trust Depositor and the Issuer, respectively (giving effect to the provisions of Sections 9-406 and 9-408 of the UCC), and neither the sale, transfer or assignment of the Loan under the Loan Sale Agreement and this Agreement to the Trust Depositor and the Issuer, respectively, nor the granting of a security interest under the Indenture to the Trustee, violates, conflicts with or contravenes any Applicable Law or any contractual or other restriction, limitation or encumbrance; provided that this clause shall not apply (a) to Qualified Participated Loans or (b) for a period of 60 days after the Closing Date, to all other Participated Loans, which will be converted to full assignments within 60 days following the Closing Date;

(x)            the Loan is not the subject of an offer of exchange or tender by its issuer, for cash, securities or any other type of consideration, and has not been called for redemption or tender into any other security or property;

(xi)           the Loan (a) is not an equity security, (b) does not provide for the conversion or exchange into an equity security at any time on or after the date it is included as part of the Collateral, and (c) does not constitute, and none of the Related Property securing the Loan constitutes, Margin Stock;

(xii)          the Loan is not a Loan with respect to which interest required by the Underlying Loan Agreement to be paid in cash has previously been deferred or capitalized as principal and not subsequently paid in full;

(xiii)         the Loan provides for a fixed amount of principal payable in cash no later than its stated or legal maturity;

(xiv)        all payments in respect of the Loan are required to be made free and clear of, and without deduction or withholding for or on account of, any taxes, unless such withholding or deduction is required by Applicable Law in which case the Obligor thereof is required to make “gross-up” payments that cover the full amount of any such withholding taxes on an after-tax basis;

(xv)         the information with respect to such Loan set forth on the list of Loans delivered to the Trustee is true and complete;

(xvi)        the repayment of the Loan is not subject to material non-credit related risk (for example, a Loan, the payment of which is expressly contingent upon the nonoccurrence of a catastrophe), as reasonably determined by the Servicer in accordance with the Credit and Collection Policy;

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(xvii)       to the best of the Originator’s or the Trust Depositor’s knowledge, as applicable, if the Loan is a Third Party Acquired Loan, then immediately prior to the transfer and assignment (if applicable) contemplated by the instruments of conveyance relating to such Loan, the assignor (if any) held good and indefeasible title to, and was the sole owner of, the Loans being transferred to the Issuer, subject to no Liens except Liens which will be released simultaneously with such transfer and assignment (if applicable) and Liens permitted by the Transfer and Servicing Agreements; and immediately upon the transfer and assignment (if applicable) contemplated by the instruments of conveyance relating to such Loan, the Issuer will hold good and indefeasible title to, and be the sole owner of, each Loan, subject to no Liens except Liens in favor of the Trustee;

(xviii)      to the best of the Originator’s or the Trust Depositor’s knowledge, as applicable, (a) the Loan has been documented in a manner consistent with the Credit and Collection Policy and (b) the Loan is evidenced by a promissory note (other than in the case of a Noteless Loan), a credit agreement containing an express promise to pay, a security agreement or instrument and related loan documents that have been duly authorized and executed, are in full force and effect and constitute the legal, valid, binding and absolute and unconditional payment obligation of the related Obligor, enforceable against such Obligor in accordance with their terms (subject, as to enforcement only, to applicable bankruptcy, insolvency, moratorium or other similar laws affecting the rights of creditors generally and to general principles of equity, whether considered in a suit at law or in equity), and there are no conditions precedent to the enforceability or validity of the Loan that have not been satisfied or validly waived;

(xix)         to the best of the Originator’s or the Trust Depositor’s knowledge, as applicable, all parties that have had any interest in the Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period in which they held and disposed of such interest, were) (i) in compliance with any and all applicable licensing requirements of the laws of the state wherein any Related Property is located, and (ii) (A) organized under the laws of such state, (B) qualified to do business in such state, (C) federal savings and loan associations or national banks having principal offices in such state or (D) not doing business in such state;

(xx)          the Loan (i) was originated and underwritten, or purchased and re-underwritten, by the Originator, subject to, without limitation, the completion of a due diligence review, (ii) is fully documented, and (iii) is being serviced by the Servicer, in accordance with the Credit and Collection Policy and the Servicing Standard;

(xxi)         in the case of a Third Party Acquired Loan, such Loan (i) was acquired by the Issuer in an arm’s length transaction at the fair market value thereof as of the related date of acquisition, (ii) is fully documented and (iii) is being serviced by the Servicer, in each case in accordance with the Credit and Collection Policy and the Servicing Standard;

(xxii)        the Loan has an original term to maturity that does not exceed 120 months and the Loan matures prior to the Stated Maturity Date;

(xxiii)       all of the original or certified Required Loan Documents with respect to the Loan have been, or will be, delivered to the Trustee on or prior to the Closing Date (in the case of an Initial Loan) and the applicable Cut-Off Date (in the case of an Additional Loan or

22

Substitute Loan), and all Servicing Files are being or shall be maintained at the principal place of business of the Servicer in accordance with the Servicing Standard;

(xxiv)       the Loan is not currently delinquent in payment and, since its origination or purchase, the Loan has never been more than 30 days delinquent in payment of either principal or interest;

(xxv)        the Originator has not received notice of a material default, breach, violation or event or condition which would give rise to a right of acceleration existing under the Underlying Loan Agreement related to the Loan and no event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a material default, breach, violation or event or condition which would give rise to a right of acceleration of the Loan;

(xxvi)       to the best of the Originator’s or the Trust Depositor’s knowledge, as applicable, no provision of the Required Loan Documents has been waived, modified, or altered in any respect by the Originator or any of its Affiliates on or after (i) the date on which the Originator originated or acquired the related Loan, in the case of a Loan acquired by the Issuer from the Originator, or (ii) the date on which the Issuer acquired the related Loan, in the case of a Third Party Acquired Loan, except in accordance with the Credit and Collection Policy and the Servicing Standard and by instruments duly authorized and executed and contained in the Required Loan Documents and recorded, if necessary, to protect the interests of the Noteholders and which has been delivered to the Trustee or, with respect to any Agented Loan, to the custodian or collateral agent with respect thereto;

(xxvii)      the Loan is neither a new loan that replaced a prior loan by the Originator or any of its Affiliates to the Obligor that was a Delinquent Loan or a Charged-Off Loan nor an extension of credit by the Originator to the Obligor for the purpose of (i) making any past due principal, interest or other payments due on the Loan, (ii) preventing such Loan or any other loan to the related Obligor from becoming past due or (iii) causing a Delinquent Loan or a Charged-Off Loan to cease to be so classified;

(xxviii)     other than in the case of Permitted PIK Loans, the Loan does not permit interest to be deferred or capitalized;

(xxix)       the Loan is not subject to any right of rescission, set-off, counterclaim or defense, including the defense of usury, by the related Obligor (including any account debtor or Person obligated to make payments on the Loan to such Obligor), nor will the operation of any of the terms of the Underlying Loan Agreement, or the exercise of any right thereunder, render the Underlying Loan Agreement unenforceable in whole or in part, or subject to any right of rescission, set-off, counterclaim or defense, including the defense of usury, no such right of rescission, set-off, counterclaim or defense has been asserted with respect thereto, and the Underlying Loan Agreement with respect to the Loan provide for an affirmative waiver by the related Obligor of all rights of rescission, set-off and counterclaim against the Originator and its assignees;

(xxx)        the Loan does not contain a confidentiality provision that restricts or purports to restrict the ability of the Trustee to exercise its rights under the Transfer and Servicing

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Agreements, including, without limitation, its rights to review the Loan, the Required Loan Documents and Loan File;

(xxxi)       other than with respect to Agented Loans, the Originator has caused, and will cause, to be performed any and all acts reasonably required to be performed to preserve the rights and remedies of the Trustee as specified in this Agreement and in the Indenture and in any Insurance Policies applicable to the Loan;

(xxxii)      the Loan provides for cash payments that fully amortize the Outstanding Loan Balance of such Loan on or by its maturity and does not provide for such Outstanding Loan Balance to be discounted pursuant to a prepayment in full;

(xxxiii)     such Loan does not permit interest to be capitalized in its entirety or contain payment obligations relating to “put rights” by the related Obligor;

(xxxiv)     the proceeds of such Loan will not be used to finance activities of the type engaged in by businesses classified under NAICS Codes 2361 (Residential Building Construction), 2362 (Nonresidential Building Construction), 2371 (Utility System Construction), or 2372 (Land Subdivision);

(xxxv)      such Loan was purchased for a price equal to or greater than 90% of par, provided that Loans purchased for a price lower than 90% of par may comprise 7.5% of the Aggregate Outstanding Loan Balance;

(xxxvi)     such Loan is not a Revolving Loan or a Delayed Draw Term Loan, provided that any such Loan shall be deemed an Eligible Loan if the sum of the Outstanding Loan Balances of all Revolving Loans plus the sum of the undrawn portions of all Delayed Draw Term Loans does not exceed 12.5% of the Aggregate Outstanding Loan Balance;

(xxxvii)    if the Loan is one of a number of loans made to the same Obligor at the same seniority in such Obligor’s capital structure, such Loan and any other loans to the same Obligor contain standard cross-collateralization and cross-default provisions; and

(xxxviii)   if the Loan is an Agented Loan:

(i)the related Required Loan Documents (A) shall include a note purchase or similar agreement containing provisions relating to the appointment and duties of a paying agent and a collateral agent and in such capacity such agent has the right to receive and collect payments and to enforce the Obligor’s obligations on behalf of all holders of the Obligor’s underlying indebtedness at the direction of the requisite majority of the underlying lenders and (B) if the note in respect of such Agented Loan was issued in a transaction involving more than one class of notes, intercreditor provisions;

(ii)if the entity serving as the collateral agent of the security for all notes of the Obligor issued under the applicable Underlying Loan Agreement has changed from the time of the origination of the Loan, all appropriate

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assignments of the collateral agent’s rights in and to the collateral on behalf of the holders of the indebtedness of the Obligor under such facility have been executed and filed or recorded as appropriate prior to such Loan becoming a part of the Collateral;

(iii)all required notifications, if any, have been given to the collateral agent, the paying agent and any other parties required by the Underlying Loan Agreement of, and all required consents, if any, have been obtained with respect to, the Originator’s assignment of such Loan and the Originator’s right, title and interest in the Related Property to the Trust Depositor, the assignment thereof to the Issuer and the Trustee’s security interest therein on behalf of the Noteholders;

(iv)the right to control the actions of and replace the collateral agent and/or the paying agent of the Obligor’s indebtedness under the facility is to be exercised by at least a majority in interest of all holders of such indebtedness; and

(v)all indebtedness of the Obligor of the same priority within each facility is cross-defaulted, the Related Property securing such indebtedness is held by the collateral agent for the benefit of all holders of such indebtedness and all holders of such indebtedness (A) have an undivided pari passu interest in the collateral securing such notes, (B) are secured by, and share in the proceeds of the sale or other disposition of, such collateral on a pro rata basis and (C) may transfer or assign their right, title and interest in the Related Property;

“Eligible Obligor” means, on any date of determination, any Obligor that:

(i)            is a business organization (and not a natural person) that is duly organized and validly existing under the laws of its jurisdiction of organization;

(ii)           such Obligor is duly organized and validly existing under the laws of, or all or substantially all of its assets are located in, the United States, Canada, or any Group I Country, Group II Country or Group III Country;

(iii)          is a legal operating entity or holding company (except with respect to a Loan to an SPE Obligor);

(iv)          is not a Governmental Authority;

(v)           is not an Affiliate (other than with respect to an SPE Obligor) of Ares Capital, the Servicer, the Trust Depositor or the Issuer;

(vi)          is not the subject of an Insolvency Proceeding; and

(vii)         is not an Obligor of a Charged-Off Loan or Delinquent Loan; provided that an Obligor with respect to a Charged-Off Loan or a Delinquent Loan shall cease to be disqualified

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under this clause (vii) as of the date that each Loan which caused such Obligor to be so disqualified has become a performing Loan and maintained such status for a period of 6 consecutive months.

“Eligible Repurchase Obligations” means repurchase obligations with respect to any security that is a direct obligation of, or fully guaranteed by, the United States or any agency or instrumentality thereof the obligations of which are backed by the full faith and credit of the United States, in either case entered into with a depository institution or trust company (acting as principal) described in clauses (c)(ii) and (c)(iv) of the definition of Permitted Investments.

“Enterprise Value” means, with respect to any Obligor, as of any date of determination, (i) if such Obligor has been the subject of a merger, acquisition or recapitalization transaction within the most recent three months, the valuation of such Obligor as an entirety as determined in connection with such transaction, as such valuation may be reduced as determined by the Servicer in its reasonable discretion and in a manner consistent with the Credit and Collection Policy, giving due consideration to transactions involving enterprises comparable to such Obligor occurring during such three month period, and (ii) in all other cases, the valuation of such Obligor as an entirety as determined by the Servicer in its reasonable discretion and in a manner consistent with the Credit and Collection Policy, giving due consideration to transactions involving enterprises comparable to such Obligor which have been consummated within the three months prior to such date.

“Environmental Laws” means any and all foreign, federal, state and local laws, statutes, ordinances, rules, regulations, permits, licenses, approvals, interpretations and orders of courts or Governmental Authorities, relating to the protection of human health or the environment, including, but not limited to, requirements pertaining to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation, handling, reporting, licensing, permitting, investigation or remediation of hazardous materials, and shall include, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous Material Transportation Act (49 U.S.C. § 331 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Safe Drinking Water Act (42 U.S.C. § 300, et seq.), the Environmental Protection Agency’s regulations relating to underground storage tanks (40 C.F.R. Parts 280 and 281), and the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), and the rules and regulations thereunder, each as amended or supplemented from time to time.

“Event of Default” shall have the meaning specified in Section 5.01 of the Indenture.

“Excess Liquidation Proceeds” means, as of any Distribution Date, the positive excess of the cumulative Liquidation Proceeds received on Charged-Off Loans over the sum of the cumulative Recovery Values of all Charged-Off Loans and the aggregate of all Excess Liquidation Proceeds distributed on prior Distribution Dates.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

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“Excluded Amounts” means (i) any amount received by, on or with respect to any Loan in the Collateral, which amount is attributable to the payment of any tax, fee or other charge imposed by any Governmental Authority on such Loan, (ii) any amount representing escrows relating to taxes, insurance and other amounts in connection with any Loan which is held in an escrow account for the benefit of the related Obligor and the secured party pursuant to escrow arrangements, (iii) any amount with respect to any Loan substituted, sold, retransferred or replaced under Sections 2.05, 2.06 or 11.01, to the extent such amount is attributable to a time after the effective date of such substitution, sale, retransfer or replacement, (iv) any fee retained by the Originator in connection with the origination of any Loan, and (v) any amount permitted to be retained by the Servicer as an Excluded Amount hereunder.

“Expected Aggregate Outstanding Loan Balance” means $400,000,000.

“Exposure Amount” as of any date means, with respect to any Revolving Loan or Delayed Draw Term Loan, the excess, if any, of (a) the maximum commitment of the Issuer under the terms of the related loan agreement to make loans or issue, fund, reimburse or cash collateralize letters of credit (and, for the avoidance of doubt, the Issuer’s commitment in respect of a Charged-Off Loan or a Loan as to which the commitment to make additional loans or issue, fund, reimburse or cash collateralize letters of credit thereunder has been terminated shall be zero) over (b) the sum of the outstanding principal balance and the aggregate amount of all issued and outstanding letters of credit with respect to such Revolving Loan or Delayed Draw Term Loan, as the case may be, as of such date.

“Fair Market Value” means for a Loan (including a Charged-Off Loan) the value determined within ten days prior to the sale of such Loan to an Affiliate:

(i)as the average of the bid side prices determined by the Servicer based upon information from three unaffiliated loan market participants (or, if the Servicer is unable to obtain bids from three such participants, then from such lesser number of unaffiliated loan market participants as the Servicer can obtain using efforts consistent with the Servicing Standard);

(ii)if a value cannot be obtained pursuant to the means contemplated by clause (i) after reasonable efforts by the Servicer, through a Valuation; or

(iii)if a value cannot be obtained pursuant to the means contemplated by clauses (i) and (ii) after reasonable efforts by the Servicer, by the Servicer in its judgment exercised in accordance with the Servicing Standard.

“FDIC” shall mean the Federal Deposit Insurance Corporation and any successor thereto.

“Finance Charges” means, with respect to any Loan, any interest or finance charges owing by an Obligor pursuant to or with respect to such Loan.

“First Lien Loan” means a Loan which (i) is not, except as provided in the last sentence of this definition, by its terms (and is not expressly permitted by its terms to become) subordinate in right of payment to any other obligation for borrowed money of the Obligor of such Loan, (ii) is secured by a valid first priority perfected security interest or Lien in, to or on specified Related

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Property subject to customary permitted Liens (whether or not the Issuer and any other lenders are also granted a security interest of a lower priority in additional Related Property), and (iii) is secured by Related Property having a value (determined as set forth below) not less than the Outstanding Loan Balance of such Loan plus the aggregate Outstanding Loan Balance of all other Loans of equal seniority secured by a first Lien or security interest in the same Related Property. The determination as to whether condition (iii) of this definition is satisfied shall be based on the Servicer’s judgment at the time the Loan is included in the Collateral. The right to receive the proceeds of designated Related Property subject to a set of contractual payment priorities affecting debt issued under or governed by the same Underlying Loan Agreement will not prevent a Loan that satisfies the express requirements hereof from being a First Lien Loan.

“Fixed Rate Excess” means, as of any date of determination, an amount equal to a fraction (expressed as a percentage), the numerator of which is equal to the product of (a) the excess, if any, of the Weighted Average Coupon for such date over 12% and (b) the sum of the Outstanding Loan Balances of all Fixed Rate Loans (excluding any Charged-Off Loans, Delinquent Loans and Credit Impaired Loans) in the Collateral as of such date and the denominator of which is equal to the Aggregate Outstanding Loan Balance, in each case solely to the extent that the Fixed Rate Excess is included in the calculation of the Weighted Average Spread as of such date. In determining the Fixed Rate Excess on any date of determination, the Weighted Average Coupon will be calculated as if the Floating Rate Excess were equal to zero, and Loans that are Charged-Off Loans, Delinquent Loans and Credit Impaired Loans will be included in the calculations described herein if, as of such date, such Loans are paying in full current interest pursuant to the terms of their Underlying Note or, if a Noteless Loan, the related Underlying Loan Agreement.

“Fixed Rate Loan” means a Loan, other than a Floating Rate Loan, where the Loan Rate payable by the Obligor thereunder is expressed as a fixed rate of interest.

“Floating LIBOR Rate Loan” means, as of any date of determination, a Loan where the Loan Rate payable by the Obligor thereof in respect of the majority of the Outstanding Loan Balance of such Loan is based on the Underlying LIBOR Rate plus some specified percentage in addition thereto, and the Loan provides that such Loan Rate will reset upon any change in the related Underlying LIBOR Rate.

“Floating Prime Rate Loan” means, as of any date of determination, a Loan where the Loan Rate payable by the Obligor thereof in respect of the majority of the Outstanding Loan Balance of such Loan is based on the Underlying Prime Rate plus some specified percentage in addition thereto, and the Loan provides that such Loan Rate will reset upon any change in the related Underlying Prime Rate.

“Floating Rate Excess” means, as of any date of determination, a fraction (expressed as a percentage), the numerator of which is equal to the product of (a) the excess, if any, of the Weighted Average Spread for such date over the Minimum Weighted Average Spread for such date and (b) the sum of the Outstanding Loan Balances of all Floating Rate Loans (excluding Charged-Off Loans, Delinquent Loans and Credit Impaired Loans) in the Collateral as of such date, and the denominator of which is the Aggregate Outstanding Loan Balance, in each case solely to the extent that the Floating Rate Excess is included in the calculation of the Weighted

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Average Coupon in the Collateral as of such date. In computing the Floating Rate Excess on any date of determination, the Weighted Average Spread for such date will be computed as if the Fixed Rate Excess were equal to zero, and Loans that are Charged-Off Loans, Delinquent Loans and Credit Impaired Loans will be included in the calculations described herein if, as of such date, such Loans are paying in full current interest pursuant to the terms of their respective Underlying Note or, if a Noteless Loan, the related Underlying Loan Agreement.

“Floating Prime Rate Loan” means, as of any date of determination, a Loan where the Loan Rate payable by the Obligor thereof in respect of the majority of the Outstanding Loan Balance of such Loan is based on the Underlying Prime Rate plus some specified percentage in addition thereto, and the Loan provides that such Loan Rate will reset upon any change in the related Underlying Prime Rate.

“Floating Rate Loan” means a Floating LIBOR Rate Loan, a Floating Prime Rate Loan or a Swapped Floating Rate Loan.

“Foreclosed Property” means Related Property acquired by the Issuer for the benefit of the Noteholders in foreclosure or by deed in lieu of foreclosure or by other legal process.

“Funding Entity” means, with respect to any Class A-1A VFN Noteholder, any Liquidity Provider party to a Liquidity Facility entered into by such Holder in connection with the Class A-1A VFN Purchase Agreement or a guarantor of such Liquidity Provider.

“Funding I Transaction” means the Sale and Servicing Agreement, dated as of November 3, 2004 (as amended or supplemented from time to time) by and among Ares Capital, as originator and as servicer, Ares Capital CP Funding LLC, as borrower, each of the conduit purchasers and institutional purchasers party thereto, each of the purchaser agents from time to time party thereto, Wachovia Capital Markets, as administrative agent, and Lyon Financial Services, Inc. (d/b/a U.S. Bank Portfolio Services) as backup servicer and U.S. Bank National Association, as trustee, as amended.

“Governmental Authority” means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any court or arbitrator having jurisdiction over such Person.

“Group I Country” means any of The Netherlands, the United Kingdom, Australia and New Zealand.

“Group II Country” means any of Germany, Ireland, Sweden and Switzerland.

“Group III Country” means any of Austria, Belgium, Denmark, Finland, France, Iceland, Liechtenstein, Luxembourg, Norway and Spain.

“Highest Required Investment Category” means (a) with respect to ratings assigned by Moody’s, “Aa2” and “P-1”, and (b) with respect to rating assigned by S&P, “A-1” for short-term instruments and “A” for long-term instruments.

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“Holder” means (a) with respect to a Certificate, the Person in whose name such Certificate is registered in the Certificate Register, and (b) with respect to a Note, the Person in whose name such Note is registered in the Note Register; provided that, unless repugnant to the context, Holder shall be deemed to include the beneficial owner of such Certificate or Note.

“Indebtedness” means, with respect to any Person at any date, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (other than current liabilities incurred in the ordinary course of business and payable in accordance with customary trade practices) or which is evidenced by a note, bond, debenture or similar instrument, (b) all obligations of such Person under capital leases, (c) all obligations of such Person in respect of acceptances issued or created for the account of such Person, and (d) all liabilities secured by any Lien on any property owned by such Person even though such Person has not assumed or otherwise become liable for the payment thereof.

“Indenture” means the Indenture, dated as of the Closing Date, between the Issuer and the Trustee, as such agreement may be amended, modified, waived, supplemented or restated from time to time.

“Indenture Collateral” shall have the meaning provided in the “granting clause” of the Indenture.

“Independent” means, when used with respect to any specified Person, the Person (a) is in fact independent of the Issuer, any other obligor on the Notes, the Trust Depositor and any Affiliate of any of the foregoing Persons, (b) does not have any direct financial interest or any material indirect financial interest in the Issuer, any such other obligor, the Trust Depositor or any Affiliate of any of the foregoing Persons and (c) is not connected with the Issuer, any such other obligor, the Trust Depositor or any Affiliate of any of the foregoing Persons as an officer, employee, trustee, partner, director or person performing similar functions.

“Independent Accountants” shall have the meaning provided in Section 2.06(g).

“Ineligible Loan” means any Loan that is not an Eligible Loan due to a breach of a representation or warranty as of its date of transfer to the Issuer which materially and adversely affects the value of the Loan or the interest of the Securityholders therein (notwithstanding that such representation or warranty was made to the Originator’s or the Trust Depositor’s best knowledge).

“Initial Aggregate Outstanding Loan Balance” means the Aggregate Outstanding Loan Balance as of the Closing Date of the Initial Loans transferred to the Issuer on the Closing Date.

“Initial Class A-1A Principal Balance” means $75,000,000.

“Initial Class A-1A VFN Principal Balance” means an amount equal to zero.

“Initial Class A-1B Principal Balance” means $14,000,000.

“Initial Class A-2A Principal Balance” means $75,000,000.

“Initial Class A-2B Principal Balance” means $33,000,000.

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“Initial Class B Principal Balance” means $23,000,000.

“Initial Class C Principal Balance” means $44,000,000.

“Initial Class D Principal Balance” means $32,000,000.

“Initial Class E Principal Balance” means $54,000,000.

“Initial Loan Assets” means any assets acquired by the Trust Depositor from the Originator and by the Issuer from the Trust Depositor on the Closing Date pursuant to Section 2.01, which assets shall include the Trust Depositor’s (or Originator’s, as applicable) right, title and interest in the following:

(i)            the Initial Loans, all payments paid in respect thereof and all monies due, to become due or paid in respect thereof accruing on and after the Closing Date and all Liquidation Proceeds and recoveries thereon;

(ii)           all security interests and Liens and Related Property subject thereto from time to time purporting to secure payment by Obligors under such Loans;

(iii)          all guaranties, indemnities and warranties, Asset Specific Swaps, and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Loans;

(iv)          the Transaction Accounts together with all cash and investments in each of the foregoing;

(v)           all collections and records (including Computer Records) with respect to the foregoing;

(vi)          all documents relating to the applicable Loan Files; and

(vii)         all income, payments, proceeds and other benefits of any and all of the foregoing, including but not limited to, all accounts, cash and currency, chattel paper, electronic chattel paper, tangible chattel paper, copyrights, copyright licenses, equipment, fixtures, general intangibles, instruments, commercial tort claims, deposit accounts, inventory, investment property, letter of credit rights, software, supporting obligations, accessions, and other property consisting of, arising out of, or related to the foregoing, but excluding any Excluded Amount with respect thereto.

“Initial Loans” means those Loans conveyed to the Issuer on the Closing Date and identified on the initial List of Loans required to be delivered pursuant to Section 2.02(d).

“Initial Purchaser” means Wachovia Capital Markets, LLC.

“Insolvency Event” means, with respect to a specified Person, (i) the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of such Person or any substantial part of its property in an involuntary case under any applicable Insolvency Law now

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or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or ordering the winding-up or liquidation of such Person’s affairs, and such decree or order shall remain unstayed or undismissed and in effect for a period of 60 consecutive days; or (ii) the commencement by such Person of a voluntary case under any applicable Insolvency Law now or hereafter in effect, or the consent by such Person to the entry of an order for relief in an involuntary case under any such law, or the consent by such Person to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or the making by such Person of any general assignment for the benefit of creditors, or the failure by such Person generally to pay its debts as such debts become due, or the taking of action by such Person in furtherance of any of the foregoing.

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

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

“Insurance Policy” means, with respect to any Loan, an insurance policy covering liability and physical damage to or loss of the applicable Related Property, including, but not limited to, title, hazard, life, accident and/or flood insurance policies.

“Insurance Proceeds” means any amounts payable or any payments made on or with respect to a Loan or the Related Property under any Insurance Policy which are not applied or paid by the Obligor or the Servicer, as applicable, to the restoration or repair of the Related Property or released to the Obligor, another creditor or any other Person in accordance with the Applicable Law, the Required Loan Documents, the Credit and Collection Policy, the Servicing Standard and this Agreement, net of costs of collection.

“Interest Amount” means, with respect to any Distribution Date, the Class A-1A Interest Amount, the Class A-1A VFN Interest Amount, the Class A-1B Interest Amount, the Class A-2A Interest Amount, the Class A-2B Interest Amount, the Class B Interest Amount, the Class C Interest Amount, and the Class D Interest Amount payable on such Distribution Date, as applicable.

“Interest Collection Account” means a sub-account of the Principal and Interest Account established and maintained pursuant to Section 7.03(a).

“Interest Collections” means the aggregate of:

(i)            amounts deposited into the Principal and Interest Account in respect of:

(a)           all payments received on or after the Closing Date on account of interest on the Loans (including Net Trust Swap Receipts, Finance Charges, fees and the deferred interest component of a Permitted PIK Loan) and all late payment, default and waiver charges;

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(b)           the Excess Liquidation Proceeds;

(c)           Insurance Proceeds (other than amounts to be applied to the restoration or repair of the Related Property, or released or to be released to the Obligor or others);

(d)           all proceeds from any other Related Property securing the Loans (other than amounts released or to be released to the Obligor or others);

(e)           the interest portion of any amounts received (1) in connection with the purchase or repurchase of any Loan and the amount of any adjustment for substituted Loans and (2) as Scheduled Payment Advances that the Servicer determines to make; and

(f)            the portion of any Sale Proceeds which constitute Sale Premiums and accrued interest; and

(g)           Swap Breakage Receipts plus

(ii)           investment earnings on funds invested in Permitted Investments in the Transaction Accounts; minus

(iii)          the amount of any losses incurred in connection with investments in Permitted Investments in the Transaction Accounts.

“Interest Distributable Amount” means, as of any Distribution Date, the amount of Interest Collections remaining after distribution of amounts under clauses 1 through 7 under Section 7.05(a).

“Interest Distributable Test” means a test satisfied on any Distribution Date if the Interest Distributable Amount exceeds the sum of the Additional Principal Amount and the Required Reserve Amount for such Distribution Date.

“Interest Period” means, for the first Distribution Date, the period commencing on the Closing Date (or, in the case of the Class A-1A VFN Notes, on the date of any Draw under the Class A-1A VFN Notes) and ending on the day before the first Distribution Date (or, in the case of prepayment of any portion of the Class A-1A VFN Notes before such Distribution Date, ending on the day before the related Interim Distribution Date); and thereafter, the period commencing on a Distribution Date (or, in the case of any incremental Draw under the Class A-1A VFN Notes, from the date of such Draw) and ending on the day before the next Distribution Date (or, in the case of prepayment of any portion of the Class A-1A VFN Notes before such Distribution Date, ending on the day before the related Interim Distribution Date).

“Interest Shortfall” means, with respect to each Class of Offered Notes and Class D Notes and any Distribution Date, as applicable, an amount equal to the excess, if any, of (i) the Interest Amount with respect to such Class of Notes over (ii) the amount of interest actually paid to such Class of Notes, together with the unpaid portion of any such excess from prior Distribution Dates (and interest accrued thereon at the then applicable Note Interest Rate).

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“Interim Distribution Date” means any Business Day occurring prior to the Stated Maturity Date on which a Class A-1A VFN Prepayment is made.

“Interim Test Date” means each Distribution Date occurring during the Ramp-Up Period.

“Interim Tests” means tests that are satisfied if, as of any Interim Test Date, (a) the Issuer has achieved the target level set forth in such Schedule II with respect to (i) the Diversity Score, (ii) the Moody’s Weighted Average Rating, (iii) the Weighted Average Spread and (iv) the Aggregate Outstanding Loan Balance or (b) in the event that any of the tests set forth in clause (a) are not satisfied as of such date, the Servicer, on behalf of the Issuer, has delivered a Compliance Plan to the Trustee and the Rating Agencies.

“Investment” means, with respect to any Person, any direct or indirect loan, advance or investment by such Person in any other Person, whether by means of share purchase, capital contribution, loan or otherwise, excluding the acquisition of Loans pursuant to the Transaction Documents.

“Investment Earnings” means the investment earnings (net of losses and investment expenses) on amounts on deposit in the Principal and Interest Account, the Note Distribution Account and the Reserve Fund, to be credited to the Principal and Interest Account on the applicable Distribution Date pursuant to Section 7.01 and Section 7.03.

“Ireland Paying Agent” means initially, the Paying Agent in Ireland appointed by the Issuer pursuant to Section 3.03 of the Indenture, and any successor Paying Agent appointed by the Issuer pursuant to such Section 3.03 of the Indenture.

“Irish Stock Exchange” means the Irish Stock Exchange and any successor securities exchange thereto on which the Listed Notes may be listed for trading.

“Issuer” means the trust created by the Trust Agreement and funded pursuant to this Agreement, consisting of the Loan Assets.

“Large Middle Market Loan” means any Loan issued as part of a loan facility with an original loan size (including any first and second lien loans included in the facility) greater than $125,000,000 but less than $250,000,000, including for purposes of this definition the maximum available amount of commitments under any Revolving Loans and Delayed Draw Term Loans.

“LIBOR” shall have the meaning provided in Section 7.06.

“LIBOR Determination Date” shall have the meaning provided in Section 7.06.

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever, including, without limitation, any conditional sale or other title retention agreement, and any financing lease having substantially the same economic effect as any of the foregoing (including any UCC financing statement or any similar instrument filed against a Person’s assets or properties).

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“Liquidation Expenses” means, with respect to any Loan, the aggregate amount of all out-of-pocket expenses reasonably incurred by the Servicer (including amounts paid to any Subservicer) and any reasonably allocated costs of counsel (if any), in each case in accordance with the Servicer’s customary procedures in connection with the repossession, refurbishing and disposition of any Related Property securing such Loan upon or after the expiration or earlier termination of such Loan and other out-of-pocket costs related to the liquidation of any such Related Property, including the attempted collection of any amount owing pursuant to such Loan if it is a Charged-Off Loan and, if requested by the Trustee, the Servicer must provide to the Trustee a breakdown of the Liquidation Expenses for any Loan along with any supporting documentation therefor.

“Liquidation Proceeds” means, with respect to any Charged-Off Loan, whatever is receivable or received when such Loan or the Related Property is sold, liquidated, foreclosed, exchanged, or otherwise disposed of, whether such disposition is voluntary or involuntary, and includes all amounts representing late fees and penalties relating thereto net of, without duplication, (i) Liquidation Expenses relating to such Loan or Related Property reimbursed to the Servicer therefrom pursuant to the terms of this Agreement and (ii) amounts required to be released to other creditors, including any other costs, expenses and taxes, or the related Obligor or grantor pursuant to applicable law or the governing Required Loan Documents.

“Liquidation Report” shall have the meaning provided in Section 5.03(c).

“Liquidity Facility” means a liquidity loan agreement, credit facility and/or purchase agreement providing for the several commitments of the Liquidity Providers party thereto in the aggregate to make loans to, or acquire interests in the assets of, a Class A-1A VFN Noteholder in an aggregate principal amount at any one time outstanding at least equal to the Class A-1A VFN Commitments of such Holder.

“Liquidity Provider” means one or more banks or other institutions or entities from which a Class A-1A VFN Noteholder is entitled to borrow from or to which a Class A-1A VFN Noteholder is entitled to sell an interest in assets under a Liquidity Facility and any guarantor of any such Liquidity Facility.

“List of Loans” means the list identifying each Loan constituting part of the Loan Assets, which list shall consist of the initial List of Loans reflecting the Initial Loans transferred to the Issuer on the Closing Date, together with any Subsequent List of Loans amending the most current List of Loans reflecting the Additional Loans or Substitute Loans transferred to the Issuer on the related Cut-Off Date (together with, if applicable, a deletion from such list of the related Loan or Loans identified on the corresponding Loan Asset Certificate), and which list in each case (a) identifies by account number and primary Obligor name of each such Loan included in the Collateral and (b) sets forth as to each such Loan (i) the Outstanding Loan Balance as of the Closing Date in the case of the Initial Loans and the related Cut-Off Date in the case of Additional Loans or Substitute Loans, and (ii) the maturity date, and which list (as in effect on the Closing Date) is attached to this Agreement as Exhibit G.

“Listed Notes” means the Class A-1A Notes, the Class A-1B Notes, the Class A-2A Notes, the Class A-2B Notes, Class B Notes, Class C Notes and the Class D Notes.

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“Loan” means, an individual loan to an Obligor, or portion thereof including, as applicable, Traditional Middle Market Loans, Large Middle Market Loans and Broadly Syndicated Loans that satisfy certain representations and warranties described herein and that arise under certain single lender or multi-lender commercial loan or credit agreements or other debt agreements or instruments customary for the applicable type of Loan originated or acquired by Ares Capital or one of its Affiliates, and include Term Loans, Delayed Draw Term Loans and Revolving Loans, First Lien Loans, Second Lien Loans and Subordinated Loans and, for a period of 60 calendar days after the Closing Date (other than in the case of Qualified Participated Loans which the Originator expects will become part of the Collateral during the Ramp-Up Period as Additional Loans and will remain Participated Loans for so long as such Loans are included in the Collateral, which would represent not more than 5% of the Aggregate Outstanding Loan Balance), Participations therein, which are expected to be converted into full assignments within 60 days following the Closing Date.

“Loan Asset Certificate” means, with respect to any repurchase of Ineligible Loans or any transfer of Substitute Loans or Additional Loans to the Issuer in accordance with Section 11.01 or Section 2.06, as applicable (and the Trust Depositor’s corresponding prior purchase of such Loans from the Originator), a notice in the form of Exhibit F, signed both by the Trust Depositor and the Originator, (i) identifying the Loans to be repurchased or the Substitute Loans or Additional Loans to be transferred, and the date of repurchase or Cut-Off Date with respect to such Loan Assets to be repurchased, Substitute Loans or Additional Loans, and (x) in the case of a Loan Asset Certificate relating to Additional Loans, the Outstanding Loan Balance of such Loans, or (y) in the case of a Loan Asset Certificate relating to Loan Assets to be repurchased or Substitute Loans, the reasons for the repurchase or substitution and the Transfer Deposit Amount in respect of such Loan Assets, and (ii) certifying that after giving effect to the acquisition or substitution of such Loans by the Issuer, the Portfolio Acquisition and Disposition Requirements and, solely with respect to any such acquisition or substitution effected after the Effective Date, the Portfolio Criteria, are satisfied.

“Loan Assets” means, collectively and as applicable, the Initial Loan Assets, the Substitute Loan Assets and the Additional Loan Assets, as applicable.

“Loan Checklist” means the list delivered by the Trust Depositor (or Servicer on its behalf) to the Trustee pursuant to Section 2.08 that identifies the type of loan being delivered and the items contained in the related Loan File.

“Loan File” means, with respect to any Loan and Related Property, each of the Required Loan Documents and, duly executed originals (to the extent required by the Credit and Collection Policy) and copies of any other Records relating to such Loan and Related Property (as identified in the Loan Checklist delivered to the Trustee).

“Loan Rate” means, (i) with respect to any Loan in a Due Period (other than a Swapped Floating Rate Loan), the current cash pay interest rate for such Loan in such period, as specified in the Underlying Notes or related Required Loan Documents and (ii) with respect to any Swapped Floating Rate Loan in a Due Period, the sum of (a) the excess of (1) the current cash pay interest rate for such Swapped Floating Rate Loan in such period as specified in the Underlying Notes or Required Loan Documents for such Loan over (2) the fixed rate of interest payable to the Swap

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Counterparty for such Swapped Floating Rate Loan in such period as specified in the related Asset Specific Swap and (b) the floating rate of interest payable by the Swap Counterparty for such Swapped Floating Rate Loan in such period as specified in the related Asset Specific Swap.

“Loan Rate Index” means (a) in the case of a Floating Prime Rate Loan, the Underlying Prime Rate (b) in the case of a Floating LIBOR Rate Loan, the Underlying LIBOR Rate and (c) in the case of a Fixed Rate Loan, a fixed rate of interest.

“Loan Register” means, with respect to each Noteless Loan, the register in which the obligor (acting as an agent of the holder of such Noteless Loan) or the agent or collateral agent on such Loan will record, among other things, (i) the amount of such Loan, (ii) the amount of any principal or interest due and payable or to become due and payable from the Obligor thereunder, (iii) the amount of any sum in respect of such Loan received from the Obligor and each lender’s share thereof, (iv) the date of origination of such Loan and (v) the maturity date of such Loan.

“Loan Sale Agreement” means the Commercial Loan Sale Agreement, dated as of the date hereof, between the Originator and the Trust Depositor, as such agreement may be amended, modified, waived, supplemented or restated from time to time.

“Loan-to-Value” means, with respect to any Loan, as of any date of determination, the percentage equivalent of a fraction (a) the numerator of which is equal to the sum of (i) the maximum availability (as provided in the applicable loan documentation) of such Loan as of the date of its origination plus (ii) the maximum availability under all other indebtedness of the related Obligor which ranks either senior to, or pari passu with, such Loan and (b) the denominator of which is equal to the Enterprise Value of the Obligor with respect to such Loan.

“London Banking Day” means any day on which dealings in deposits in U.S. Dollars are transacted in the London interbank market.

“Majority Noteholders” means, as of any date of determination (i) prior to the payment in full of the Offered Notes and the Class D Notes, the Noteholders evidencing more than 50% of the aggregate Outstanding Principal Balance of all Offered Notes and Class D Notes (voting as a single Class); provided that for purposes of the calculation described herein, the Class A-1A VFN Notes will be treated as Outstanding to the extent of the aggregate Class A-1A VFN Commitments in effect as of such date and (ii) from and after the payment in full of the Offered Notes and the Class D Notes, the Class E Noteholders evidencing more than 50% of the aggregate Outstanding Principal Balance of the Class E Notes.

“Mandatory Repurchase” shall have the meaning provided in Section 11.01.

“Mandatory Substitution” shall have the meaning provided in Section 11.01.

“Margin Stock” means “Margin Stock” as defined under Regulation U issued by the Board of Governors of the Federal Reserve System.

“Market Value” means, for any Charged-Off Loan, Delinquent Loan or, for the purposes of determining whether such Loan is a Current Pay Loan or satisfies the Credit Impaired Criteria,

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any Loan, the value of such Loan, as of the last day of the immediately preceding Due Period, determined as follows:

(a)with respect to any Broadly Syndicated Loan or any Loan which is publicly rated by Moody’s or S&P:

(i)the value determined as the average of the bid side prices determined by the Servicer based upon information from three unaffiliated loan market participants (or, if the Servicer is unable to obtain bids from three such participants, then the lower of such bids from two unaffiliated loan market participants);

(ii)if a value cannot be obtained pursuant to the means contemplated by clause (a)(i) after reasonable efforts by the Servicer, the value determined through a valuation of the fair market value of such Loan established by reference to a third-party pricing service such a LoanX or LPC or other service selected by the Servicer in accordance with the Servicing Standard (provided that, if the fair market value is available from more than one pricing service, the highest such value so obtained shall be used) performed within 20 days following the applicable date of determination; or

(iii)if a value cannot be obtained pursuant to the means contemplated by clauses (a)(i) and (a)(ii) after reasonable efforts by the Servicer, the Market Value of such Loan for a period of 30 days after such date of determination shall be the market value determined by the Servicer in its judgment exercised in accordance with the Servicing Standard, and the Market Value of such Loan after such 30-day period shall be deemed to be zero; provided that the Servicer shall deliver an Officer’s Certificate to the Trustee and the Rating Agencies certifying that the Market Value of such Loan determined pursuant to this clause (a)(iii) is equal to a price at which the Servicer reasonably believes such Loan can be sold for within such 30-day period;

(b)with respect to any other Loan, the value determined by the Servicer in its judgment exercised in accordance with the Servicing Standard.

“Material Adverse Effect” means, with respect to any event or circumstance, a material adverse effect on (i) the business, financial condition, operations, performance or properties of the Originator, the Trust Depositor, the Issuer or the Servicer, (ii) the validity, enforceability or collectibility of this Agreement or any other Transaction Document, or the validity, enforceability or collectibility of the Loans generally or any material portion of the Loans, (iii) the rights and remedies of the Trustee on behalf of the Noteholders, (iv) the ability of the Originator, the Trust Depositor, the Issuer, the Servicer, the Backup Servicer or the Trustee to perform in all material respects their respective obligations under this Agreement or any Transaction Document, or (v) the status, existence, perfection, priority or enforceability of the Trustee’s security interest in the Collateral on behalf of the Noteholders.

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“Material Modification” means:

(i)            a termination or release (including pursuant to prepayment), or an amendment, modification or waiver, or equivalent similar undertaking or agreement, by the Servicer with respect to a Loan and the related Underlying Note (or in case of a Noteless Loan, the related Underlying Loan Agreement) which would not otherwise be permitted under the standards and criteria set forth in Section 5.02(e)(i); or

(ii)           a termination or release (including pursuant to prepayment), or an amendment, modification or waiver, or equivalent similar undertaking or agreement, by the Servicer with respect to a Loan and the related Underlying Note (or in case of a Noteless Loan, the related Underlying Loan Agreement) which is entered into for reasons related to the inability of the applicable Obligor to make payments of principal or interest under such Loan, as determined in accordance with the Credit and Collection Policy and the Servicing Standard.

“Maximum Class A-1A VFN Commitment” means an amount equal to $50,000,000.

“Maximum Weighted Average Life” means, as of the Closing Date, 9.0 years, declining by 0.50 years for the first Due Period and declining by 0.25 years for each Due Period elapsed thereafter.

“Measurement Date” means (i) the Effective Date and (ii) after the Effective Date, each Cut-Off Date with respect to an Additional Loan or a Substitute Loan and each Determination Date.

“Minimum Weighted Average Spread” means, as of any date of determination, the then current Reference Spread set forth in the Collateral Quality Table.

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

“Moody’s Industry Classification Group” means any of the Moody’s industry classification groups, any additional classification groups established by Moody’s with respect to the Initial Loans, and any classification groups that may be subsequently established by Moody’s with respect to any Additional Loan acquired after the Closing Date or a Substitute Loan and provided, in each case, by the Servicer or Moody’s to the Trustee.

“Moody’s Rating” means, with respect to any Loan, the rating assigned to such Loan by Moody’s; provided that, other than in the case of a DIP Loan, prior to the time that such Loan has been assigned a rating by Moody’s, the Moody’s Rating shall be deemed to be, with respect to such Loan:

(i)            the Moody’s Rating determined as follows (all references to “rating” in clauses (a) through (d) below are to ratings by Moody’s):

(a)           if the Obligor of such Loan has a corporate family rating from Moody’s, then the Moody’s Rating of such Loan shall be such rating;

(b)           if the Obligor of such Loan does not have a senior unsecured obligation publicly rated by Moody’s but the Loan itself is rated by Moody’s then the Moody’s Rating of such Loan shall be such rating;

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(c)           if the Obligor of such Loan has a senior unsecured obligation publicly rated by Moody’s, then the Moody’s Rating of such Loan shall be one subcategory above such rating;

(d)           if neither such Loan nor any senior unsecured obligation of the Obligor has been publicly rated by Moody’s, but another obligation of the Obligor has been so rated, then the Moody’s Rating Loan shall be determined as though such Loan were a senior unsecured Loan, as follows:

(1)           if there is a rating by Moody’s on a senior secured obligation of the Obligor, then the Moody’s Rating of such Loan shall equal such rating if such Loan is also a senior secured obligation of the Obligor, shall be one subcategory below such rating if such Loan is a senior unsecured obligation of the Obligor, and shall be three subcategories below such rating if such rating is “Ba3” or higher or two subcategories below such rating if such rating is “B1” or lower, in each case if such Loan is a subordinated obligation of the Obligor,

(2)           if there is a rating by Moody’s on a senior unsecured obligation of the Obligor, then the Moody’s Rating of such Loan shall equal such rating if such Loan is also a senior unsecured obligation of the Obligor, shall equal such rating if such rating is “Baa3” or higher or shall equal one subcategory above such rating if such rating is “Ba1” or lower, in each case if such Loan is a senior secured obligation of the Obligor, and shall be two subcategories below such rating if such rating is “B1” or higher or one subcategory below such rating if such rating is “B2” or lower, in each case if such Loan is a subordinated obligation of the Obligor: or

(3)           if there is a rating by Moody’s on a subordinated obligation of the Obligor, then the Moody’s Rating of such Loan

(A)          shall equal such rating if such Loan is also a subordinated obligation of the Obligor or if such rating is equal to “Caa1”, “Caa2”, “Caa3”, “Ca” or “C”,

(B)           shall be one subcategory above such rating if such rating is “Baa3” or higher and such Loan is a senior (either secured or unsecured) obligation of the Obligor,

(C)           shall be two subcategories above such rating if such rating is below “Baa3” and such Loan is a senior secured obligation of the Obligor (except that if such rating is “B3”, the Moody’s Rating of such Loan shall be “B2”), and

(D) shall be one subcategory above such rating if such rating is below “Baa3” and such Loan is a senior unsecured obligation of the Obligor;

provided that if the operation of clauses (1) through (3) above shall result in two or more inconsistent Moody’s Ratings, then the Moody’s Rating of the related Loan shall be the lowest of such Moody’s Ratings.

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(ii)           If a Moody’s Rating cannot be determined pursuant to clause (i) above, then at the election of the Servicer, the Moody’s Rating of such Loan may be determined using any one of the methods provided below:

(a)           if there are public ratings on the obligations of the underlying borrower by S&P then the Moody’s Rating of such Loan will be the public rating according to clause (i) above using such S&P ratings; provided that bank loan ratings by S&P may not be used; provided further that such resulting rating will be reduced by (x) one rating subcategory if it is “BBB-” or higher and (y) two rating subcategories if it is “BB+” or lower; provided further that no more than 10% of the Aggregate Outstanding Loan Balance may be Loans given a Moody’s Rating based on a rating given by S&P as provided in this subclause (ii)(a).

(b)           with respect to a senior secured Loan issued by a U.S. Obligor, if

(1)           neither the Obligor nor any of its affiliates is subject to reorganization or bankruptcy proceedings,

(2)           no debt securities or obligations of the Obligor are in default,

(3)           neither the Obligor nor any of its affiliates has defaulted on any debt during the past two years,

(4)           the Obligor has been in existence for the past five years,

(5)           the Obligor is current on any cumulative dividends,

(6)           the fixed-charge ratio for the Obligor exceeds 125% for each of the past two fiscal years and for the most recent quarter,

(7)           the Obligor had a net profit before tax in the past fiscal year and the most recent quarter; and

(8)           the annual financial statements of the Obligor are unqualified and certified by a firm of independent accountants of international reputation, and quarterly statements are unaudited but signed by a corporate officer, the Moody’s Rating of such Loan will be “B3”;

(c)           with respect to a senior secured Loan issued by a U.S. Obligor, if

(1)           neither the Obligor nor any of its affiliates is subject to reorganization or bankruptcy proceedings and

(2)           no debt security or obligation of the Obligor has been in default during the past two years, the Moody’s Rating of such Loan will be “Caa2”;

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provided further that if a Moody’s Rating is obtained pursuant to this subclause (ii)(c) the Obligor must confirm such Rating with Moody’s within 30 days pursuant to clause (iii) below: and

(d)           if a debt security or obligation of the Obligor has been in default during the past two years, the Moody’s Rating of such Loan will be “Ca”.

(iii)          If such Loan is not rated by Moody’s or S&P, and no other security or obligation of the Obligor is rated by Moody’s or S&P, or if the rating of such Loan is not addressed in any of clauses (i) or (ii) above, then the Issuer or the Servicer on behalf of the Issuer, may present such Loan to Moody’s for an estimate of such Loan’s Moody’s Rating Factor, from which its corresponding Moody’s Rating shall be determined; provided that pending the receipt from Moody’s of such estimate, the Moody’s Rating of such Loan shall be the rating as may be estimated in good faith by the Servicer; provided further that such estimated rating shall not be higher than “B3” for the first 60 Business Days following the applicable Cut-Off Date and not higher than “Caa2” thereafter.

(iv)          In all cases, if a Loan is (x) on watch for upgrade it shall be treated as upgraded by one rating subcategory or (y) on watch for downgrade it shall be treated as downgraded by one rating subcategory unless in each case, Moody’s has advised the Servicer in writing that such treatment is no longer required.

(v)           The Moody’s Rating may in the Servicer’s discretion be determined in accordance with Annex B as of the Cut-Off Date for such Loan subject to the satisfaction of the qualifications set forth therein (a) at all times prior to the end of the Replenishment Period with respect to Loans representing not more than 30% of the Expected Aggregate Outstanding Loan Balance (as such percentage may be adjusted in the discretion of Moody’s) and (b) following the Replenishment Period with respect to Loans representing the greater of (1) 30% of the Expected Aggregate Outstanding Loan Balance as of the applicable date of determination (as such percentage may be adjusted in the discretion of Moody’s) and (2) the Outstanding Loan Balance of Loans included in the Collateral as of such date which have a Moody’s Rating previously determined under this clause (v). The Servicer shall re-determine and report to Moody’s the Moody’s Rating for each Loan with a Moody’s Rating determined under this clause (v) within 30 days after receipt of annual financial statements from the related Obligor.

“Moody’s Rating Condition” means, with respect to any action or series of related actions or proposed transaction or series of proposed transactions, that Moody’s shall have notified the Trust Depositor, the Servicer, the Owner Trustee and the Trustee in writing that such action or series of related actions or the consummation of such proposed transaction or series of related transactions will not result in a reduction or withdrawal of the then-current rating by Moody’s with respect to any outstanding Class of Notes as a result of such action or series of related actions or the consummation of such proposed transaction or series of related transactions.

“Moody’s Rating Factor” means, for any Loan with a Moody’s Rating, the number set forth below under the heading “Moody’s Rating Factor” across from the Moody’s Rating of such Loan or, in the case of a rating assigned by Moody’s at the request of the Issuer (or the Servicer on behalf of the Issuer), the Moody’s Rating Factor as assigned by Moody’s.

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Moody’s Rating of Loan	Moody’s Rating Factor
Aaa(1)	1
Aa1	10
Aa2	20
Aa3	40
A1	70
A2	120
A3	180
Baa1	260
Baa2	360
Baa3	610
Ba1	940
Ba2	1,350
Ba3	1,766
B1	2,220
B2	2,720
B3	3,490
Caa1	4,770
Caa2	6,500
Caa3	8,070
Ca	10,000
C	10,000

(1)           Includes any security issued or guaranteed as to the payment of principal and interest by the United States government or any agency or instrumentality thereof.

“Moody’s Recovery Rate” means, with respect to any Loan, the recovery rate specified by Moody’s for such Loan; provided that (i) the Moody’s Recovery Rate for any Loan for which the Moody’s Rating has been determined pursuant to clause (e) of the definition of “Moody’s Rating”, shall be determined in accordance with Annex B, and (ii) prior to the time that such recovery rate has been specified by Moody’s or so determined, the Moody’s Recovery Rate with respect to such loan shall be deemed to be the percentage specified in the table below:

Moody’s Category	Recovery Rate
Type 1: U.S. or Canadian Obligor
senior secured Loan with first priority perfected Lien	50%
Type 2: U.S. or Canadian Obligor
senior secured “second lien” or “last-out” Loan	40%
Type 3: U.S. or Canadian Obligor
senior unsecured Loan	30%
Type 4: Non-U.S., Non-Canadian Obligor
any Loan	0%

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“Moody’s Weighted Average Rating” means, as of any date of determination, the number obtained by dividing (a) the sum of the products obtained by multiplying the Outstanding Loan Balance of each Loan by its Moody’s Rating Factor as of such date by (b) the Aggregate Outstanding Loan Balance as of such date.

“Moody’s Weighted Average Rating Factor Test” means a test that will be satisfied, as of any date of determination, if the Weighted Average Rating is less than or equal to the sum of (a) the number in the appropriate column in the Collateral Quality Table opposite the then-current Reference Spread plus (b) the Recovery Rate Modifier, in each case as of such date of determination.

“Moody’s Weighted Average Recovery Rate” means, as of any Measurement Date, the percentage (rounded up to the first decimal place) obtained by dividing (a) the sum of the products obtained by multiplying the Outstanding Loan Balance of each Loan by its Moody’s Recovery Rate, by (b) the Aggregate Outstanding Loan Balance.

“Net Trust Swap Payments” means net trust swap amounts payable by the Issuer to the Swap Counterparties with respect to Asset Specific Swaps.

“Net Trust Swap Receipts” means net trust swap amounts payable by the Swap Counterparties to the Issuer with respect to Asset Specific Swaps.

“New York Business Day” means any Business Day in the city of New York, New York.

“Nonrecoverable Advance” means any Scheduled Payment Advance or Servicing Advance, as applicable, previously made in respect of a Loan or any Related Property that, as determined by the Servicer in its reasonable, good faith judgment, will not be ultimately recoverable from subsequent payments or collections with respect to the applicable Loan including, without limitation, payments or reimbursements from the related Obligor, Insurance Proceeds or Liquidation Proceeds on or in respect of such Loan or Related Property; provided that for purposes of the Servicer’s ability to reimburse itself for Nonrecoverable Advances pursuant to Section 5.09 and clause (2) of Section 7.05(a), Scheduled Payment Advances of interest made in respect of Delinquent Loans shall be deemed not to be Nonrecoverable Advances.

“Note” means any one of the notes of the Issuer of any Class executed and authenticated in accordance with the Indenture.

“Note Break-Even Loss Rate” means, with respect to any Class of Notes rated by S&P, at any time, the maximum percentage of defaults (as determined by S&P through application of the S&P CDO Monitor) that the Current Portfolio or the Proposed Portfolio, as applicable, can sustain such that, after giving effect to S&P assumptions on recoveries and timing and to the Priority of Payments with respect to the Notes, will result in sufficient funds remaining for the

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ultimate payment of principal of and interest on such Class of Notes in full by its stated maturity date and the timely payment of interest on such Class of Notes.

“Note Distribution Account” means the non-interest bearing trust account so designated and established and maintained pursuant to Section 7.01.

“Note Interest Rate” means, as the context requires, any of the Class A-1A Note Interest Rate, the Class A-1A VFN Note Interest Rate, the Class A-1B Note Interest Rate, the Class A-2A Note Interest Rate, the Class A-2B Note Interest Rate, the Class B Note Interest Rate, the Class C Note Interest Rate, and the Class D Note Interest Rate.

“Noteholder” means each Person in whose name a Note is registered in the Note Register.

“Noteless Loan” means a Loan with respect to which (i) the related Underlying Loan Agreement does not require the Obligor to execute and deliver an Underlying Note to evidence the indebtedness created under such Loan and (ii) no Underlying Notes are outstanding with respect to the portion of the Loan transferred to the Issuer.

“Note Register” shall have the meaning provided in Section 1.01 of the Indenture.

“Notes Loss Differential” means, with respect to any Class of Notes rated by S&P, at any time, the rate calculated by subtracting the Class Scenario Loss Rate at such time from the Note Break-Even Loss Rate for such Class of Notes at such time.

“Obligor” means, with respect to any Loan, any Person or Persons obligated to make payments pursuant to or with respect to such Loan, including any guarantor thereof, but excluding, in each case, any such Person that is an obligor or guarantor that is in addition to the primary obligors or guarantors with respect to the assets, cash flows or credit of which the related Loan is principally underwritten.

“OCC” means the Office of the Comptroller of the Currency.

“Offered Notes” means the Class A Notes, the Class B Notes and the Class C Notes.

“Offering Memorandum” means the Offering Memorandum, dated July 7, 2006 prepared in connection with the offer and sale of the Offered Notes.

“Officer’s Certificate” means a certificate delivered to the Trustee or the Owner Trustee, as the case may be, signed by a Responsible Officer of the Trust Depositor, the Servicer or the Originator on behalf of such Person, or by a Responsible Officer of the Owner Trustee (or another Person) on behalf of the Issuer, as required by this Agreement or any other Transaction Document.

“Opinion of Counsel” means a written opinion of counsel, who may be outside counsel, or internal counsel (except with respect to federal securities law, tax law, bankruptcy law or UCC matters), for the Trust Depositor or the Servicer, including Latham & Watkins, LLP or other counsel reasonably acceptable to the Owner Trustee or the Trustee, as the case may be.

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“Optional Repurchase” means a repurchase of the Notes pursuant to Section 10.01.

“Originator” shall have the meaning provided in the Preamble.

“Outstanding” shall have the meaning provided in the Indenture.

“Outstanding Loan Balance” of a Loan means the excess of (a) the sum, without duplication, of (i) the outstanding principal amount of such Loan or portion thereof transferred to the Issuer as of the Closing Date or the Cut-Off Date, as applicable, or, if the Loan is acquired by the Issuer for a purchase price which is less than 90% of the outstanding principal amount of such Loan or portion thereof transferred to the Issuer as of the Closing Date or the Cut-Off Date, as applicable, then the purchase price paid by the Issuer therefor plus (ii) the principal amount advanced by the Issuer with respect to any Revolving Loan or Delayed Draw Term Loan on or after the Closing Date, as applicable, over (b) all Principal Collections received on such Loan, or portion thereof, transferred to the Issuer since the Closing Date or the related Cut-Off Date, as applicable; provided that for all purposes other than (x) determining the Transfer Deposit Amount with respect to a Loan and (y) the determination of the Cumulative Charged-Off Amount and (ii) any Loan or portion of any Loan charged–off pursuant to clause (iv) of the definition of Charged–Off Loan will be deemed to have an Outstanding Loan Balance equal to zero; and provided further that, for any Permitted PIK Loan, the Outstanding Loan Balance of such Permitted PIK Loan shall not include any Accreted Interest with respect thereto.

“Outstanding Principal Balance” means, as of any date of determination and with respect to any Note or Class of Notes, as the context requires, other than any Class A-1A VFN Notes, the original principal amount of such Notes on the Closing Date, as reduced by all amounts paid by the Issuer with respect to such principal amount up to such date, and with respect to any Class A-1A VFN Note or the Class A-1A VFN Notes in the aggregate, as the context requires, the outstanding principal amount thereof as of such date of determination (after giving effect to all distributions made on such date) unless otherwise expressly required in the context used.

“Owner Trustee” means the Person acting, not in its individual capacity, but solely as Owner Trustee, under the Trust Agreement, its successors in interest and any successor owner trustee under the Trust Agreement.

“Participated Loans” means the Loans in which the Issuer holds a Participation interest as of the Closing Date or the related Cut-Off Date (if after the Closing Date), as the case may be.

“Participated Portion” shall have the meaning provided in Section 13.22.

“Participation” means an undivided 100% participation interest or subparticipation (including any participation in a subparticipation) granted by the Trust Depositor in and to the Participated Loans and all Related Property therefor.

“Paying Agent” shall have the meaning provided in Section 3.03 of the Indenture and Section 3.09 of the Trust Agreement.

“Percentage Interest” means, for the Holder of a Class of Notes, the fraction, expressed as a percentage, the numerator of which is the then current outstanding principal amount represented

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by such Note and the denominator of which is the then current Outstanding Principal Balance of all Notes of the applicable Class.

“Permitted Investments” means negotiable instruments or securities or other investments (a) which, except in the case of demand or time deposits, investments in money market funds and Eligible Repurchase Obligations, are represented by instruments in bearer or registered form or ownership of which is represented by book entries by a Clearing Agency or by a Federal Reserve Bank in favor of depository institutions eligible to have an account with such Federal Reserve Bank who hold such investments on behalf of their customers, (b) that, as of any date of determination, mature by their terms on or prior to the Distribution Date immediately following such date of determination, and (c) that evidence:

(i)            direct obligations of, and obligations fully guaranteed as to full and timely payment by, the United States (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States);

(ii)           demand deposits, time deposits or certificates of deposit of depository institutions or trust companies incorporated under the laws of the United States or any state thereof and subject to supervision and examination by federal or state banking or depository institution authorities; provided that at the time of the Issuer’s investment or contractual commitment to invest therein, the commercial paper, if any, and short-term unsecured debt obligations (other than such obligation whose rating is based on the credit of a Person other than such institution or trust company) of such depository institution or trust company shall have a credit rating from each Rating Agency in the Highest Required Investment Category granted by such Rating Agency;

(iii)          commercial paper, or other short term obligations, having, at the time of the Issuer’s investment or contractual commitment to invest therein, a rating in the Highest Required Investment Category granted by each Rating Agency;

(iv)          demand deposits, time deposits or certificates of deposit that are fully insured by the FDIC and either have a rating on their certificates of deposit or short-term deposits from Moody’s and S&P of “P-1” and “A-1+”, respectively;

(v)           notes that are payable on demand or bankers’ acceptances issued by any depository institution or trust company referred to in clause (ii) above;

(vi)          investments in taxable money market funds or other regulated investment companies having, at the time of the Issuer’s investment or contractual commitment to invest therein, a rating of “Aaa” and “MR1+” from Moody’s and a rating of “AAAm” from S&P or otherwise subject to satisfaction of the Rating Agency Condition;

(vii)         time deposits (having maturities of not more than 90 days) by an entity the commercial paper of which has, at the time of the Issuer’s investment or contractual commitment to invest therein, a rating of the Highest Required Investment Category granted by each Rating Agency;

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(viii)        Eligible Repurchase Obligations with a rating acceptable to the Rating Agencies, which in the case of S&P shall be at least “A-1”; or

(ix)           any negotiable instruments or securities or other investments subject to satisfaction of the Rating Agency Condition.

Permitted Investments shall not include any instrument, security or investment (w) which, if purchased at a price (excluding accrued interest) in excess of 100% of par, is subject to substantial non-credit risk as determined by the Servicer in its reasonable business judgment, (x) the S&P rating of which includes a “p”, “pi”, “q”, “r” or “t” subscript, (y) subject to a tender offer or other offer to exchange such instruments, security or investment for cash or another instrument, security or investment or (z) which, is an interest only security, a mortgage backed security or a security the payments on which from the obligor to the Issuer would be subject to withholding tax in any jurisdiction. Investments in Permitted Investments rated “A-1” by S&P may not exceed 20% of the Outstanding Principal Balance. The Trustee may, pursuant to the direction of the Servicer, purchase or sell to itself or an Affiliate, as principal or agent, the Permitted Investments described above.

“Permitted Liens” means

(i)            with respect to the interest of the Originator, the Trust Depositor and the Issuer in the Loans: (a) Liens in favor of the Trust Depositor created pursuant to the Loan Sale Agreement and transferred to the Issuer pursuant hereto, (b) Liens in favor of the Issuer created pursuant to this Agreement, (c) Liens in favor of the Trustee created pursuant to the Indenture and/or this Agreement, and (d) Liens, if any, which have priority over first priority perfected security interests in the Loans or any portion thereof under the UCC or any other Applicable Law; and

(ii)           with respect to the interest of the Originator, the Trust Depositor and the Issuer in the other Collateral (including any Related Property): (a) materialmen’s, warehousemen’s, mechanics’ and other Liens arising by operation of law in the ordinary course of business for sums not due or sums that are being contested in good faith, (b) purchase money security interests in certain items of equipment, (c) Liens for state, municipal and other local taxes if such taxes shall not at the time be due and payable or the validity or amount thereof is currently being contested by an appropriate Person in good faith by appropriate proceedings, (d) other customary Liens permitted with respect thereto consistent with the Servicing Standard, (e) Liens in favor of the Trust Depositor created by the Originator and transferred by the Trust Depositor to the Issuer pursuant to this Agreement, (f) Liens in favor of the Issuer created pursuant to this Agreement, (g) Liens in favor of the Trustee created pursuant to the Indenture and/or this Agreement, (h) Liens which have priority over first priority perfected security interests in the other Collateral, the Indenture Collateral or any portion thereof under the UCC or any other Applicable Law, (i) with respect to Agented Loans, Liens in favor of the lead agent, the collateral agent or the paying agent on behalf of all holders of indebtedness of such Obligor under the related facility and (j) with respect to any Subordinated Loans, Liens in favor of senior lenders with respect to the related Obligor, its property and assets.

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“Permitted PIK Loan” means a Loan that requires the Obligor to pay only a portion of the accrued and unpaid interest in cash on a current basis, the remainder of which is deferred and paid later together with interest thereon as a lump sum and is treated as Interest Collections at the time it is received, and carries a current cash pay interest rate of not less than 2.5% per annum.

“Permitted Prepayment Date” means an Interim Distribution Date that does not fall on (a) a Distribution Date or (b) the 20th calendar day of any calendar month in which no Distribution Date occurs.

“Person” means any individual, corporation, estate, partnership, business or statutory trust, limited liability company, sole proprietorship, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization or government or any agency or political subdivision thereof or other entity.

“Portfolio Acquisition and Disposition Requirements” means, with respect to any acquisition (whether by purchase or substitution) or disposition of a Loan, each of the following conditions: (a) such Loan, if being acquired by the Issuer, is an Eligible Loan; (b) such Loan is being acquired or disposed of in accordance with the terms and conditions set forth in this Agreement; (c) the acquisition or disposition of such Loan does not result in a reduction or withdrawal of the then-current rating issued by any Rating Agency on any Class of Notes then outstanding; and (d) such Loan is not being acquired or disposed of for the primary purpose of recognizing gains or decreasing losses resulting from market value changes.

“Portfolio Criteria” means the following tests and conditions:

(a)           the S&P CDO Monitor Test is satisfied;

(b)           the Moody’s Weighted Average Rating Factor Test is satisfied;

(c)           the Weighted Average Spread Test is satisfied;

(d)           the Diversity Test is satisfied;

(e)           the Weighted Average Life Test is satisfied;

(f)            the Weighted Average Coupon equals or exceeds 12.0%;

(g)           the Moody’s Weighted Average Recovery Rate equals or exceeds 38.5%;

(h)           the S&P Weighted Average Recovery Rate equals or exceeds 43.4%;

(i)            the Class A-1A VFN Funding Test is satisfied.

(j)            not more than 15.0% of the Aggregate Outstanding Loan Balance may consist of Fixed Rate Loans;

(k)           not more than 20.0% of the Aggregate Outstanding Loan Balance may consist of Floating Prime Rate Loans;

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(l)            not more than 60.0% of the Aggregate Outstanding Loan Balance may consist of Second Lien Loans and Subordinated Loans;

(m)          not more than 15.0% of the Aggregate Outstanding Loan Balance may consist of Subordinated Loans;

(n)           not more than 10.0% of the Aggregate Outstanding Loan Balance may consist of Loans that pay interest less frequently than quarterly;

(o)           not more than 15.0% of the Aggregate Outstanding Loan Balance may consist of Loans (other than Charged-Off Loans) with a Moody’s Rating of “Caa1” or lower;

(p)           not more than 15.0% of the Aggregate Outstanding Loan Balance may consist of Loans (other than Charged Off Loans) with an S&P Rating of “CCC+” or lower;

(q)           not more than 10.0% of the Aggregate Outstanding Loan Balance may consist of Loans to Obligors organized under the laws of, or all or substantially all of the assets of which are located in, any country other than the United States;

(r)            the sum of the Outstanding Loan Balances of Loans to Obligors organized under the laws of, or all or substantially all of the assets of which are located in, Group I Countries, Group II Countries or Group III Countries may not exceed 5.0% of the Aggregate Outstanding Loan Balance;

(s)           not more than 2.5% of the Aggregate Outstanding Loan Balance may consist of Loans to a single Obligor organized under the laws of, or all or substantially all of the assets of which are located in, a Group II Country or a Group III Country;

(t)            not more than 3.0% of the Aggregate Outstanding Loan Balance may consist of Loans to a single Obligor, except that the Outstanding Loan Balance of Loans to any three single Obligors may each be up to 4.0% of the Aggregate Outstanding Loan Balance;

(u)           not more than 5.0% of the Aggregate Outstanding Loan Balance may consist of Qualified Participated Loans;

(v)           not more than 5.0% of the Aggregate Outstanding Loan Balance may consist of Swapped Floating Rate Loans;

(w)          not more than 7.5% of the Aggregate Outstanding Loan Balance may consist of DIP Loans; provided that the aggregate Outstanding Loan Balance of all DIP Loans of any single Obligor shall not exceed 2% of the Aggregate Outstanding Loan Balance;

(x)            the sum of the Outstanding Loan Balances of Loans for which the Obligors are classified in any single Moody’s Industry Classification Group does not

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exceed 15.0% of the Aggregate Outstanding Loan Balance, except that the Outstanding Loan Balance of Loans for which the Obligors are classified in any two Moody’s Industry Classification Groups may each be up to 20.0% of the Aggregate Outstanding Loan Balance; and

(y)           not less than 40.0% of the Aggregate Outstanding Loan Balance may consist of First Lien Loans.

Compliance with the above criteria will be determined, in the case of a Measurement Date relating to any Additional Loan or Substitute Loan, after giving effect to the acquisition or substitution of all Additional Loans or Substitute Loans, as applicable, on such date.

“Pre-Paid Loan” means any Loan (other than a Charged-Off Loan) that has been terminated or has been prepaid in full or in part prior to its scheduled expiration date.

“Prepayments” means any and all (i) full prepayments, including prepayment premiums, on or with respect to a Loan (including, with respect to any Loan and any Due Period, any Scheduled Payment, Finance Charge or portion thereof that is due in a subsequent Due Period that the Servicer has received and expressly permitted the related Obligor to make in advance of its scheduled due date, and that will be applied to such Scheduled Payment on such due date), (ii) Liquidation Proceeds, and (iii) Insurance Proceeds.

“Principal and Interest Account” means the trust account so designated and established and maintained pursuant to Section 7.03.

“Principal Collection Account” means a sub-account of the Principal and Interest Account established and maintained pursuant to Section 7.03(a).

“Principal Collections” means amounts deposited into the Principal and Interest Account in respect of payments received on or after the Closing Date in the case of the Initial Loans and the applicable Cut-Off Date in the case of any Additional Loans or Substitute Loans on account of principal on the Loans, including:

(i)            the principal portion of:

(a)           any Scheduled Payments and Prepayments (other than Liquidation Proceeds); and

(b)           any amounts received (1) in connection with the purchase or repurchase of any Loan and the amount of any adjustment for substituted Loans and (2) any Scheduled Payment Advances that the Servicer determines to make;

(ii)           Curtailments and Liquidation Proceeds other than Excess Liquidation Proceeds;

(iii)          all Sale Proceeds not attributable to accrued interest or Sale Premium;

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(iv)          amounts previously deposited in accordance with the procedures for the substitution of Loans that have not been applied to purchase one or more Substitute Loans within 90 days of their deposit into the Principal Collection Account; provided that prior to the expiration of 90 days after the deposit of such amounts into the Principal Collection Account, such amounts shall not be deemed to be Principal Collections for purposes of the requirement that all Principal Collections then held in the Principal Collection Account be transferred to the Note Distribution Account on each Distribution Date; provided further that following the expiration of such 90 day period, such amounts shall be deemed to have been Principal Collections as of the date deposit of such amounts for purposes of effecting a Special Redemption; and

(v)           all other amounts not specifically included in Interest Collections.

“Priority of Payments” means, collectively, the payments made on each Distribution Date in accordance with Section 7.05(a) and Section 7.05(b).

“Proceeds” means, with respect to any Collateral, all property that is receivable or received when such Collateral is sold, liquidated, foreclosed, exchanged, or otherwise disposed of, whether such disposition is voluntary or involuntary, and includes all rights to payment with respect to any insurance relating to such Collateral.

“Proposed Portfolio” means the portfolio (measured by the outstanding principal balance and treating Revolving Loans and Delayed Draw Term Loans as fully funded) of (a) the Loans, (b) Principal Collections held as cash and (c) Permitted Investments purchased with Principal Collections resulting from the repurchase, maturity or other disposition of Loan or a proposed acquisition of an Additional Loan or substitution of a Substitute Loan, as the case may be.

“Pro Rata Distribution Date” means any Distribution Date other than a Sequential Distribution Date.

“Purchase Agreement” means the Purchase Agreement, dated as of the Closing Date, among the Issuer, the Trust Depositor and the Initial Purchaser, as amended, modified, restated, waived or supplemented from time to time.

“Qualified Institution” means (a) the corporate trust department of the Trustee or (b) a depository institution or trust company organized under the laws of the United States or any one of the states thereof or the District of Columbia (or any domestic branch of a foreign bank), (i)(A) that has either (1) a long-term unsecured debt rating acceptable to the Rating Agencies, which, in the case of S&P, shall be “AA–” and in the case of Moody’s, shall be “Aa3” or (2) a short-term unsecured debt rating or certificate of deposit rating acceptable to the Rating Agencies, which, in the case of S&P, shall be “A-1+” and in the case of Moody’s, shall be “P-1”, (B) the parent corporation, if such parent corporation guarantees the obligations of the depository institution, of which has either (1) a long-term unsecured debt rating acceptable to the Rating Agencies, which, in the case of S&P, shall be “AA–”, and in the case of Moody’s, shall be “Aa3” or (2) a short-term unsecured debt rating or certificate of deposit rating acceptable to the Rating Agencies, which, in the case of S&P, shall be “A-1+” and in the case of Moody’s, shall be “A-1”, or (C)

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otherwise satisfies the Rating Agency Condition, and (ii) whose deposits are insured by the FDIC and satisfies the Rating Agency Condition.

“Qualified Participated Loan” means a Participated Loan acquired from an institution that is rated at least “A” by S&P and “A2” by Moody’s at the time of sale.

“Qualified Second Lien Loan” means any Second Lien Loan (a) which has a Loan-to-Value of not greater than 70%, (b) as to which the ratio, for the related Obligor, of (x) the sum of (i) the maximum availability (as provided in the applicable loan documentation) of such Loan as of the date of its origination plus (ii) the maximum availability under all other indebtedness of the related Obligor which ranks either senior to, or pari passu with, such Loan to (y) such Obligor’s earnings before interest, taxes, depreciation and amortization (or similar term as defined in the related Underlying Loan Agreements) for the twelve calendar months preceding such date shall not exceed (I) in the case of Obligors in the media and telecommunications industries, 7.5:1.0 and (II) in the case of all other Obligors, 5.5:1.0, provided that for the avoidance of doubt, an Obligor’s earnings before interest, taxes, depreciation and amortization shall be calculated in accordance with the Credit and Collection Policy; and (c) with respect to which the Underlying Loan Agreement (i) contains a limit on the amount of first-lien senior debt which may be incurred by the related Obligor, (ii) preserves enforcement rights for the second lien lender after a default under the related Underlying Loan Agreement, and (iii) contains either or both (x) a standstill period applicable to the holders of such Second Lien Loan of not longer than 180 days following a default under the loan agreement governing the senior indebtedness of such Obligor, and (y) provisions requiring the consent of the holders of such Second Lien Loan to release of all or substantially all of the Related Property securing such Loan unless the majority of the proceeds of the disposition of such Related Property are used to repay the indebtedness which is senior to or pari passu with such Second Lien Loan, or to repay such Second Lien Loan.

“Qualified Transferee” means:

(i)            the Trust Depositor, the Issuer, the Trustee and any Affiliate thereof; or

(ii)           any other Person which:

(a)           has at least $50,000,000 in capital/statutory surplus or shareholders’ equity (except with respect to a pension advisory firm or similar fiduciary); and

(b)           is one of the following:

(1)           an insurance company, bank, savings and loan association, investment bank, trust company, commercial credit corporation, pension plan, pension fund, pension fund advisory firm, mutual fund, real estate investment trust, governmental entity or plan;

(2)           an investment company, money management firm or a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act, or an “institutional accredited investor” within the meaning of Regulation D;

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(3)           the trustee, collateral agent or administrative agent in connection with (x) a securitization of the subject Loan through the creation of collateralized debt or loan obligations or (y) an asset-backed commercial paper funded transaction funded by a commercial paper conduit whose commercial paper notes are rated at least “A-1” by S&P and at least “P-1” by Moody’s, or (z) a repurchase transaction funded by an entity which would otherwise be a Qualified Transferee so long as the “equity interest” (other than any nominal or de minimis equity interest) in the special purpose entity that issues notes or certificates in connection with any such collateralized debt or loan obligation, asset-backed commercial paper funded transaction or repurchase transaction is owned by one or more entities that are Qualified Transferees under subclause (ii)(b)(1) or (ii)(b)(2) above; or

(4)           any entity Controlled (as defined below) by any of the entities described in clause (ii)(a) or clause (ii)(b) above.

For purposes of this definition only, “Control” means the ownership, directly or indirectly, in the aggregate of more than fifty percent (50%) of the beneficial ownership interests of an entity and the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of an entity, whether through the ability to exercise voting power, by contract or otherwise, and “Controlled” has the meaning correlative thereto.

“Quarterly Report” has the meaning provided in Section 9.01.

“Ramp-Up Period” means the period commencing on the Closing Date and ending on the Effective Date.

“Rating Agency” means each of S&P and Moody’s, so long as such Persons maintain a rating on any of the Offered Notes or the Class D Notes; and if either of S&P or Moody’s no longer maintains a rating on any of the Offered Notes or the Class D Notes, such other nationally recognized statistical rating organization, if any, selected by the Trust Depositor.

“Rating Agency Condition” means, with respect to any action or series of related actions or proposed transaction or series of related proposed transactions, a condition that is satisfied when each applicable Rating Agency shall have notified the Trust Depositor, the Servicer, the Issuer, the Owner Trustee and the Trustee in writing that such action or series of related actions or the consummation of such proposed transaction or series of related transactions will not result in a Ratings Effect.

“Ratings Confirmation Failure” shall have the meaning provided in Section 2.06(g).

“Rating Criteria” means the criteria which will be satisfied of any date with respect to any Class A-1A VFN Noteholder if:

(i)            the short-term debt, deposit or similar obligations of such Class A-1A VFN Noteholder are rated “P-1” and not on watch for possible downgrade by Moody’s and at least “A-1” by S&P and the long-term debt obligations of such Class A-1A VFN Noteholder are rated at least “AA-” by S&P;

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(ii)           the obligations of such Class A-1A VFN Noteholder under the Class A-1A VFN Purchase Agreement are guaranteed (pursuant to a guarantee which complies with the then-current S&P criteria regarding guarantees) by an entity meeting the Rating Criteria set forth in clause (i) above; or

(iii)          such Class A-1A VFN Noteholder is then entitled under a Liquidity Facility to borrow from, or sell an interest in assets to, one or more Liquidity Providers so long as:

(a)           the short-term debt, deposit or similar obligations of each such Liquidity Provider are on such date rated “P-1” and not on watch for possible downgrade by Moody’s and at least “A-1” by S&P and the long-term debt obligations of such Liquidity Provider are rated at least “AA-” by S&P; and

(b)           the aggregate amount of commitments to make loans or purchase interests in assets under such Liquidity Facility held by Liquidity Providers whose short-term debt, deposit or similar obligations are on such date rated “P-1” and not on watch for possible downgrade by Moody’s and at least “A-1” by S&P is not less than the Class A-1A VFN Commitment in respect of the Class A-1A VFN Notes held by such Class A-1A VFN Noteholder.

“Ratings Effect” means, with respect to any action or series of related actions or proposed transaction or series of related proposed transactions, a reduction or withdrawal of the then-current rating issued by a Rating Agency with respect to any outstanding Class of Notes as a result of such action or series of related actions or the consummation of such proposed transaction or series of related transactions.

“Record Date” means, for book-entry Notes, the calendar day immediately preceding the applicable Distribution Date; the Repurchase Date or Refinancing Date, as applicable, and for the definitive Notes, the last Business Day of the calendar month preceding the related Distribution Date, the Repurchase Date or the Refinancing Date, as applicable.

“Records” means all Loan and other documents, books, records and other information (including, without limitation, computer programs, tapes, disks, data processing software and related property and rights) executed in connection with the origination or acquisition of the Loans or maintained with respect to the Loans and the related Obligors that the Originator or the Servicer have generated, in which the Originator, the Trust Depositor, the Issuer, the Trustee or the Servicer have acquired an interest pursuant to the Transfer and Servicing Agreements or in which the Originator, the Trust Depositor, the Issuer, the Trustee or the Servicer have otherwise obtained an interest to the extent transferable, and subject to any confidentiality and/or transferability restrictions.

“Recovery Rate Modifier” means an amount equal to, as of any date of determination, the product of (i) the excess, if any, of the Moody’s Weighted Average Recovery Rate as of such date of determination minus 38.5% times (ii) 5,500; provided that, if the Moody’s Weighted Average Recovery Rate shall be (x) greater than or equal to 60%, then solely for the purposes of the calculation of the Recovery Rate Modifier, the Moody’s Weighted Average Recovery Rate shall be deemed to be equal to 60% (or, such other value, with respect to which the Rating

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Agency Condition shall be satisfied), or (y) less than or equal to 38.5%, then solely for the purposes of the calculation of the Recovery Rate Modifier, the Moody’s Weighted Average Recovery Rate shall be deemed to be equal to 38.5%.

“Recovery Value” means, with respect to any Charged-Off Loan or Delinquent Loan, the lower of (a) the product obtained by multiplying (i) the lower of (A) the Moody’s Recovery Rate applicable to such Loan and (B) the S&P Priority Category Recovery Rate applicable to such Loan and (ii) the Outstanding Loan Balance immediately before such Loan became a Charged-Off Loan or Delinquent Loan, as applicable, and (b) the Market Value of such Loan.

“Reference Banks” means leading banks selected by the Trustee and engaged in transactions in Eurodollar deposits in the international Eurocurrency market.

“Reference Spread” means, initially 5.0%, or such other percentage set forth in the Collateral Quality Table under the heading “Weighted Average Spread” that has been most recently specified by the Servicer in a notice to the Trustee as the level that will apply for purposes of determining compliance with the Weighted Average Spread Test, the Diversity Test and the Moody’s Weighted Average Rating Factor Test; provided that no such specification shall be effective unless, on the date of such notice and immediately after giving effect to such specification, the Moody’s Weighted Average Rating of the Loans in the Collateral is equal to or less than, and the Diversity Score is equal to or greater than, the number specified in the applicable column in the Collateral Quality Table opposite the specified Reference Spread.

“Refinancing” means a refinancing of the Offered Notes and the Class D Notes pursuant to Section 10.03(a) of the Indenture.

“Refinancing Date” means the Distribution Date on or after the Distribution Date occurring in June, 2010 designated as such by the Issuer (at the direction of the Holders representing at least 66-2/3% of the aggregate Outstanding Principal Balance of the Class E Notes) in connection with a Refinancing.

“Refinancing Price” means an amount equal to the sum of (i) the then Outstanding Principal Balance of each Class of Offered Notes and the Class D Notes plus accrued and unpaid interest thereon to but excluding the Refinancing Date and all other amounts accrued and unpaid with respect thereto, plus (ii) with respect to the Class A-1A VFN Notes, any accrued and previously unpaid Class A-1A VFN Breakage Costs, Class A-1A VFN Increased Costs and Class A-1A VFN Commitment Fee, plus (iii) all administrative and other fees, expenses, advances and other amounts then accrued and payable or reimbursable in accordance with the Priority of Payments (excluding any amounts payable to the Class E Noteholders or to the Certificateholders).

“Registered” means, with respect to any debt obligation, a debt obligation that was issued after July 18, 1984 and that is in registered form for purposes of the Code.

“Related Property” means, with respect to any Loan and as applicable in the context used, the interest of the Obligor, or the interest of the Originator, the Trust Depositor or the Issuer under the Loan, in any property or other assets designated and pledged or mortgaged as collateral to secure repayment of such Loan (including, without limitation, a pledge of the stock, membership

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or other ownership interests in the Obligor), including all Proceeds from any sale or other disposition of such property or other assets.

“Replenishment Period” means the period beginning on the Effective Date and terminating on the earlier to occur of (a) the Business Day preceding the Distribution Date in June, 2011, (b) an Event of Default, (c) the Distribution Date following the date on which the Servicer notifies the Trustee in writing that, in light of the composition of the Loans, general market conditions and other factors, the Servicer (in its sole discretion) has determined that investments in Additional Loans within the foreseeable future would either be impractical or not beneficial, or (d) the Distribution Date on which the Class D Accrued Payable first exceeds zero; provided that, (i) if the Replenishment Period terminates as described in clauses (a) or (d) above, the Replenishment Period may not be extended or reinstated without the consent of the Servicer and the Majority Noteholders and satisfaction of the Moody’s Rating Condition and the S&P Rating Condition with respect to the extension of the Replenishment Period, and (ii) if the Replenishment Period terminates as a result of the occurrence of an Event of Default, the Replenishment Period may not be reinstated unless (w) the event giving rise to such termination has been cured or waived, (x) no other events that would terminate the Replenishment Period have occurred, (y) the Servicer and the Majority Noteholders have consented to such reinstatement and (z) the S&P Rating Condition and the Moody’s Rating Condition have been satisfied with respect to the reinstatement of the Replenishment Period.

“Repossessed Property” means items of Related Property taken in the name of the Issuer as a result of legal action enforcing the Lien on the Related Property resulting from a default on the related Loan.

“Representative Amount” means an amount that is representative for a single transaction in the relevant market at the relevant time.

“Repurchase Date” means the Distribution Date designated as such by the Issuer (at the direction of the Holders representing at least 66-2/3% of the aggregate Outstanding Principal Balance of the Class E Notes) in a notice of the election to effect an Optional Repurchase, delivered at least 15 Business Days prior to such Distribution Date to the Issuer and the Trustee.

“Repurchase Price” means, in the case of a repurchase of the Notes pursuant to Section 10.01 of the Indenture, an amount equal to the sum of (i) the then Outstanding Principal Balance of each Class of Offered Notes and the Class D Notes to be repurchased plus accrued and unpaid interest thereon to but excluding the Repurchase Date and all other amounts accrued and unpaid with respect thereto, plus (i) any accrued and previously unpaid Class A-1A VFN Breakage Costs, Class A-1A VFN Increased Costs and Class A-1A VFN Commitment Fee, plus (iii) all administrative and other fees, expenses, advances, and other amounts then accrued and payable or reimbursable in accordance with the Priority of Payments (including fees and expenses, if any, incurred by the Trustee and the Servicer in connection with any sale of loans in connection with a repurchase).

“Required Loan Documents” means, with respect to:

(i)            all Loans in the aggregate:

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(a)           a blanket assignment of all of the Originator’s and Trust Depositor’s right, title and interest in and to all Related Property securing the Loans at any time transferred to the Issuer, including, without limitation, all rights under applicable guarantees and Insurance Policies; such assignment shall be in the name of “U.S. Bank National Association, its successors and assigns, as Trustee under the Indenture, dated as of July 7, 2006 relating to ARCC Commercial Loan Trust 2006”;

(b)           irrevocable powers of attorney of the Trustee, the Originator, the Trust Depositor and the Issuer to the Servicer to execute, deliver, file or record and otherwise deal with the Related Property for the Loans at any time transferred to the Issuer. The powers of attorney will permit the Servicer to prepare, execute and file or record UCC financing statements and notices to insurers; and

(c)           blanket UCC-1 financing statements identifying by type all Related Loan Assets for the Loans at any time transferred to the Issuer as Collateral under the Indenture and naming the Issuer and the Trustee, as assignee of the Issuer, as “Secured Party” and the Trust Depositor as the “Debtor”. The UCC-1 Financing Statements will be filed promptly following the Closing Date in Delaware and will be in the nature of protective notice filings rather than the financing statements;

(ii)           for each Loan:

(a)           (1) other than in the case of a Noteless Loan or a Participated Loan, the original or, if accompanied by “lost note” affidavit and indemnity, a copy of, the Underlying Note, endorsed by the prior holder of record either in blank or to the Trustee (and evidencing an unbroken chain of endorsements from the prior holder thereof evidenced in the chain of endorsements to the Trustee), with any endorsement to the Trustee to be in the following form: “U.S. Bank National Association, its successors and assigns, as Trustee under the Indenture, dated as of July 7, 2006, relating to ARCC Commercial Loan Trust 2006”, and (2) in the case of a Noteless Loan or a Participated Loan, (A) a copy of each executed transfer document or instrument relating to such Noteless Loan or a Participated Loan either (1) evidencing the assignment of such Noteless Loan or Participated Loan to the Originator, from the Originator to the Trust Depositor and from the Trust Depositor either to the Trustee or in blank, or (2) in the case of a Third Party Acquired Loan, from the prior third party owner thereof either to the Trustee or in blank and (B) executed copies or executed originals, as applicable, a copy of the related credit agreement, note purchase agreement or sale and servicing agreement (or equivalent agreement), as applicable, together with executed copies or executed originals, as applicable, of all other documents and instruments described in clauses (ii)(b), (c) and (d) with respect to such Noteless Loan or Participated Loan;

(b)           other than in the case of a Noteless Loan, originals or copies of each of the following, to the extent applicable to the related Loan: any related loan agreement, credit agreement, note purchase agreement, security agreement, sale and servicing agreement, acquisition agreement, subordination agreement, intercreditor agreement or similar instruments, guarantee, Insurance Policy, assumption or substitution agreement or similar

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material operative document, in each case together with any amendment or modification thereto, as set forth on the Loan Checklist;

(c)           other than in the case of a Noteless Loan or a Participated Loan, with respect to any Loan in respect of which the Originator (or a wholly owned subsidiary of the Originator) is the lead agent, collateral agent and paying agent and receives payment directly from the Obligor of such Loan, either (1) copies of the UCC-1 financing statements, if any, and any related continuation statements, showing the Obligor, as debtor and the Originator as secured party or (2) copies of any such financing statements certified by the Servicer to be true and complete copies thereof in instances where the original financing statements have been sent to the appropriate public filing office for filing, as set forth on the Loan Checklist;

(d)           a copy of the related Loan Checklist; and

(e)           in the case of a Swapped Floating Rate Loan, copies of the related Asset Specific Swap and assignment of the rights thereunder to the Issuer.

“Required Reserve Amount” means, with respect to each Distribution Date, an amount equal to the excess of the aggregate Outstanding Loan Balance of Delinquent Loans over the aggregate Recovery Value of Delinquent Loans.

“Reserve Fund” means the trust account so designated and established and maintained pursuant to Section 7.01.

“Responsible Officer” means, when used with respect to (a) the Owner Trustee or the Trustee, any officer assigned to the corporate trust office (and, with respect to the Trustee, the CDO Group) having direct responsibility for the administration of the Trust Agreement or the Indenture, as the case may be, or the transactions contemplated thereby, including any Chief Executive Officer, President, Executive Vice President, Vice President, Assistant Vice President, Secretary, any Assistant Secretary, any trust officer or any other officer of the Owner Trustee or the Trustee customarily performing functions similar to those performed by any of the above designated officers and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject and (b) the Trust Depositor, the Issuer, the Originator or the Servicer, the Chief Executive Officer, the Chief Investment Officer, Chief Financial Officer or any Managing Director thereof who is also a Servicing Officer of such Person or of the designated manager of such Person, as applicable.

“Revolving Loan” means a Loan that is a line of credit arising from an extension of credit by the Originator to or on behalf of an Obligor with a commitment that is fixed pursuant to the terms of the related Required Loan Documents.

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

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“S&P CDO Monitor” means the dynamic, analytical computer program provided by S&P to the Servicer and the Trustee within 30 days after the Closing Date for the purpose of estimating the default risk of Loans.

“S&P CDO Monitor Test” means the test that will be satisfied on any Measurement Date if after giving effect to the substitution of a Substitute Loan, the acquisition of an Additional Loan or the sale of a Loan (or any combination of the foregoing), as the case may be, on such Measurement Date, the Notes Loss Differential of the Proposed Portfolio is positive; or if the Notes Loss Differential of the Proposed Portfolio is negative prior to giving effect to such substitution, acquisition or sale, as the case may be, the extent of compliance is improved after giving effect to such substitution, acquisition or sale. The S&P CDO Monitor Test will be considered improved if the Notes Loss Differential of the Proposed Portfolio is greater than the corresponding Notes Loss Differential of the Current Portfolio. In the event such test is updated or otherwise modified by S&P after the Closing Date, the “S&P CDO Monitor Test” shall mean such test as so updated or otherwise modified.

“S&P Priority Category Recovery Rate” means, with respect to any Loan, unless otherwise specified by S&P, the percentage specified in the table below:

S&P Priority Category	Recovery Rate
First Lien Loan	57%
Qualified Second Lien Loan	43.5%
Second Lien Loan (other than a Qualified Second	38%
Lien Loan), up to an aggregate of Outstanding Loan
Balances of such Second Lien Loans of less than or
equal to 15% of the Expected Aggregate
Outstanding Loan Balance
Second Lien Loans (other than a Qualified Second	23%
Lien Loan), representing the aggregate of
Outstanding Loan Balances of such Second Lien
Loans in excess of 15% of the Expected Aggregate
Outstanding Loan Balance
Subordinated Loan	23%

“S&P Rating” means, with respect to any Loan, if such Loan is rated by S&P, for determining the S&P Rating as of any date of determination:

(i)            if there is an issuer credit rating of the Obligor of such Loan, or the guarantor who unconditionally and irrevocably guarantees such Loan, then the S&P Rating shall be such rating (regardless of whether there is a published rating by S&P on such Loan in the Collateral);

(ii)           if there is no issuer credit rating of the Obligor and no other security or obligation of the Obligor is rated by S&P, then the Issuer shall apply to S&P for a corporate credit estimate after the acquisition of such Loan, which shall be its S&P Rating; provided that

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pending the receipt from S&P’s of such estimate, the S&P’s Rating of such Loan shall be the rating as may be estimated in good faith by the Servicer; provided further that such estimated rating shall not be higher than “B-” for the first 60 Business Days following the applicable Cut-Off Date and not higher than “CCC” thereafter;

(iii)          if there is no issuer credit rating of the Obligor and such Loan is not rated by S&P, but another security or obligation of the Obligor is rated by S&P and the Issuer does not obtain a S&P Rating for such Loan pursuant to clause (ii) above, then the S&P Rating of such Loan shall be the issuer credit rating or shall be determined as follows: (a) if there is a rating on a senior secured obligation of the Obligor, then the S&P Rating of such Loan shall be one rating subcategory below such rating; (b) if there is a rating on a senior unsecured obligation of the Obligor, then the S&P Rating of such Loan shall equal such rating; and (c) if there is a rating on a subordinated obligation of the Obligor, then the S&P Rating of such Loan shall be one rating subcategory above such rating;

(iv)          if there is no issuer credit rating of the Obligor published by S&P and such Loan is not rated by S&P and no other security or obligation of the Obligor is rated by S&P and the Issuer does not obtain a S&P Rating for such Loan pursuant to clause (ii) above, then the S&P Rating of such Loan shall be determined as follows: If such Loan has a public rating by Moody’s, then the S&P Rating of such Loan shall be (a) one rating subcategory below the S&P equivalent of the rating assigned by Moody’s if such Loan is rated “Baa3” or higher by Moody’s, and (b) two rating subcategories below the S&P equivalent of the rating assigned by Moody’s if such Loan is rated “Bal” or lower by Moody’s; provided that not more than 10% (or such higher percentage as S&P may specify in writing to the Issuer and the Trustee from time to time) of the Aggregate Outstanding Loan Balance shall be deemed to have a S&P Rating based on a rating assigned by Moody’s as provided in this clause iv; and

(v)           if (a) the S&P Rating previously provided for a Loan expires 13 months after issuance without such S&P Rating being renewed, (b) the Servicer fails to provide S&P with requested materials in connection with obtaining an S&P Rating for a Loan, (c) the Servicer fails to provide financial statements with respect to any Obligor every 13 months from the date the applicable Loan is included in the Collateral, until such Loan is paid in full or (d) no other rating for such Loan applies by operation of clauses (i) through (iv) above, the applicable Loan will be deemed to have an S&P Rating of “CCC–”.

“S&P Rating Condition” means, with respect to any action or series of related actions or proposed transaction or series of proposed transactions, that S&P shall have notified the Trust Depositor, the Servicer, the Owner Trustee and the Trustee in writing that such action or series of related actions or the consummation of such proposed transaction or series of related transactions will not result in a reduction or withdrawal of the then-current rating issued by S&P with respect to any outstanding Class of Notes as a result of such action or series of related actions or the consummation of such proposed transaction or series of related transactions.

“S&P Weighted Average Recovery Rate” means, as of any Measurement Date, the percentage (rounded up to the first decimal place) obtained by dividing (a) the sum of the products obtained by multiplying the Outstanding Loan Balance of each Loan by its S&P Priority Category Recovery Rate, by (b) the Aggregate Outstanding Loan Balance.

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“SAIF” means the Savings Association Insurance Fund, or any successor thereto.

“Sale Premium” means, with respect to any Loan sold pursuant to this Agreement, the excess, if any, of the applicable Sale Proceeds (exclusive of accrued interest and of any amounts reimbursable to the Servicer therefrom pursuant to Section 7.03(h)) over the Outstanding Loan Balance of such Loan at the time of sale.

“Sale Proceeds” means, with respect to a Loan (other than a Charged-Off Loan), all proceeds received as a result of a sale of such Loan pursuant to this Agreement, net of any sales, brokerage and related administrative or sales expenses of the Servicer or the Trustee in connection with any such sale.

“Scheduled Payment” means, with respect to any Loan, each payment of principal and/or interest scheduled to be made by the related Obligor under the terms of such Loan after (a) in the case of the Initial Loans, the Closing Date or (b) in the case of Additional Loans or Substitute Loans, the related Cut–Off Date, as adjusted pursuant to the terms of the related Underlying Note and/or Required Loan Documents.

“Scheduled Payment Advance” means, with respect to any Distribution Date, the amounts, if any, deposited by the Servicer in the Principal and Interest Account for such Distribution Date in respect of Scheduled Payments (or portions thereof) pursuant to Section 5.09.

“Second Lien Loan” means a Loan which (i) is not by its terms (and is not expressly permitted by its terms to become) subordinate in right of payment to any other obligation for borrowed money of the Obligor of such Loan, other than a First Lien Loan, (ii) is secured by a valid second priority perfected security interest or Lien in, to or on specified Related Property, subject to customary permitted liens (whether or not the Issuer and any other lenders are also granted a security interest of a higher or lower priority in additional Related Property), (iii) is secured by Related Property having a value (determined as set forth below) not less than the Outstanding Loan Balance of such Loan plus the aggregate Outstanding Loan Balances of all other Loans of equal or higher seniority secured by a first or second Lien or security interest in the same Related Property, and (iv) does not qualify as an First Lien Loan. The determination as to whether condition (iii) of this definition is satisfied shall be based on the Servicer’s judgment at the time the Loan is included in the Collateral.

“Securities” means the Notes and the Certificate, or any of them.

“Securities Act” means the Securities Act of 1933, as amended from time to time.

“Securityholders” means, collectively, the Noteholders and the Certificateholders.

“Senior Servicing Fee” shall have the meaning provided in Section 5.11.

“Sequential Distribution Date” means any Distribution Date (a) following the occurrence of a Servicer Default, an Event of Default, a Downgrade Event, the Sequential Pool Condition, the existence of any Class D Accrued Payable or a Ratings Confirmation Failure, (b) on which the Interest Distributable Test is not satisfied or (c) on which a CCC Excess Failure occurs; provided that in the case of a Sequential Distribution Date arising due to a Ratings Confirmation Failure,

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only the first Distribution Date following such Ratings Confirmation Failure and each subsequent Distribution Date prior to the earlier of (i) the date on which the Effective Date Ratings Confirmation is delivered and (ii) the date on which the Outstanding Principal Balance of each Class of Offered Notes and the Class D Notes has been reduced to zero shall be a Sequential Distribution Date.

“Sequential Pool Condition” means a condition that will be satisfied following the Replenishment Period, as of the first Distribution Date on or after the date on which the Aggregate Outstanding Loan Balance is less than 45.0% of the Expected Aggregate Outstanding Loan Balance.

“Servicer” means initially Ares Capital, or its successors in interest, until any Servicer Transfer hereunder or the resignation or permitted assignment by the Servicer and, thereafter, means the Successor Servicer appointed pursuant to Article VIII with respect to the duties and obligations required of the Servicer under this Agreement.

“Servicer Default” shall have the meaning specified in Section 8.01.

“Servicer Transfer” shall have the meaning specified in Section 8.02(b).

“Servicing Advances” means, all reasonable and customary “out-of-pocket” costs, expenses and taxes incurred in the performance by the Servicer of its servicing obligations, including, but not limited to, the cost of (i) the preservation, restoration and protection of the Related Property, (ii) any enforcement or judicial proceedings, including foreclosures, (iii) the management and liquidation of the Foreclosed Property or Repossessed Property, (iv) compliance with its obligations under this Agreement and the other Transaction Documents, and (v) services rendered in connection with the liquidation of a Loan (other than Liquidation Expenses), for all of which costs and expenses the Servicer is entitled to reimbursement thereof with interest thereon as provided in this Agreement.

“Servicing Fee” shall have the meaning provided in Section 5.11.

“Servicing Fee Percentage” means 0.50% per annum.

“Servicing File” means, for each Loan, the following documents or instruments:

(a)           copies of each of the Required Loan Documents; and

(b)           any other portion of the Loan File which is not part of the Required Loan Documents.

“Servicing Officer” means any officer of the Servicer involved in, or responsible for, the administration and servicing of Loans whose name appears on a list of servicing officers appearing in an Officer’s Certificate furnished to the Trustee by the Servicer, as the same may be amended from time to time.

“Servicing Standard” means, with respect to any Loans included in the Collateral, to service and administer such Loans in accordance with the Underlying Loan Agreements and all customary

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and usual servicing practices (A) which are consistent with the higher of: (x) the customary and usual servicing practices that a prudent loan investor or lender would use in servicing loans like the Loans for its own account, and (y) the same care, skill, prudence and diligence with which the Servicer services and administers loans for its own account or for the account of others; (B) with a view to maximize the value of the Loans; and (C) without regard to: (1) the Servicer’s obligations to incur servicing and administrative expenses with respect to a Loan, (2) the Servicer’s right to receive compensation for its services hereunder or with respect to any particular transaction, (3) the ownership by the Servicer or any Affiliate of any Loans, (4) the ownership, servicing or management for others by the Servicer of any other Loans or property by the Servicer or (5) any relationship that the Servicer or any Affiliate of the Servicer may have with any holder of mezzanine loans of the Obligor with respect to such Loans.

“Servicing Transfer Costs” means, costs and expenses, if any, incurred by the Trustee, by the Collateral Administrator or by the Backup Servicer for costs and expenses associated with the transfer of servicing to the Successor Servicer, which shall not exceed $100,000 in the aggregate for any given servicing transfer.

“Solvent” means, as to any Person at any time, that (a) the fair value of the property of such Person is greater than the amount of such Person’s liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated for purposes of Section 101(32) of the Bankruptcy Code; (b) the present fair saleable value of the property of such Person in an orderly liquidation of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts and other liabilities as they become absolute and matured; (c) such Person is able to realize upon its property and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business; (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature; and (e) such Person is not engaged in business or a transaction, and is not about to engage in a business or a transaction, for which such Person’s property would constitute unreasonably small capital.

“SPE Obligor” means, with respect to any Loan, an Obligor that is organized as a special purpose entity and is not an operating company.

“Special Redemption” means principal payments on the Notes made by the Issuer on any Distribution Date during the Replenishment Period following written notice delivered by the Servicer to the Trustee on or before the end of the related Due Period that:

(a)           (i) any Principal Collections have remained on deposit in the Principal Collection Account for at least 90 days from the date of their deposit to that account, and (ii) the servicer has elected not to apply those amounts to the Class A-1A VFN Funding Account or to reduce the Outstanding Principal Balance of the Class A-1A VFN Notes; and

(b)           the amounts described in the preceding clause (a) equal or exceed $1,000,000 in the aggregate.

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“Special Redemption Amount” means those amounts to be distributed pursuant to a Special Redemption and in accordance with the priority of payments set forth in Section 7.05 (b)(I).

“Specified Amendment” means, with respect to any Loan (other than a Loan which is publicly rated by S&P and Moody’s), any waiver, modification, amendment or variance of such Loan which does not constitute a Material Modification of the type specified in clause (ii) of the definition thereof and which effects any term of such Loan in a manner that would:

(i)            modify the amortization schedule with respect to such Loan in a manner that (i) reduces the dollar amount of any Scheduled Payment by more than the greater of (x) 25% and (y) $250,000, (ii) postpones any Scheduled Payment by more than two payment periods or (iii) causes the weighted average life of the applicable Loan to increase by more than 25%; or

(ii)           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 a Loan or as a result of an increase in the interest rate index for any reason other than such amendment, waiver or modification); or

(iii)          extend the stated maturity date of such Loan by more than 24 months; provided that any such extension shall be deemed not to have been made until the business day following the original stated maturity date of such Loan; provided further that such extension shall not cause the weighted average life of such Loan to increase by more than 25%; or

(iv)          release any party from its obligations under such Loan, if such release would have a Material Adverse Effect on the Loan; or

(v)           reduce the principal amount thereof.

“Stated Maturity Date” means December 20, 2019.

“Subordinated Loan” means any Loan which is by its terms (or is expressly permitted by its terms to become) subordinate in right of payment to any First Lien Loan or Second Lien Loan (including any Qualified Second Lien Loan) or other senior obligation of the Obligor of such Loan.

“Subordinated Servicing Fee” shall have the meaning provided in Section 5.11.

“Subparticipated Period” shall have the meaning provided in Section 13.22.

“Subparticipated Portion” shall have the meaning provided in Section 13.22.

“Subparticipation” shall have the meaning provided in Section 13.22.

“Subsequent List of Loans” means a list, in the form of the initial List of Loans delivered on the Closing Date, but listing each Additional Loan or Substitute Loan, as the case may be, transferred to the Issuer pursuant to Section 2.06 or Section 11.01.

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“Subservicer” means any direct or indirect wholly owned subsidiary of Ares Capital that Ares Capital has identified as a subservicer or additional collateral agent or any other Person with whom the Servicer has entered into a Subservicing Agreement and who satisfies the requirements set forth in Section 5.02(b) in respect of the qualification of a Subservicer.

“Subservicing Agreement” means any agreement between the Servicer and any Subservicer relating to subservicing and/or administration of certain Loans as provided in this Agreement, a copy of which shall be delivered, along with any modifications thereto, to the Trustee.

“Subsidiary” means, as to any Person, a corporation, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly, through one or more intermediaries, or both, by such Person.

“Substitute Loan” means one or more Eligible Loans transferred by the Originator to the Trust Depositor and by the Trust Depositor to the Issuer pursuant to a substitution effected under and in accordance with Section 11.01 and identified in the related Loan Asset Certificate.

“Substitute Loan Assets” means any assets acquired by the Trust Depositor from the Originator and by the Issuer from the Trust Depositor in connection with a substitution of one or more Substitute Loans pursuant to Section 11.01, which assets shall include the Trust Depositor’s (or Originator’s, as applicable) right, title and interest in the following:

(i)            the Substitute Loans listed in the related Subsequent List of Loans, all payments paid in respect thereof and all monies due, to become due or paid in respect thereof accruing on and after the applicable Cut-Off Date and all Liquidation Proceeds and recoveries thereon, in each case as they arise after the applicable Cut-Off Date;

(ii)           all security interests and Liens and Related Property subject thereto from time to time purporting to secure payment by Obligors under such Loans;

(iii)          all guaranties, indemnities and warranties, Asset Specific Swaps, and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Loans;

(iv)          all collections and records (including Computer Records) with respect to the foregoing;

(v)           all documents relating to the applicable Loan Files; and

(vi)          all income, payments, proceeds and other benefits of any and all of the foregoing, including but not limited to, all accounts, cash and currency, chattel paper, electronic chattel paper, tangible chattel paper, copyrights, copyright licenses, equipment, fixtures, general intangibles, instruments, commercial tort claims, deposit accounts, inventory, investment property, letter of credit rights, software, supporting obligations, accessions, and other property

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consisting of, arising out of, or related to the foregoing, but excluding any Excluded Amount with respect thereto.

“Substitute Loan Qualification Conditions” means, with respect to any Substitute Loans being transferred to the Issuer in connection with a Mandatory Substitution effected pursuant to Section 11.01, the accuracy of each of the following statements as of the related Cut-Off Date for each such Loan:

(i)            the Outstanding Loan Balance of such Substitute Loan or, if more than one Substitute Loan will be added in replacement of a Loan to be reassigned by the Issuer to the Trust Depositor, the sum of the Outstanding Loan Balances of such Substitute Loans, is not less than that of the Loan identified on the related Loan Asset Certificate as the Loan to be reassigned by the Issuer to the Trust Depositor and reconveyed to the Originator in exchange for such Substitute Loan or Loans;

(ii)           no selection procedures believed by the Originator or the Trust Depositor to be adverse shall have been employed in the selection of such Loan being substituted from the Originator’s portfolio; and

(iii)          all actions or additional actions (if any) necessary to perfect the security interest and assignment of such Substitute Loan and Related Property to the Trust Depositor, the Issuer, and the Trustee shall have been taken as of or prior to the related Cut-Off Date.

(iv)          the Substitute Loan has a maturity date that is prior to the Stated Maturity Date.

“Successor Backup Servicer” shall have the meaning provided in Section 8.10(a).

“Successor Servicer” shall have the meaning provided in Section 8.02(b).

“Swap Breakage Receipts” means, any amount payable to the Issuer in connection with the termination, transfer, reduction or amendment of an Asset Specific Swap, or any portion thereof, in accordance with the provisions of the such Asset Specific Swap.

“Swap Counterparty” with respect to any Asset Specific Swap, means a party that is a recognized dealer in interest rate swaps and interest rate caps, organized under the laws of the United States or a jurisdiction located therein (or another jurisdiction reasonably acceptable to the Issuer and each Rating Agency), that:  (a) at the time it becomes a Swap Counterparty has a short-term rating of at least “A-1” by S&P or a long-term senior unsecured debt rating of at least “A+” by S&P if such Person does not have a short term rating by S&P (for so long as any of the Offered Notes or Class D Notes are deemed outstanding and are rated by S&P), and either a long-term senior unsecured debt rating of at least “Aa3” by Moody’s (if such Person does not have at least a “P-1” short-term debt rating by Moody’s) or a long-term senior unsecured debt rating of at least “A1” by Moody’s and not subject to the qualification that the party has been placed on credit watch with negative implications (only if the short-term debt of such Person is rated at least “P-1” by Moody’s and not subject to the qualification that the party has been placed on credit watch with negative implications) (for so long as any of the Offered Notes or Class D Notes are deemed outstanding and are rated by Moody’s), and either a long-term senior

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unsecured debt rating of at least “A1” by Moody’s (if such Person does not have at least a “P-1” short-term debt rating by Moody’s) or a long-term senior unsecured debt rating of at least “A2” by Moody’s (only if the short-term debt of such Person is rated at least “P-1” by Moody’s) (for so long as any of the Offered Notes or Class D Notes are deemed outstanding and are rated by Moody’s); provided that, should a Rating Agency effect an overall downward adjustment of its short-term or long-term debt ratings, then the rating required of that Rating Agency under this clause (a) for a party to constitute a Swap Counterparty shall be downwardly adjusted accordingly; provided further that any adjustment to a rating shall be subject to the prior written consent of the applicable Rating Agency, (b) legally and effectively accepts the rights and obligations under the applicable Asset Specific Swap and (c) in connection with a substitute Swap Counterparty, otherwise satisfies the Rating Agency Condition.

“Swapped Floating Rate Loan” means a Loan where the interest rate payable by the Obligor thereunder has been swapped to a floating rate index pursuant to an Asset Specific Swap; provided that upon the termination of, or the occurrence of a payment default by the Swap Counterparty under, such Asset Specific Swap, the related Loan shall no longer constitute a Swapped Floating Rate Loan and shall be treated as a Fixed Rate Loan for all purposes.

“Tape” shall have the meaning provided in Section 5.15(b)(ii).

“Telerate Page 3750” means the display page currently so designated on the Moneyline Telerate Service (or such other page as may replace that page on that service for the purpose of displaying comparable rates or prices).

“Termination Notice” shall have the meaning provided in Section 8.02(a).

“Term Loan” means a loan that is a closed-end extension of credit by the Originator to an Obligor which may be fully funded or partially funded at the closing thereof, and which provides for full amortization of the principal thereof prior to or upon maturity.

“Third Party Acquired Loan” means any Initial Loan or Additional Loan acquired by the Issuer directly from a third party in a transaction arranged and underwritten by the Originator or any transaction in which the Issuer is the designee of the Originator under the instruments of conveyance relating to the applicable Loan.

“Three Month Index Maturity” shall have the meaning provided in Section 7.06.

“Three Month LIBOR” means LIBOR for the Three Month Index Maturity.

“Traditional Middle Market Loan” means any Loan issued as part of a loan facility with an original loan size (including any first and second lien loans included in the facility) of $125,000,000 or less, including for purposes of this definition the maximum available amount of commitments under any Revolving Loans and Delayed Draw Term Loans.

“Transaction Account Property” means the Transaction Accounts, all amounts and investments held from time to time in any Transaction Account (whether in the form of deposit accounts, physical property, book-entry securities, uncertificated securities or otherwise), and all proceeds of the foregoing.

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“Transaction Accounts” means, collectively, the Principal and Interest Account, the Note Distribution Account, the Reserve Fund, the Class A-1A VFN Funding Account and the Certificate Account.

“Transaction Documents” means this Agreement, the Indenture, the Trust Agreement, the Loan Sale Agreement, the Purchase Agreement, the Class A-1A VFN Purchase Agreement, the Collateral Administration Agreement, the Notes, the Certificate, any fee letters, any UCC financing statements filed pursuant to the terms of the Transaction Documents, and any additional document the execution of which is necessary or incidental to carrying out the terms of, or which is identified as a “Transaction Document” in the foregoing documents, all as such documents are amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time.

“Transfer and Servicing Agreements” means collectively this Agreement, the Loan Sale Agreement, the Indenture and the Trust Agreement.

“Transfer Deposit Amount” means, on any date of determination with respect to any Loan an amount equal to the sum of the Outstanding Loan Balance of such Loan, together with accrued interest thereon through such date of determination at the Loan Rate provided for thereunder, and any outstanding Scheduled Payment Advances and Servicing Advances thereon that have not been waived by the Servicer entitled thereto, together with accrued interest thereon due the Servicer.

“Trust Agreement” means the Amended and Restated Trust Agreement, dated on or about July 7, 2006, between the Trust Depositor and the Owner Trustee, among others, as such agreement may be further amended, modified, waived, supplemented or restated from time to time.

“Trust Depositor” shall have the meaning provided in the Preamble.

“Trust Estate” shall have the meaning provided in the Trust Agreement.

“Trustee” means the Person acting as Trustee under the Indenture, its successors in interest and any successor trustee under the Indenture.

“Trustee Fee” shall have the meaning provided in the fee letter, dated as of the date hereof between the Issuer and the Trustee.

“Trustees” means the Owner Trustee and the Trustee, or any of them individually as the context may require.

“UCC” means the Uniform Commercial Code, as amended from time to time, as in effect in any specified jurisdiction.

“Underlying LIBOR Rate” means, with respect to any Loan, “LIBOR” (or similar definition) as determined in accordance with the Underlying Loan Agreement related to such Loan.

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“Underlying Loan Agreement” means each single lender or multi-lender commercial loan or credit agreements or other debt agreements or instruments customary for the applicable type of Loan originated or acquired by Ares Capital or one of its Affiliates.

“Underlying Note” means the one or more promissory notes executed by an Obligor evidencing a Loan.

“Underlying Prime Rate” means, with respect to any Loan, the “prime rate” or “base rate” as determined in accordance with the Underlying Loan Agreement related to such Loan.

“United States” means the United States of America.

“U.S. Dollar” and “$” means lawful currency of the United States.

“USD-LIBOR-Reference Banks” shall have the meaning provided in Section 7.06(a).

“Valuation” means, with respect to any Loan, a valuation of the fair market value of such Loan established by reference to (i) a third-party pricing service such as LoanX or LPC or other service selected by the Servicer in accordance with the Servicing Standard; provided that if a fair market value is available from more than one pricing service the highest such value so obtained shall be used, or (ii) if data for such Loan is not available from such a pricing service, an analysis performed by a nationally recognized valuation firm to establish a fair market value of such Loan which reflects the price that would be paid by a willing buyer to a willing seller of such Loan in an expedited sale on an arm’s-length basis.

“Warehouse Facilities” means initially, the Funding I Transaction and any similar collateralized financing facility the Originator and the Servicer may enter into after the Closing Date.

“Weighted Average Coupon” means, as of any Measurement Date, a fraction (expressed as a percentage and rounded up to the next 0.001%), (a) the numerator of which is the sum of the products determined by multiplying the Outstanding Loan Balance of each Fixed Rate Loan (excluding Charged-Off Loans, Delinquent Loans and Credit Impaired Loans) in the Collateral as of such Measurement Date by the current Loan Rate on such Loan, and (b) the denominator of which is the sum of the Outstanding Loan Balances of all Fixed Rate Loans (excluding Charged-Off Loans, Delinquent Loans and Credit Impaired Loans) in the Collateral as of such Measurement Date; provided that if the foregoing amount is less than 12.0% for such Measurement Date, any Floating Rate Excess as of such Measurement Date shall be added to such amount; and provided further that, for purposes of this definition: (1) no contingent payment of interest will be included in such calculation; (2) any stated coupon shall exclude any portion of the interest that is currently being deferred in violation of the terms of the related Underlying Loan Documents; and (3) Loans that are Charged-Off Loans, Delinquent Loans and Credit Impaired Loans will be included in the calculations described herein if, as of such Measurement Date, such Loans are paying in full current interest pursuant to the terms of their respective Underlying Note, or, if a Noteless Loan, pursuant to the terms of the related Underlying Loan Agreement.

“Weighted Average Life” means, as of any Measurement Date with respect to any Loan, the number obtained by dividing (a) the sum of the products obtained by multiplying (i) the Average

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Life at such time of each Loan (excluding Charged-Off Loans) by (ii) the Outstanding Loan Balance of such Loan by (b) the Aggregate Outstanding Loan Balance (excluding Charged-Off Loans) as of such date.

“Weighted Average Life Test” means a test that (a) will be satisfied as of any Measurement Date during the Replenishment Period if the Weighted Average Life is less than the Maximum Weighted Average Life and (b) will be deemed satisfied at all times after the Replenishment Period.

“Weighted Average Spread” means, as of any date of determination, a fraction (expressed as a percentage and rounded up to the next 0.001%), (a) the numerator of which is the sum of the products determined by multiplying the Outstanding Loan Balance of each Floating Rate Loan (excluding Charged-Off Loans, Delinquent Loans and Credit Impaired Loans) in the Collateral as of such date by the stated spread above or below LIBOR of the current Loan Rate applicable to such Loan, and (b) the denominator of which is the sum of the Outstanding Loan Balances of all Floating Rate Loans (excluding Charged-Off Loans, Delinquent Loans and Credit Impaired Loans) in the Collateral as of such date; provided that if the foregoing amount is less than the Minimum Weighted Average Spread for such date of determination, any Fixed Rate Excess as of such date shall be added to such amount; and provided further that, for purposes of this definition: (1) no contingent payment of interest will be included in such calculation, (2) any Loan Rate shall exclude any portion of the interest that is currently being deferred in violation of the terms of the related Loan Documents, (3) in the case of a Floating Rate Loan, other than a Swapped Floating Rate Loan, with a Loan Rate not expressed as a stated spread above or below LIBOR (including Floating Prime Rate Loans), the stated spread to LIBOR relating to such Loan shall be calculated on any date of determination by the Servicer in its sole discretion on behalf of the Issuer by subtracting LIBOR from the Loan Rate of such Loan, (4) in the case of a Swapped Floating Rate Loan, the stated spread for such Loan shall be equal to the excess of the current cash pay interest rate for such Loan as specified in the related Underlying Notes or Required Loan Documents over the fixed rate of interest payable to the Swap Counterparty for such Loan as specified in the related Asset Specific Swap, and (5) Loans that are Charged-Off Loans, Delinquent Loans and Credit Impaired Loans will be included in the calculations described herein if, as of such date, such Loans are paying in full current interest pursuant to the terms of their respective Underlying Note, or, in the case of a Noteless Loan, the related Underlying Loan Agreement.

“Weighted Average Spread Test” means a test that will be satisfied, as of any date of determination, if the Weighted Average Spread equals or exceeds the Minimum Weighted Average Spread.

Section 1.02.Usage of Terms

With respect to all terms in this Agreement, the singular includes the plural and the plural the singular. Words importing any gender include the other genders. References to “writing” include printing, typing, lithography and other means of reproducing words in a visible form. References to Persons include their permitted successors and assigns, The term “including” means “including without limitation”.

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References to agreements or documents in this Agreement are to be construed to include all such agreements and documents as amended, modified or supplemented from time to time pursuant to the terms thereof. References to statutes in this Agreement are to be construed as including all statutory provisions consolidating, amending, modifying, codifying, reenacting or replacing, from time to time, the statute to which reference is made and all regulations promulgated pursuant to such statutes.

Section 1.03.Section References

All Section references (including references to the Preamble), unless otherwise indicated, shall be to Sections (and the Preamble) in this Agreement.

Section 1.04.Calculations

Except as otherwise provided herein, all interest rate and basis point calculations hereunder will be made on the basis of a 360 day year and the actual days elapsed in the relevant period and will be carried out to at least three decimal places.

Section 1.05.Accounting Terms

All accounting terms used but not specifically defined herein shall be construed in accordance with generally accepted accounting principles in the United States.

ARTICLE II.

ESTABLISHMENT OF ISSUER; TRANSFER OF LOAN ASSETS

Section 2.01.Creation and Funding of Issuer; Transfer of Loan Assets

(a)The Issuer was created pursuant to the terms and conditions of the Trust Agreement, upon the execution and delivery of the Trust Agreement and the filing by the Owner Trustee of the Certificate of Trust (as defined in the Trust Agreement) under the Delaware Statutory Trust Act. The Trust Depositor, as settlor of the Issuer, shall fund and convey assets to the Issuer pursuant to the terms and provisions hereof. The Issuer shall be administered pursuant to the provisions of this Agreement and the Trust Agreement for the benefit of the Securityholders. The Servicer is hereby specifically recognized by the parties hereto as empowered to act on behalf of the Issuer and the Owner Trustee in accordance with Section 5.02(e), Section 5.02(g) and otherwise to perform the duties and obligations required to be performed by the Servicer under the Transaction Documents.

(b)Subject to and upon the terms and conditions set forth herein (including, without limitation, Section 13.22), the Trust Depositor hereby sells, transfers, assigns, sets over and otherwise conveys to the Issuer, for a purchase price consisting of $296,000,000 in cash (less placement expenses and certain other expenses associated with the initial offer and sale of the Notes the proceeds of which represent consideration paid by the Issuer herein), $32,000,000 in aggregate principal amount of the Class D Notes, $54,000,000 in aggregate principal amount of the Class E Notes and the Certificate, all the right, title and interest of the Trust Depositor in and to the Initial Loan Assets.

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(c)To the extent the purchase price paid to the Trust Depositor for any Loan Asset conveyed under this Agreement is less than the fair market value of such Loan, the difference between such fair market value and the purchase price shall be deemed to be a capital contribution made by the Trust Depositor to the Issuer on the Closing Date, in the case of the Initial Loans, and on the applicable Cut-Off Date, in the case of any Additional Loans or Substitute Loans.

(d)The Originator and the Trust Depositor each acknowledge with respect to itself that the representations and warranties of the Originator in the Loan Sale Agreement and of the Trust Depositor in Section 3.01 through Section 3.04 will run to and be for the benefit of the Issuer and the Trustees, and the Issuer and the Trustees may enforce directly (without joinder of the Trust Depositor when enforcing against the Originator) the repurchase obligations of the Originator or Trust Depositor, as applicable, with respect to breaches of such representations and warranties as set forth in the Loan Sale Agreement or in this Agreement.

(e)The sale, transfer, assignment, set-over and conveyance of the Loan Assets by the Trust Depositor to the Issuer pursuant to this Agreement does not constitute and is not intended to result in a creation or an assumption by the Trust Depositor or the Issuer of any obligation of the Originator as lead agent, collateral agent or paying agent under any Agented Loan. The Trust Depositor also hereby assigns to the Issuer all of the Trust Depositor’s right, title and interest (but none of its obligations) under the Loan Sale Agreement, including but not limited to the Trust Depositor’s right to exercise the remedies created by the Loan Sale Agreement.

(f)The Originator, Trust Depositor and Issuer intend and agree that (i) the transfer of the Loan Assets to the Trust Depositor and the transfer of the Loan Assets to the Issuer are intended to be a sale, conveyance and transfer of ownership of the Loan Assets, as the case may be, rather than the mere grant of a security interest to secure a borrowing and (ii) such Loan Assets shall not be part of the Originator’s or the Trust Depositor’s estate in the event of a filing of a bankruptcy petition or other action by or against such Person under any Insolvency Law. In the event, however, that notwithstanding such intent and agreement, such transfers are deemed to be a mere grant of a security interest to secure indebtedness, the Originator shall be deemed to have granted (and as of the Closing Date hereby grants) to the Trust Depositor and the Trust Depositor shall be deemed to have granted (and as of the Closing Date hereby grants) to the Issuer, as the case may be, a perfected first priority security interest in all right, title and interest of the Originator or of the Trust Depositor, respectively, in such Loan Assets and this Agreement shall constitute a security agreement under Applicable Law securing the repayment of the purchase price paid hereunder and the obligations and/or interests represented by the Securities, in the order of priorities, and subject to the other terms and conditions, of this Agreement, the Indenture and the Trust Agreement, together with such other obligations or interests as may arise hereunder and thereunder in favor of the parties hereto and thereto.

(g)If any such transfer of the Loan Assets is deemed to be a mere grant of a security interest to secure a borrowing, the Trust Depositor may, to secure the Trust Depositor’s own borrowing under the Loan Sale Agreement (to the extent that the transfer of the Loan Assets thereunder is deemed to be a mere grant of a security interest to secure a borrowing), repledge and reassign (i) all or a portion of the Loan Assets pledged to Trust Depositor by the Originator

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with respect to which the Trust Depositor has not released its security interest at the time of such pledge and assignment, and (ii) all proceeds thereof. Such repledge and reassignment may be made by the Trust Depositor with or without a repledge and reassignment by the Trust Depositor of its rights under any agreement with the Originator and without further notice to or acknowledgment from the Originator. The Originator waives, to the extent permitted by Applicable Law, all claims, causes of action and remedies, whether legal or equitable (including any right of setoff), against the Trust Depositor or any assignee of Trust Depositor relating to such action by the Trust Depositor in connection with the transactions contemplated by this Agreement.

Section 2.02.Conditions to Transfer of Initial Loan Assets to Issuer

On or before the Closing Date, the Originator or the Trust Depositor, as applicable, shall deliver or cause to be delivered to the Owner Trustee and the Trustee each of the documents, certificates and other items as follows:

(a)an Officer’s Certificate from the Originator substantially in the form of Exhibit C;

(b)copies of the minutes of the board of directors of the Originator, the Servicer and the Trust Depositor or of the executive committee of the board of directors of the Originator, the Servicer and the Trust Depositor approving the execution, delivery and performance of this Agreement and the transactions contemplated hereunder, certified in each case by a Responsible Officer of the Originator, the Servicer and the Trust Depositor;

(c)officially certified evidence dated within 30 days prior to the Closing Date of due formation and good standing of the Originator under the laws of the State of Delaware;

(d)the initial List of Loans, certified by a Responsible Officer of the Trust Depositor, together with an Assignment substantially in the form of Exhibit A (along with the delivery of any instruments and Loan Files as required under Section 2.08);

(e)an Officer’s Certificate from the Trust Depositor substantially in the form of Exhibit B;

(f)a letter from KPMG LLP or another nationally recognized accounting firm, addressed to the Originator and the Trust Depositor (with a copy to Moody’s and S&P), stating that such firm has reviewed a sample of the Initial Loans and performed specific procedures for such sample with respect to certain loan terms and identifying those Initial Loans that do not conform;

(g)officially certified evidence dated within 30 days prior to the Closing Date of due organization and good standing of the Trust Depositor under the laws of the State of Delaware;

(h)evidence of proper filing with appropriate offices in the State of Delaware of a UCC financing statement listing the Originator, as debtor, naming the Trustee as total assignee and identifying the Loan Assets as collateral; and evidence of proper filing with

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appropriate offices in the State of Delaware of a UCC financing statement listing the Trust Depositor, as debtor, naming the Trustee as total assignee and identifying the Loan Assets as collateral; and evidence of proper filing with appropriate offices in the State of Delaware of a UCC financing statement naming the Issuer, as debtor, naming the Trustee as secured party and identifying the Indenture Collateral, as collateral;

(i)an Officer’s Certificate from the Servicer listing the Servicing Officers;

(j)evidence of deposit in the Principal and Interest Account of all funds received with respect to the Initial Loans on and after the Closing Date, together with an Officer’s Certificate from the Servicer to the effect that such amount is correct; and

(k)a fully executed copy of each of the Transaction Documents.

Section 2.03.Issuance of the Notes

On the Closing Date, if the conditions set forth in Section 2.02 have been satisfied, the Issuer shall issue, to or upon the written order of the Trust Depositor, the Certificate representing ownership of a beneficial interest in 100% of the Issuer and the Issuer shall issue, and the Trustee shall authenticate, to or upon the written order of the Trust Depositor, the Notes secured by the Collateral.

Section 2.04.[Reserved.]

Section 2.05.Sales of Loans

(a)Except as otherwise expressly permitted or required by this Agreement, the Servicer (on behalf of the Issuer) shall not sell, transfer, exchange or otherwise dispose of any Loan; provided that the Servicer (on behalf of the Issuer) may direct the Trustee to sell (and the Trustee shall sell in accordance with such instructions) for cash any Loan, if on or prior to the trade date for such sale, transfer, exchange or other disposition, the Servicer has certified to the Trustee that each of the conditions applicable to such sale, transfer, exchange or other disposition set forth below has been satisfied:

(i)the applicable Loan is a Delinquent Loan, Credit Impaired Loan or Charged-Off Loan;

(ii)the sale will be undertaken in accordance with the Portfolio Acquisition and Disposition Requirements;

(iii)after giving effect to the sale, the S&P CDO Monitor Test will be maintained or improved;

(iv)the Moody’s or S&P rating of the Class A Notes is not lower than the Moody’s or S&P rating of such Notes on the Closing Date;

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(v)the Moody’s or S&P rating of the Class B Notes, the Class C Notes or the Class D Notes is not more than one rating subcategory below the respective Moody’s or S&P rating of such Notes on the Closing Date;

(vi)no Servicer Default or Event of Default has occurred; and

(vii)if such Loan is purchased by the Servicer or an Affiliate thereof, (A) such purchase represents the best execution for the Issuer and (B) such Person purchases such Loan at a price that is at least equal to the Fair Market Value of such Loan.

(b)The Servicer and the Issuer hereby expressly agree that no sale of Loans shall be executed in a manner that can reasonably be expected to cause the Issuer or the assets of the Issuer not to be in compliance with the requirements of Rule 3a-7 under the 1940 Act.

(c)The Sale Proceeds from any sale pursuant to this Section 2.05 will be deposited into the Principal and Interest Account and allocated as provided in Section 7.05. Upon receipt by the Servicer for deposit in the Principal and Interest Account of the amounts of Sale Proceeds received in connection with any such sale, and upon receipt by the Trustee of an Officer’s Certificate of the Servicer as to the satisfaction of all applicable conditions of this Section 2.05, the Trustee shall assign to the party designated by the Servicer (or to the Servicer itself) all of the Issuer’s right, title and interest in the repurchased or substituted Loan and related Loan Assets without recourse, representation or warranty. Such reassigned Loan shall no longer thereafter be included in the Collateral.

(d)In the event that the Servicer has notified the Trustee of an Optional Repurchase of the Notes, the Servicer may at any time direct the Trustee to sell, and the Trustee shall sell in the manner directed by the Servicer, any Loan without regard to the foregoing limitations in this Section 2.05; provided that (i) the Servicer certifies to the Trustee that in its judgment exercised in accordance with the Servicing Standard and based on calculations included in the certification (which shall include the sales prices of the Loans), the Sale Proceeds from the sale of one or more of the Loans shall be sufficient to pay the Repurchase Price with respect to all the Notes and (ii) the Servicer shall sell any Loan pursuant to this Section 2.05 only at a price that is commercially reasonable as reasonably determined by the Servicer in accordance with the Servicing Standard.

Section 2.06.Conveyance of Additional Loans; Effective Date Ratings Confirmation

(a)Conveyance of Additional Loans. The Issuer may (and the Trustee shall upon instruction of the Servicer acting on behalf of the Issuer), at any time during the Ramp-Up Period and the Replenishment Period and subject to the conditions set forth in this Section 2.06, apply Principal Collections standing to the credit of the Principal Collection Account, Draws under the Class A-1A VFN Notes and amounts standing to the credit of the Class A-1A VFN Funding Account to purchase Additional Loan Assets from the Trust Depositor. The purchase price paid by the Issuer for any Additional Loan shall be an amount equal to (x) in the case of a Loan originated by the Originator, the Outstanding Loan Balance thereof or (y) in the case of a

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Loan acquired by the Originator from a third party, the purchase price paid for such Loan, as applicable, plus, in each case, accrued and unpaid interest thereon.

(b)Upon the acquisition of any Additional Loan Assets pursuant to and in accordance with this Section 2.06, such Additional Loan Assets shall become part of the Collateral subject to the Lien of the Indenture. The Servicer represents and warrants in connection with the foregoing that it will not cause the Issuer to acquire any Additional Loan pursuant to this Section 2.06 for the primary purpose of recognizing gains or decreasing losses resulting from market value changes in the Loans.

(c)The Originator shall transfer to the Trust Depositor and the Trust Depositor shall transfer to the Issuer the Additional Loans and the Loan Assets related thereto only upon the satisfaction of each of the following conditions on or prior to the related Cut-Off Date (and the delivery of a related Loan Asset Certificate by the Trust Depositor shall be deemed a representation and warranty by the Issuer, the Trust Depositor and the Originator that such conditions are satisfied as of the related Cut-Off Date):

(i)the Trust Depositor shall have provided the Issuer and the Trustee with a timely Loan Asset Certificate complying with the definition thereof contained herein, which Loan Asset Certificate shall be delivered no later than 11:00 a.m. (New York City time) on the related Cut-Off Date;

(ii)with respect to the acquisition of any Additional Loan, after giving effect to the inclusion of such Loan in the Collateral, the Portfolio Acquisition and Disposition Requirements and, solely with respect to such acquisitions effected during the Replenishment Period, the Portfolio Criteria, are satisfied; provided that if any component of the Portfolio Criteria is not satisfied prior to giving effect to the acquisition of any such Additional Loan effected during the Replenishment Period, the Portfolio Criteria shall be deemed satisfied with respect to such component if the component is maintained or improved by the inclusion of such Additional Loans;

(iii)(A) the Originator shall have delivered to the Trust Depositor and Trustee and (B) the Trust Depositor shall have delivered to the Issuer a duly updated Subsequent List of Loans listing the Additional Loans;

(iv)the Trust Depositor shall have deposited or caused to be deposited in the Principal and Interest Account all Collections received with respect to the Additional Loans on and after the related Cut-Off Date;

(v)as of each Cut-Off Date, each of the Originator and the Trust Depositor was Solvent and neither of them have been made not Solvent by such transfer nor is either of them aware of any pending insolvency;

(vi)no selection procedures believed by the Originator or the Trust Depositor to be adverse to the interests of the Holders shall have been utilized in selecting the Additional Loans; and

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(vii)each of the representations and warranties made by the Trust Depositor pursuant to Section 3.02 (including without limitation that such Additional Loan is an Eligible Loan) and Section 3.04 applicable to the Additional Loans shall be true and correct as of the related Cut-Off Date.

(d)The Originator shall, at its own expense, on or prior to the related Cut-Off Date, indicate in its Computer Records that ownership of the Additional Loans identified on the Subsequent List of Loans has been sold by the Originator to the Trust Depositor, pursuant to the Loan Sale Agreement, and by the Trust Depositor to the Issuer, pursuant to this Agreement.

(e)The Originator shall deliver written notice of the inclusion of an Additional Loan to Moody’s and S&P.

(f)The Servicer on behalf of the Issuer shall present each Additional Loan proposed to be included in the Collateral to each Rating Agency for review by such Rating Agency in order that each Rating Agency may provide a rating and a recovery rate with respect to such Loan; provided that (i) such Loan may become a part of the Collateral prior to the Servicer’s presentment of the Loan to the Rating Agencies as described herein, (ii) the Servicer’s failure to present a Loan to the Rating Agencies as described herein shall not constitute an independent breach of, or default under, this Agreement or any other Transaction Document, (iii) with respect to S&P, the recovery rate shall be determined in accordance with the S&P Priority Category Recovery Rate and (iv) with respect to Moody’s, the Servicer shall have no obligation to present an Additional Loan if a Moody’s Rating for such Loan has been determined by reference to clause (v) of the definition of Moody’s Rating.

(g)Effective Date Ratings Downgrade. On or before the Effective Date, but in no case later than the date which is 15 Business Days prior to the Distribution Date occurring in June, 2007, the Servicer will (i) cause a firm of nationally recognized independent certified public accountants (the “Independent Accountants”) to determine the extent of compliance with the Portfolio Criteria of the Loans included in the Collateral as of the Effective Date, (ii) deliver a report of such Independent Accountants certifying the results of that determination to the Trustee and the Rating Agencies (such report, the “Accountants’ Effective Date Certificate”) and (iii) request that each Rating Agency confirm in writing (the “Effective Date Ratings Confirmation”), within 30 days after the Effective Date (or such later date as such Rating Agency may determine), that it has not reduced or withdrawn any of the ratings assigned to the Offered Notes or the Class D Notes on the Closing Date. In the event that (A) any rating assigned to the Offered Notes or the Class D Notes on the Closing Date is reduced or withdrawn or (B) the Issuer is not in compliance with the Portfolio Criteria as of the Effective Date and the Servicer does not receive the Effective Date Ratings Confirmation from Moody’s (in each case, such event, a “Ratings Confirmation Failure”), the next and succeeding Distribution Dates shall be Sequential Distribution Dates until the earlier of (x) such date as each such Rating Agency shall confirm its respective ratings of the Offered Notes and the Class D Notes assigned on the Closing Date and (y) the Outstanding Principal Balance of each Class of Offered Notes and the Class D Notes is reduced to zero.

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Section 2.07.Release of Excluded Amounts

(a)The parties hereto acknowledge and agree that the Issuer has no interest in the Excluded Amounts. The Trustee hereby agrees to release to the Issuer from the Loan Assets, and the Issuer hereby agrees to release to the Trust Depositor, any Excluded Amounts immediately upon identification thereof and upon receipt of an Officer’s Certificate of the Servicer, which release shall be automatic and shall require no further act by the Trustee or the Issuer; provided that the Trustee and the Owner Trustee shall execute and deliver such instruments of release and assignment or other documents, or otherwise confirm the foregoing release, as may reasonably be requested by the Trust Depositor in writing. Such Excluded Amounts shall not constitute and shall not be included in the Loan Assets.

(b)Immediately upon the release to the Trust Depositor by the Trustee of the Excluded Amounts, the Trust Depositor hereby irrevocably agrees to release to the Originator such Excluded Amounts, which release shall be automatic and require no further action by the Trust Depositor; provided that the Trust Depositor shall execute and deliver such instruments of release and assignment, or otherwise confirming the foregoing release of any Excluded Amounts, as may be reasonably requested by the Originator.

Section 2.08.Delivery of Documents in the Loan File

(a)Subject to the delivery requirements set forth in Section 2.08(b), the Issuer hereby authorizes and directs the Originator and the Trust Depositor to deliver possession of all the Loan Files and the related Loan Checklists to the Trustee (with copies to be held by the Servicer) on behalf of and for the account of the Noteholders. The Originator and the Trust Depositor shall also identify on the List of Loans (including any deemed amendment thereof associated with any Additional Loans or Substitute Loans), whether by attached schedule or marking or other effective identifying designation, all Loans that are or are evidenced by such instruments.

(b)With respect to each Loan in the Collateral, before the Closing Date in the case of the Initial Loans, and before the related Cut-Off Date in the case of any Additional Loans or Substitute Loans, the Trust Depositor will deliver or cause to be delivered to the Trustee, to the extent not previously delivered, each of the documents in the Loan File with respect to such Loan.

Section 2.09.[Reserved]

Section 2.10.Certification by Trustee; Possession of Loan Files

(a)Review; Certification. On or prior to the Closing Date, in the case of the Initial Loans, and the related Cut-Off Date, in the case of any Additional Loans or Substitute Loans, the Trustee shall review the portion of each Loan File constituting the Required Loan Documents required to be delivered pursuant to Section 2.08(b) on the Closing Date in the case of the Initial Loans and the related Cut-Off Date, in the case of any Additional Loans or Substitute Loans, and shall deliver to the Originator, the Trust Depositor, and the Servicer a certification in the form attached hereto as Exhibit L-1 on or prior to the Closing Date in the case of the Initial Loans and the related Cut-Off Date in the case of any Additional Loans or Substitute Loans. Within two Business Days after the Trustee receives the portion of the Loan

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File permitted to be delivered after the Closing Date in the case of the Initial Loans and the related Cut-Off Date in the case of any Additional Loans or Substitute Loans pursuant to Section 2.10(b), the Trustee shall deliver to the Originator, the Trust Depositor, and the Servicer a certification in the form attached hereto as Exhibit L-2.

(b)Non-Conforming Loan Files. If the Trustee during the process of reviewing the Loan Files finds any document constituting a part of a Loan File which is not properly executed, is missing, is unrelated to a Loan identified in the List of Loans, or does not conform in a material respect to the requirements of the definition of Loan File, or the description thereof as set forth in the List of Loans, the Trustee shall promptly so notify the Originator, the Trust Depositor and the Servicer. In performing any such review, the Trustee may conclusively rely on the Originator as to the purported genuineness of any such document and any signature thereon. It is understood that the scope of the Trustee’s review of the Loan Files is limited solely to confirming that the documents listed in the definition of Required Loan Documents have been executed and received and relate to the Loans identified in the List of Loans; provided with respect to the UCC financing statements referenced in clause (ii)(c) of the definition of Required Loan Documents, the Trustee’s sole responsibility will be to confirm that the Loan File contains UCC financing statements (to the extent required by such definition) and not to make determinations about the materiality of such UCC financing statements. The Originator agrees to use reasonable efforts to remedy a material defect in a document constituting part of a Loan File of which it is so notified by the Trustee. If, however, within 30 days after the Trustee’s notice to it respecting such material defect the Originator has not remedied the defect and such defect materially and adversely affects the value of the related Loan, such Loan will be treated as an Ineligible Loan and the Originator shall (i) substitute in lieu of such Loan a Substitute Loan or (ii) repurchase such Loan, in each case, in the manner and subject to the conditions set forth in Section 11.01.

(c)Release of Entire Loan File Upon Sale, Substitution or Repurchase. Subject to Section 5.08(a), upon receipt by the Trustee of a certification of a Servicing Officer of the Servicer of such substitution or of such purchase and the deposit of the amounts then required to be deposited as described in Section 2.05, Section 2.10(b) or Section 11.01, as applicable, in the Principal and Interest Account (which certification shall be in the form of Exhibit M), the Trustee shall release to the Servicer for release to the Originator the related Loan File and the Trustee and the Issuer shall execute, without recourse, and deliver such instruments of transfer necessary to transfer all right, title and interest in such Loan to the Originator free and clear of any Liens created by the Transaction Documents. All costs of any such transfer shall be borne by the Originator.

(d)Partial Release of Loan File and/or Related Property. Subject to Section 5.08(b), if in connection with taking any action in connection with a Loan (including, without limitation, the amendment to documents in the Loan File and/or a revision to Related Property) the Servicer requires any item constituting part of the Loan File, or the release from the Lien of the related Loan of all or part of any Related Property, the Servicer shall deliver to the Trustee a certificate to such effect in the form attached as Exhibit M hereto. Subject to Section 5.08(d), upon receipt of such certification, the Trustee shall deliver to the Servicer within two Business Days of such request (if such request was received by 1:00 p.m., New York City time), the requested documentation, and the Trustee shall execute, without recourse, and deliver

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such instruments of transfer necessary to release all or the requested part of the Related Property from the Lien of the related Loan and/or the Lien under the Transaction Documents.

(e)Annual Reporting. On the Distribution Date in December of each year, commencing December 20, 2006, the Trustee shall deliver to the Originator, the Trust Depositor, and the Servicer a report detailing all transactions with respect to the Loans for which the Trustee holds the Loan Files pursuant to this Agreement during the prior calendar year. Such report shall list all Loan Files which were released by or returned to the Trustee during the prior calendar year, the date of such release or return and the reason for such release or return as identified or the related request for release delivered by the Servicer.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

The Trust Depositor makes, and upon acquiring any Additional Loan or Substitute Loan is deemed to make, the representations and warranties in Section 3.01 through Section 3.04, on which the Issuer will rely in purchasing the Initial Loan Assets on the Closing Date and on which the Securityholders will rely.

Such representations and warranties are given as of the execution and delivery of this Agreement and as of the Closing Date (or Cut-Off Date, as applicable), but shall survive the sale, transfer and assignment of the Loan Assets to the Issuer. The repurchase obligation or substitution obligation of the Trust Depositor set forth in Section 11.01 constitutes the sole remedy available for a breach of a representation or warranty of the Trust Depositor set forth in Section 3.01 through Section 3.04 and no Servicer Default or other default may result therefrom.

Section 3.01.Representations and Warranties Regarding the Trust Depositor

By its execution of this Agreement, the Trust Depositor represents and warrants to the Issuer, the Trustee, the Securityholders that:

(a)Organization and Good Standing. The Trust Depositor is a limited liability company duly organized, validly existing and in good standing under the laws of Delaware and has the power to own its assets and to transact the business in which it is currently engaged. The Trust Depositor is duly qualified to do business as a foreign entity and is in good standing in each jurisdiction in which the character of the business transacted by it or properties owned or leased by it requires such qualification and in which the failure so to qualify would have a Material Adverse Effect with respect to the Trust Depositor or the Issuer.

(b)Authorization; Valid Sale; Binding Obligations. The Trust Depositor has the power and authority to make, execute, deliver and perform this Agreement and the other Transaction Documents to which it is a party and all of the transactions contemplated under this Agreement and the other Transaction Documents to which it is a party, and to create the Issuer and cause it to make, execute, deliver and perform its obligations under this Agreement and the other Transaction Documents to which the Issuer is a party, and the Trust Depositor has taken all necessary limited liability company action to authorize the execution, delivery and performance of this Agreement and the other Transaction Documents to which it is a party and to cause the

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Issuer to be created. This Agreement shall effect a valid sale, transfer and assignment of or grant a security interest in the Loan Assets from the Trust Depositor to the Issuer. This Agreement and the other Transaction Documents to which the Trust Depositor is a party constitute the legal, valid and binding obligation of the Trust Depositor enforceable in accordance with their respective terms, except as enforcement of such terms may be limited by applicable Insolvency Laws and general principles of equity, whether considered in a suit at law or in equity.

(c)No Consent Required. The Trust Depositor is not required to obtain the consent of any other party (other than those that it has already obtained) or any consent, license, approval or authorization from, or registration or declaration with, any Governmental Authority (other than those that it has already obtained) in connection with the execution, delivery, performance, validity or enforceability of this Agreement or the other Transaction Documents to which it is a party.

(d)No Violations. The execution, delivery and performance of this Agreement and the other Transaction Documents to which it is a party by the Trust Depositor, and the consummation of the transactions contemplated hereby and thereby, will not violate any Applicable Law applicable to the Trust Depositor, or conflict with, result in a default under or constitute a breach of the Trust Depositor’s organizational documents or Contractual Obligations to which the Trust Depositor is a party or by which the Trust Depositor or any of the Trust Depositor’s properties may be bound, or result in the creation or imposition of any Lien of any kind upon any of its properties pursuant to the terms of any such Contractual Obligations, other than as contemplated by the Transaction Documents.

(e)Litigation. No litigation or administrative proceeding of or before any court, tribunal or governmental body is currently pending, or to the knowledge of the Trust Depositor threatened, against the Trust Depositor or any of its properties or with respect to this Agreement, the other Transaction Documents to which it is a party or the Securities (i) that, if adversely determined, would in the reasonable judgment of the Trust Depositor be expected to have a Material Adverse Effect with respect to the Trust Depositor or the Issuer or (ii) seeking to adversely affect the federal income tax or other federal, state or local tax attributes of the Certificate or Notes.

(f)Solvency. The Trust Depositor, at the time of and after giving effect to each conveyance of Loan Assets hereunder, is Solvent on and as of the date thereof.

(g)Taxes. The Trust Depositor has filed or caused to be filed all tax returns which, to its knowledge, are required to be filed and has paid all taxes shown to be due and payable on such returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than any amount of tax due, the validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in accordance with generally accepted accounting principles have been provided on the books of the Trust Depositor); no tax Lien has been filed and, to the Trust Depositor’s knowledge, no claim is being asserted, with respect to any such tax, fee or other charge.

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(h)Place of Business; No Changes. The Trust Depositor’s location (within the meaning of Article 9 of the UCC) is the State of Delaware. The Trust Depositor has not changed its name, whether by amendment of its certificate of formation, by reorganization or otherwise, and has not changed its location within the four months preceding the Closing Date.

(i)Not an Investment Company. The Trust Depositor is not and, after giving effect to the transactions contemplated by the Transaction Documents, will not be required to be registered as an “investment company” under the 1940 Act.

(j)Sale Treatment. Other than for accounting and tax purposes, the Trust Depositor has treated the transfer of Loan Assets to the Issuer for all purposes as a sale and purchase on all of its relevant books and records and other applicable documents.

(k)Security Interest.

(i)This Agreement creates a valid and continuing security interest in favor of the Issuer (as defined in the applicable UCC) in all right, title and interest of Trust Depositor in the Loan Assets, which security interest is prior to all other Liens (except for Permitted Liens), and is enforceable as such against creditors of and purchasers from the Trust Depositor;

(ii)the Loans, along with the related Loan Files, constitute either a “general intangible”, an “instrument”, an “account”, “investment property”, or “chattel paper”, within the meaning of the applicable UCC;

(iii)the Trust Depositor owns and has, and upon the sale and transfer thereof by the Trust Depositor to the Issuer, the Issuer will have, good and marketable title to the Loan Assets free and clear of any Lien (other than Permitted Liens), claim or encumbrance of any Person;

(iv)the Trust Depositor has, within 10 days of the acquisition of a Loan, received all consents and approvals required by the terms of the Loan Assets to the sale of the Loan Assets hereunder to the Issuer;

(v)the Trust Depositor has caused the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable law in order to perfect the security interest in such Loan Assets granted to the Issuer under this Agreement;

(vi)other than the security interest granted to the Issuer pursuant to this Agreement, the Trust Depositor has not pledged, assigned, sold, granted a security interest in or otherwise conveyed any of such Loan Assets. The Trust Depositor has not authorized the filing of and is not aware of any financing statements naming the Trust Depositor as debtor that include a description of collateral covering such Loan Assets other than any financing statement (A) relating to the security interest granted to the Trust Depositor under the Loan Sale Agreement, or (B) that has been terminated. The Trust Depositor is not aware of the filing of any judgment or tax Lien filings against the Trust Depositor;

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(vii)all original executed copies of each Underlying Note (if any) that constitute or evidence the Loan Assets have been delivered to the Trustee, and in the case of Noteless Loans, the documents required pursuant to clause (ii)(a)(2) of the definition of Required Loan Documents have been delivered to the Trustee;

(viii)except with respect to Noteless Loans, the Trust Depositor has received a written acknowledgment from the Trustee that the Trustee or its bailee is holding any Underlying Notes that constitute or evidence any Loan Assets solely on behalf of and for the benefit of the Securityholders; and

(ix)none of the Underlying Notes that constitute or evidence any Loan Assets has any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than the Issuer and the Trustee.

(l)Value Given. The cash payments and Securities of the Issuer received by the Trust Depositor in respect of the purchase price of the Loans sold hereunder, together with the Issuer’s assumption of the future funding obligations under the Revolving Loans and Delayed Draw Term Loans, constitutes reasonably equivalent value in consideration for the transfer to the Issuer of such Loans under this Agreement, such transfer was not made for or on account of an antecedent debt owed by the Originator to the Trust Depositor, and such transfer was not and is not voidable or subject to avoidance under any Insolvency Law.

(m)Investment Company. The Issuer is not and, after giving effect to the transactions contemplated by the Transaction Documents, will not be required to be registered as an “investment company” within the meaning of the 1940 Act.

(n)No Defaults. The Trust Depositor is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or governmental agency, which default might have consequences that would have a Material Adverse Effect with respect to the Trust Depositor.

(o)Bulk Transfer Laws. The transfer, assignment and conveyance of the Loans by the Trust Depositor pursuant to this Agreement are not subject to the bulk transfer laws or any similar statutory provisions in effect in any applicable jurisdiction.

(p)Origination and Collection Practices. The origination and collection practices used by any Affiliate of the Trust Depositor with respect to each Loan have been in all material respects legal, proper and prudent and comply with the Credit and Collection Policy.

(q)Adequacy of Consideration. The Trust Depositor will receive fair consideration and reasonably equivalent value in exchange for the sale of the Loans.

(r)Lack of Intent to Hinder, Delay or Defraud. Neither the Trust Depositor nor any of its Affiliates sold, or will sell, any interest in any Loan with any intent to hinder, delay or defraud any of their respective creditors.

(s)Nonconsolidation. Each of the Issuer and the Trust Depositor conducts its affairs such that the Issuer or the Trust Depositor would not be substantively consolidated in

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each others estate and their respective separate existences would not be disregarded in the event of the Trust Depositor’s bankruptcy. Without limitation to any of the foregoing, (A) with respect to clauses (s)(xxix) and (s)(xxx), the Trust Depositor and (B) with respect to each other subclauses of this clause (s), each of the Issuer and the Trust Depositor, has not and shall not:

(i)	engage in any business or activity other than the purchase and receipt of Collateral and related assets under this Agreement, the sale and pledge of Collateral under the Transaction Documents, and such other activities as are incidental thereto;
(ii)	acquire or own any material assets other than (a) the Collateral and related assets under this Agreement and (b) incidental property as may be necessary for the operation of either the Issuer or the Trust Depositor and the performance of its obligations under the Transaction Documents;
(iii)	merge into or consolidate with any Person or dissolve, terminate or liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure, or jurisdiction of formation;
(iv)	fail to preserve its existence as an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization or formation, amend, modify, terminate or fail to comply with the provisions of its operating agreement, or fail to observe limited liability company formalities;
(v)	own any Subsidiary or make any Investment in any Person;
(vi)	except as permitted by this Agreement, commingle its assets with the assets of any of its Affiliates, or of any other Person;
(vii)	incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than indebtedness incurred under the Transaction Documents; provided that, such debt is not evidenced by a note and is paid when due;
(viii)	become insolvent or fail to pay its debts and liabilities from its assets as the same shall become due;
(ix)	fail to maintain its records, books of account and bank accounts separate and apart from those of any other Person;
(x)	enter into any contract or agreement with any Person, except upon terms and conditions that are commercially reasonable and intrinsically fair and substantially similar to those that would be available on an arms-length basis with third parties other than such Person;

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(xi)	seek its dissolution or winding up in whole or in part;
(xii)	fail to correct any known misunderstandings regarding the separate identity of Issuer and the Trust Depositor or any principal or Affiliate thereof or any other Person;
(xiii)	guarantee, become obligated for, or hold itself out to be responsible for the debt of another Person;
(xiv)	make any loan or advances to any third party, including any principal or Affiliate, or hold evidence of indebtedness issued by any other Person (other than the Loans and cash);
(xv)	fail to file its own separate tax return, or file a consolidated federal income tax return with any other Person, except as may be required by the Code and treasury regulations;
(xvi)	fail either to hold itself out to the public as a legal entity separate and distinct from any other Person or to conduct its business solely in its own name in order not (a) to mislead others as to the identity with which such other party is transacting business, or (b) to suggest that it is responsible for the debts of any third party (including any of its principals or Affiliates);
(xvii)	fail to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations;
(xviii)	file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any applicable insolvency, bankruptcy, liquidation or reorganization statute, or make an assignment for the benefit of creditors;
(xix)	except as may be required by the Code and treasury regulations, share any common logo with or hold itself out as or be considered as a department or division of (a) any of its principals or Affiliates, (b) any Affiliate of a principal or (c) any other Person;
(xx)	permit any transfer (whether in any one or more transactions) of any direct or indirect ownership interest in the Issuer or the Trust Depositor to the extent it has the ability to control the same, unless the Issuer or the Trust Depositor delivers to the Trustee an acceptable non-consolidation opinion;
(xxi)	fail to maintain separate financial statements, showing its assets and liabilities separate and apart from those of any other Person;

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(xxii)fail to pay its own liabilities and expenses only out of its own funds;

(xxiii)fail to pay the salaries of its own employees, if any, in light of its contemplated business operations;

(xxiv)acquire the obligations or securities of its Affiliates or stockholders;

(xxv)guarantee any obligation of any person, including an Affiliate;

(xxvi)fail to allocate fairly and reasonably any overhead expenses that are shared with an Affiliate, including paying for office space and services performed by any employee of an Affiliate;

(xxvii)fail to use separate invoices and checks bearing its own name;

(xxviii)pledge or permit the pledge of its assets or ownership interests in the Issuer for the benefit of any other Person, other than with respect to payment of the indebtedness to the Secured Parties hereunder;

(xxix)fail at any time to have at least one independent manager (an “Independent Manager”) who is not currently a director, officer, employee, trade creditor shareholder, manager or member (or spouse, parent, sibling or child of the foregoing) of (a) the Servicer, (b) the Issuer, (c) any principal of the Servicer, (d) any Affiliate of the Servicer, or (e) any Affiliate of any principal of the Servicer; provided such Independent Manager may be an independent manager or an independent director of another special purpose entity affiliated with the Servicer or fail to ensure that all limited liability company action relating to the selection, maintenance or replacement of the Independent Manager are duly authorized by the unanimous vote of the board of managers (including the Independent Managers);

(xxx)fail to provide that the unanimous consent of all members (including the consent of the Independent Manager) is required for the Trust Depositor to (a) dissolve or liquidate, in whole or part, or institute proceedings to be adjudicated bankrupt or insolvent, (b) institute or consent to the institution of bankruptcy or insolvency proceedings against it, (c) file a petition seeking or consent to reorganization or relief under any applicable federal or state law relating to bankruptcy or insolvency, (d) seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar official for the Trust Depositor, (e) make any assignment for the benefit of the Trust Depositor’s creditors, (f) admit in writing its inability to pay its

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debts generally as they become due, or (g) take any action in furtherance of any of the foregoing; and

(xxxi)take or refrain from taking, as applicable, each of the activities specified in the non-consolidation opinion of Latham & Watkins LLP, dated as of the date hereof, upon which the conclusions expressed therein are based.

(xxxii)The Issuer has received in writing from the Trust Depositor confirmation that the Trust Depositor will not cause the Issuer to file a voluntary petition under the Bankruptcy Code or Insolvency Laws.

(t)Accuracy of Information. All written factual information heretofore furnished by the Trust Depositor for purposes of or in connection with this Agreement or the other Transaction Documents to which Trust Depositor is a party, or any transaction contemplated hereby or thereby is, and all such written factual information hereafter furnished by the Trust Depositor to any party to the Transaction Documents will be, true and accurate in all material respects, on the date such information is stated or certified.

The representations and warranties set forth in Section 3.01(k) may not be waived by any Person and shall survive the termination of this Agreement. The Trust Depositor and Issuer (i) shall not waive any breach of the representations and warranties in Section 3.01(k), and (ii) shall provide S&P with prompt written notice of any breach of the representations and warranties set out in Section 3.01(k).

Section 3.02.Representations and Warranties Regarding Each Loan and as to Certain Loans in the Aggregate

The Trust Depositor represents and warrants (x) with respect to Section 3.02(a), Section 3.02(b) and Section 3.02(d) as to each Loan as of the Closing Date, and as of each Cut-Off Date with respect to each Additional Loan and each Substitute Loan, as applicable, and (y) with respect to Section 3.02(c), as to the Collateral in the aggregate as of the Closing Date, and as of each Cut-Off Date with respect to Additional Loans and Substitute Loans (after giving effect to the addition of such Additional Loans and Substitute Loans to the Collateral), that:

(a)List of Loans. The information set forth in the List of Loans attached hereto as Exhibit G (as the same may be amended or deemed amended in respect of a conveyance of Additional Loans or Substitute Loans on a Cut-Off Date) is true, complete and correct as of the applicable Cut-Off Date.

(b)Eligible Loan. Such Loan satisfies the criteria for the definition of Eligible Loan set forth in this Agreement as of the date of its conveyance hereunder.

(c)Loans Secured by Real Property. To the Trust Depositor’s best knowledge after reasonable inquiry, less than 40% of the Aggregate Outstanding Loan Balance of the Collateral as of the Closing Date consists of Loans principally secured by real property and the Trust Depositor will not effectuate the transfer of an Additional Loan or Substitute Loan

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if the Trust Depositor knows after reasonable inquiry that such transfer would cause more than 40% of the Aggregate Outstanding Loan Balance of the Collateral as of any Cut-Off Date to consist of Loans principally secured by real property; provided that, for this purpose, a Loan will be considered principally secured by real property if the Trust Depositor knows, after reasonable inquiry that the fair market value of the interest in real property securing the Loan exceeds 50% of its Outstanding Loan Balance.

(d)Participated Loans. Any Participated Loan included in the Collateral (other than a Qualified Participated Loan) shall be converted to a full assignment within 60 days following the Closing Date.

Section 3.03.[Reserved]

Section 3.04.Representations and Warranties Regarding the Required Loan Documents

The Trust Depositor represents and warrants on the Closing Date with respect to the Initial Loans (or as of the related Cut-Off Date, with respect to Additional Loans and Substitute Loans), that except as otherwise provided in Section 2.08, the Required Loan Documents and each other item identified on each Loan Checklist with respect to the Loan File for each Loan are in the possession of the Trustee.

Section 3.05.[Reserved]

Section 3.06.Representations and Warranties Regarding the Servicer

The Servicer represents and warrants to the Owner Trustee, the Trustee and the Securityholders that:

(a)Organization and Good Standing. The Servicer is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the power to own its assets and to transact the business in which it is currently engaged. The Servicer is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the character of the business transacted by it or properties owned or leased by it requires such qualification and in which the failure so to qualify would have a Material Adverse Effect on the business, properties, assets, or condition (financial or otherwise) of the Servicer or the Issuer. The Servicer is properly licensed in each jurisdiction to the extent required by the laws of such jurisdiction to service the Loans in accordance with the terms hereof and in which the failure to so qualify would have a Material Adverse Effect on the business, properties, assets, or condition (financial or otherwise) of the Servicer or Issuer.

(b)Authorization; Binding Obligations. The Servicer has the power and authority to make, execute, deliver and perform this Agreement and the other Transaction Documents to which the Servicer is a party and all of the transactions contemplated under this Agreement and the other Transaction Documents to which the Servicer is a party, and has taken all necessary corporate action to authorize the execution, delivery and performance of this Agreement and the other Transaction Documents to which the Servicer is a party. This Agreement and the other Transaction Documents to which the Servicer is a party constitute the

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legal, valid and binding obligations of the Servicer enforceable in accordance with their respective terms, except as enforcement of such terms may be limited by Insolvency Laws and general principles of equity, whether considered in a suit at law or in equity.

(c)No Consent Required. The Servicer is not required to obtain the consent of any other party (other than those that it has already obtained) or any consent, license, approval or authorization from, or registration or declaration with, any Governmental Authority (other than those that it has already obtained) in connection with the execution, delivery, performance, validity or enforceability of this Agreement and the other Transaction Documents to which the Servicer is a party.

(d)No Violations. The execution, delivery and performance of this Agreement and the other Transaction Documents to which the Servicer is a party by the Servicer will not violate any Applicable Law applicable to the Servicer, or conflict with, result in a default under or constitute a breach of the Servicer’s organizational documents or any Contractual Obligations to which the Servicer is a party or by which the Servicer or any of the Servicer’s properties may be bound, or result in the creation of or imposition of any Lien of any kind upon any of its properties pursuant to the terms of any such Contractual Obligations, other than as contemplated by the Transaction Documents.

(e)Litigation. No litigation or administrative proceeding of or before any court, tribunal or governmental body is currently pending, or to the knowledge of the Servicer threatened, against the Servicer or any of its properties or with respect to this Agreement, or any other Transaction Document to which the Servicer is a party that, if adversely determined, would in the reasonable judgment of the Servicer be expected to have a Material Adverse Effect with respect to the Servicer or the Issuer.

(f)Reports. All reports, certificates and other written information furnished by the Servicer with respect to the Loans are correct in all material respects.

Section 3.07.Representations and Warranties of the Backup Servicer

The Backup Servicer hereby represents and warrants to the Owner Trustee, the Trustee, the Securityholders, as follows:

(a)Organization. It is a Minnesota corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation with all requisite power and authority to own its properties and to conduct its business as presently conducted and to enter into and perform its obligations pursuant to this Agreement.

(b)Good Standing. The Backup Servicer is duly qualified to do business and is in good standing, and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of its property and the conduct of its business requires such qualification, licenses or approvals, except where the failure to so qualify or have such licenses or approvals has not had, and would not be reasonably expected to have, a Material Adverse Effect on the interests of the Securityholders.

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(c)Authorization. It has the power and authority to execute and deliver this Agreement and to carry out its terms. It has duly authorized the execution, delivery and performance of this Agreement by all requisite action.

(d)No Violations. The consummation of the transactions contemplated by, and the fulfillment of the terms of, this Agreement by it will not violate any Applicable Law or conflict with, result in any breach of any of the terms or provisions of, or constitute a default under, its organizational documents or any Contractual Obligations by which it or any of its property is bound or result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any Contractual Obligations.

(e)No Consent Required. No consent, approval, authorization, order, registration, filing, qualification, license or permit of or with any Governmental Authority having jurisdiction over it or any of its respective properties is required to be obtained in order for it to enter into this Agreement or perform its obligations hereunder.

(f)Binding Obligation. This Agreement constitutes its legal, valid and binding obligation, enforceable in accordance with its terms, except as such enforceability may be limited by applicable Insolvency Laws and general principles of equity (whether considered in a suit at law or in equity).

(g)Litigation. There are no proceedings or investigations pending or, to the best of its knowledge, threatened, against it before any Governmental Authority (i) asserting the invalidity of this Agreement, (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or (iii) seeking any determination or ruling that might (in its reasonable judgment) have a Material Adverse Effect on the interests of the Securityholders.

(h)No Conflict. The execution and delivery of this Agreement, the performance of the transactions contemplated hereby and the fulfillment of the terms hereof will not conflict with, result in any breach of its articles of incorporation or bylaws or any of the material terms and provisions of, constitute (with or without notice or lapse of time or both) a default under any indenture, contract, agreement, mortgage, deed of trust, or other instrument to which the Backup Servicer is a party or by which it or any of its property is bound.

(i)Validity, Etc. This Agreement constitutes the legal, valid and binding obligation of the Backup Servicer, enforceable against the Backup Servicer in accordance with its terms, except as such enforceability may be limited by applicable Insolvency Laws or general principles of equity (whether considered in a suit at law or in equity).

ARTICLE IV.

PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS

Section 4.01.Custody of Loans

The contents of each Loan File shall be held in the custody of the Trustee under the Indenture for the benefit of, and as agent for, the Securityholders.

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Section 4.02.Filing

On or prior to the Closing Date, the Originator, Trust Depositor and Servicer shall cause the UCC financing statement(s) referred to in Section 2.02(h) to be filed, and from time to time the Servicer, on behalf of the Issuer, shall take and cause to be taken such actions and execute such documents as are necessary or desirable or as the Issuer or Trustee (acting at the direction of the Majority Noteholders) may reasonably request to perfect and protect the Trustee’s first priority perfected security interest in the Loan Assets against all other Persons, including, without limitation, the filing of financing statements, amendments thereto and continuation statements, the execution of transfer instruments and the making of notations on or taking possession of all records or documents of title. Notwithstanding the obligations of the Originator, Trust Depositor and Servicer set forth in the preceding sentence, the Originator, Trust Depositor and Issuer hereby authorize the Servicer to prepare and file, at the expense of the Servicer, UCC financing statements (including but not limited to renewal, continuation or in lieu statements) and amendments or supplements thereto or other instruments as the Servicer may from time to time deem necessary or appropriate in order to perfect and maintain the security interest granted hereunder in accordance with the UCC.

Section 4.03.Changes in Name, Corporate Structure or Location

(a)During the term of this Agreement, none of the Originator, the Servicer, the Trust Depositor or the Issuer shall change its name, form of organization, existence, state of formation or location without first giving at least 30 days’ prior written notice to the Owner Trustee, the Trustee, and the other parties hereto.

(b)If any change in either the Servicer’s, the Originator’s or the Trust Depositor’s name, form of organization, existence, state of formation, location or other action would make any financing or continuation statement or notice of ownership interest or Lien relating to any Loan Asset seriously misleading within the meaning of applicable provisions of the UCC or any title statute, the Servicer, no later than five Business Days after the effective date of such change, shall file such amendments as may be required to preserve and protect the Trustee’s security interest in the Loan Assets and the proceeds thereof. Promptly after taking any of the foregoing actions, the Servicer shall deliver to the Owner Trustee and the Trustee an Opinion of Counsel reasonably acceptable to the Owner Trustee and the Trustee stating that, in the opinion of such counsel, all financing statements or amendments necessary to preserve and protect the Trustee’s security interest in the Loan Assets have been filed, and reciting the details of such filing.

Section 4.04.Costs and Expenses

The Servicer agrees to pay all reasonable costs and disbursements in connection with the perfection and the maintenance of perfection, as against all third parties, of the Trustees’ and Issuer’s right, title and interest in and to the Loan Assets (including, without limitation, the security interest in the Related Property related thereto and the security interests provided for in the Indenture); provided to the extent permitted by the Required Loan Documents, the Servicer may seek reimbursement for such costs and disbursements from the related Obligors.

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Section 4.05.Sale Treatment

Other than for accounting and tax purposes, the Trust Depositor shall treat the transfer of Loan Assets made hereunder for all purposes as a sale and purchase on all of its relevant books and records.

Section 4.06.Separateness from Trust Depositor

The Originator agrees to take or refrain from taking or engaging in with respect to the Trust Depositor each of the actions or activities specified in the “substantive consolidation” opinion of Latham & Watkins, LLP (including any certificates of the Originator attached thereto) delivered on the Closing Date, upon which the conclusions therein are based.

ARTICLE V.

SERVICING OF LOANS

Section 5.01.Appointment and Acceptance

Ares Capital is hereby appointed as Servicer pursuant to this Agreement and pursuant to the other Transaction Documents under which the Servicer has any rights, duties or obligations. Ares Capital accepts such appointment and agrees to act as the Servicer pursuant to this Agreement and pursuant to the other Transaction Documents under which Ares Capital, as Servicer, has any rights, duties or obligations.

Section 5.02.Duties of the Servicer

(a)The Servicer, as an independent contract servicer, shall service and administer the Loans and shall have full power and authority, acting alone, to do any and all things in connection with such servicing and administration which the Servicer may deem necessary or desirable and consistent with the terms of this Agreement, the Credit and Collection Policy and the Servicing Standard. The parties hereto each acknowledge, and the Noteholders and the Certificateholder are hereby deemed to acknowledge, that the Servicer, as Servicer under this Agreement, possesses only such rights with respect to the enforcement of rights and remedies with respect to the Loans and the Related Property and under the Required Loan Documents as those which have been transferred to the Issuer with respect to the related Loan. Therefore, the provisions of this Article V shall only apply to Agented Loans with respect to which the Servicer is the lead agent and to the extent not inconsistent with the related Required Loan Documents.

(b)The Servicer may perform its duties directly or, consistent with the Servicing Standard, through agents, accountants, experts, attorneys, brokers, consultants or nominees selected with reasonable care by the Servicer. The Servicer will remain fully responsible and fully liable for its duties and obligations hereunder and under any other Transaction Document notwithstanding any such delegation to a third party. Performance by any such third party of any of the duties of the Servicer hereunder or under any other Transaction Document shall be deemed to be performance thereof by the Servicer. In addition, the Servicer may enter into Subservicing Agreements for any servicing and administration of Loans with any

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entity; provided that the Rating Agency Condition is satisfied with respect to the entry of the Servicer into any such Subservicing Agreement. The Servicer shall be entitled to terminate any Subservicing Agreement in accordance with the terms and conditions of such Subservicing Agreement and to either itself directly service the related Loans or enter into a Subservicing Agreement with a successor Subservicer which qualifies hereunder. Notwithstanding any Subservicing Agreement, any of the provisions of this Agreement relating to agreements or arrangements between the Servicer and a Subservicer or reference to actions taken through a Subservicer or otherwise, so long as this Agreement shall remain effective, the Servicer shall remain obligated and primarily liable to the Trustee, for itself and on behalf of the Securityholders, for the servicing and administering of the Loans in accordance with the provisions of this Agreement, the Credit and Collection Policy and the Servicing Standard, without diminution of such obligation or liability by virtue of such Subservicing Agreements or other arrangements with third parties pursuant to this clause (b) or by virtue of indemnification from the Subservicer and to the same extent and under the same terms and conditions as if the Servicer alone were servicing and administering the Loans. For purposes of this Agreement, the Servicer shall be deemed to have received payments on Loans when any Subservicer has received such payments. The Servicer shall be entitled to enter into any agreement with a Subservicer for indemnification of the Servicer by such Subservicer, and nothing contained in this Agreement shall be deemed to limit or modify such indemnification.

(c)Any Subservicing Agreement that may be entered into and any transactions or services relating to the Loans involving a Subservicer in its capacity as such and not as an originator shall be deemed to be between the Subservicer and the Servicer alone, and the Trustee and the Securityholders shall not be deemed parties thereto and shall have no claims, rights, obligations, duties or liabilities with respect to the Subservicer except as set forth in Section 5.02(d). Notwithstanding the foregoing, the Servicer shall (i) at its expense and without reimbursement, deliver to the Trustee a copy of each Subservicing Agreement and (ii) provide notice of the termination of any Subservicer within a reasonable time after such Subservicer’s termination to the Trustee.

(d)In the event the Servicer shall for any reason no longer be the Servicer, the Servicer at its expense and without right of reimbursement therefor, shall, upon request of the Trustee, deliver to the Successor Servicer all documents and records (including computer tapes and diskettes) in it possession relating to each Subservicing Agreement and the Loans then being serviced hereunder and an accounting of amounts collected and held by it hereunder and otherwise use its best efforts to effect the orderly and efficient transfer of the Subservicing Agreements and of any other arrangements with third parties pursuant to clause (a) of this Section 5.02 to the Successor Servicer to the extent permitted thereby.

(e)Modifications and Waivers Relating to Loans.

(i)So long as it is consistent with the Credit and Collection Policy and the Servicing Standard, the Servicer may waive, modify or vary any term of any Loan if in the Servicer’s determination such waiver, modification or variance (1) will not extend the stated maturity date of such Loan to the Stated Maturity Date or beyond, and (2) can reasonably be expected to increase the collectability of or realization on such Loan when compared to expected Collections in the absence of such waiver, modification or variance; provided the Servicer may

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not enter into any amendment, waiver, modification or variance with respect to any loan for the purpose or with the intention of causing a breach of a representation or warranty hereunder to occur with respect to such Loan solely in order to render such loan eligible for repurchase or substitution hereunder or to otherwise make such Loan eligible for repurchase pursuant to Section 11.01.

(ii)Except as expressly set forth in Section 5.02(e)(i), the Servicer may execute any amendments, waivers, modifications or variances related to such Loan and any documents related thereto on behalf of the Issuer. The Servicer will provide each Rating Agency with a written summary of any such amendment, waiver, modification or variance promptly after its execution and, promptly upon request by any Rating Agency, a copy of any such waiver, modification or variance. Such summary shall set forth a brief description of the reasons for, and the effect of, such waiver, modification or variance, and shall indicate whether such waiver, modification or variance constitutes a Specified Amendment.

(iii)Although costs incurred by the Servicer or any Subservicer in respect of Servicing Advances, including any interest owed with respect thereto, may be added to the amount owing by the Obligor under the related Loan, such amounts shall not be so added for the purposes of calculating distributions to Noteholders. Any fees and costs imposed in connection therewith on the Obligor of the related Loan, and any reimbursement thereof by any Obligor or out of Sale Proceeds, Liquidation Proceeds or Insurance Proceeds received with respect to the related Loan or its Related Property shall be withdrawn and payable to the Servicer from the Principal and Interest Account pursuant to Section 7.03(h). Without limiting the generality of the foregoing, so long as it is consistent with the Credit and Collection Policy and the Servicing Standard, the Servicer shall continue, and is hereby authorized and empowered to execute and deliver on behalf of the Issuer, the Trustee, the Owner Trustee, and each Securityholder, all instruments of amendment, waiver, satisfaction or cancellation, or of partial or full release, discharge and all other comparable instruments, with respect to the Loans and with respect to any Related Property. Such authority shall include, but not be limited to, the authority to substitute or release items of Related Property consistent with the Credit and Collection Policy and the Servicing Agreement and sell participations or assignments in Loans previously transferred to the Issuer. The Issuer, the Trustee and the Owner Trustee have granted a power of attorney to the Servicer with respect thereto, pursuant to Section 5.02(x). In connection with any such sale, the Servicer shall deposit in the Principal and Interest Account, pursuant to Section 7.03(b), all proceeds received upon such sale (other than Excluded Amounts). If reasonably required by the Servicer, the Issuer, the Trustee and the Owner Trustee, shall furnish the Servicer, within five Business Days of receipt of the Servicer’s request, with any powers of attorney and other documents necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties under this Agreement or under any of the other Transaction Documents. Any such request by the Servicer to the Issuer, the Trustee or the Owner Trustee, shall be accompanied by a certification in the form of Exhibit L signed by a Servicing Officer. In connection with any substitution of Related Property, the Servicer shall deliver to the Trustee the items required by, and within the time frame, set forth in Section 2.08, assuming that the date of substitution is the relevant Cut-Off Date.

(f)The Servicer, in servicing and administering the Loans, shall act in a manner, consistent with the Credit and Collection Policy and the Servicing Standard (which

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includes, without limitation to any of the foregoing, the duty to act in good faith and exercise commercially reasonable judgment and reasonable care), employ or cause to be employed procedures (including collection, foreclosure, Foreclosed Property and Repossessed Property management procedures), in accordance with the Required Loan Documents, the Credit and Collection Policy and the Servicing Standard.

(g)In accordance with the power set forth in Section 2.01(a), the Servicer shall perform the duties of the Issuer and the Owner Trustee under the Transaction Documents. In furtherance of the foregoing, the Servicer shall consult with the Owner Trustee as the Servicer deems appropriate regarding the duties of the Issuer and the Owner Trustee under the Transaction Documents. The Servicer shall monitor the performance of the Issuer and the Owner Trustee and shall recommend to the Owner Trustee actions necessary to comply with the Issuer’s or the Owner Trustee’s duties under the Transaction Documents. The Servicer shall prepare for execution by the Owner Trustee or the Issuer or shall cause the preparation by other appropriate Persons of all such documents, reports, filings, instruments, certificates and opinions as it shall be the duty of the Issuer or the Owner Trustee to prepare, file or deliver pursuant to the Transaction Documents.

(h)In addition to the duties of the Servicer set forth in this Agreement or any of the Transaction Documents, the Servicer shall perform or shall cause to be performed such calculations and shall prepare for execution by the Issuer or the Owner Trustee or shall cause the preparation by other appropriate Persons of all such documents, reports, filings, instruments, certificates and opinions as it shall be the duty of the Issuer to prepare, file or deliver pursuant to state and federal tax and securities laws. In accordance with the directions of the Issuer or the Owner Trustee, as applicable, the Servicer shall administer, perform or supervise the performance of such other activities in connection with the Issuer as are not covered by any of the foregoing provisions and as are expressly requested by the Issuer or the Owner Trustee and are reasonably within the capability of the Servicer.

(i)Notwithstanding anything in this Agreement or any of the Transaction Documents to the contrary, the Servicer shall be responsible for promptly (upon a Responsible Officer of the Servicer having actual knowledge thereof) notifying the Trustee in the event that any withholding tax is imposed on the Issuer’s payments (or allocations of income) to a Securityholder. Any such notice shall be in writing and specify the amount of any withholding tax required to be withheld pursuant to such provision.

(j)All tax returns required to be signed by the Issuer, if any, will be signed by the Servicer on behalf of the Issuer.

(k)The Servicer shall maintain appropriate books of account and records relating to services performed under this Agreement, which books of account and records shall be reasonably accessible for inspection by the Owner Trustee at any time during the Servicer’s normal business hours upon not less than three Business Days’ prior written notice.

(l)Without the prior written consent of the Majority Noteholders and subject to the satisfaction of the Rating Agency Condition, the Servicer shall not agree or consent to, or otherwise permit to occur, any material amendment, modification, change, supplement or

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rescission of or to the Credit and Collection Policy, in whole or in part, in any manner that could have a Material Adverse Effect on the Loans.

(m)For so long as any of the Notes are outstanding and are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, (i) the Servicer will provide or cause to be provided to any holder of such Notes and any prospective purchaser thereof designated by such holder, upon the request of such a holder or prospective purchaser, the information required to be provided to such holder or prospective purchaser by Rule 144A(d)(4) under the Securities Act; and (ii) the Servicer shall update such information from time to time in order to prevent such information from becoming false and misleading and will take such other actions as are necessary to ensure that the safe harbor exemption from the registration requirements of the Securities Act under Rule 144A is and will be available for resales of such Notes conducted in accordance with Rule 144A.

(n)The initial Servicer will keep in full force and effect its existence, rights and franchise as a Maryland corporation, and the Servicer shall obtain and preserve its qualification to do business as a foreign corporation in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement and of any of the Loans and to perform its duties under this Agreement.

(o)The Servicer shall be obligated to make the Servicing Advances (but not Scheduled Payment Advances) incurred in the performance of its servicing duties hereunder as provided in Section 5.09. The Servicer shall be entitled to reimbursement for such Servicing Advances from the Collections received from the Loan to which such Servicing Advances relate pursuant to Section 5.10(d) and Section 7.03(h). Notwithstanding anything contained herein to the contrary, in no event shall the application of Servicing Advances or Scheduled Payment Advances prevent a Loan from being or becoming a Delinquent Loan or Charged-Off Loan, as applicable.

(p)The Servicer shall not be responsible for any taxes on the Issuer (except to the extent of taxes attributable to the Servicer’s ownership, if any, of equity interests in the Issuer) or any Servicing Fees payable to any Successor Servicer.

(q)All payments received on Loans by the Servicer will be applied by the Servicer to amounts due by the Obligor in accordance with the provisions of the related Underlying Loan Agreement or, if to be applied at the discretion of the Servicer, then consistent with the Credit and Collection Policy and the Servicing Standard.

(r)The Servicer shall be responsible for any tax reporting, disclosure, record keeping or list maintenance requirements of the Issuer under Sections 6011(a), 6111(d) or 6112 of the Code, including, but not limited to, the preparation of IRS Form 8886 pursuant to Federal Income Tax Regulations Section 1.6011-4(d) or any successor provision and any required list maintenance under Federal Income Tax Regulations Section 301.6112-1 or any successor provision.

(s)The Servicer shall notify the Backup Servicer of any material modification to its servicing system.

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(t)            The Servicer shall provide to Moody’s and S&P (a) annual financial statements for each Obligor of a Loan included in the Collateral (other than a Loan which is publicly rated by Moody’s or S&P, as applicable) as promptly as reasonably practicable after receipt of such annual financial statements by the Servicer with respect to the end of the fiscal year of such Obligor, until such time as the related Loan has been paid in full or is no longer part of the Collateral, (b) promptly after a Responsible Officer of the Servicer becomes aware thereof, email notice of any payment default (following the expiration of any applicable grace period) under a Loan and (c) copies of all notices (other than agent bank rate reset and payment notices) sent to the Trustee. The Servicer shall notify S&P if any Obligor of a Loan included in the Collateral fails to provide annual financial statements within 135 days after the end of the fiscal year of each such Obligor.

(u)           The Servicer shall provide each Rating Agency (i) within 60 days after each calendar quarter (except the fourth calendar quarter), commencing with the quarter ending September 30, 2006, the unaudited quarterly financial statements of the Servicer and (ii) within 90 days after each fiscal year of the Servicer, commencing with the fiscal year ending December 31, 2006, the audited annual financial statements of the Servicer, together with the related report of the independent accountants to the Servicer.

(v)           The initial Servicer will maintain the Servicing Files at the principal place of business of the Servicer at the address set forth in Section 13.04 in accordance with the Servicing Standard.

(w)          Promptly following any extension of the Replenishment Period or any early termination of the Replenishment Period, the Servicer shall give written notice thereof to the Trustees, the Trust Depositor and the Rating Agencies at the addresses described in Section 13.04.

(x)            The Servicer shall deliver the Accountants’ Effective Date Certificate to the Trustee and the Rating Agencies.

(y)           The Trust Depositor, the Issuer, the Owner Trustee and the Trustee each hereby irrevocably (except as provided below) appoint the Servicer its respective true and lawful agent and attorney-in-fact (with full power of substitution) in its name, place and stead and at the Issuer’s expense, in connection with the performance of the Servicer’s duties provided for in this Agreement and in the other Transaction Documents, including the following powers: (a) to give any necessary receipts or acquittance for amounts collected or received on or with respect to the Loans and the Related Property, (b) to make all necessary transfers of the Loans, and/or of the Related Property, as applicable, in accordance herewith and therewith, (c) to execute (under hand, under seal or as a deed) and deliver all necessary or appropriate bills of sale, assignments, agreements and other instruments and endorsements in connection with any such transfer, and (d) to execute (under hand, under seal or as a deed) any votes, consents, directions, releases, amendments, waivers, satisfactions and cancellations, agreements, instruments, orders or other documents or certificates in connection with or pursuant to this Agreement or the other Transaction Documents relating thereto or to the duties of the Servicer hereunder or thereunder, the Trust Depositor, the Issuer, the Owner Trustee and the Trustee hereby ratifying and confirming all that such attorney-in-fact (or any substitute) shall lawfully do under this power of

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attorney and in accordance with this Agreement and the other Transaction Documents as applicable thereto. Nevertheless, if so requested by the Servicer, the Trust Depositor, the Issuer, the Owner Trustee and the Trustee or any thereof, as requested, shall ratify and confirm any such act by executing and delivering to the Servicer or as directed by the Servicer all proper bills of sale, assignments, releases, endorsements and other certificates, instruments and documents of whatever nature as may reasonably be designated in any such request. This power of attorney shall, however, expire, and the Servicer and any substitute agent or attorney-in-fact appointed by the Servicer pursuant hereto shall cease to have any power to act as the agent or attorney-in-fact of the Issuer, the Trustee or of the Owner Trustee upon termination of this Agreement or upon a Servicer Transfer from and after which the Successor Servicer shall be deemed to have the rights of the Servicer pursuant to this clause (x).

(z)            The Servicer shall execute and file such financing statements and cause to be executed and filed such continuation statements, all in such manner and in such places as may be required by law fully to preserve, maintain and protect the interest of the Issuer, the Securityholders, the Trustee and the Owner Trustee in the Loans and in the proceeds thereof. The Servicer shall deliver (or cause to be delivered) to the Owner Trustee and the Trustee file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing.

(aa) The Servicer shall transfer an amount of Principal Collections sufficient to cause the Class A-1A VFN Funding Test to be satisfied from the Principal Collection Account to the Class A-1A VFN Funding Account if: (i) at any time during the Replenishment Period the Issuer receives a payment of principal with respect to a Revolving Loan; and (ii) after giving effect to such payment (and any corresponding increase in the Exposure Amount) the Class A-1A VFN Funding Test is not satisfied.

(bb) Notwithstanding any other provision of this Agreement, if any material conflict or material inconsistency exists among the Required Loan Documents, the Credit and Collection Policy and the Servicing Standard, the provisions of the Required Loan Documents shall control.

(cc) Notwithstanding anything in this Agreement or any Transaction Document to the contrary, the Owner Trustee shall have no duty or obligation to supervise or otherwise monitor the Servicer or any agents, employees or servants thereof, nor shall the Owner Trustee (as such and in its individual capacity) have any liability for any act or omission of the Servicer or any agents, employees or servants thereof in preparing, executing, delivering or filing any document or in otherwise carrying out its duties hereunder or under any Transaction Document. The Owner Trustee shall be fully protected in relying on any recommendation of the Servicer hereunder or under any Transaction Document.

(dd) The Servicer on behalf of the Issuer shall deliver to the Rating Agencies a Compliance Plan in the event that any Interim Test is not satisfied as of any Interim Test Date.

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Section 5.03.        Liquidation of Loans

(a)           In the event that any payment due under any Loan and not postponed pursuant to Section 5.02 is not paid when the same becomes due and payable, or in the event the Obligor fails to perform any other covenant or obligation under the Loan, the Servicer in accordance with the Required Loan Documents, the Credit and Collection Policy and the Servicing Standard shall take such action as shall maximize the amount of recovery thereon and as the Servicer shall deem to be in the best interests of the Noteholders.

(b)           The Servicer, consistent with its Credit and Collection Policy and the Servicing Standard, may accelerate all payments due under any Loan to the extent permitted by the Required Loan Documents and may foreclose upon at a public or private sale or otherwise comparably effect the ownership of Related Property relating to Charged-Off Loans for which the related Loan is still outstanding and as to which no satisfactory arrangements can be made for collection of delinquent payments in accordance with the provisions of Section 5.10 and, subject to applicable laws, may act, or may engage an experienced Person qualified to act, as sales and processing agent for the Related Property that is foreclosed upon. In connection with any such foreclosure or other conversion and any other liquidation action or enforcement of remedies, the Servicer shall exercise collection and foreclosure procedures in accordance with the Credit and Collection Policy and the Servicing Standard. Without limiting the generality of the foregoing, the Servicer may (i) sell any such Related Property by using commercially reasonable efforts to obtain bids to purchase such Related Property from at least three Persons (other than the Servicer or any of its Affiliates) or (ii) in its discretion purchase, or procure that any of its Affiliates purchases, any such Related Property for a price equal to the then Fair Market Value of such Related Property. If the Servicer elects to obtain bids for the sale of the Related Property it may sell the Related Property to the highest bidder (if any bids are received) or the Servicer or an Affiliate may purchase the Related Property for a price equal to the highest bid, but in no event may the Servicer sell any Related Property to the Servicer or any of its Affiliates for a purchase price less than the then Fair Market Value of such Related Property. Any purchase of the Related Property by the Servicer or any of its Affiliates other than pursuant to a bid price is to be evidenced by a certificate of a Responsible Officer of the Servicer delivered to the Trustee setting forth the Loan, the Related Property, the sale price of the Related Property and certifying that such sale price is the Fair Market Value of such Related Property. In any case in which any such Related Property has suffered damage, the Servicer will not expend funds in connection with any repair or toward the repossession of such Related Property unless it reasonably determines that such repair and/or repossession will increase the Liquidation Proceeds by an amount greater than the amount of such expenses.

(c)           After a Loan has been liquidated, the Servicer shall promptly prepare and forward to the Trustee and upon request, any Securityholder, a report (the “Liquidation Report”), in the form attached hereto as Exhibit D, detailing the Liquidation Proceeds received from such Loan, the Liquidation Expenses incurred and reimbursed to the Servicer with respect thereto, any Scheduled Payment Advances and Servicing Advances, together with interest due thereon, reimbursed to the Servicer therefrom, any loss incurred in connection therewith, and any Nonrecoverable Advances to be reimbursed to the Servicer with respect thereto in accordance with the Priority of Payments in Section 7.05.

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Section 5.04.        [Reserved]

Section 5.05.        [Reserved]

Section 5.06.        Collection of Certain Loan Payments

(a)           The Servicer shall make reasonable efforts, consistent with the Credit and Collection Policy and the Servicing Standard, to collect all payments required under the terms and provisions of the Loans. Consistent with the foregoing and the Credit and Collection Policy and the Servicing Standard, the Servicer may in its discretion waive or permit to be waived any fee or charge which the Servicer would be entitled to retain hereunder as servicing compensation and extend the due date for payments due on a Loan as provided in Section 5.02(e).

(b)           Except as otherwise permitted under this Agreement, the Servicer agrees not to make, or consent to, any change, in the direction of, or instructions with respect to, any payments to be made by an Obligor or, in connection with an Agented Loan, the paying agent with respect thereto, in any manner that would diminish, impair, delay or otherwise adversely affect the timing or receipt of such payments to the Principal and Interest Account without the prior written consent of the Trustee and with the consent of the Majority Noteholders.

Section 5.07.        Access to Certain Documentation and Information Regarding the Loans

The Servicer shall provide to the Owner Trustee, the Trustee, the Backup Servicer, any bank, thrift or insurance company regulatory authority and the supervisory agents and examiners of the foregoing, access to the documentation regarding the Loans required by applicable local, state and federal regulations, such access being afforded without charge but only upon not less than three Business Days prior written request by the Owner Trustee, the Trustee or any such regulated Noteholder and during normal business hours at the offices of the Servicer designated by it and in a manner that does not unreasonably interfere with the Servicer’s normal operations or customer or employee relations. The Trustee, the Owner Trustee, such Noteholder and the representative of any such regulatory authority designated by the related Noteholder to view such information shall and shall cause their representatives to hold in confidence all such information except to the extent disclosure may be required by law (and all reasonable applications for confidential treatment are unavailing) and except to the extent that the Trustee and the Owner Trustee may reasonably determine that such disclosure is consistent with their obligations hereunder. The Servicer may request that any such Person not a party hereto enter into a confidentiality agreement reasonably acceptable to the Servicer prior to permitting such Person to view such information.

Section 5.08.        Satisfaction of Collateral and Release of Loan Files

(a)           Upon the payment in full of any Loan, the receipt by the Servicer of a notification that payment in full will be escrowed in a manner customary for such purposes or the deposit into the Principal and Interest Account of the purchase price of any Loan acquired by the Trust Depositor, the Servicer or another Person pursuant to this Agreement, or any other Transaction Document, the Servicer will immediately notify the Trustee by a certification in the form of Exhibit M (which certification shall include a statement to the effect that all amounts received or to be received in connection with such payment which are required to be deposited in

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the Principal and Interest Account pursuant to Section 7.03(b) have been or will be so deposited) of a Servicing Officer and shall request delivery to it of the Loan File. Upon receipt of such certification and request, the Trustee in accordance with Section 2.10(c), shall release, within two Business Days (if such request was received by 1:00 p.m. New York City time), the related Loan File to the Servicer. Expenses incurred in connection with any instrument of satisfaction or deed of reconveyance shall be payable by the Servicer and shall not be chargeable to the Principal and Interest Account or the Note Distribution Account; provided that the Servicer may collect and retain such expenses from the underlying Obligor.

(b)           From time to time and as appropriate for the servicing or foreclosure of any Loan, the Trustee shall, upon request of the Servicer and delivery to the Trustee of a certification in the form of Exhibit M signed by a Servicing Officer, release the related Loan File to the Servicer within two Business Days (if such request was received by 1:00 p.m. New York City time), and the Trustee shall execute such documents as shall be necessary to the prosecution of any such proceedings. The Servicer shall return the Loan File to the Trustee when the need therefor by the Servicer no longer exists, unless the Loan has been liquidated and the Liquidation Proceeds relating to the Loan have been deposited in the Principal and Interest Account and remitted to the Trustee for deposit in the Note Distribution Account or the Loan File or such document has been delivered to an attorney, or to a public trustee or other public official as required by law, for purposes of initiating or pursuing legal action or other proceedings for the foreclosure or repossession of Related Property either judicially or non-judicially, and the Servicer has delivered to the Trustee a certificate of a Servicing Officer certifying as to the name and address of the Person to whom such Loan File or such document was delivered and the purpose or purposes of such delivery. Upon receipt of a certificate of a Servicing Officer stating that such Loan was liquidated, the servicing receipt relating to such Loan shall be released by the Trustee to the Servicer.

(c)           The Trustee shall execute and deliver to the Servicer any court pleadings, requests for trustee’s sale or other documents provided to it necessary to the foreclosure or trustee’s sale in respect of Related Property or to any legal action brought to obtain judgment against any Obligor on the related loan agreement (including any Underlying Note or other agreement securing Related Property) or to obtain a deficiency judgment, or to enforce any other remedies or rights provided by the related loan agreement (including any Underlying Note or other agreement securing Related Property) or otherwise available at law or in equity. Together with such documents or pleadings, the Servicer shall deliver to the Trustee a certificate of a Servicing Officer requesting that such pleadings or documents be executed by the Trustee and certifying as to the reason such documents or pleadings are required and that the execution and delivery thereof by the Trustee will not invalidate or otherwise adversely affect the Lien of the agreement securing Related Property, except for the termination of such a Lien upon completion of the foreclosure or trustee’s sale. The Trustee shall, upon receipt of a written request from a Servicing Officer, execute any document provided to the Trustee by the Servicer or take any other action requested in such request, that is, in the opinion of the Servicer as evidenced by such request, required or appropriate by any state or other jurisdiction to discharge the Lien securing Related Property upon the satisfaction thereof and the Trustee will sign and post, but will not guarantee receipt of, any such documents to the Servicer, or such other party as the Servicer may direct, within five Business Days of the Trustee’s receipt of such certificate or documents. Such certificate or documents shall establish to the Trustee’s satisfaction that the related Loan has

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been paid in full by or on behalf of the Obligor (or subject to a deficiency claim against such Obligor) and that such payment has been deposited in the Principal and Interest Account.

(d)           Notwithstanding anything contained in this Section 5.08 to the contrary, in no event may the Servicer possess in excess of 10 Loan Files (excluding Loan Files for Loans which have been paid in full or repurchased) at any given time.

Section 5.09.        Scheduled Payment Advances; Servicing Advances and Nonrecoverable Advances

(a)           For each Due Period, if the Servicer determines that any Scheduled Payment (or portion thereof) that was due and payable pursuant to a Loan in the Collateral during such Due Period was not received prior to the end of such Due Period, the Servicer has the right to elect, but is not obligated, to make a Scheduled Payment Advance in an amount up to the amount of such delinquent Scheduled Payment (or portion thereof) unless the Servicer believes in good faith that pursuant to Section 5.09(b) that such advance will be a Nonrecoverable Advance, in an amount of up to 60 days’ accrued interest in respect of a Loan paying interest monthly and the amount of interest accrued in one interest period in respect of Loans paying interest less frequently than monthly. The Servicer will deposit any Scheduled Payment Advances into the Principal and Interest Account on or prior to 1:00 p.m. (New York City time) on the related Determination Date, in immediately available funds. The Servicer will be entitled to be reimbursed for Scheduled Payment Advances, together with accrued and unpaid interest thereon, pursuant to Section 7.03, Section 7.05(a) and Section 7.05(b).

(b)           The Servicer will not make a Scheduled Payment Advance or a Servicing Advance if the Servicer has determined in its sole discretion, exercised in good faith and consistent with the Servicing Standard, that the amount of such Scheduled Payment Advance or Servicing Advance proposed to be advanced plus interest expected to accrue thereon, will be a Nonrecoverable Advance. Absent bad faith, the Servicer’s determination as to whether any Scheduled Payment Advance or Servicing Advance is expected to be a Nonrecoverable Advance or whether, once advanced, it is a Nonrecoverable Advance, shall be conclusive and binding on the Issuer and on the Noteholders. The determination by the Servicer that any proposed Servicing Advance, if made, would constitute a Nonrecoverable Advance or that it has made a Nonrecoverable Advance shall be made by the Servicer and shall be evidenced by an Officer’s Certificate delivered promptly to the Trustee, setting forth the basis for such determination.

(c)           The Servicer will be entitled to recover any Scheduled Payment Advance made by it, together with accrued interest due thereon, from Interest Collections in the case of Scheduled Payment Advances of interest, and from Principal Collections in the case of Scheduled Payment Advance of principal, in each case received from the Obligor with respect to the specific Loan for which such Scheduled Payment Advance was made or other collections or proceeds with respect to such Loan or the Related Property pursuant to the Priority of Payments; provided that, if at any time a Scheduled Payment Advance, together with accrued interest thereon, made by the Servicer is subsequently determined to be a Nonrecoverable Advance, the Servicer will be entitled to recover the amount of such Nonrecoverable Advance from the Principal and Interest Account on any Business Day during any Due Period prior to the related Determination Date (or on a Distribution Date prior to any payment of interest on or principal of

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the Notes in accordance with the Priority of Payments). The Servicer will be entitled to recover the amount of any Servicing Advance, together with accrued interest thereon, from the Principal and Interest Account from amounts received from or with respect to the specific Loan or Related Property with respect to which such Servicing Advance was made on any Business Day during any Due Period prior to the related Determination Date, provided that, if at any time a Servicing Advance of interest, together with accrued interest thereon, is subsequently determined to be a Nonrecoverable Advance, the Servicer will be entitled to recover the amount of such Nonrecoverable Advance from the Principal and Interest Account on any Business Day during any Due Period prior to the related Determination Date (or on any Distribution Date prior to any payment of interest on or principal of the Notes in accordance with the Priority of Payments), provided further that, if at any time a Servicing Advance of principal, together with accrued interest thereon, is subsequently determined to be a Nonrecoverable Advance, the Servicer will be entitled to recover the amount of such Nonrecoverable Advance on a Distribution Date to the extent then permitted in accordance with the Priority of Payments.

(d)           The Servicer shall be entitled to an annual rate of interest payable at the Ares Capital Prime Rate (and, in the case of any Successor Servicer, at the rate published in The Wall Street Journal from time to time as the prime rate in the United States) with respect to each Scheduled Payment Advance and each Servicing Advance from and including the date such advance is made by the Servicer to but not including the date of reimbursement of such advance to the Servicer. The Servicer shall deliver to the Trustee promptly after the end of a Due Period a certificate setting forth the amount of compound interest due to the Servicer on the next Distribution Date.

Section 5.10.        Title, Management and Disposition of Foreclosed Property

(a)           In the event that title to Related Property is acquired by the Servicer hereunder in foreclosure or by deed in lieu of foreclosure or by other legal process, the deed or certificate of sale, or the Repossessed Property, shall be taken in the name of the Issuer for the benefit of the Securityholders.

(b)           The Servicer, subject to the provisions of this Article V, shall manage, conserve, protect and operate each such Foreclosed Property or other Repossessed Property for the Securityholders solely for the purpose of its prudent and prompt disposition and sale. The Servicer shall, either itself or through an agent selected by the Servicer, manage, conserve, protect and operate the Foreclosed Property or other Repossessed Property in a manner consistent with the Credit and Collection Policy and the Servicing Standard. The Servicer shall attempt to sell the same (and may temporarily rent the same) on such terms and conditions as the Servicer deems to be in the best interest of the Securityholders.

(c)           The Servicer shall cause to be deposited in the Principal and Interest Account, no later than two Business Days after the receipt thereof, all revenues received with respect to the conservation and disposition of the related Foreclosed Property or other Repossessed Property net of Liquidation Expenses.

(d)           The Servicer shall, subject to Section 5.02(p) and Section 7.03, reimburse itself for any related unreimbursed Scheduled Payment Advances and Servicing Advances,

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together with accrued and unpaid interest due thereon, and unpaid Servicing Fees, and the Servicer shall deposit in the Principal and Interest Account the net cash proceeds of the sale of any Foreclosed Property or other Repossessed Property to be distributed to the Securityholders in accordance with Section 7.05.

Section 5.11.        Servicing Compensation

(a)           As compensation for its servicing activities hereunder and reimbursement for its expenses, the Servicer shall be entitled to receive a servicing fee calculated and payable quarterly in arrears on each Distribution Date prior to the termination of the Issuer (with respect to each Due Period, the “Servicing Fee”), which will comprise of the senior servicing fee (the “Senior Servicing Fee”) and the subordinated servicing fee (the “Subordinated Servicing Fee”), each of which will be in an amount equal to the product of: (i) the Servicing Fee Percentage, (ii) the Aggregate Outstanding Loan Balance as of the beginning of the related Due Period (or, with respect to the first Due Period, as of the Closing Date) and (iii) a fraction, the numerator of which is equal to the number of days in the related Due Period (or, with respect to the first Due Period, the number of days from the Closing Date to the end of the first Due Period) and the denominator of which is 360. The Servicing Fee is payable out of Collections pursuant to Section 7.05(a) and Section 7.05(b). If the Servicer is replaced, the Originator shall be responsible for the payment of any fee payable to a Successor Servicer in excess of the Servicing Fee to the extent such fee is not paid pursuant to Section 7.05(a) and Section 7.05(b).

(b)           In addition to the Servicing Fee, the Servicer shall be entitled to retain for itself as additional servicing compensation assumption and other administrative fees paid or payable in connection with any Loan.

Section 5.12.        Assignment; Resignation

The Servicer shall not assign its rights and duties under this Agreement (other than in connection with a subservicing or other arrangement permitted under this Agreement) nor resign from the obligations and duties hereby imposed on it as Servicer except (a) by mutual consent of the Servicer, the Trustee and the Majority Noteholders, (b) in connection with a merger, conversion or consolidation permitted pursuant to Section 5.13 (in which case, subject to the Rating Agency Condition being satisfied with respect thereto, the Person resulting from the merger, conversion or consolidation shall be the successor of the Servicer, or the Servicer, with the consent of the Trustee and the Backup Servicer (which shall not be unreasonably withheld or delayed), may appoint a successor Servicer which satisfies the criteria set forth in this Agreement, such successor Servicer accepts such appointment, and the Rating Agency Condition is satisfied with respect thereto), (c) upon the reasonable determination by the Servicer that the Servicer’s duties thereunder are no longer permissible under Applicable Law or administrative determination and such incapacity cannot be cured by the Servicer or (d) upon the reasonable determination by the Servicer that the continued performance of its duties as Servicer will cause a materially adverse accounting, regulatory or tax result for the Servicer or its investment advisor. Any such determination permitting the resignation of the Servicer shall be evidenced by a written Opinion of Counsel (who may be counsel for the Servicer) to such effect delivered to the Trustee, which Opinion of Counsel shall be in form and substance reasonably acceptable to

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the Trustee. No such resignation shall become effective until a successor has assumed the Servicer’s responsibilities and obligations hereunder in accordance with Section 8.03.

Section 5.13.        Merger or Consolidation of Servicer

(a)           Any Person into which the Servicer may be merged or consolidated, or any Person resulting from such merger, conversion or consolidation to which the Servicer is a party, or any Person succeeding to substantially all of the business of the Servicer, and who shall be an established commercial loan servicing institution that on a consolidated basis has a net worth of at least $50,000,000, shall be the Successor Servicer hereunder without execution or filing of any paper or any further act on the part of any of the parties hereto, notwithstanding anything herein to the contrary; provided that no such merger, conversion or consolidation of the Servicer or transfer of all or substantially all or the Servicer assets or business shall be permitted hereunder unless the Rating Agency Condition is satisfied with respect thereto or unless the Servicer appoints a Successor Servicer which meets such requirements and accepts such appointment to become Servicer hereunder and the Rating Agency Condition is satisfied with respect thereto. Such Successor Servicer shall be a permitted assignee of the Servicer. The provisions of Section 8.03(c) and (e) shall apply to any such servicing transfer.

(b)           So long as the Servicer is the Originator, upon the occurrence of any merger or consolidation of the Originator or transfer of substantially all of its assets and its business which, in the case of a merger or consolidation, results in the failure of the holders of the common voting stock of the Originator as of the Closing Date to own 51% of the outstanding common voting stock of the Originator or any successor entity with or into which the Originator shall have been merged or consolidated, the Servicer shall (i) provide the Trust Depositor, the Trustee, and the Rating Agencies with notice of such change-in-control within 30 days after completion of the same, and (ii) satisfy the Rating Agency Condition after completion of the same.

Section 5.14.        Limitation on Liability of the Servicer and Others

The Servicer and any stockholder, partner, member, manager, director, officer, employee or agent of the Servicer may rely on any document of any kind which it in good faith reasonably believes to be genuine and to have been adopted or signed by the proper authorities or persons respecting any matters arising hereunder. Except as otherwise provided in Section 5.02(b), the Servicer shall not be liable for any errors, inaccuracies or omissions of any Person not affiliated with the Servicer contained in any information, report, certificate, data or other document delivered to the Servicer or on which the Servicer must rely in order to perform its obligations hereunder and under the other Transaction Documents. The Servicer shall not be in default hereunder or incur any liability, except as provided in the proviso in the last sentence of this Section 5.14 for any failure, error or delay in carrying out its duties hereunder or under any other Transaction Document if such failure, error or delay results from the Servicer acting in accordance with information prepared or supplied by a Person other than the Servicer or any of its Affiliates or the failure or delay of any such Person to prepare or provide such information. Subject to the terms of Section 12.01 herein, the Servicer shall have no obligation to appear with respect to, prosecute or defend any legal action which is not incidental to the Servicer’s duty to service the Loans in accordance with this Agreement. The Servicer shall not be responsible for

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the payment of any taxes imposed on or with respect to the Issuer (except to the extent of taxes attributable to the Servicer’s ownership, if any, of equity interests in the Issuer) or for the fees of any Successor Servicer. Except as provided herein, the Servicer shall not be under any liability to any other party to the Agreement, the Noteholder, or the Certificateholder or any other Person for any action taken or for refraining from taking any action pursuant to this Agreement whether arising from express or implied duties under this Agreement; provided notwithstanding anything to the contrary contained herein, nothing shall protect the Servicer against any liability that would otherwise be imposed by reason of its willful misfeasance, bad faith or negligence in the performance of duties or by reason of its willful misconduct hereunder.

Section 5.15.        The Backup Servicer

(a)           The Issuer, the Trustee and the Trust Depositor hereby appoint Lyon Financial Services, Inc. (d/b/a U.S. Bank Portfolio Services) to act as Backup Servicer in accordance with the terms of this Agreement. Lyon Financial Services, Inc. (d/b/a U.S. Bank Portfolio Services) hereby accepts such appointment and agrees to perform the duties and responsibilities with respect thereto set forth herein.

(b)           The Backup Servicer shall perform the following duties and obligations:

(i)            On or before the Closing Date, the Backup Servicer shall accept from the Servicer delivery of the information required to be set forth in the Quarterly Reports in hard copy and in an agreed upon electronic format.

(ii)           Not later than 12:00 noon New York City time four Business Days after the end of the related Due Period, the Servicer shall provide to the Backup Servicer and the Backup Servicer shall accept delivery of tape in an agreed upon electronic format (the “Tape”) from the Servicer, which shall include but not be limited to the following information: (A) for each Loan, (1) Loan number, (2) Loan category (i.e., Traditional Middle Market Loan, Large Middle Market Loan, or Broadly Syndicated Loan), (3) Moody’s and S&P Industry Classification Group, (4) type of Loan (i.e., Term Loan, Delayed Draw Term Loan or Revolving Loan), (5) type of security interest (i.e., First Lien Loan, Second Lien Loan, or Subordinated Loan), (6) origination date, (7) maturity date, (8) benchmark for Loan Rate, (9) margin, (10) frequency of Scheduled Payments, (11) the collection status, and (12) the Outstanding Loan Balance and (B) the Aggregate Outstanding Loan Balance. With respect to its duties pursuant to this Section 5.15(b)(ii), the Backup Servicer shall have no duty to confirm that the Tape contains the foregoing information nor shall it be required to verify, recompute, reconcile or recalculate any such data or information.

(iii)          Prior to the Distribution Date, the Backup Servicer shall review the Quarterly Report to ensure that it is complete on its face, and based solely on the information provided to the Backup Servicer pursuant to
Section 5.15(b)(ii), that the following items in such Quarterly Report have been accurately calculated, if applicable, and reported: (A) the Aggregate Outstanding Loan Balance, (B) the Backup Servicing Fee, (C) the Loans that are more than 60 days delinquent (other than Charged-Off Loans), (D) the Charged-Off Loans, and (E) the Priority of Payments. The Backup Servicer shall notify the Trustee, the Initial Purchaser and the Servicer

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of any discrepancies with the Quarterly Report based on such review not later than the Business Day preceding such Distribution Date.

(iv)          If the Servicer disagrees with the report provided under paragraph (iii) above by the Backup Servicer or if the Servicer or any subservicer has not reconciled such discrepancy, the Backup Servicer agrees to confer with the Servicer to resolve such disagreement on or prior to the next succeeding Determination Date and shall settle such discrepancy with the Servicer if possible, and notify the Trustee, the Initial Purchaser and the Rating Agencies of the resolution thereof. The Servicer hereby agrees to cooperate at its own expense with the Backup Servicer in reconciling any discrepancies herein. If within 20 days after the delivery of the report provided under paragraph (iii) above by the Backup Servicer, such discrepancy is not resolved, the Backup Servicer shall promptly notify the Servicer, Trustee, the Initial Purchaser and the Rating Agencies of the continued existence of such discrepancy. Following receipt of such notice by the Trustee, the Initial Purchaser and the Rating Agencies, the Servicer shall deliver to the Trustee, the Initial Purchaser, the Backup Servicer and the Rating Agencies no later than the related Distribution Date a certificate describing the nature and amount of such discrepancies and the actions the Servicer proposes to take with respect thereto.

With respect to the foregoing, the Backup Servicer, in the performance of its duties and obligations hereunder, is entitled to rely conclusively, and shall be fully protected in so relying, on the contents of each Tape, including, but not limited to, the completeness and accuracy thereof, provided by the Servicer.

(c)           After the termination or resignation by the Servicer in accordance with this Agreement, all authority, power, rights and responsibilities of the Servicer, under this Agreement, whether with respect to the Loans or otherwise, shall pass to and be vested in the Successor Servicer or the Backup Servicer, as applicable in accordance with Section 8.03 and such applicable party shall be deemed the Successor Servicer, subject to and in accordance with the provisions of Section 8.03, as long as such named Successor Servicer is not prohibited by any Applicable Law from fulfilling the same, as evidenced by an Opinion of Counsel; provided if Lyon as Backup Servicer becomes the Successor Servicer, it will not make any Scheduled Payment Advances.

(d)           Any Person (i) into which the Backup Servicer may be merged or consolidated, (ii) that may result from any merger or consolidation to which the Backup Servicer shall be a party, or (iii) that may succeed to the properties and assets of the Backup Servicer substantially as a whole, which Person in any of the foregoing cases executes an agreement of assumption to perform every obligation of the Backup Servicer hereunder, shall be the successor to the Backup Servicer under this Agreement without further act on the part of any of the parties to this Agreement.

(e)           As compensation for its backup servicing activities hereunder, the Backup Servicer shall be entitled to receive the Backup Servicing Fee. The Backup Servicing Fee shall be calculated and payable quarterly in arrears on each Distribution Date. The Backup Servicer’s entitlement to receive the portion of the Backup Servicing Fee related to its Backup Servicer duties (other than due and unpaid Backup Servicer Fees owed through such date) shall cease on

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the earliest to occur of: (i) it becoming the Successor Servicer, (ii) its removal as Backup Servicer, or (iii) the termination of this Agreement.

(f)            The Backup Servicer may be removed and replaced as provided in Section 8.10.

(g)           The Backup Servicer undertakes to perform only such duties and obligations as are specifically set forth in this Agreement, it being expressly understood by all parties hereto that there are no implied duties or obligations of the Backup Servicer hereunder. Without limiting the generality of the foregoing, the Backup Servicer, except as expressly set forth herein, shall have no obligation to supervise, verify, monitor or administer the performance of the Servicer. The Backup Servicer may act through its agents, attorneys and custodians in performing any of its duties and obligations under this Agreement, it being understood by the parties hereto that the Backup Servicer will be responsible for any misconduct or negligence on the part of such agents, attorneys or custodians acting for and on behalf of the Backup Servicer. Neither the Backup Servicer nor any of its officers, directors, employees or agents shall be liable, directly or indirectly, for any damages or expenses arising out of the services performed under this Agreement other than damages or expenses that result from the negligence or willful misconduct of it or them or the failure to perform materially in accordance with this Agreement.

(h)           Limitation on Liability. The Backup Servicer shall not be liable for any obligation of the Servicer contained in this Agreement or for any errors of the Servicer contained in any Tape, certificate or other data or document delivered to the Backup Servicer hereunder or on which the Backup Servicer must rely in order to perform its obligations hereunder, and the parties hereto each agree to look only to the Servicer to perform such obligations. The Backup Servicer shall have no responsibility and shall not be in default hereunder or incur any liability for any failure, error, malfunction or any delay in carrying out any of its respective duties under this Agreement if such failure or delay results from the Backup Servicer acting in accordance with information prepared or supplied by a Person other than the Backup Servicer or the failure of any such other Person to prepare or provide such information. The Backup Servicer shall have no responsibility, shall not be in default and shall incur no liability for (i) any act or failure to act of any third party, including the Servicer (other than any agent, attorney or custodian acting on behalf of the Backup Servicer), (ii) any inaccuracy or omission in a notice or communication received by the Backup Servicer from any third party (other than any agent, attorney or custodian acting on behalf of the Backup Servicer), (iii) the invalidity or unenforceability of any Loan under Applicable Law, (iv) the breach or inaccuracy of any representation or warranty made with respect to any Loan, or (v) the acts or omissions of any Successor Backup Servicer.

Section 5.16.        Covenants of the Backup Servicer

The Backup Servicer hereby covenants that:

(a)           The Backup Servicer will comply in all material respects with all Applicable Law.

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(b)The Backup Servicer will preserve and maintain its existence, rights and franchises as a corporation in good standing under the laws of the jurisdiction of its incorporation and will obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement, the other Transaction Documents and each other instrument or agreement necessary or appropriate to the proper administration of this Agreement and the transactions contemplated hereby.

(c)The Backup Servicer shall perform in all material respects all of its obligations and duties under this Agreement.

ARTICLE VI.

COVENANTS OF THE TRUST DEPOSITOR

Section 6.01.Legal Existence

During the term of this Agreement, the Trust Depositor will keep in full force and effect its existence, rights and franchises as a limited liability company under the laws of the jurisdiction of its organization and will obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement, the other Transaction Documents and each other instrument or agreement necessary or appropriate to the proper administration of this Agreement and the transactions contemplated hereby.  In addition, all transactions and dealings between the Trust Depositor and its Affiliates will be conducted on an arm’s-length basis.

Section 6.02.Loans Not to Be Evidenced by Promissory Notes

The Trust Depositor will take no action to cause any Loan not originally evidenced by an Underlying Note to be evidenced by an instrument (as defined in the UCC), except in connection with the enforcement or collection of such Loan.

Section 6.03.Security Interests

The Trust Depositor will not sell, pledge, assign or transfer to any Person other than the Issuer, or grant, create, incur, assume or suffer to exist any Lien on any Loan in the Collateral or its interest in any Related Property, other than the Lien granted to the Issuer, whether now existing or hereafter transferred to the Issuer, or any interest therein.  The Trust Depositor will immediately notify the Owner Trustee and the Trustee of the existence of any Lien on any Loan in the Collateral or its interest in any Related Property; and the Trust Depositor shall defend the right, title and interest of the Issuer in, to and under the Loans in the Collateral and the Issuer’s interest in any Related Property, against all claims of third parties; provided that nothing in this Section 6.03 shall prevent or be deemed to prohibit the Trust Depositor from suffering to exist Permitted Liens upon any of the Loans in the Collateral or its interest in any Related Property.

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Section 6.04.Delivery of Principal Collections and Interest Collections

The Trust Depositor agrees to pay to the Servicer promptly (but in no event later than two Business Days after receipt) all Collections received by the Trust Depositor in respect of the Loans, for application in accordance with Section 7.05.

Section 6.05.Regulatory Filings

The Trust Depositor shall make any filings, reports, notices, applications and registrations with, and seek any consents or authorizations from, the Commission and any state securities authority on behalf of the Issuer as may be necessary or that the Trust Depositor deems advisable to comply with any federal or state securities or reporting requirements laws.

Section 6.06.Compliance with Law

The Trust Depositor hereby agrees to comply in all material respects with all Applicable Law applicable to the Trust Depositor except where the failure to do so would not have a Material Adverse Effect on the Securityholders.

Section 6.07.Activities; Transfers of Notes or Certificates by Trust Depositor

Except as contemplated by this Agreement or the other Transaction Documents, the Trust Depositor shall not engage in any business or activity of any kind, or enter into any transaction or indenture, mortgage, instrument, agreement, contract, lease or other undertaking, which is not directly related to the transactions contemplated and authorized by this Agreement or the other Transaction Documents; provided that the Trust Depositor may purchase and sell (or grant Liens in respect of) assets similar to the Loan Assets to other Persons in securitization or other non-recourse financing transactions involving the Originator or any of its Affiliates on terms and conditions (with respect to liabilities and restrictions on its activities, as well as restrictions on its interactions with the Originator or its Affiliates, relevant to the “bankruptcy remoteness” or “substantive consolidation” analysis relating to the Trust Depositor) substantially similar to the terms and conditions applicable to the Trust Depositor under the Transaction Documents so long as the Securityholders are not materially adversely affected thereby and the Rating Agency Condition is satisfied.  Notwithstanding anything to the contrary contained herein, the Trust Depositor may assign, transfer, convey or finance all or any portion of any Class of Notes or the Certificate owned by it provided such assignment, transfer, conveyance or financing is done in accordance with the terms of Section 4.02 of the Indenture.

Section 6.08.Indebtedness

The Trust Depositor shall not create, incur, assume or suffer to exist any Indebtedness or other liability whatsoever, except (a) obligations incurred under this Agreement or the other Transaction Documents or to the Originator, (b) liabilities incident to the maintenance of its limited liability company existence in good standing or (c) liabilities necessarily incurred to facilitate transactions permitted by Section 6.07.

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Section 6.09.Guarantees

The Trust Depositor shall not become or remain liable, directly or contingently, in connection with any Indebtedness or other liability of any other Person, whether by guarantee, endorsement (other than endorsements of negotiable instruments for deposit or collection in the ordinary course of business), agreement to purchase or repurchase, agreement to supply or advance funds, or otherwise except in connection with the transactions permitted by Section 6.07.

Section 6.10.Investments

The Trust Depositor shall not make or suffer to exist any loans or advances to, or extend any credit to, or make any investments (by way of transfer of property, contributions to capital, purchase of stock or securities or evidences of indebtedness, acquisition of the business or assets, or otherwise) in, any Person except for (a) transfers of Loan Assets to the Issuer as contemplated by the Transaction Documents and the receipt of $54,000,000 in aggregate principal amount of the Class E Notes and the Certificate as partial consideration for the transfer of the Loan Assets to the Issuer or (b) as may be necessary to facilitate transactions permitted by Section 6.07.  Without limiting the generality of the foregoing or restricting the ability of the Trust Depositor to make capital contributions to the Issuer, the Trust Depositor shall not (i) provide credit to any other Securityholder for the purpose of enabling such Securityholder to purchase any Securities or (ii) lend any money to the Issuer.

Section 6.11.Merger; Sales

The Trust Depositor shall not enter into any transaction of merger or consolidation, or liquidate or dissolve itself (or suffer any liquidation or dissolution) or acquire or be acquired by any Person, or convey, sell, lease or otherwise dispose of all or substantially all of its property or business.

Section 6.12.Distributions

The Trust Depositor shall not declare or pay, directly or indirectly, any dividend or make any other distribution (whether in cash or other property) with respect to the profits, assets or capital of the Trust Depositor or any Person’s interest therein, or purchase, redeem or otherwise acquire for value any of its members’ interests now or hereafter outstanding, except that, so long as no Event of Default has occurred and is continuing and no Event of Default would occur as a result thereof or after giving effect thereto and the Trust Depositor would continue to be Solvent as a result thereof and after giving effect thereto, the Trust Depositor may declare and pay distributions to its members.

Section 6.13.Other Agreements

Except as provided in this Agreement or the other Transaction Documents, the Trust Depositor shall not become a party to, or permit any of its properties to be bound by, any indenture, mortgage, instrument, contract, agreement, lease or other undertaking, except this Agreement and the other Transaction Documents to which it is a party and any agreement relating to another transaction permitted by Section 6.07; nor shall it amend or modify without

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the prior satisfaction of the Rating Condition the provisions of its organizational documents which relate to its bankruptcy remote nature or separateness covenants as required by the Rating Agencies or in connection with the true sale and substantial nonconsolidation opinions delivered on the Closing Date, or issue any power of attorney except to the Owner Trustee, the Trustee or the Servicer in accordance with the Transaction Documents or in connection with another transaction permitted by Section 6.07.

Section 6.14.Separate Legal Existence

The Trust Depositor shall (a) maintain compliance with the covenants set forth in the Limited Liability Company Operating Agreement of the Trust Depositor, dated as of June 20, 2006, by Ares Capital Corporation and Philip A. Martone and (b) take or refrain from taking, as applicable, each of the activities specified in the “substantive consolidation” opinion of Latham & Watkins, LLP, delivered on the Closing Date, upon which the conclusions expressed therein are based.

Section 6.15.Location; Records

The Trust Depositor shall (a) not move its location outside the State of New York or its jurisdiction of formation outside of the State of Delaware without 30 days’ prior written notice to the Owner Trustee and the Trustee and (b) will promptly take all actions (if any) required (including, but not limited to, all filings and other acts necessary or advisable under the UCC of each relevant jurisdiction) in order to continue the first priority perfected security interest of the Trustee in all Loans.

Section 6.16.Liability of Trust Depositor

The Trust Depositor shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Trust Depositor under this Agreement.

Section 6.17.Bankruptcy Limitations

The Trust Depositor shall not, without the affirmative vote of a majority of the managers of the Trust Depositor (which must include the affirmative vote of at least one (1) duly appointed Independent managers) (a) dissolve or liquidate, in whole or in part, or institute proceedings to be adjudicated bankrupt or insolvent, (b) consent to the institution of bankruptcy or insolvency proceedings against it, (c) file a petition seeking or consent to reorganization or relief under any applicable federal or state law relating to bankruptcy, (d) consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the limited liability company or a substantial part of its property, (e) make a general assignment for the benefit of creditors, (f) admit in writing its inability to pay its debts generally as they become due, or (g) take any limited liability company action in furtherance of the actions set forth in clauses (a) through (f) above; provided that no manager may be required by any member of the Trust Depositor to consent to the institution of bankruptcy or insolvency proceedings against the Trust Depositor so long as it is Solvent.  The provisions of this Section 6.17 shall survive the termination of this Agreement.

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Section 6.18.Limitation on Liability of Trust Depositor and Others

The Trust Depositor and any director or officer or employee or agent of the Trust Depositor may rely in good faith on any document of any kind, prima facie properly executed and submitted by any Person respecting any matters arising hereunder.  The Trust Depositor and any director or officer or employee or agent of the Trust Depositor shall be reimbursed by the Trustee for any liability or expense incurred by reason of the Trustee’s willful misfeasance, bad faith or gross negligence (except errors in judgment) in the performance of its duties hereunder, or by reason of the Trustee’s material breach of the obligations and duties under this Agreement or the Transaction Documents.  The Trust Depositor shall not be under any obligation to appear in, prosecute or defend any legal action that shall not be incidental to its obligations under this Agreement, and that in its opinion may involve it in any expense or liability.

Section 6.19.Insurance Policies

Upon and after an Event of Default or Servicer Default, the Trust Depositor will cause to be performed any and all acts reasonably required to be performed to preserve the rights and remedies of the Trustee and the Issuer in any insurance policies applicable to the Loans or to transfer the Servicer’s rights and remedies therein to the Successor Servicer appointed pursuant to Section 8.03, including, without limitation, in each case, any necessary notifications of insurers, assignments of policies or interests therein, and establishments of co-insured, joint loss payee and mortgagee rights in favor of the Trustee, the Issuer, or the Successor Servicer, respectively.

Section 6.20.Payments from Obligors

The Trust Depositor agrees not to make, or consent to, any change in the direction of, or instructions with respect to, any payments to be made by an Obligor in any manner that would diminish, impair, delay or otherwise adversely affect the timing or receipt of such payments into the Principal and Interest Account without the prior written consent of the Trustee and with the consent of the Majority Noteholders.

ARTICLE VII.

ESTABLISHMENT OF ACCOUNTS;
DISTRIBUTIONS; RESERVE FUND

Section 7.01.Note Distribution Account, Certificate Account, Class A-1A VFN Funding Account and Reserve Fund

(a)On or before the Closing Date, the Servicer (i) shall establish the Note Distribution Account with and in the name of the Trustee for the benefit of the Securityholders and (ii) shall establish with and in the name of the Trustee the Class A-1A VFN Funding Account for the benefit of the Securityholders.  On or before the Closing Date, the Trust Depositor shall establish the Reserve Fund in the name of, and to be maintained by, the Trustee.  The Paying Agent under the Trust Agreement shall establish and maintain with the Trustee the Certificate Account as a non-interest bearing trust account.  The Servicer and Trustee (so long as such account is maintained with the Trustee) are hereby required to ensure that each of the Note

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Distribution Account and the Reserve Fund is established and maintained as an Eligible Deposit Account with a Qualified Institution.  If any institution with which any of the accounts are established pursuant to this Section 7.01(a) ceases to be a Qualified Institution, the Servicer, or if the Servicer fails to do so, the Trustee (as the case may be) shall within ten Business Days establish a replacement account at a Qualified Institution after notice of such event.  In no event shall the Trustee be responsible for monitoring whether such institution shall remain a Qualified Institution.  Each Qualified Institution maintaining an Eligible Deposit Account shall agree in writing to comply with all instructions originated by the Trustee or, with respect to the Principal and Interest Account only, the Servicer directing disposition of the funds in the Eligible Deposit Account without the further consent of the Trust Depositor or the Issuer.

(b)Prior to the occurrence of a Servicer Default or an Event of Default, to the extent there are uninvested available amounts deposited in the Principal and Interest Account or in the Reserve Fund on or before 3:00 p.m. (New York City time), all such amounts shall be invested in Permitted Investments selected by the Servicer in written instructions (which may be in the form of standing instructions) delivered to the Trustee and to the Qualified Institution holding such Transaction Account, if other than the Trustee, that mature no later than the Business Day immediately preceding the next Distribution Date; to the extent that there are uninvested available funds deposited after 3:00 p.m.  (New York City time), such funds shall be swept into the overnight funds investment which shall be a Permitted Investment selected by the Servicer in written instructions (which may be in the form of standing instructions) delivered to the Trustee and to the Qualified Institution holding such Transaction Account, if other than the Trustee.  From and after the occurrence of a Servicer Default or an Event of Default, to the extent there are uninvested amounts in the Principal and Interest Account or in the Reserve Fund (net of any losses and investment expenses), all amounts may be invested in Permitted Investments described in clause (vi) of the definition thereof selected by the Trustee and if any such Transaction Account is held by a Qualified Institution other than the Trustee, then upon written instructions (which may be in the form of standing instructions) from the Trustee to such Qualified Institution, that mature no later than the Business Day immediately preceding the next Distribution Date.  Once such funds are invested, the Trustee shall not change the investment of such funds other than in connection with the withdrawal or liquidation of such investments and the transfer of such funds as provided herein on or prior to the next succeeding Distribution Date.  Subject to the restrictions herein, the Servicer or Trustee may purchase a Permitted Investment from itself or an Affiliate with respect to investment of funds in the Transaction Accounts.  Subject to the other provisions hereof, the Servicer in the case of the Principal and Interest Account and the Class A-1A VFN Funding Account and the Trustee in the case of all other Transaction Accounts shall have sole control over each such investment and the income thereon, and any certificate or other instrument evidencing any such investment, if any, shall be delivered directly to the Servicer or its agent or the Trustee or its agent, as applicable, together with each document of transfer, if any, necessary to transfer title to such investment to the Servicer or Trustee, as applicable, in a manner which complies with this Section 7.01.  All Investment Earnings on investments of funds in the Transaction Accounts shall be deposited in the Principal and Interest Account pursuant to Section 7.03 and distributed on the next Distribution Date pursuant to Section 7.05.  The Trust Depositor and the Issuer agree and acknowledge that the Servicer and Trustee are to have “control” (within the meaning of the UCC) of collateral comprised of “investment property” (within the meaning of the UCC) for all purposes of this Agreement.  In the absence of timely written direction from the Servicer or the Trust Depositor,

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the Trustee shall invest amounts in the Note Distribution Account and the Reserve Fund Account in Permitted Investments of the type specified in clause (vi) of the definition of Permitted Investments herein.

(c)On or prior to the Closing Date, the Servicer will establish the Class A-1A VFN Funding Account for the benefit of the Securityholders in accordance with clause (a) of this Section 7.01 and into which amounts will be deposited from time to time in accordance with the Priority of Payments and in the circumstances described herein, including in connection with a Draw funded by a Class A-1A VFN Noteholder that has failed to satisfy the Rating Criteria.  Amounts standing to the credit of the Class A-1A VFN Funding Account may be withdrawn by the Servicer on behalf of the Issuer at any time to fund Exposure Amounts with respect to Revolving Loans and Delayed Draw Term Loans and may be applied during the Ramp-up Period and the Replenishment Period to acquire Additional Loans.  Any interest earned on Permitted Investments held in the Class A-1A VFN Funding Account will be applied as Interest Collections.

(d)The Servicer will deposit amounts representing payments sent by Obligors and by paying agents under Agented Loans with respect to Loans pledged to the Trustee as well as with respect to Loans not pledged to the Trustee to the Principal and Interest Account.

Section 7.02.[Reserved]

Section 7.03.Principal and Interest Account

(a)The Servicer shall cause to be established and maintained with and in the name of the Trustee the Principal and Interest Account including two subaccounts, one designated as the Interest Collection Account and the other designated as the Principal Collection Account titled “Principal and Interest Account for Ares Capital Corporation, its successors and assigns as Servicer for ARCC Commercial Loan Trust 2006 subject to the lien of U.S. Bank National Association, its successors and assigns, as Trustee on behalf of the registered holders of ARCC Commercial Loan Trust 2006, Series 2006 Notes”.  The Principal and Interest Account shall be held in one or more Eligible Deposit Accounts with a Qualified Institution in the form of time deposit or demand accounts, which may be interest-bearing or such accounts may be trust accounts wherein the moneys therein are invested in Permitted Investments titled “Ares Capital Corporation, as Servicer, in trust for the registered holders of Ares Capital Loan Trust Notes, Series 2006 Class A-1A, Class A-1A VFN, Class A-1B, Class A-2A Notes, Class A-2B Notes, Class B, Class C, Class D, and Class E Notes”.  All funds in such Principal and Interest Account not so invested shall be insured to the extent and the amount permitted by the BIF or SAIF of the FDIC to the maximum extent provided by law.  The creation of any Principal and Interest Account shall be evidenced by a letter agreement in the form of Exhibit E.  A copy of such letter agreement shall be furnished to the Trustee, the Owner Trustee, the Servicer, and, upon request, any Securityholder.  The Servicer may, upon written notice to the Trustee, transfer any Principal and Interest Account to a different Eligible Deposit Account.

(b)The Servicer shall deposit or cause to be deposited (within two Business Days of receipt thereof) in the applicable Principal and Interest Account and retain therein, subject to withdrawal as permitted by this Section 7.03, the following amounts received by the

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Servicer (and shall segregate and deposit Interest Collections into the Interest Collections Account and Principal Collections into the Principal Collection Account):

(i)all Principal Collections accruing and received on or after the Closing Date or the related Cut-Off Date, as applicable;

(ii)all Interest Collections accruing and received on or after the Closing Date;

(iii)all Insurance Proceeds (other than amounts to be applied to restoration or repair of any Related Property or to be released to the Obligor, other creditors or any other Person in accordance with the Required Loan Documents, the Credit and Collection Policy and the Servicing Standard);

(iv)any other proceeds from any other Related Property securing the Loans (other than amounts released to the Obligor, other creditors or any other Person in accordance with Applicable Law, the Required Loan Documents, the Credit and Collection Policy and the Servicing Standard);

(v)any amounts paid in connection with the purchase or repurchase of any Loan;

(vi)any amount required to be deposited in the Principal and Interest Account pursuant to Section 5.10 or this Section 7.03; and

(vii)the amount of any gains and interest incurred in connection with investments in Permitted Investments.

(c)The Servicer shall have no obligation to deposit into the Principal and Interest Account any Excluded Amounts.

(d)Not later than the close of business on each Determination Date immediately preceding a Distribution Date, the Servicer will remit to the Principal and Interest Account any Scheduled Payment Advance that the Servicer determines to make.

(e)Notwithstanding Section 7.03(b), if: (i) at any time during the Replenishment Period the Issuer receives a payment of principal with respect to a Revolving Loan and, after giving effect to such payment (and any corresponding increase in the Exposure Amount), the Class A-1A VFN Funding Test is not satisfied, the Servicer will transfer an amount of Principal Collections sufficient to cause the Class A-1A VFN Funding Test to be satisfied from the Principal Collection Account to the Class A-1A VFN Funding Account; (ii) the Servicer: (A) makes a deposit into the Principal and Interest Account in respect of a Collection of a Loan in the Collateral and such Collection was received by the Servicer in the form of a check that is not honored for any reason; or (B) makes a mistake with respect to the amount of any Collection and deposits an amount that is less than or more than the actual amount of such Collection; the Servicer shall appropriately adjust the amount subsequently deposited into the Principal and Interest Account to reflect such dishonored check or mistake, and any Scheduled

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Payment in respect of which a dishonored check is received shall be deemed not to have been paid.

(f)The foregoing requirements for deposit in the Principal and Interest Accounts shall be exclusive, it being understood and agreed that, without limiting the generality of the foregoing, payments with respect to the Servicing Fee, Liquidation Expenses and Excluded Amounts may not be deposited by the Servicer in the Principal and Interest Account.

(g)So long as no Servicer Default shall have occurred and be continuing, and consistent with any requirements of the Code, the Principal and Interest Account shall either be maintained within an Eligible Deposit Account as an interest-bearing account meeting the requirements set forth in Section 7.03(a), or the funds held therein may be invested by the Servicer (to the extent practicable) in Permitted Investments, as directed in writing by the Servicer, and, in each case, with a stated maturity date (giving effect to any applicable grace period) no later than the Business Day immediately preceding the Distribution Date next following the Due Period in which the date of investment occurs.  All Permitted Investments must be held by or registered in the name of “Ares Capital Corporation, as Servicer, in trust for the registered holders of ARCC Commercial Loan Trust 2006, Series 2006 Notes”.  Any Investment Earnings on funds held in the Principal and Interest Account shall be deemed part of the Interest Collection Account and shall be deposited therein pursuant to Section 7.03 and distributed on the next Distribution Date pursuant to Section 7.05.  The amount of any losses incurred in connection with the investment of funds in the Principal and Interest Account in Permitted Investments directed by the Servicer shall be deposited in the Principal and Interest Account by the Servicer from its own funds immediately as realized without reimbursement therefor.

(h)The Servicer may (and, for the purposes of clause (i) below, shall), at any time upon one Business Day’s notice to the Trustee (so long as it is held by the Trustee), make withdrawals from the Principal and Interest Account for the following purposes:

(i)to remit to the Trustee on the Business Day immediately preceding a Distribution Date, for deposit in the Note Distribution Account, Interest Collections and Principal Collections received during the immediately preceding Due Period (other than such amounts which are deemed herein not to be Principal Collections at such time);

(ii)subject to Section 5.02(q), to reimburse itself for any unreimbursed Scheduled Payment Advances and Servicing Advances, together with accrued and unpaid interest due thereon, to the extent deposited in the Principal and Interest Account (and not netted from Scheduled Payments or other amounts received from the Obligor of the related Loans or from other proceeds received with respect to such Obligor or the Related Property);

(iii)to withdraw any amount received from an Obligor that is recoverable and sought to be recovered as a voidable preference by a trustee in bankruptcy pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court having competent jurisdiction;

(iv)to make investments in Permitted Investments;

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(v)to withdraw any funds deposited in the Principal and Interest Account that were not required or permitted to be deposited therein or were deposited therein in error;

(vi)prior to a Servicer Default, to pay itself certain additional servicing compensation as permitted under Section 5.11(b);

(vii)to purchase Substitute Loans pursuant to Section 11.01, to the extent funds have previously been deposited by the Originator for such purpose;

(viii)during the Ramp-Up Period and the Replenishment Period, to acquire Additional Loans pursuant to Section 2.06;

(ix)to clear and terminate the Principal and Interest Account upon the termination of the Agreement; and

(x)to make scheduled periodic payments (excluding any termination payments) due under any Asset Specific Swap to the extent Interest Collections deposited in the Principal and Interest Account from the specific related Loan (and not netted from Scheduled Payments or other amounts received from the Obligor of the related Loan or from other proceeds received with respect to such Obligor or the Related Property).

Section 7.04.Securityholder Distributions

(a)Each Securityholder as of the related Record Date shall be paid on the next succeeding Distribution Date by check mailed to such Securityholder at the address for such Securityholder appearing on the Note Register or Certificate Register or by wire transfer to the account directed by such Securityholder if such Securityholder provides written instructions to the Trustee, or Owner Trustee, respectively, at least ten days prior to such Distribution Date, which instructions may be in the form of a standing order.

(b)The Trustee shall serve as the Paying Agent hereunder and shall make the payments to the Securityholders required hereunder.  The Trustee hereby agrees that all amounts held by it for payment hereunder will be held in trust for the benefit of the Securityholders.

Section 7.05.Allocations and Distributions

(a)Interest Allocations.  On each Distribution Date, (i) the Trustee shall deposit into the Note Distribution Account all funds on deposit in the Reserve Fund and (ii) the Trustee shall withdraw, in accordance with the Quarterly Report, from the Note Distribution Account (A) the Interest Collections and (B) amounts deposited therein from the Reserve Fund to the extent necessary to make the following payments.  The payments listed below will be made only to the extent there are sufficient amounts available in the Note Distribution Account on the Distribution Date; provided that if on the initial Distribution Date, the amounts on deposit in the Note Distribution Account are not sufficient to make the following payments, the Servicer may make a Servicing Advance to the extent of the deficiency (subject to the Servicer’s reasonable expectation that the payments on the Loans with respect to which such Servicing Advance is made will be paid on the next payment date under the Loans) by making a deposit in

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the Note Distribution Account no later than the Business Day preceding such Distribution Date.  Payments will be made in the order of priority listed below.  With respect to pro rata payments of principal on the Notes, such payments shall be made pro rata to the Classes of Notes then outstanding based on the respective Outstanding Principal Balance of each such Class of Notes as of the last day of the Due Period as set forth in the Quarterly Report.  If on any Pro Rata Distribution Date the Outstanding Principal Balance of any Class of Notes shall be reduced to zero after application of any payments in respect of principal on such Distribution Date, the amount remaining for distribution in respect of principal on such date shall be distributed pro rata to the Classes of Notes which then have Outstanding Principal Balances based on the respective original principal amounts of such Classes of Notes.  Payments shall be made in the following order of priority:

1.pro rata, based on the amounts payable under this clause 1, to the payment of Administrative Expenses, subject to the limitations set forth in the definition thereof;

2.to the Servicer, to the extent not previously reimbursed, the sum of (i) Scheduled Payment Advances relating to interest on the Loans, together with accrued interest thereon, from Interest Collections received on the Loans for which such Scheduled Payment Advances were made, (ii) Servicing Advances, together with accrued interest thereon, from Interest Collections received on the Loans for which such Servicing Advances were made and (iii) all Nonrecoverable Advances relating to interest, together with accrued interest thereon;

3.to the Servicer, its accrued and unpaid Senior Servicing Fee;

4.pro rata, based on the amounts payable under this clause 4, to the Class A-1 Noteholders and the Class A-2 Noteholders; provided that:

(a)all Interest Collections allocated to the Class A-1 Noteholders shall be distributed in the following order of priority: (1) pro rata based upon amounts payable under this clause (4)(a)(1) (A) to the Class A-1A Noteholders, the Class A-1A Interest Amount for the related Interest Period and the Class A-1A Interest Shortfall, if any, and (B) to the Class A-1A VFN Noteholders, the Commitment Fee Amount, the Class A-1A VFN Interest Amount for the related Interest Period and the Class A-1A VFN Interest Shortfall, if any, and (2) to the Class A-1B Noteholders, the Class A-1B Interest Amount for the related Interest Period and the Class A-1B Interest Shortfall, if any; and

(b)all Interest Collections allocated to the Class A-2 Noteholders shall be distributed in the following order of priority: (1) to the Class A-2A Noteholders, the Class A-2A Interest Amount for the related Interest Period and the Class A-2A Interest Shortfall, if any, and (2) to the Class A-2B Noteholders, the Class A-2B Interest Amount for the related Interest Period and the Class A-2B Interest Shortfall, if any;

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5.to the Class B Noteholders, the Class B Interest Amount for the related Interest Period and the Class B Interest Shortfall, if any;

6.to the Class C Noteholders, the Class C Interest Amount for the related Interest Period and the Class C Interest Shortfall, if any;

7.to the Class D Noteholders, the Class D Interest Amount for the related Interest Period and the Class D Interest Shortfall, if any;

8.(i) prior to the occurrence of a Servicer Default or an Event of Default, an amount equal to the Additional Principal Amount, to be paid as follows:

(a)if such Distribution Date is a Pro Rata Distribution Date, to the Class A-1A Noteholders, Class A-1A VFN Noteholders, Class A-1B Noteholders, Class A-2A Noteholders and Class A-2B Noteholders, the Class B Noteholders, the Class C Noteholders, and the Class D Noteholders, pro rata, until the Additional Principal Amount is reduced to zero; and

(b)if such Distribution Date is a Sequential Distribution Date, to the Class A Noteholders, the Class B Noteholders, the Class C Noteholders and Class D Noteholders, sequentially until the Additional Principal Amount is reduced to zero, as follows:

(I)to the Class A-1 Noteholders and the Class A-2 Noteholders, pro rata, until the Outstanding Principal Balance of the Class A Notes is reduced to zero; provided that (A) amounts paid to the Class A-1 Noteholders will be paid to the Class A-1A Notes and Class A-1A VFN Notes pro rata based on their Outstanding Principal Balances prior to the Class A-1B Notes and (B) amounts paid to the Class A-2 Noteholders will be paid to the Class A-2A Notes prior to the Class A-2B Notes;

(II)to the Class B Noteholders, the Class B Accrued Payable, if any;

(III)to the Class B Noteholders until the Outstanding Principal Balance of the Class B Notes is reduced to zero;

(IV)to the Class C Noteholders, the Class C Accrued Payable, if any;

(V)to the Class C Noteholders until the Outstanding Principal Balance of the Class C Notes is reduced to zero;

(VI)to the Class D Noteholders, the Class D Accrued Payable, if any; and

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(VII)to the Class D Noteholders until the Outstanding Principal Balance of the Class D Notes is reduced to zero;

(ii)on and after the occurrence of a Servicer Default or an Event of Default, the Interest Distributable Amount will be treated as funds available for principal distributions and will be distributed in accordance with Section 7.05(b)(II);

9.to the Reserve Fund, until the amount therein equals the Required Reserve Amount;

10.to the Servicer, its accrued and unpaid Subordinated Servicing Fee;

11.to the Class A-1A VFN Noteholders, any accrued and unpaid Class A-1A VFN Increased Costs and Class A-1A VFN Breakage Costs;

12.           to the Servicer, to the extent not reimbursed pursuant to clause 2 above, reimbursement for the amount of any Scheduled Payment Advances relating to interest on the Loans, together with accrued interest thereon;

13.pro rata, based on the amounts owed to such Persons under this clause 13, Administrative Expenses, to the extent not paid pursuant to clause 1 due to the limitations set forth in the definition thereof, and any other amounts payable to the Trustee, the Class A-1A VFN Note Agent, the Owner Trustee, the Collateral Administrator and the Backup Servicer related to indemnification, and, to the Trustee, the Collateral Administrator, the Backup Servicer and any Successor Servicer, any Servicing Transfer Costs payable to such party to the extent not paid pursuant to clause 1; and

15.any remaining amounts to the Certificateholders.

(b)(I) Principal Allocations on any Pro Rata Distribution Date.  On each Pro Rata Distribution Date, the Trustee will distribute all Principal Collections and all other funds available for principal distributions on deposit in the Note Distribution Account, in accordance with the Quarterly Report, to the extent there are sufficient funds, to the following parties in the order of priority listed below.  With respect to pro rata payments of principal of the Notes, such payments shall be made pro rata to the Classes then outstanding based on the respective Outstanding Principal Balances of each such Class of Notes as of the last day of the related Due Period, as set forth in the Quarterly Report.  If on any Pro Rata Distribution Date the Outstanding Principal Balance of any Class shall be reduced to zero after application of any payments in respect of principal on such Distribution Date, the amount remaining for distribution in respect of principal on such date shall be distributed pro rata to the Classes of Notes which then have Outstanding Principal Balances based on the respective original principal amounts of such Classes of Notes.  On any Pro Rata Distribution Date during the Ramp-Up Period and the Replenishment Period, payments of principal to the Class A-1A VFN Notes may be applied, in the Servicer’s discretion and in proportions as the Servicer may determine, (i) to repay the Outstanding Principal Balance of the Class A-1A VFN Notes and/or (ii) to the Class A-1A VFN Funding Account.  On any Pro Rata Distribution Date, principal payments on the Notes will be made to the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes and the

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Class E Notes, pro rata until the Outstanding Principal Balance of each such Class of Notes is reduced to zero.  Payments shall be made in the following order of priority:

1.to the Servicer, to the extent not previously reimbursed, from Principal Collections received from the specific Loans for which Scheduled Payment Advances or Servicing Advances were made, as applicable, reimbursement for the amount of any such Scheduled Payment Advances or Servicing Advances relating to the principal on such Loans, together with accrued interest thereon;

2.during the Ramp-Up Period and the Replenishment Period, to the Class A-1A VFN Noteholders, in the Servicer’s discretion and in such amounts as the Servicer may determine to repay the principal of the Class A-1A VFN Notes;

3.to the Class A-1A VFN Funding Account, the amount required to cause the Class A-1A VFN Funding Test to be satisfied;

4.during the Ramp-Up Period and the Replenishment Period, all remaining Principal Collections shall be deposited to the Principal Collection Account for use in the acquisition of Additional Loans; provided that no Principal Collections constituting the Special Redemption Amount shall be deposited to the Principal Collection Account pursuant to this clause 4 but shall be distributed pursuant to clause 5;

5.after the Replenishment Period (or, in the case of the Special Redemption Amount, on any Distribution Date), to the Class A-1A Noteholders, the Class A-1A VFN Noteholders, the Class A-1B Noteholders, the Class A-2A Noteholders, the Class A-2B Noteholders, the Class B Noteholders, the Class C Noteholders, the Class D Noteholders and the Class E Noteholders, pro rata until the Outstanding Principal Balance of each such Class of Notes is reduced to zero;

6.to the Servicer, to the extent not reimbursed pursuant to clause 1 above, reimbursement for the amount of (i) any Scheduled Payment Advances relating to principal on the Loans, together with accrued interest thereon, (ii) Servicing Advances, together with accrued interest thereon and (iii) all Nonrecoverable Advances (other than those relating to interest), together with accrued interest thereon;

7.to the Servicer, an amount equal to its accrued and unpaid Servicing Fee, to the extent not previously paid;

8.pro rata, to the persons entitled thereto, based upon the amounts owed to such Persons under this clause 8, Administrative Expenses, to the extent not previously paid, and amounts owed to the Trustee, the Class A-1A VFN Note Agent, the Collateral Administrator, the Owner Trustee and the Backup Servicer for fees and expenses and other amounts, including such amounts related to indemnification, and, to the Trustee, the Backup Servicer, Collateral Administrator, and any Successor Servicer, to the extent not previously paid, any Servicing Transfer Costs payable to such party to the extent not previously paid; and

9.any remaining Principal Collections to the Certificateholders.

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(II)Principal Allocations on any Sequential Distribution Date.  On each Sequential Distribution Date, the Trustee will distribute all Principal Collections and all other funds available for principal distributions on deposit in the Note Distribution Account, in accordance with the Quarterly Report, to the extent there are sufficient funds, to the following parties in the order of priority listed below:

1.to the Servicer, to the extent not previously reimbursed, from Principal Collections received from the specific Loans for which Scheduled Payment Advances or Servicing Advances were made, as applicable, reimbursement for the amount of any such Scheduled Payment Advances or Servicing Advances relating to the principal on such Loans, together with accrued interest thereon;

2.to the Class A-1A VFN Funding Account, the amount required to cause the Class A-1A VFN Funding Test to be satisfied;

3.pro rata, based on the amounts payable under this clause 3, to the Class A-1 Noteholders and the Class A-2 Noteholders;

provided that all Principal Collections allocated to the Class A-1 Noteholders shall be paid as follows:

(a)to the Class A-1 Noteholders, in the following order of priority:

(1)pro rata (A) to the Class A-1A Noteholders, the Class A-1A Interest Amount for the related Interest Period and the Class A-1A Interest Shortfall, if any, and (B) to the Class A-1A VFN Noteholders, the Commitment Fee Amount, the Class A-1A VFN Interest Amount for the related Interest Period and the Class A-1A VFN Interest Shortfall, if any;

(2)pro rata to the Class A-1A Noteholders and the Class A-1A VFN Noteholders until the Outstanding Principal Balance of the Class A-1A Notes and Class A-1A VFN Notes is reduced to zero;

(3)to the Class A-1B Noteholders, the Class A-1B Interest Amount for the related Interest Period and the Class A-1B Interest Shortfall Amount, if any; and

(4)to the Class A-1B Noteholders until the Outstanding Principal Balance of the Class A-1B Notes is reduced to zero;

provided further that all Principal Collections allocated to the Class A-2 Noteholders will be paid as follows:

(b)to the Class A-2 Noteholders, in the following order of priority:

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(1)to the Class A-2A Noteholders, the Class A-2A Interest Amount for the related Interest Period and the Class A-2A Interest Shortfall, if any;

(2)to the Class A-2A Noteholders until the Outstanding Principal Balance of the Class A-2A Notes is reduced to zero;

(3)to the Class A-2B Noteholders, the Class A-2B Interest Amount for the related Interest Period and the Class A-2B Interest Shortfall Amount, if any; and

(4)to the Class A-2B Noteholders until the Outstanding Principal Balance of the Class A-2B Notes is reduced to zero;

4.to the Class B Noteholders, in the following order: (i) any unpaid Class B Interest Amount, (ii) any unpaid Class B Interest Shortfall and (iii) the Class B Accrued Payable, if any;

5.to the Class B Noteholders until the Outstanding Principal Balance of the Class B Notes is reduced to zero;

6.to the Class C Noteholders, in the following order: (i) any unpaid Class C Interest Amount, (ii) any unpaid Class C Interest Shortfall and (iii) the Class C Accrued Payable, if any;

7.to the Class C Noteholders until the Outstanding Principal Balance of the Class C Notes is reduced to zero;

8.to the Class D Noteholders, in the following order: (i) any unpaid Class D Interest Amount, (ii) any unpaid Class D Interest Shortfall and (iii) the Class D Accrued Payable, if any;

9.to the Class D Noteholders until the Outstanding Principal Balance of the Class D Notes is reduced to zero;

10.to the Servicer, to the extent not reimbursed pursuant to clause 1 above, reimbursement for the amount of (i) any Scheduled Payment Advances relating to principal on the Loans, together with accrued interest thereon, (ii) Servicing Advances, together with accrued interest thereon and (iii) all Nonrecoverable Advances (other than those relating to interest), together with accrued interest thereon;

11.to the Servicer, an amount equal to its accrued and unpaid Servicing Fee, to the extent not previously paid;

12.pro rata, based upon the amounts owed to such Persons under this clause 13, to the payment of Administrative Expenses, to the extent not previously paid, amounts

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owed to the Trustee, the Class A-1A VFN Note Agent, the Owner Trustee, the Collateral Administrator and the Backup Servicer for fees and expenses and other amounts, including such amounts related to indemnification, and, to the Trustee, the Backup Servicer, the Collateral Administrator and any Successor Servicer, any Servicing Transfer Costs payable to such party to the extent not previously paid;

13.to the Class E Noteholders until the Outstanding Principal Balance of the Class E Notes is reduced to zero; and

14.any remaining Principal Collections to the Certificateholder.

Section 7.06.Determination of LIBOR

(a)The Trustee will determine the interest rate for each Interest Period by determining the London interbank offered rate (“LIBOR”) for deposits in U.S. Dollars for a period of three months (the “Three Month Index Maturity”) which appears on Telerate Page 3750 as of 11:00 a.m., London time, on the day that is two London Banking Days preceding that Interest Period (“LIBOR Determination Date”).  If such rate does not appear on Telerate Page 3750 on the related LIBOR Determination Date, the rate for that Interest Period will be determined as if the parties had specified “USD-LIBOR-Reference Banks” as the applicable rate.  “USD-LIBOR-Reference Banks” means that the interest rate for an Interest Period will be determined on the basis of the rates at which deposits in U.S. Dollars are offered by the Reference Banks at approximately 11:00 a.m., London time, on the related LIBOR Determination Date to prime banks in the London interbank market for the Three Month Index Maturity commencing on the beginning of that Interest Period and in a Representative Amount.  The Trustee will request the principal London office of each of the Reference Banks to provide a quotation of its rate.  If at least two such quotations are provided, the rate for that Interest Period will be the arithmetic mean of the quotations.  If fewer than two quotations are provided as requested, the rate for that Interest Period will be the arithmetic mean of the rates quoted by major banks in New York City, selected by the Trustee, at 11:00 a.m., New York City time, on the beginning of that Interest Period for loans in U.S. Dollars to leading European banks for the Three Month Index Maturity commencing at the beginning of that Interest Period and in a Representative Amount.

(b)In the case of the Class A-1A VFN Notes, for any Interest Period (other than the First Interest Period) having a term other than three months, LIBOR shall be determined through the use of straight-line interpolation by reference to two rates calculated in accordance with the foregoing procedures, one of which shall be determined as if such maturity of the U.S. Dollar deposits referred to therein were the period of time for which rates are available next shorter than such Interest Period and the other of which will be determined as if such maturity were the period of time for which rates are available next longer than such Interest Period; provided that, if an Interest Period is less than or equal to seven days, then LIBOR shall be determined by reference to a rate calculated in accordance with Section 7.06(a) as if such maturity of the U.S. Dollar deposits referred to therein were a period of time equal to seven days; provided further that for purposes of this Section 7.06(b), the LIBOR Determination Date shall be the date on which notice of a proposed Draw is given by the Issuer to the Class A-1A VFN Agent pursuant to the Class A-1A VFN Purchase Agreement.

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(c)With respect to an Interest Period having a designated maturity other than three months, LIBOR shall be determined through the use of a straight-line interpolation by reference to two rates calculated in accordance with Section 7.06(a), one of which shall be determined as if the maturity of the U.S. Dollar deposits referred to therein were the period of time for which rates are available next shorter than such Interest Period, and the other of which shall be determined as if the maturity were the period of time for which rates are available next longer than such Interest Period.

(d)The establishment of LIBOR on the applicable London Banking Day by the Trustee and the Trustee’s subsequent calculation of the rates of interest applicable to the Notes for the related Distribution Date shall, in the absence of manifest error, be final and binding.  Each such rate of interest may be obtained by access to the Trustee’s website.

ARTICLE VIII.

SERVICER DEFAULT; SERVICER TRANSFER

Section 8.01.Servicer Default

“Servicer Default” means the occurrence of any of the following:

(a)any failure by the Servicer to remit or cause to be remitted when due any payment required to be remitted by the Servicer made under the terms of this Agreement or the other Transaction Documents which continues unremedied for a period of two Business Days, it being understood that the Servicer shall not be responsible for the failure of either the Issuer or the Trustee to remit funds that were received by the Issuer or the Trustee from or on behalf of the Servicer in accordance with this Agreement or the other Transaction Documents; or

(b)failure by the Servicer duly to observe or perform, in any material respect, any other covenants or agreements of the Servicer set forth in this Agreement or the other Transaction Documents, or any representation or warranty of the Servicer made in this Agreement or the other Transaction Documents or in any certificate delivered thereto proves to have been incorrect when made, and which failure or breach has a Material Adverse Effect on the rights of the Noteholders and which failure continues unremedied for a period of 30 days (if such failure or breach can be remedied) after the first to occur of (i) the date on which written notice of such failure requiring the same to be remedied shall have been given to a Responsible Officer of the Servicer by the Trustee, or a Responsible Officer of the Servicer and the Trustee by the Holders of at least 25% of the Aggregate Outstanding Principal Balance of the Notes, and (ii) the date on which a Responsible Officer of the Servicer receives actual knowledge of such failure or breach; or

(c)a decree or order of a court or agency or supervisory authority having jurisdiction for the appointment of a conservator or receiver or liquidator in any Insolvency Proceedings, or for the winding-up or liquidation of its affairs, shall have been entered against the Servicer and such decree or order shall have remained in force, undischarged or unstayed for a period of 60 consecutive days; or

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(d)the Servicer shall consent to the appointment of a conservator or receiver or liquidator in any Insolvency Proceedings of or relating to the Servicer or of or relating to all or substantially all of the Servicer’s property; or

(e)the Servicer shall file a petition to take advantage of any applicable Insolvency Laws, make an assignment for the benefit of its creditors or generally fail to pay its debts as they become due; or

(f)without the consent of the Majority Noteholders, the Servicer agrees or consents to, or otherwise permits to occur, any material amendment, modification, change, supplement or rescission of or to the Credit and Collection Policy or the Servicing Standard, in whole or in part, that would have a Material Adverse Effect on the Collateral; provided that such consent shall not be required in the case of an amendment which was mandated by Applicable Law or any Governmental Authority; or

(g)failure by the Servicer to observe or perform the Credit and Collection Policy or the Servicing Standard regarding the servicing of the Loans in any manner that would have a Material Adverse Effect on the Loans and continues unremedied for a period of 30 days (if such failure or breach can be remedied) after the first to occur of (i) the date on which written notice of such failure requiring the same to be remedied shall have been given to a Responsible Officer of the Servicer by the Trustee, or a Responsible Officer of the Servicer and the Trustee by Holders of at least 25% of the Aggregate Outstanding Principal Balance of the Notes, and (ii) the date on which a Responsible Officer of the Servicer receives actual knowledge of such failure or breach; or

(h)the Servicer shall cease to be managed by Ares Capital Management LLC.

Section 8.02.Servicer Transfer

(a)If a Servicer Default has occurred and is continuing, the Majority Noteholders may, by written notice (a “Termination Notice”) delivered to the parties hereto, terminate all (but not less than all) of the Servicer’s management, administrative, servicing, custodial and collection functions; provided no Termination Notice shall be required as a condition to termination with respect to any Servicer Default described under Section 8.01(c), Section 8.01(d) and Section 8.01(e).

(b)Upon delivery of the notice contemplated by Section 8.02(a) (or, if later, on a date designated therein or, without notice if permitted under Section 8.02(a)), and on the date that a Successor Servicer shall have been appointed and accepted such appointment pursuant to Section 8.03 (such appointment being herein called a “Servicer Transfer”), all rights, benefits, fees, indemnities, authority and power of the Servicer under this Agreement, whether with respect to the Loans, the Loan Files or otherwise, shall pass to and be vested in such successor (the “Successor Servicer”) pursuant to and under this Section 8.02; and, without limitation, the Successor Servicer is authorized and empowered to execute and deliver on behalf of the Servicer, as attorney-in-fact or otherwise, any and all documents and other instruments, and to do any and all acts or things necessary or appropriate to effect the purposes of such notice of termination.  The Servicer agrees to cooperate with the Successor Servicer in effecting the

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termination of the responsibilities and rights of the Servicer hereunder, including, without limitation, the transfer to the Successor Servicer for administration by it of all cash amounts which shall at the time be held by the Servicer for deposit, or have been deposited by the Servicer, in the Principal and Interest Account, or thereafter received with respect to the Loans.  The Servicer shall transfer to the Successor Servicer (i) all records held by the Servicer relating to the Loans in such electronic form as the Successor Servicer may reasonably request and (ii) any Loan Files in the Servicer’s possession.  In addition, the Servicer shall permit access to its premises (including all Computer Records and programs) to the Successor Servicer or its designee, and shall pay the reasonable transition expenses of the Successor Servicer.  Upon a Servicer Transfer, the Successor Servicer shall also be entitled to receive the Servicing Fee thereafter payable for performing the obligations of the Servicer.  Any indemnities provided in this Agreement or the other Transaction Documents in favor of the Servicer and any Servicing Fee or other fees, costs, expenses, Scheduled Payment Advances and Servicing Advances, together with accrued interest due the Servicer thereon, and Nonrecoverable Advances which have accrued and/or are unpaid or unreimbursed to the Servicer shall survive the resignation or termination of the Servicer and the appointment of a Successor Servicer pursuant to Section 5.13 and the Servicer being replaced shall remain entitled thereto until paid hereunder out of the Principal and Interest Account or the Note Distribution Account in accordance with the Priority of Payments.

Section 8.03.Appointment of Successor Servicer; Reconveyance; Successor Servicer to Act

(a)Upon delivery of the notice required by Section 8.02(a) (or, if later, on a date designated therein), the Servicer shall continue to perform all servicing functions under this Agreement until the date specified in the Termination Notice or, if no such date is specified, until a date mutually agreed by the Servicer and the Trustee.  The Trustee shall as promptly as possible after the giving of or receipt of a Termination Notice, appoint a Successor Servicer, which shall be the Backup Servicer, in accordance with Section 5.15(c), and named Successor Servicer shall accept its appointment by a written assumption in a form acceptable to the Trustee and Owner Trustee; provided that no appointment of a Successor Servicer or acceptance and assumption by a proposed Successor Servicer shall be effective without the prior satisfaction of the Rating Agency Condition.  If within 60 days of delivery of a Termination Notice a Successor Servicer is not appointed and the Servicer shall have yet to cure the Servicer Default, then the Trustee shall offer the Trust Depositor, and the Trust Depositor shall offer the Originator, the right to accept retransfer of all the Loan Assets, and such parties may accept retransfer of such Loan Assets in consideration of the Trust Depositor’s delivery to the Principal and Interest Account on or prior to the next upcoming Distribution Date of a sum equal to the Aggregate Outstanding Principal Balance of all Securities (other than the Certificates) then outstanding, together with accrued and unpaid interest thereon through such date of deposit and all other amounts due and owing to any Person under the Transaction Documents; provided that the Trustee, if so directed by the Majority Noteholders in writing, need not accept and effect such reconveyance in the absence of evidence (which may include valuations of an investment bank or similar entity) reasonably acceptable to such Trustee or Majority Noteholders that such retransfer would not constitute a fraudulent conveyance of the Trust Depositor or the Originator.

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(b) The Backup Servicer may, in its discretion, or shall, if it is unable to so act or if the Majority Noteholders request in writing to the Backup Servicer, appoint, or petition a court of competent jurisdiction to appoint, any established servicing institution having a net worth of not less than $50,000,000 as the Successor Servicer in the assumption of all or any part of the responsibilities, duties or liabilities of the Servicer.

(c) As compensation, any Successor Servicer (including, without limitation, the Backup Servicer) so appointed shall be entitled to receive the Servicing Fee, together with any other servicing compensation in the form of assumption fees, late payment charges or otherwise as provided herein that accrued prior thereto; including, without limitation, all reasonable costs (including reasonable attorneys’ fees) incurred in connection with transferring the servicing obligations under the Agreement and amending the Agreement to reflect such transfer.

(d) In the event the Backup Servicer is requested by the Servicer to solicit bids, the Backup Servicer shall solicit, by public announcement, bids from banks and loan servicing institutions meeting the qualifications set forth above.  Such public announcement shall specify that the Successor Servicer shall be entitled to the full amount of the Servicing Fee as servicing compensation, together with the other servicing compensation in the form of assumption fees, late payment charges or otherwise that accrued prior thereto.  Within 30 days after any such public announcement, the Backup Servicer shall negotiate and effect the sale, transfer and assignment of the servicing rights and responsibilities hereunder to the qualified party submitting the highest qualifying bid.  The Backup Servicer shall deduct from any sum received by the Backup Servicer from the successor to the Servicer in respect of such sale, transfer and assignment all costs and expenses of any public announcement and of any sale, transfer and assignment of the servicing rights and responsibilities hereunder and the amount of any unreimbursed Servicing Advances.  After such deductions, the remainder of such sum shall be paid by the Backup Servicer to the Servicer at the time of such sale, transfer and assignment to the Servicer’s successor.  The Backup Servicer and such successor shall take such action, consistent with the Agreement, as shall be necessary to effectuate any such succession.  Neither the Backup Servicer nor any other Successor Servicer shall be held liable by reason of any failure to make, or any delay in making, any distribution hereunder or any portion thereof caused by (i) the failure of the Servicer to deliver, or any delay in delivering, cash, documents or records to it, or (ii) restrictions imposed by any regulatory authority having jurisdiction over the Servicer hereunder.  No appointment of a successor to the Servicer under this clause (d) shall be effective until written notice of such proposed appointment shall have been provided by the Trustee and to each Securityholder and the Backup Servicer shall have consented thereto.  The Backup Servicer shall not resign as Servicer until a Successor Servicer has been appointed and accepted such appointment.

(e) On or after a Servicer Transfer, the Successor Servicer shall be the successor in all respects to the Servicer in its capacity as servicer under this Agreement and the transactions set forth or provided for herein with respect to the servicing of the Loans and shall be subject to all the responsibilities, duties and liabilities relating thereto placed on the Servicer by the terms and provisions hereof, and the terminated Servicer shall be relieved of such responsibilities, duties and liabilities arising after such Servicer Transfer; provided that (i) the Successor Servicer will not assume any obligations of the Servicer described in Section 8.02, (ii)

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the Successor Servicer shall not be liable for any acts or omissions of the Servicer occurring prior to such Servicer Transfer or for any breach by the Servicer of any of its representations and warranties contained herein or in any other Transaction Document, (iii) no obligation to perform any repurchase or advancing obligations, if any, of the Servicer, (iv) no obligation to pay any taxes required to be paid by the Servicer, (v) no obligation to pay any of the fees and expenses of any other party involved in this transaction and (vi) no liability or obligation with respect to any Servicer indemnification obligations of any prior servicer including the original servicer.  The indemnification obligations of the Backup Servicer, upon becoming a successor Servicer are expressly limited to those instances of negligence, willful misconduct or fraud of the Backup Servicer in its role as successor Servicer.  Notwithstanding anything else herein to the contrary, in no event shall the Trustee or the Backup Servicer be liable for any Servicing Fee or for any differential in the amount of the servicing fee paid hereunder and the amount necessary to induce any Successor Servicer to act as Successor Servicer under this Agreement and the transactions set forth or provided for herein, including any Servicing Transfer Costs.  The Issuer, Securityholders and the Trustee and such successor shall take such action, consistent with this Agreement, as shall be necessary to effectuate any such succession.  The terminated Servicer shall remain entitled to payment and reimbursement of the amounts set forth in the last sentence of Section 8.02(b) notwithstanding its termination hereunder, to the same extent as if it had continued to service the Loans hereunder.

(f) Notwithstanding anything contained in this Agreement to the contrary, a Successor Servicer is authorized to accept and rely on all of the accounting, records (including computer records) and work of the prior Servicer relating to the Loans (collectively, the “Predecessor Servicer Work Product”) without any audit or other examination thereof, and such Successor Servicer shall have no duty, responsibility, obligation or liability for the acts and omissions of the prior Servicer.  If any error, inaccuracy, omission or incorrect or non-standard practice or procedure (collectively, “Errors”) exist in any Predecessor Servicer Work Product and such Errors make it materially more difficult to service or should cause or materially contribute to the Successor Servicer making or continuing any Errors (collectively, “Continued Errors”), such Successor Servicer shall have no duty, responsibility, obligation or liability for such Continued Errors; provided that such Successor Servicer agrees to use its best commercially reasonable efforts to prevent further Continued Errors.  In the event that the Successor Servicer becomes aware of Errors or Continued Errors, it shall use its best efforts to reconstruct and reconcile such data as is commercially reasonable to correct such Errors and Continued Errors and to prevent future Continued Errors.  Such Successor Servicer shall be entitled to recover its costs thereby expended as Servicing Transfer Costs.

Section 8.04. Notification to Securityholders

(a) Promptly following the occurrence of any Servicer Default, the Servicer shall give written notice thereof to the Trustee, the Owner Trustee, the Trust Depositor and each Rating Agency at the addresses described in Section 13.04 and to the Noteholders and Certificateholder at their respective addresses appearing on the Note Register and the Certificate Register, respectively, as provided under the Indenture.

(b) Within ten days following any termination of the Servicer or appointment of a Successor Servicer pursuant to this Article VIII, the Trustee shall give written notice thereof

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to each Rating Agency and the Trust Depositor at the addresses described in Section 13.04 and to the Noteholders and Certificateholder at their respective addresses appearing on the Note Register and the Certificate Register, respectively, as provided under the Indenture.

Section 8.05. Effect of Transfer

(a) After a Servicer Transfer, the terminated Servicer shall have no further obligations with respect to the management, administration, servicing, custody or collection of the Loans and the Successor Servicer appointed pursuant to Section 8.03 shall have all of such obligations, except that the terminated Servicer will transmit or cause to be transmitted directly to the Successor Servicer for its own account, promptly on receipt and in the same form in which received, any amounts (properly endorsed where required for the Successor Servicer to collect them) received as payments upon or otherwise in connection with the Loans.

(b) A Servicer Transfer shall not affect the rights and duties of the parties hereunder (including but not limited to the indemnities of the Servicer) other than those relating to the management, administration, servicing, custody or collection of the Loans.

Section 8.06. Database File

Upon reasonable request by the Trustee or the Backup Servicer, the Servicer will provide the Successor Servicer with a magnetic tape or excel file or similar spreadsheet file containing the database file for each Loan (a) as of the Closing Date, (b) as of each Cut-Off Date, (c) as of each Determination Date prior to a Servicer Default and (d) on and as of the Business Day before the actual commencement of servicing functions by the Successor Servicer following the occurrence of a Servicer Default.

Section 8.07. Waiver of Defaults

The Majority Noteholders may, on behalf of all the Securityholders, and subject to satisfying the Rating Agency Condition, waive any events permitting removal of the Servicer pursuant to this Article VIII; provided that the Majority Noteholders may not waive a default in making a required distribution on a Note without the consent of each Holder of a Note and each Rating Agency must confirm that such waiver will not result in a Ratings Effect.  Upon any waiver or cure of a past default, such default shall cease to exist, and any Servicer Default or Event of Default arising therefrom shall be deemed to have been remedied for every purpose of this Agreement.  No such waiver or cure shall extend to any subsequent or other default or impair any right consequent thereto except to the extent expressly so waived.

Section 8.08. Responsibilities of the Successor Servicer

(a) The Successor Servicer will not be responsible for delays attributable to the Servicer’s failure to deliver information, defects in the information supplied by the Servicer or other circumstances beyond the control of the Successor Servicer.

(b) The Successor Servicer will make arrangements with the Servicer for the prompt and safe transfer of, and the Servicer shall provide to the Successor Servicer, all necessary servicing files and records, including (as deemed necessary by the Successor Servicer

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at such time): (i) microfiche loan documentation, (ii) servicing system tapes, (iii) Loan payment history, (iv) collections history and (v) the trial balances, as of the close of business on the day immediately preceding conversion to the Successor Servicer, reflecting all applicable Loan information.  The current Servicer shall be obligated to pay the costs associated with the transfer of the servicing files and records to the Successor Servicer, to the extent such costs are not paid pursuant to the Priority of Payments as Servicing Transfer Costs due to the limit set forth in the definition of Servicing Transfer Costs.

(c) The Successor Servicer shall have no responsibility and shall not be in default hereunder nor incur any liability for any failure, error, malfunction or any delay in carrying out any of its duties under this Agreement if any such failure or delay results from the Successor Servicer acting in accordance with information prepared or supplied by a Person other than the Successor Servicer or the failure of any such Person to prepare or provide such information.  The Successor Servicer shall have no responsibility, shall not be in default and shall incur no liability (i) for any act or failure to act by any third party, including the Servicer, the Trust Depositor, the Owner Trustee or the Trustee or for any inaccuracy or omission in a notice or communication received by the Successor Servicer from any third party or (ii) which is due to or results from the invalidity, unenforceability of any Loan with applicable law or the breach or the inaccuracy of any representation or warranty made with respect to any Loan.

(d) If the Backup Servicer or any other Successor Servicer assumes the role of Successor Servicer hereunder, such Successor Servicer shall be entitled to the benefits of (and subject to the provisions of) Section 5.02 concerning delegation of duties to subservicers and other third parties.

Section 8.09. Rating Agency Condition for Servicer Transfer

Notwithstanding the foregoing provisions relating to a Servicer Transfer, no Servicer Transfer shall be effective hereunder unless prior written notice thereof shall have been given to the Rating Agencies, and the Rating Agency Condition shall have been satisfied with respect thereto.

Section 8.10. Appointment of Successor Backup Servicer; Successor Backup Servicer to Act

(a) The Backup Servicer may be removed, with or without cause, by the Servicer so long as no Servicer Default or Event of Default has occurred and is continuing or, if such an event exists, then the Trustee, at the direction of the Majority Noteholders, by notice given in writing to the Backup Servicer (the “Backup Servicer Termination Notice”), a copy of which shall be provided to S&P promptly after it is delivered to the Backup Servicer.  The Backup Servicer shall continue to perform all backup servicing functions under this Agreement until the date specified in the Backup Servicer Termination Notice or, if no such date is specified, until a date mutually agreed by the Backup Servicer and the party giving the Backup Servicer Termination Notice.  As promptly as possible after the giving of a Backup Servicer Termination Notice, party giving the Backup Servicer Termination Notice to the Servicer with the consent of the Majority Noteholders, not to be unreasonably withheld, if the Servicer sent the Backup Servicer Termination Notice and otherwise shall appoint a Successor Backup Servicer

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(the “Successor Backup Servicer”) and such Successor Backup Servicer shall accept its appointment by a written assumption in a form acceptable to the Trustee and Owner Trustee.

(b) In the event that a Successor Backup Servicer has not been appointed and has not accepted its appointment at the time when the then Backup Servicer has ceased to act as Backup Servicer, the Trustee shall petition a court of competent jurisdiction to appoint any established financial institution having a net worth of at least $50,000,000 and whose regular business includes the backup servicing of loans similar to the Loans as the Successor Backup Servicer hereunder and the Successor Backup Servicer shall be the successor in all respects to the Backup Servicer in its capacity as Backup Servicer under this Agreement and the transactions set forth or provided for herein and shall be subject to all the responsibilities, duties and liabilities relating thereto placed on the Backup Servicer by the terms and provisions hereof, and the terminated Backup Servicer shall be relieved of such responsibilities, duties and liabilities arising after such backup servicer transfer (the “Backup Servicer Transfer”); provided that the Successor Backup Servicer shall not be liable for any acts or omissions of the Backup Servicer occurring prior to such Backup Servicer Transfer or for any breach by the Backup Servicer of any of its representations and warranties contained herein or in any related document or agreement.  As compensation therefor, the Successor Backup Servicer shall be entitled to receive reasonable compensation equal to the monthly Backup Servicing Fee.  Notwithstanding anything else herein to the contrary, in no event shall the Trustee or the Servicer be liable for any Backup Servicing Fee or for any differential in the amount of the backup servicing fee paid hereunder and the amount necessary to induce any Successor Backup Servicer to act as Backup Servicer under this Agreement and the transactions set forth or provided for herein.  The Issuer, Securityholders and the Trustee and such successor shall take such action, consistent with this Agreement, as shall be necessary to effectuate any such succession.

ARTICLE IX.

REPORTS

Section 9.01. Quarterly Reports

On each Determination Date, the Issuer shall provide to the Backup Servicer, the Owner Trustee, the Trustee, the Initial Purchaser and each Rating Agency, a quarterly statement (a “Quarterly Report”) with respect to the related Distribution Date and Due Period.  The Quarterly Report shall include, without limitation, the following information determined as of the end of the related Due Period or as otherwise specified below:

(a) (i) the Aggregate Outstanding Principal Balance of the Notes of each Class as of the immediately preceding Distribution Date after giving effect to any payment of principal on such Distribution Date (including as a percentage of the original Aggregate Outstanding Principal Balance of the Notes after giving effect to such payment), (ii) the amount of principal payments to be made on the Notes of each Class on the related Distribution Date, (iii) the Aggregate Outstanding Principal Balance of the Notes of each Class after giving effect to any payment of principal on the related Distribution Date (including as a percentage of the original Aggregate Outstanding Principal Balance of the Notes of such Class after giving effect to such payment), (iv) the amount of any Class B Accrued Payable, Class C Accrued Payable

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and Class D Accrued Payable on the related Distribution Date; and (v) the amount of Class A-1A VFN Commitments (whether funded or unfunded) which remains outstanding;

(b) the interest payable on each Class of Notes on the related Distribution Date, including any Interest Shortfall thereon (in the aggregate and separately for each Class) and the Class A-1A VFN Commitment Fee accrued with respect to the related Distribution Date;

(c) the Administrative Expenses payable on the related Distribution Date on an itemized basis; and

(d) a list of Loans which are subject to an Asset Specific Swap.

Section 9.02. Officer’s Certificate

Each Quarterly Report delivered pursuant to Section 9.01 shall be accompanied by a certificate of a Responsible Officer of the Issuer certifying the accuracy of the Quarterly Report and a certificate of a Responsible Officer of the Servicer certifying that no Servicer Default or event that with notice or lapse of time or both would become a Servicer Default has occurred, or if such event has occurred and is continuing, specifying the event and its status.

Section 9.03. Other Data; Obligor Financial Information

(a) In addition, the Issuer shall, upon the request of any Trustee, the Backup Servicer or any Rating Agency, furnish such Trustee, Rating Agency or the Backup Servicer, as the case may be, such underlying data in the possession of the Issuer used to generate a Quarterly Report as may be reasonably requested.  The Servicer will also forward to the Trustee, the Owner Trustee, the Backup Servicer and each Rating Agency (i) within 60 days after each calendar quarter (except the fourth calendar quarter), commencing with the quarter ending September 30, 2006, the unaudited quarterly financial statements of the Servicer and (ii) within 90 days after each fiscal year of the Servicer, commencing with the fiscal year ending December 31, 2006, the audited annual financial statements of the Servicer, together with the related report of the independent accountants to the Servicer.

(b) The Servicer will forward to Moody’s and S&P: (i) copies of all financial statements of each Obligor of a Loan included in the Collateral (other than a Loan which is publicly rated by Moody’s or S&P, as applicable) as promptly as reasonably practicable after receipt of such financial statements by the Servicer with respect to the end of the fiscal year of such Obligor, until such time as the related Loan has been paid in full and is no longer part of the Collateral; (ii) email notice of any payment default (following the expiration of any applicable grace period) under a Loan promptly after a Responsible Officer of the Servicer becomes aware thereof; and (iii) notice of failure, by any Obligor of a Loan included in the Collateral, to provide annual financial statements within 135 days after the end of the fiscal year of such Obligor.

(c) The Servicer will forward to Moody’s and S&P promptly upon request any additional financial information in the Servicer’s possession or reasonably obtainable by the Servicer as Moody’s and S&P shall reasonably request with respect to an Obligor as to which any Scheduled Payment is past due for at least ten days.

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(d) Upon any Loan becoming a Delinquent Loan, and without any request therefor by Moody’s and S&P, and promptly after receipt thereof by the Servicer, the Servicer will forward to Moody’s and S&P updated financial information with respect to the related Obligor.

(e) The Servicer will provide to the Rating Agencies such financial information, documents and other materials in the Servicer’s possession or reasonably obtainable by the Servicer as the Rating Agencies shall reasonably request in connection with any annual review and/or re-grading of the Loans in the and the related Obligors which the Rating Agencies may undertake.

Section 9.04. Annual Report of Accountants

On or before April 1 of each year (commencing April 1, 2007), the Issuer shall cause to be delivered to the Trustee and each of the Rating Agencies a statement from a firm of Independent Accountants indicating (i) that such firm has reviewed the Quarterly Reports received since the last review and applicable information from the Trustee, (ii) that the calculations within those Quarterly Reports have been performed in accordance with the applicable provisions of this Agreement, (iii) the Aggregate Outstanding Loan Balance as of the immediately preceding Distribution Date and (iv) whether the remaining Scheduled Payments on the Collateral shall be sufficient to pay the principal of the Notes by the Stated Maturity Date with interest due thereon at the applicable Note Interest Rate; provided that in the event of a conflict between such firm of Independent Accountants and the Issuer with respect to any matter in this paragraph, the determination by such firm of Independent Accountants shall be conclusive.  In the event such firm of Independent Accountants requires the Trustee to agree to the procedures performed by such firm of Independent Accountants, the Servicer shall direct the Trustee in writing to so agree; and the Trustee will deliver such letter of agreement in conclusive reliance upon the direction of the Servicer, on behalf of the Issuer, and the Trustee will not make any independent inquiry or investigation as to, and shall have no obligation or liability in respect of, the sufficiency, validity or correctness of such procedures.  The Independent Accountants’ report shall also indicate that the firm is independent of the Servicer within the meaning of the Code of Professional Ethics of the American Institute of Certified Public Accountants.

Section 9.05. Annual Statement of Compliance from Servicer

The Servicer will deliver to the Trustee and the Owner Trustee within 90 days of the end of each fiscal year commencing with the year ending December 31, 2006, an Officer’s Certificate stating that (a) the Servicer has fully complied in all material respects with certain provisions of the Agreement relating to servicing of the Loans and payments on the Notes, (b) a review of the activities of the Servicer during the prior calendar year and of its performance under this Agreement was made under the supervision of the officer signing such certificate and (c) to the best of such officer’s knowledge, based on such review, the Servicer has fully performed or caused to be performed in all material respects all its obligations under this Agreement for such year, or, if there has been a Servicer Default or default in any of its obligations which, with notice or passage of time, could become a Servicer Default, specifying each such default known to such officer and the nature and status thereof and the steps being taken or necessary to be taken to remedy such event.

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Section 9.06. [Reserved]

Section 9.07. Notices of Event of Default or Servicer Default

(a) Promptly upon a Responsible Officer of the Servicer becoming aware thereof, the Servicer shall furnish to the Trustee and the Backup Servicer notice of the occurrence of any Event of Default or Servicer Default or of any situation which the Servicer reasonably expects to develop into an Event of Default or Servicer Default.

Section 9.08. Trustee’s Right to Examine Servicer Records, Audit Operations and Deliver Information to Noteholders

The Trustee shall have the right upon reasonable prior notice, during normal business hours, in a manner that does not unreasonably interfere with the Servicer’s normal operations or customer or employee relations, no more often than once a year unless an Event of Default or Servicer Default shall have occurred and be continuing in which case as often as reasonably required, to examine and audit any and all of the books, records or other information of the Servicer, whether held by the Servicer or by another on behalf of the Servicer, which may be relevant to the performance or observance by the Servicer of the terms, covenants or conditions of this Agreement.  No amounts payable in respect of the foregoing shall be paid from the Loan Assets.

The Trustee shall have the right, in accordance with the Indenture, to deliver information provided by the Servicer to any Noteholder requesting the same.

ARTICLE X.

TERMINATION

Section 10.01. Optional Repurchase and Refinancing of Notes

(a) Optional Repurchase.

(i) At any time after the date on which the Aggregate Outstanding Loan Balance shall be less than 15.0% of the Expected Aggregate Outstanding Loan Balance or, if less, the Aggregate Outstanding Loan Balance as of the Effective Date, the Issuer, at the direction of the Holders representing at least 66-2/3% of the Outstanding Principal Balance of the Class E Notes, may effect an Optional Repurchase of the Offered Notes and the Class D Notes, in whole but not in part, at the Repurchase Price, on the Repurchase Date, pursuant to the Indenture and the other Transaction Documents.  To exercise such option, the Servicer on behalf of the Issuer shall deposit in the Note Distribution Account an amount equal to the Repurchase Price and shall comply with the requirements of Section 10.01 of the Indenture.

(ii) Notice of any purchase pursuant to Section 10.01(a)(i) shall be given, at least ten Business Days prior to the proposed Repurchase Date, by the Servicer to the Issuer, the Trustee, the Class A-1A VFN Agent, the Owner Trustee and the Rating Agencies and by the Trustee to each Holder of Notes.  The Issuer may withdraw any notice of repurchase or specify a new Repurchase Date at any time prior to the second Business Day preceding the

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proposed Repurchase Date set forth in any prior notice of repurchase by providing written notice to the Trustee.

(b) Optional Refinancing.

(i) The Issuer, at the direction of the Holders representing at least 66-2/3% of the Outstanding Principal Balance of the Class E Notes, may effect a Refinancing of the Offered Notes and the Class D Notes on any Refinancing Date by payment to the Holders of the Offered Notes and the Class D Notes and other Persons entitled thereto the Refinancing Price pursuant to the Indenture and the other Transaction Documents.  To effect a Refinancing, the Servicer on behalf of the Issuer shall deposit in the Note Distribution Account an amount equal to the Refinancing Price and shall comply with the provisions of Section 10.04 of the Indenture.

(ii) Notice of any Refinancing pursuant to Section 10.01(b)(i) shall be given, at least ten Business Days prior to the proposed Refinancing Date, by the Issuer to the Servicer, the Trustee, the Class A-1A VFN Agent, the Owner Trustee and the Rating Agencies and by the Trustee to each Holder of Notes.

Section 10.02. Termination

(a) This Agreement shall terminate upon notice to the Trustee of the earlier of the following events: (i) the final payment on or the disposition or other liquidation by the Issuer of the last Loan (including, without limitation, in connection with a redemption by the Issuer of all outstanding Notes pursuant to Section 10.01) or the disposition of all property acquired upon foreclosure or deed in lieu of foreclosure of any Loan and the remittance of all funds due thereunder with respect thereto, or (ii) mutual written consent of the Servicer, the Trust Depositor, Trustee, the Originator and all Securityholders.

(b) Notice of any termination, specifying the Distribution Date upon which the Issuer will terminate and that the Noteholders shall surrender their Notes to the Trustee for payment of the final distribution and cancellation shall be given promptly by the Servicer to the Trustee and by the Trustee to all Noteholders during the month of such final distribution before the Determination Date in such month, specifying (i) the Distribution Date upon which final payment of the Notes (or Repurchase Price, as applicable) will be made upon presentation and surrender of Notes at the office of the Trustee therein designated, (ii) the amount of any such final payment and (iii) that the Record Date otherwise applicable to such Distribution Date is not applicable, payments being made only upon presentation and surrender of the Notes at the office of the Trustee therein specified.

ARTICLE XI.

REMEDIES UPON MISREPRESENTATION

Section 11.01.Repurchases of, or Substitution for, Loans for Breach of Representations and Warranties

(a) In the event that the Issuer determines that a Loan is an Ineligible Loan then the Trust Depositor and the Originator must either repurchase such Ineligible Loan

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(“Mandatory Repurchase”) or substitute for such Ineligible Loan a Substitute Loan (“Mandatory Substitution”).  The repurchase price for such Ineligible Loan shall be the Transfer Deposit Amount.  In the event that the Trust Depositor and the Originator substitute a Substitute Loan for such Ineligible Loan at any time after the Effective Date, after giving effect to such substitution, the Portfolio Criteria must be satisfied for the applicable Substitute Loan to become part of the Collateral (or, if any component of the Portfolio Criteria was not satisfied prior to giving effect to such substitution, compliance with such component shall be maintained or improved after giving effect to such substitution).  In addition, the substitution of any Substitute Loan into the Collateral will be subject to the following requirements:

(i) each Substitute Loan must have an Outstanding Loan Balance, or if more than one Substitute Loan will be added in replacement of a Loan to be reassigned by the Issuer to the Trust Depositor the sum of the Outstanding Loan Balances of such Substitute Loans must be, equal to or greater than that of the Loan being substituted; and

(ii) all actions or additional actions (if any) necessary to perfect the security interest and assignment of such Loan being substituted and Related Property to the Trust Depositor and the Originator, and of such Substitute Loan and Related Property to the Issuer and the Trustee, shall have been taken as of or prior to the date of substitution of such Loan.

(b) A substitution may be accomplished by either (a) a contemporaneous substitution of a Substitute Loan meeting the criteria specified above for the Loan being replaced or (b) a deposit by the Servicer into the Principal and Interest Account of the Transfer Deposit Amount with respect to the Loan being replaced and then, within 90 days, the sale by the Trust Depositor to the Issuer of one or more Substitute Loans in exchange for the funds so deposited.  In the event that the full Transfer Deposit Amount is not used to purchase Substitute Loans within the 90 day period, then the remaining amount of such funds previously deposited as described above will be distributed from the Principal and Interest Account and distributed, in accordance with the Priority of Payments, on the next Distribution Date, provided that, with respect to any such amounts constituting Principal Collections, no such distribution shall be made during the Replenishment Period unless the conditions for payment of a Special Redemption Amount by the Issuer are not satisfied with respect to such amount.  The price paid (or, in the case of a contemporaneous conveyance of a Substitute Loan pursuant to this Agreement, deemed paid) by the Issuer for any Substitute Loan shall be an amount equal to (i) in the case of a Loan originated by the Originator, the Outstanding Loan Balance thereof and (ii) in the case of a Loan acquired by the Originator from a third party, the purchase price paid for such Loan, plus, in each case, accrued and unpaid interest thereon, which price may equal, exceed or be less than the fair market value of such Substitute Loan as of the related Cut-Off Date.

(c) The Originator shall provide written notice to each Rating Agency of the transfer of a Substitute Loan to the Issuer.  The Servicer on behalf of the Issuer will present each Substitute Loan proposed to be included in the Collateral to each Rating Agency in order to obtain a rating and a recovery rate with respect to such Loan; provided that (a) such Loan may become a part of the Collateral prior to the Servicer’s presentment of the Loan to the Rating Agencies as described herein, (b) the Servicer’s failure to present a Loan to the Rating Agencies as described herein shall not constitute an independent breach of, or default under, any Transaction Document, (c) with respect to S&P, the recovery rate shall be determined in

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accordance with the S&P Priority Category Recovery Rate and (d) the Servicer shall have no obligation to present a Substitute Loan to Moody’s if a Moody’s Rating for such Loan has been determined by reference to clause (e) of the definition of Moody’s Rating.

(d) Prior to any substitution or repurchase effected pursuant to this Section 11.01, the Servicer shall deliver a written notice to the Trustee setting forth (1) the Originator’s intent to effect such a substitution or repurchase, (2) the specific Loan or Loans to be substituted or repurchased and (3) the reasons for such substitution or repurchase.

(e) With respect to any Substitute Loans to be conveyed to the Trust Depositor by the Originator pursuant to this Section 11.01 and in accordance with the Loan Sale Agreement, the Originator shall sell, transfer, assign, set over and otherwise convey to the Trust Depositor, without recourse other than as expressly provided herein and therein (and the Trust Depositor shall be required to purchase through cash payment or by exchange of one or more related Loans released by the Issuer to the Trust Depositor on the related Cut-Off Date), all the right, title and interest of the Originator in and to the Substitute Loan Assets.  To the extent the purchase price paid to the Originator for any Substitute Loan is less than the fair market value, as determined by the Servicer, of such Substitute Loan, the difference between such fair market value and the purchase price shall be deemed to be a capital contribution made by the Originator to the Trust Depositor on the relevant Cut-Off Date.

(f) Subject to the conditions set forth in Section 11.01(g), the Trust Depositor shall sell, transfer, assign, set over and otherwise convey to the Issuer, without recourse other than as expressly provided herein, (i) all the right, title and interest of the Trust Depositor in and to the Substitute Loans purchased pursuant to this Section 11.01, and (ii) all other rights and property interests consisting of Substitute Loan Assets related to such Substitute Loans (the property in clauses (i) and (ii) above, upon such transfer, becoming part of the Collateral).

(g) The Originator shall transfer to the Trust Depositor and the Trust Depositor shall transfer to the Issuer the Substitute Loans and the other property and rights related thereto described in Sections 11.01(e) and (f) only upon the satisfaction of each of the following conditions on or prior to the related Cut-Off Date and the delivery of a related Loan Asset Certificate by the Trust Depositor shall be deemed a representation and warranty by the Trust Depositor and by the Originator that such conditions have been or will be, as of the related Cut-Off Date, satisfied:

(i) the Trust Depositor shall have provided the Owner Trustee and the Trustee with a timely Loan Asset Certificate complying with the definition thereof contained herein (a copy of which shall be provided to S&P promptly after it is delivered to the Owner Trustee), which Loan Asset Certificate shall be delivered no later than 11:00 a.m. (New York City time) on the date which is ten Business Days prior to the related Cut-Off Date;

(ii) the conveyance of the Substitute Loans to the Issuer satisfies the Substitute Loan Qualification Conditions and the Portfolio Acquisition and Disposition Requirements;

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(iii) with respect to any substitution effected after the Effective Date, after giving effect to the inclusion of the applicable Substitute Loans in the Collateral, the Portfolio Criteria are satisfied; provided that if any component of the Portfolio Criteria is not satisfied prior to giving effect to such inclusion of a Substitute Loan, the Portfolio Criteria shall be deemed satisfied with respect to such component if the component is maintained or improved by the inclusion of such Substitute Loan;

(iv)the Originator shall have delivered to the Trust Depositor, and the Trust Depositor shall have delivered to the Issuer and the Trustee, a duly updated Subsequent List of Loans listing the Substitute Loans; provided that each such Subsequent List of Loans shall separately identify (by attached schedule, or marking or other effective identifying designation) the related Loan or Loans being removed from the Issuer and replaced by the Substitution Loans, such replaced Loans being deleted from the List of Loans by virtue of the delivery of such Subsequent List of Loans;

(v) the Trust Depositor shall have deposited or caused to be deposited in the Principal and Interest Account all Collections received with respect to the Substitute Loan on and after the related Cut-Off Date;

(vi)each of the representations and warranties made by the Trust Depositor pursuant to Section 3.02 (including, without limitation, the representations and warranties made pursuant to Section 3.02(b) (“Eligible Loan”) and Section 3.02(c) (“Loans Secured by Real Property”)) and Section 3.04 applicable to the Substitute Loan shall be true and correct as of the related Cut-Off Date; and

(vii)the Originator shall bear all incidental transaction costs incurred in connection with a substitution effected pursuant to this Agreement and shall, at its own expense, on or prior to the related Cut-Off Date and indicate in its Computer Records that ownership of each Substitute Loan identified on the Subsequent List of Loans has been sold by the Originator to the Trust Depositor and by the Trust Depositor to the Issuer pursuant to the Loan Sale Agreement and this Agreement, respectively.

(h) The Originator shall provide written notice of each substitution effected pursuant to this Section 11.01 to each Rating Agency.

(i) The Servicer, the Issuer and the Trustee (acting as the request of the Servicer, on behalf on the Issuer) shall execute and deliver such instruments, consents or other documents and perform all acts reasonably requested by the Servicer in order to effect the transfer and release of any of the Issuer’s interests in the Loans that are being substituted.

Section 11.02. Reassignment of Repurchased or Substituted Loans

Upon receipt by the Trustee for deposit in the Principal and Interest Account of any amounts described in Section 11.01 (or upon the Cut-Off Date related to a Substitute Loan in the case of a contemporaneous substitution described in Section 11.01), and upon receipt of a Loan Asset Certificate in the form attached hereto as Exhibit F, the Trustee shall assign to the Trust Depositor and the Trust Depositor shall assign to the Originator all of the Issuer’s (or Trust Depositor’s, as applicable) right, title and interest in the repurchased or substituted Loan and

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related Loan Assets without recourse, representation or warranty.  Such reassigned Loan shall no longer thereafter be included in any calculations of Outstanding Loan Balances required to be made hereunder or otherwise be deemed a part of the Issuer.

ARTICLE XII.

INDEMNITIES

Section 12.01.Indemnification by Servicer

The Servicer agrees to indemnify, defend and hold the Trustee (as such and in its individual capacity), the Owner Trustee (as such and in its individual capacity), the Backup Servicer, the Collateral Administrator, a Successor Servicer, and the Issuer harmless from and against any and all claims, losses, penalties, fines, forfeitures, reasonable legal fees and related costs, judgments (provided that any indemnification for damages is limited to actual damages, not consequential, special or punitive damages), reasonable legal fees and related costs and any other reasonable costs, fees and expenses that such Person may sustain as a result of the Servicer’s gross negligence, willful misconduct or fraud in the performance of its duties hereunder, except to the extent such damages arise from the gross negligence, willful misconduct or fraud on the part of the Person claiming indemnification.  Any Person seeking indemnification hereunder shall promptly notify the Servicer if such Person receives a complaint, claim, compulsory process or other notice of any loss, claim, damage or liability giving rise to a claim of indemnification hereunder but failure to provide such notice shall not relieve the Servicer of its indemnification obligations hereunder unless the Servicer is deprived of material substantive or procedural rights or defenses as a result thereof.  The Servicer shall assume (with the consent of the indemnified party, such consent not to be unreasonably withheld) the defense and any settlement of any such claim and promptly pay, discharge and satisfy any judgment or decree which may be entered against the indemnified party in respect of such claim.  If the consent of the indemnified party required in the immediately preceding sentence is unreasonably withheld, the Servicer is relieved of its indemnification obligations hereunder with respect to such Person.  The parties agree that the provisions of this Section 12.01 shall not be interpreted to provide recourse to the Servicer against loss by reason of the bankruptcy, insolvency or lack of creditworthiness of an Obligor with respect to a Loan.  The Servicer shall have no liability for making indemnification hereunder to the extent any such indemnification constitutes recourse for uncollectible or uncollected Loans.  The provisions of this Section 12.01 shall survive the termination of this Agreement and the earlier resignation or removal of the Trustee, the Owner Trustee, the Backup Servicer or the Collateral Administrator.  Any indemnification pursuant to this Section 12.01 shall not be payable from the Collateral.

Section 12.02.Indemnification by Trust Depositor

(a) The Trust Depositor agrees to indemnify, defend, and hold the Trustee (as such and in its individual capacity), the Owner Trustee (as such and in its individual capacity), the Backup Servicer, the Successor Servicer, the Collateral Administrator, and the Issuer harmless from and against any and all claims, losses, penalties, fines, forfeitures, reasonable legal fees and related costs, judgments (provided that any indemnification for damages is limited to actual damages, not consequential, special or punitive damages), and any other reasonable

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costs, fees and expenses that such Person may sustain as a result of the Trust Depositor’s gross negligence, willful misconduct or fraud in the performance of its duties hereunder, except to the extent such damages arise from the gross negligence, willful misconduct or fraud on the part of the Person claiming indemnification.  Any Person seeking indemnification hereunder shall promptly notify the Trust Depositor if such Person receives a complaint, claim, compulsory process or other notice of any loss, claim, damage or liability giving rise to a claim of indemnification hereunder but failure to provide such notice shall not relieve the Trust Depositor of its indemnification obligations hereunder unless the Trust Depositor is deprived of material substantive or procedural rights or defenses as a result thereof.  The Trust Depositor shall assume (with the consent of the indemnified party, such consent not to be unreasonably withheld) the defense and any settlement of any such claim and promptly pay, discharge and satisfy any judgment or decree which may be entered against the indemnified party in respect of such claim.  If the consent of the indemnified party required in the immediately preceding sentence is unreasonably withheld, the Trust Depositor is relieved of its indemnification obligations hereunder with respect to such Person.  The provisions of this Section 12.02 shall survive the termination of this Agreement and the earlier resignation or removal of the Trustee or the Owner Trustee.  If the Trust Depositor has made any indemnity payment pursuant to this Section and such payment fully indemnified the recipient thereof and the recipient thereafter collects payments from others, the recipient shall repay to the Trust Depositor an amount equal to the lesser of: (i) the amount it has collected from others in respect of such indemnified amounts; and (ii) any indemnity payment it has received from the Trust Depositor.

(b) The Trust Depositor shall indemnify, defend and hold harmless the Issuer, the Owner Trustee (as such and in its individual capacity), the Backup Servicer, the Successor Servicer, and the Trustee (as such and in its individual capacity), the Collateral Administrator, their officers, directors, agents and employees, from and against all costs, expenses, losses, claims, damages and liabilities arising out of or as a result of this Agreement or the ownership of an interest in the Collateral or in respect of any Loan included in the Collateral, except to the extent that such cost, expense, loss, claim, damage or liability in the case of (i) the Owner Trustee, shall be due to the willful misfeasance, bad faith or gross negligence of the Owner Trustee, or shall arise from the breach by the Owner Trustee of any of its representations or warranties set forth in Section 7.03 of the Trust Agreement, (ii) the Trustee, shall be due to the willful misfeasance, bad faith or negligence of the Trustee, or (iii) the Collateral Administrator, shall be due to the willful misfeasance, bad faith or negligence of the Collateral Administrator.

ARTICLE XIII.

MISCELLANEOUS

Section 13.01. Amendment

(a) This Agreement may be amended from time to time by the Issuer, the Trust Depositor, the Originator, the Servicer, the Backup Servicer (if such amendment changes the rights or obligations of the Backup Servicer) and the Trustee by written agreement, with notice to the Owner Trustee and the Backup Servicer but without notice to or consent of the Securityholders, to cure any ambiguity, to correct or supplement any provisions herein, to comply with any changes in the Code, to conform this Agreement to the Offering Memorandum,

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to modify any Schedule or Annex B or to make any other provisions with respect to matters or questions arising under this Agreement which shall not be inconsistent with the provisions of this Agreement; provided that such action shall not, as evidenced by an Opinion of Counsel delivered to the Trustee, materially adversely affect the interests of any Securityholder, which Opinion of Counsel may rely upon an officer’s certificate with respect to the effect of any such amendment on the economic interests of any Securityholder; provided further that no such amendment shall reduce in any manner the amount of, or delay the timing of, any amounts received on Loans which are required to be distributed on any Note or Certificate without the consent of the Holder of such Note or Certificate, or change the rights or obligations of any other party hereto (including the Backup Servicer) without the consent of such party.

(b) Except as provided in Section 13.01(a), this Agreement may be amended from time to time by the Issuer, the Trust Depositor, the Originator, the Servicer and the Trustee by written agreement, with the consent of the Majority Noteholders adversely affected thereby with notice to the Owner Trustee, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of the Holders of the Notes or Certificates; provided that (i) no such amendment shall reduce in any manner the amount of, or delay the timing of, any amounts which are required to be distributed on any Note or Certificate without the consent of the Holder of such Note or Certificate or reduce the percentage of Holders of any Note or Certificate which are required to consent to any such amendment without the consent of the Holders of 100% of the Notes affected thereby, and (ii) no amendment affecting only one Class shall require the approval of the Holders of any other Class.

(c) Prior to the execution of any such amendment or consent (other than any amendment to Annex B or the List of Loans), the Trustee shall furnish written notification of the substance of such amendment or consent, together with a copy thereof, to each Rating Agency.  Prior to the execution of any amendment pursuant to Section 13.01, the Issuer shall obtain written confirmation from Moody’s and S&P that entry into such amendment satisfies the Moody’s Rating Condition and the S&P Rating Condition.

(d) Promptly after the execution of any such amendment or consent, written notification of the substance of such amendment or consent shall be furnished by the Trustee to the Noteholders, the Issuer, the Owner Trustee and the Certificateholders.  It shall not be necessary for the consent of any Securityholders pursuant to Section 13.01(b) to approve the particular form of any proposed amendment or consent, but it shall be sufficient if such consent shall approve the substance thereof.  The manner of obtaining such consents and of evidencing the authorization by the Securityholders of the execution thereof shall be subject to such reasonable requirements as the Trustee may prescribe for the Noteholders and as the Owner Trustee may prescribe for the Certificateholders.

(e) Notwithstanding the above, any amendment to this Agreement that would have the effect of amending or modifying the Portfolio Criteria shall be subject to the following requirements and restrictions: (a) only clauses (b) through (i) of the definition of Portfolio Criteria may be amended, (b) such amendment shall satisfy the Rating Agency Condition, (c) such amendment shall not, as evidenced by an officer’s certificate of the Servicer delivered to the Trustee, materially adversely affect the interests of any Securityholder and (d) the Issuer shall

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deliver to the Noteholders the proposed amendment and the Majority Noteholders shall not have objected to such amendment within ten Business Days from the receipt thereof; provided that any amendment that would have the effect of modifying the calculation of clauses (b) through (i) of the definition of Portfolio Criteria in order to correspond to written changes in the guidelines, methodology or standards established by the Rating Agencies shall only be subject to satisfaction of the Rating Agency Condition.

(f) Prior to the execution of any amendment to this Agreement, other than any amendment to Annex B or any amendment to the List of Loans, the Owner Trustee and the Trustee shall be entitled to receive and conclusively rely upon an Opinion of Counsel stating that the execution of such amendment is authorized and permitted by this Agreement.  Each Trustee may, but shall not be obligated to, enter into any such amendment that affects such Trustee’s own rights, duties, indemnities or immunities under this Agreement or otherwise.

(g) Prior to the execution of any amendment to Annex B, the Issuer shall obtain written confirmation from Moody’s that entry into such amendment satisfies the Moody’s Rating Condition.

(h) It shall not be necessary for the Noteholders to approve the particular form of any proposed amendment, but it shall be sufficient if such consent shall approve the substance thereof.

Section 13.02. Reserved

Section 13.03. Governing Law

(a) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES UNDER THE AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

(b) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT.  EACH PARTY HERETO (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 13.03(b).

Section 13.04. Notices

All notices, demands, certificates, requests and communications hereunder (“notices”) shall be in writing and shall be effective (a) upon receipt when sent through the U.S. mails, registered or certified mail, return receipt requested, postage prepaid, with such receipt to be

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effective the date of delivery indicated on the return receipt, or (b) one Business Day after delivery to an overnight courier, or (c) on the date personally delivered to an Responsible Officer of the party to which sent, or (d) on the date transmitted by legible telecopier or electronic mail transmission with a confirmation of receipt, in all cases addressed to the recipient as follows:

(a) if to the Servicer or the Originator:

Ares Capital Corporation
280 Park Avenue, 22nd Floor, Building East
New York, New York 10017
Attention: Michael J. Arougheti
Facsimile No.: (212) 750-1777

with a copy to:

Ares Capital Management LLC
1999 Avenue of the Stars, Suite 1900
Los Angeles, California 90067
Attention: Daniel F. Nguyen
Facsimile No.: (312) 201-4189

(b) if to the Trust Depositor:

ARCC CLO 2006 LLC
280 Park Avenue, 22nd Floor, Building East
New York, New York 10017
Attention: Michael J. Arougheti
Facsimile No.: (212) 750-1777

with a copy to:

Ares Capital Management LLC
1999 Avenue of the Stars, Suite 1900
Los Angeles, California 90067
Attention: Daniel F. Nguyen
Facsimile No.: (312) 201-4189

(c) if to the Trustee or the Collateral Administrator:

U.S. Bank National Association
One Federal Street, 3rd Floor
Boston, Massachusetts 02110
Attention: CDO Unit ARCC 2006-1
Facsimile No.: (866) 386-0156

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if to Trustee with respect to Loan Files

U.S. Bank National Association
1719 Range Way
Florence, South Carolina 29501
Attention: Sandra Farrow
Email Address: Sandra.farrow@usbank.com
Ref: ARCC 2006-1
Mail Code: Ex – SC – FLOR
Facsimile No.: 843-673-4925
Telephone No.: 843-673-4929

with a copy to:

U.S. Bank National Association
Corporate Trust Services-CDO Unit
One Federal Street, Third Floor
Boston, Massachusetts
Attention: Joel Cough
Email Address: Joel.cough@usbank.com
Ref: ARCC 2006
Facsimile No.: 866-386-0156
Telephone No.: 617-603-6491

(d) if to the Backup Servicer:

Lyon Financial Services, Inc.
d/b/a U.S. Bank Portfolio Services
1310 Madrid, Suite 103
Marshall, Minnesota 56258
Attention: Joe Andries
Ref: ARCC 2006
Facsimile No.: 507-532-7129
Telephone No.: 507-537-5201

(e) if to the Owner Trustee:

Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19890
Attention: Ian P. Monigle
Facsimile No.: (302) 636-4140

with a copy to:

the Originator and the Servicer as provided in clause (a) above

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(f) if to the Issuer:

ARCC Commercial Loan Trust 2006
c/o Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19890
Attention: Ian P. Monigle
Facsimile No.: (302) 636-4140

with a copy to:

the Originator as provided in clause (a) above

(g) if to S&P:

Standard and Poor’s Inc.
55 Water Street
41st Floor
New York, New York 10041
Attention: Surveillance: Asset-Backed Services
Facsimile No.: (212) 438-2662
Email: cdo_surveillance@sandp.com (all Quarterly Reports)

(h) if to Moody’s:

Moody’s Investors Service
99 Church Street
New York, New York 10007
Attention: CDO Monitoring Department
Facsimile No.: (212) 553-0344
Email: cdomonitoring@moodys.com; and

(i) if to the Initial Purchaser:

Wachovia Capital Markets, LLC
One Wachovia Center, Mail Code: NC0602
301 South College Street
Charlotte, North Carolina 28288-0610
Attention: Mary Katherine DuBose
Facsimile No.: (704) 374-6495.

Each party hereto may, by notice given in accordance herewith to each of the other parties hereto, designate any further or different address to which subsequent notices shall be sent.

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Section 13.05.              Severability of Provisions

If one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement, the Notes or Certificates or the rights of the Securityholders, and any such prohibition, invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenants, agreements, provisions or terms in any other jurisdiction.

Section 13.06.              Third Party Beneficiaries

Except as otherwise specifically provided herein, the parties hereto hereby manifest their intent that no third party (other than the Owner Trustee) shall be deemed a third party beneficiary of this Agreement, and specifically that the Obligors are not third party beneficiaries of this Agreement.

Section 13.07.              Counterparts

This Agreement may be executed by facsimile signature and in several counterparts, each of which shall be an original and all of which shall together constitute but one and the same instrument.

Section 13.08.              Headings

The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof.

Section 13.09.              No Bankruptcy Petition; Disclaimer

(a)           Each of the Originator, the Trustee, the Servicer, the Issuer and each Holder (by acceptance of the applicable Securities) covenants and agrees that, prior to the date that is one year and one day (or, if longer, the then applicable preference period and one day) after the payment in full of all amounts owing in respect of all outstanding Classes of Notes rated by any Rating Agency, it will not institute against the Trust Depositor or the Issuer, or join any other Person in instituting against the Trust Depositor or the Issuer, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceedings under the laws of the United States or any state of the United States; provided that nothing herein shall prohibit the Trustee from filing proofs of claim or otherwise participating in any such proceedings instituted by any other Person.  This Section 13.09 will survive the termination of this Agreement.

(b)           The Issuer acknowledges and agrees that the Certificates represent a beneficial interest in the Issuer and Loan Assets only and the Securities do not represent an interest in any assets (other than the Loan Assets) of the Trust Depositor (including by virtue of any deficiency claim in respect of obligations not paid or otherwise satisfied from the Loan Assets and proceeds thereof).  In furtherance of and not in derogation of the foregoing, to the extent that the Trust Depositor enters into other transactions as contemplated in Section 6.07, the Issuer acknowledges and agrees that it shall have no right, title or interest in or to any assets (or interests therein), other than the Loan Assets, conveyed or purported to be conveyed (whether by

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way of a sale, capital contribution or by the granting of a Lien) by the Trust Depositor to any Person other than the Issuer (the “Other Assets”).

(c)           To the extent that notwithstanding the agreements contained in this Section 13.09, the Issuer or any Securityholder, either (i) asserts an interest in or claim to, or benefit from any Other Assets, whether asserted against or through the Trust Depositor or any other Person owned by the Trust Depositor, or (ii) is deemed to have any interest, claim or benefit in or from any Other Assets, whether by operation of law, legal process, pursuant to applicable provisions of Insolvency Laws or otherwise (including without limitation pursuant to Section 1111(b) of the federal Bankruptcy Code, as amended) and whether deemed asserted against or through the Trust Depositor or any other Person owned by the Trust Depositor, then the Issuer and each Securityholder by accepting a Note or Certificate further acknowledges and agrees that any such interest, claim or benefit in or from the Other Assets is and shall be expressly subordinated to the indefeasible payment in full of all obligations and liabilities of the Trust Depositor that, under the terms of the documents relating to the securitization of the Other Assets, are entitled to be paid from, entitled to the benefits of, or otherwise secured by such Other Assets (whether or not any such entitlement or security interest is legally perfected or otherwise entitled to a priority of distribution under applicable law, including Insolvency Laws, and whether asserted against the Trust Depositor or any other Person owned by the Trust Depositor) including, without limitation, the payment of post-petition interest on such other obligations and liabilities.  This subordination agreement shall be deemed a subordination agreement within the meaning of Section 510(a) of the Bankruptcy Code.  Each of the Issuer and the Securityholders is deemed to have acknowledged and agreed that no adequate remedy at law exists for a breach of this Section 13.09 and that the terms and provisions of this Section 13.09 may be enforced by an action for specific performance.

(d)           The provisions of this Section 13.09 shall be for the third party benefit of those entitled to rely thereon, including the Securityholders, and shall survive the termination of this Agreement.

Section 13.10.              Jurisdiction

Any legal action or proceeding with respect to this Agreement may be brought in the courts of the United States for the Southern District of New York, and by execution and delivery of this Agreement, each party hereto consents, for itself and in respect of its property, to the nonexclusive jurisdiction of those courts.  Each such party irrevocably waives any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens, which it may now or hereafter have to the bringing of any action or proceeding in such jurisdiction in respect of this Agreement or any document related hereto.

Section 13.11.              Tax Characterization

Notwithstanding the provisions of Section 2.01 and Section 11.01, pursuant to Treasury Regulations Section 301.7701-3(b)(1) and for federal income tax purposes, in the event that the Certificates and the Class E Notes are owned by more than one Holder, the Issuer will be treated as a partnership, the partners of which shall be the Certificateholders and the Holders of the Class E Notes.  It is the intention of the parties to this Agreement that the Class E Notes and the

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Certificate shall be owned by a single Holder and the Issuer shall be treated as a disregarded entity for federal income tax purposes.  Furthermore, it is the intention of the parties to this Agreement that the Offered Notes and the Class D Notes shall be treated as debt of the sole owner of the Issuer for federal income tax purposes.  No party to this Agreement shall make an election to treat the Issuer as an association taxable as a corporation for federal income tax purposes.

Section 13.12.              Prohibited Transactions with Respect to the Issuer

The Originator shall not:

(a)           Provide credit to any Noteholder or Certificateholder for the purpose of enabling such Noteholder or Certificateholder to purchase Notes or Certificates, respectively;

(b)           Purchase any Notes or Certificates in an agency or trustee capacity; or

(c)           Except in its capacity as Servicer as provided in this Agreement, lend any money to the Issuer.

Section 13.13.              Limitation of Liability of Owner Trustee

Wilmington Trust Company acts on behalf of the Issuer solely as Owner Trustee hereunder and not in its individual capacity, and all Persons having any claim against the Owner Trustee (as such or in its individual capacity) or the Issuer by reason of the transactions contemplated by this Agreement or any other Transaction Document shall look only to the Trust Estate under the Trust Agreement for payment or satisfaction thereof.  The Owner Trustee (as such or in its individual capacity) makes no representations as to the validity or sufficiency of this Agreement, any other Transaction Document or the Notes, or of any Loan or related documents.  The Owner Trustee (as such or in its individual capacity) shall at no time have any responsibility or liability for or with respect to the legality, validity and enforceability of any Loan, or the perfection and priority of any security interest created by any Loan in any Collateral or the maintenance of any such perfection and priority, or for or with respect to the sufficiency of the Trust Estate under the Trust Agreement or its ability to generate the payments to be distributed to the Certificateholder under the Trust Agreement or the Noteholders under the Indenture, including, without limitation, the existence, condition and ownership of any Collateral; the existence and enforceability of any insurance thereon; the existence and contents of any Loan on any computer or other record thereof; the validity of the assignment of any Loan to the Issuer or of any intervening assignment; the completeness of any Loan; the performance or enforcement of any Loan; the compliance by the Issuer, the Trust Depositor, the Servicer or any other Person with any covenant, agreement or other obligation or any warranty or representation made under any Transaction Document or in any related document or the accuracy of any such warranty or representation; or any action of the Trustee, the Servicer or any subservicer, or any other Person taken in the name of the Owner Trustee or the Issuer, and for all purposes of this Agreement and each other Transaction Document, the Owner Trustee (as such or in its individual capacity) shall be entitled to the benefits of the Trust Agreement.

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Section 13.14.              Reserved

Section 13.15.              No Partnership

Nothing herein contained shall be deemed or construed to create a co-partnership or joint venture between the parties hereto, and the services of the Servicer shall be rendered as an independent contractor and not as agent or as a fiduciary for any party hereto or for the Securityholders.

Section 13.16.              Successors and Assigns

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

Section 13.17.              Acts of Holders

Except as otherwise specifically provided herein, whenever Holder action, consent or approval is required under this Agreement, such action, consent or approval shall be deemed to have been taken or given on behalf of, and shall be binding upon, all Holders if the Majority Noteholders agree to take such action or give such consent or approval.

Section 13.18.              Duration of Agreement

This Agreement shall continue in existence and effect until terminated as herein provided.

Section 13.19.              Limited Recourse

The obligations of the Trust Depositor, the Originator, the Issuer and the Servicer under this Agreement and the other Transaction Documents are solely the obligations of the Trust Depositor, the Originator, the Issuer and the Servicer, respectively.  No recourse shall be had for the payment of any amount owing by the Trust Depositor, the Originator, the Issuer or the Servicer or otherwise under this Agreement or under the other Transaction Documents or for the payment by the Trust Depositor, the Originator, the Issuer or the Servicer of any fee in respect hereof or thereof or any other obligation or claim of or against the Trust Depositor, the Originator, the Issuer or the Servicer arising out of or based upon this Agreement or on any other Transaction Document, against any Affiliate, shareholder, partner, manager, member, director, officer, employee, representative or agent of the Trust Depositor, the Originator, the Issuer or the Servicer or of any Affiliate of such Person.  The provisions of this Section 13.19 shall survive termination of this Agreement.

Section 13.20.              Confidentiality

Each of the Issuer, the Trust Depositor, the Servicer (if other than Ares Capital), the Trustee and the Backup Servicer shall maintain and shall cause each of its employees, officers, agents and Affiliates to maintain the confidentiality of material non-public information concerning Ares Capital and its Affiliates or about the Obligors obtained by it or them in connection with the structuring, negotiating, execution and performance of the transactions contemplated by the Transaction Documents, except that each such party and its employees, officers, agents and Affiliates may disclose such information to other parties to the Transaction

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Documents and to its external accountants, attorneys, any potential subservicers and the agents of such Persons, provided such Persons expressly agree to maintain the confidentiality of such information, and as required by an applicable law or order of any judicial or administrative proceeding.

Section 13.21.              Non-Confidentiality of Tax Treatment

All parties hereto agree that each of them and each of their managers, officers, employees, representatives, and other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transaction and all materials of any kind (including opinions or other tax analyses) that are provided to any of them relating to such tax treatment and tax structure.  “Tax treatment” and “tax structure” shall have the same meaning as such terms have for purposes of Treasury Regulation Section 1.6011-4.

Section 13.22.              Temporary Subparticipation and Elevation

(a)           The parties hereto acknowledge that, as of the date hereof, pursuant to the Loan Sale Agreement, the Trust Depositor holds a (i) participation interest in and to that portion of the Initial Loan Assets to which the Originator holds legal title (the “Participated Portion”) and (ii) a subparticipation interest in and to that portion of the Initial Loan Assets to which Ares Capital CP Funding LLC holds legal title and in which the Originator holds a participation interest under Ares Capital CP Funding LLC pursuant to a Master Participation Agreement dated as of the date hereof (the “Subparticipated Portion”).  Accordingly, the parties hereto hereby expressly agree that, notwithstanding any provision contained in this Agreement or the other Transaction Documents to the contrary, but subject to the terms, conditions and restrictions, if any, contained in the credit documentation in respect of each of the Initial Loans, during the period from the date hereof to the Elevation Date (as defined below) with respect to each Initial Loan (the “Subparticipation Period”), (i) the Issuer shall be deemed to have purchased from the Trust Depositor, and the Trust Depositor shall be deemed to have sold and granted to the Issuer, pursuant to this Agreement, in consideration of the purchase price set forth in Section 2.01(b), an undivided 100% subparticipation interest (in the case of the Participated Portion) or participation in a subparticipation interest (in the case of the Subparticipated Portion) in and to the Initial Loan Assets (the “Subparticipation”) but otherwise on the same terms and conditions set forth herein, and the terms hereof shall be construed accordingly, mutatis mutandis.  For the avoidance of doubt, during the Subparticipation Period with respect to an Initial Loan, such Initial Loan shall be deemed to be a Participated Loan hereunder.  The parties hereto shall cooperate to deliver such notices, obtain such consents, and/or fulfill such other requirements as may be necessary in connection with a subparticipation of each Initial Loan pursuant to the terms of the credit documentation in respect of such Initial Loan.

(b)           From and after the date hereof, the Originator, Servicer and Issuer shall use commercially reasonable efforts to cause the Issuer to become the record lender in respect of, and holder of legal title to, each of the Initial Loans, in accordance with the terms of the credit documentation in respect of such Initial Loan (an “Elevation,” and the date of an Elevation, an “Elevation Date”).  On the Elevation Date with respect to each Initial Loan, without any further action by any entity, the Subparticipation shall terminate and shall be of no further force or effect with respect to such Initial Loan (except that each party shall remain liable for any liabilities and

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obligations under this Section 13.22 that arose before such Elevation Date), and the Trust Depositor shall be deemed to have granted and conveyed the corresponding Initial Loan Assets by assignment to the Issuer.  Without limiting the generality of the foregoing, (i) the Originator agrees to enter into such assignment documentation with the Issuer as may be required by the credit documentation in respect of any Initial Loan included in the Participated Portion in order to cause the Elevation with respect to such Initial Loan to occur, (ii) the Originator agrees to use commercially reasonable efforts to cause Ares Capital CP Funding LLC to enter into such assignment documentation with the Issuer as may be required by the credit documentation in respect of any Initial Loan included in the Subparticipated Portion in order to cause the Elevation with respect to such Initial Loan to occur, and (iii) the Originator, Servicer and Issuer agree to use commercially reasonable efforts to cause the Elevation with respect to each Initial Loan to occur within 60 days following the Closing Date.

(c)           The Trust Depositor shall not be held to the standard of care of a fiduciary or agent and shall not be a fiduciary or agent for the Issuer but shall exercise only the same care in the administration of the Subparticipation as if it had retained such interest beneficially for its own account.  Without limiting the generality of the foregoing, (i) the Trust Depositor shall not be liable for any error in judgment or for any action taken or omitted to be taken by it hereunder except for its gross negligence or willful misconduct and (ii) the Trust Depositor may rely on legal counsel, independent public accountants and other experts selected or accepted by the Trust Depositor and shall not be liable for any action taken or omitted to be taken in good faith by the Trust Depositor in accordance with the advice of such counsel, accountants or experts.  For the avoidance of doubt, (i) this Section 13.22(c) shall apply only to responsibilities of, and actions taken by, the Trust Depositor exclusively as a result of its status as grantor of the Subparticipation pursuant to this Section 13.22, and (ii) nothing contained in this Section 13.22 shall relieve the Trust Depositor of its obligation to comply with the terms and provisions of this Agreement or from any liability for any breach of its representations, warranties, covenants or agreements contained herein.

[Remainder of Page Intentionally Left Blank]

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

ARCC COMMERCIAL LOAN TRUST 2006, as the Issuer
By:		Wilmington Trust Company, not in its
		individual capacity, but solely as Owner
		Trustee on behalf of the Issuer
By:	/s/ Michele C. Harra
Name:		Michele C. Harra
Title:		Financial Services Officer
ARCC CLO 2006 LLC, as the Trust Depositor
By:		ARES CAPITAL CORPORATION, its sole member
By:
Name:
Title:
ARES CAPITAL CORPORATION, as the
Originator and as the Servicer
By:
Name:
Title:

[Signatures Continued on the Following Page]

ARCC Commercial Loan Trust 2006
Sale and Servicing Agreement

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

ARCC COMMERCIAL LOAN TRUST 2006, as the Issuer
By:		Wilmington Trust Company, not in its
		individual capacity, but solely as Owner
		Trustee on behalf of the Issuer
By:
Name:
Title:
ARCC CLO 2006 LLC, as the Trust Depositor
By:		ARES CAPITAL CORPORATION, its sole member
By:	/s/ Michael Arougheti
Name:		Michael Arougheti
Title:		President
ARES CAPITAL CORPORATION, as the
Originator and as the Servicer
By:	/s/ Michael Arougheti
Name:		Michael Arougheti
Title:		President

[Signatures Continued on the Following Page]

ARCC Commercial Loan Trust 2006
Sale and Servicing Agreement

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

WILMINGTON TRUST COMPANY, not in its individual capacity but as the Owner Trustee
By:	/s/ Michele C. Harra
Name:		Michele C. Harra
Title:		Financial Services Officer

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

U.S. BANK NATIONAL ASSOCIATION, not in
its individual capacity but as the Trustee and the Collateral Administrator
By:	/s/ Joel D. Cough
Name:		Joel D. Cough
Title:		Assistant Vice President

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

LYON FINANCIAL SERVICES, INC. (d/b/a
U.S. BANK PORTFOLIO SERVICES), not in its individual capacity but as the Backup Servicer
By:	/s/ Joseph Andries
Name:		Joseph Andries
Title:		Senior Vice President

ANNEX A

Diversity Score Calculation

The Diversity Score for the Loans is calculated by summing each of the Industry Diversity Scores, which are calculated as follows:

(i)An “Obligor Par Amount” is calculated for each Obligor represented in the Collateral by summing the Outstanding Loan Balance of each Loan in the Collateral of that Obligor or any Affiliate of that Obligor.

(ii)An “Average Par Amount” is calculated by summing the Obligor Par Amounts and dividing by the number of Obligors represented.  For purposes of calculating the number of Obligors, any Obligors which are Affiliates will be considered one Obligor.

(iii)An “Equivalent Unit Score” is calculated for each Obligor represented in the Collateral by taking the lesser of (a) one and (b) the Obligor Par Amount for such Obligor divided by the Average Par Amount.  For purposes of calculating the Equivalent Unit Score, any Obligors which are Affiliates will be considered one Obligor.

(iv)An “Aggregate Industry Equivalent Unit Score” is then calculated for each of the Moody’s industrial classification groups by summing the Equivalent Unit Scores for each Obligor in the industry.

(v)An “Industry Diversity Score” is then established by reference to the Diversity Score Table shown below for the related Aggregate Industry Equivalent Unit Score.  If any Aggregate Industry Equivalent Unit Score falls between any two scores then the applicable Industry Diversity Score will be the lower of the two Industry Diversity Scores.

(vi)Charged-Off Loans shall be excluded from the calculation of the Diversity Score.

Diversity Score Table

Aggregate		Aggregate		Aggregate		Aggregate
Industry		Industry		Industry		Industry
Equivalent	Diversity	Equivalent	Diversity	Equivalent	Diversity	Equivalent	Diversity
Unit Score	Score	Unit Score	Score	Unit Score	Score	Unit Score	Score
0.0000	0.0000	5.0500	2.7000	10.1500	4.0200	15.2500	4.5300
0.0500	0.1000	5.1500	2.7333	10.2500	4.0300	15.3500	4.5400
0.1500	0.2000	5.2500	2.7667	10.3500	4.0400	15.4500	4.5500
0.2500	0.3000	5.3500	2.8000	10.4500	4.0500	15.5500	4.5600
0.3500	0.4000	5.4500	2.8333	10.5500	4.0600	15.6500	4.5700
0.4500	0.5000	5.5500	2.8667	10.6500	4.0700	15.7500	4.5800
0.5500	0.6000	5.6500	2.9000	10.7500	4.0800	15.8500	4.5900
0.6500	0.7000	5.7500	2.9333	10.8500	4.0900	15.9500	4.6000
0.7500	0.8000	5.8500	2.9667	10.9500	4.1000	16.0500	4.6100
0.8500	0.9000	5.9500	3.0000	11.0500	4.1100	16.1500	4.6200
0.9500	1.0000	6.0500	3.0250	11.1500	4.1200	16.2500	4.6300
1.0500	1.0500	6.1500	3.0500	11.2500	4.1300	16.3500	4.6400
1.1500	1.1000	6.2500	3.0750	11.3500	4.1400	16.4500	4.6500
1.2500	1.1500	6.3500	3.1000	11.4500	4.1500	16.5500	4.6600
1.3500	1.2000	6.4500	3.1250	11.5500	4.1600	16.6500	4.6700
1.4500	1.2500	6.5500	3.1500	11.6500	4.1700	16.7500	4.6800
1.5500	1.3000	6.6500	3.1750	11.7500	4.1800	16.8500	4.6900
1.6500	1.3500	6.7500	3.2000	11.8500	4.1900	16.9500	4.7000
1.7500	1.4000	6.8500	3.2250	11.9500	4.2000	17.0500	4.7100
1.8500	1.4500	6.9500	3.2500	12.0500	4.2100	17.1500	4.7200
1.9500	1.5000	7.0500	3.2750	12.1500	4.2200	17.2500	4.7300
2.0500	1.5500	7.1500	3.3000	12.2500	4.2300	17.3500	4.7400
2.1500	1.6000	7.2500	3.3250	12.3500	4.2400	17.4500	4.7500
2.2500	1.6500	7.3500	3.3500	12.4500	4.2500	17.5500	4.7600
2.3500	1.7000	7.4500	3.3750	12.5500	4.2600	17.6500	4.7700

Aggregate		Aggregate		Aggregate		Aggregate
Industry		Industry		Industry		Industry
Equivalent	Diversity	Equivalent	Diversity	Equivalent	Diversity	Equivalent	Diversity
Unit Score	Score	Unit Score	Score	Unit Score	Score	Unit Score	Score
2.4500	1.7500	7.5500	3.4000	12.6500	4.2700	17.7500	4.7800
2.5500	1.8000	7.6500	3.4250	12.7500	4.2800	17.8500	4.7900
2.6500	1.8500	7.7500	3.4500	12.8500	4.2900	17.9500	4.8000
2.7500	1.9000	7.8500	3.4750	12.9500	4.3000	18.0500	4.8100
2.8500	1.9500	7.9500	3.5000	13.0500	4.3100	18.1500	4.8200
2.9500	2.0000	8.0500	3.5250	13.1500	4.3200	18.2500	4.8300
3.0500	2.0333	8.1500	3.5500	13.2500	4.3300	18.3500	4.8400
3.1500	2.0667	8.2500	3.5750	13.3500	4.3400	18.4500	4.8500
3.2500	2.1000	8.3500	3.6000	13.4500	4.3500	18.5500	4.8600
3.3500	2.1333	8.4500	3.6250	13.5500	4.3600	18.6500	4.8700
3.4500	2.1667	8.5500	3.6500	13.6500	4.3700	18.7500	4.8800
3.5500	2.2000	8.6500	3.6750	13.7500	4.3800	18.8500	4.8900
3.6500	2.2333	8.7500	3.7000	13.8500	4.3900	18.9500	4.9000
3.7500	2.2667	8.8500	3.7250	13.9500	4.4000	19.0500	4.9100
3.8500	2.3000	8.9500	3.7500	14.0500	4.4100	19.1500	4.9200
3.9500	2.3333	9.0500	3.7750	14.1500	4.4200	19.2500	4.9300
4.0500	2.3667	9.1500	3.8000	14.2500	4.4300	19.3500	4.9400
4.1500	2.4000	9.2500	3.8250	14.3500	4.4400	19.4500	4.9500
4.2500	2.4333	9.3500	3.8500	14.4500	4.4500	19.5500	4.9600
4.3500	2.4667	9.4500	3.8750	14.5500	4.4600	19.6500	4.9700
4.4500	2.5000	9.5500	3.9000	14.6500	4.4700	19.7500	4.9800
4.5500	2.5333	9.6500	3.9250	14.7500	4.4800	19.8500	4.9900
4.6500	2.5667	9.7500	3.9500	14.8500	4.4900	19.9500	5.0000
4.7500	2.6000	9.8500	3.9750	14.9500	4.5000
4.8500	2.6333	9.9500	4.0000	15.0500	4.5100
4.9500	2.6667	10.0500	4.0100	15.1500	4.5200

ANNEX B

Moody’s RiskCalc Calculation

1.             Defined Terms.  The following terms shall be used in this Annex B, the meanings provided below.

“EDF” means, with respect to any Loan, the lowest 5-year expected default frequency for such Loan as determined by running the current version Moody’s RiskCalc in both the Financial Statement Only (“FSO”) and the Credit Cycle Adjusted (“CAA”) modes.

“Moody’s Industries” means any one of the Moody’s industrial classification groups as published by Moody’s from time to time.

“Pre-Qualifying Conditions” means, with respect to any Loan, conditions that will be satisfied if the Obligor with respect to the applicable Loan satisfies the following criteria:

(a)           the independent accountants of such Obligor shall have issued an unqualified audit opinion of the most recent fiscal year financial statements, including no explanatory paragraph addressing going concern or other issues;

(b)           the Obligor’s EBITDA is equal to or greater than $5,000,000;

(c)           the Obligor’s annual sales are equal to or greater than $10,000,000;

(d)           the Obligor’s book assets are equal to or greater than $10,000,000;

1.             the Obligor represents not more than 4.0% of the Expected Aggregate Outstanding Loan Balance;

2.             the Obligor is a private company with no public rating from Moody’s;

3.             the Loan is a Traditional Middle Market Loan, Large Middle Market Loan, or Broadly Syndicated Loan;

4.             for the current and prior fiscal year, such Obligors:

(a)           EBIT/interest expense ratio is greater than 1:00 and 1:25 with respect to retail (adjusted for rent expense).

(b)           debt/EBITDA rate is less than 6.0, provided that the debt/EBITDA rate is less than 8.0 for any Loans with respect to the following Moody’s Industries: (a) Telecommunications (Moody’s industrial classification group #29), (b) Printing and Publishing (Moody’s industrial classification group #26) or (c) Broadcasting and Entertainment (Moody’s industrial classification group #33).

5.             no greater than 25% of the company’s revenue is generated from any one customer of the Obligor.

6.             the Obligor is a for-profit operating company in any one of the Moody’s Industries with the exception of (i) Buildings and Real Estate (Moody’s industrial classification group #5), (ii) Finance (Moody’s industrial classification group #14), and (iii) Insurance (Moody’s industrial classification group #20);

7.             The Servicer shall calculate the ..EDF for each of the Loans to be rated pursuant to this Annex B.  The Servicer shall also provide Moody’s with the .EDF and the information necessary to calculate such .EDF upon request from Moody’s.  Moody’s shall have the right (in its sole discretion) to (i) amend or modify any of the information utilized to calculate the .EDF and recalculate the .EDF based upon such revised information, in which case such .EDF shall be determined using the table in # 3 below in order to determine the applicable Moody’s Rating, or ii) have a Moody’s credit analyst provide a rating estimate for any Loan rated pursuant to this Annex B, in which case such rating estimate provided by such credit analyst shall be the applicable Moody’s Rating.

8.             The Moody’s Rating for each Loan that satisfies the Pre-Qualifying Conditions shall be the lower of (i) the Servicer’s internal rating or (ii) the rating based on the .EDF for such Loan, in accordance with the table below:

Lowest .EDF	Moody’s Rating
less than or equal to .baa	Ba3
.ba1	B1
.ba2, .ba3 or .b1	B2
.b2 or.b3	B3
.caa	Caa1

provided that the Moody’s Rating determined pursuant the chart above will be reduced by an additional one-half rating subcategory for leveraged buyout transactions.

9.             For each Loan that meets the Pre-Qualifying Conditions, the Moody’s Recovery Rate shall be the lower of (i) the Servicer’s internal recovery rate or (ii) the recovery rate as determined in accordance with the following:

Type of Loan	Moody’s Recovery Rate
senior secured, first priority,	50%
first lien and first out
second lien, first lien and last out, all other senior secured	40%
senior unsecured	30%
all other loans	10%

provided that Moody’s shall have the right (in its sole discretion) to issue a recovery rate assigned by one of its credit analysts, in which case such recovery rate provided by such credit analyst shall be the applicable Moody’s Recovery Rate

EX-10.3

Exhibit 10.3

COMMERCIAL LOAN SALE AGREEMENT

by and between

ARES CAPITAL CORPORATION,
as the Originator

and

ARCC CLO 2006 LLC,
as the Trust Depositor

Dated as of July 7, 2006

ARCC Commercial Loan Trust 2006 Notes, Series 2006
Class A-1A, Class A-1A VFN, Class A-1B, Class A-2A, Class A-2B,
Class B, Class C, Class D and Class E Notes

TABLE OF CONTENTS

		Page
ARTICLE I            DEFINITIONS		2
Section 1.01	Definitions	2
Section 1.02	Other Terms	4
Section 1.03	Computation of Time Periods	4
Section 1.04	Interpretation	4
Section 1.05	References	5
Section 1.06	Calculations	5
ARTICLE II           TRANSFER OF LOAN ASSETS		5
Section 2.01	Transfer of Loan Assets	5
Section 2.02	Conditions to Transfer of Loan Assets to the Trust Depositor	7
Section 2.03	Acceptance by the Trust Depositor	8
Section 2.04	[Reserved]	8
Section 2.05	Conveyance of Additional Loans	8
Section 2.06	Release of Excluded Amounts	9
Section 2.07	Delivery of Documents in the Loan File; Recording of Assignments of Mortgage	9
ARTICLE III          REPRESENTATIONS AND WARRANTIES		10
Section 3.01	Representations and Warranties Regarding the Originator	10
Section 3.02	Representations and Warranties Regarding Each Loan and as to Certain Loans in the Aggregate	17
Section 3.03	[Reserved]	18
Section 3.04	Representations and Warranties Regarding the Required Loan Documents	18
Section 3.05	[Reserved]	18
Section 3.06	Representations and Warranties Regarding the Trust Depositor	18
ARTICLE IV          PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS		20
Section 4.01	Custody of Loans	20
Section 4.02	Filing	20
Section 4.03	Changes in Name, Corporate Structure or Location	20
Section 4.04	Sale Treatment	20
Section 4.05	Separateness from Trust Depositor	21
ARTICLE V           COVENANTS OF THE ORIGINATOR		21
Section 5.01	Corporate Existence	21
Section 5.02	Loans Not to Be Evidenced by Promissory Notes	21
Section 5.03	Security Interests	21
Section 5.04	Compliance with Law	22

Section 5.05	Liability of Originator	22
Section 5.06	Limitation on Liability of Originator and Others	22
Section 5.07	Merger or Consolidation of Originator; Change-in-Control	22
Section 5.08	Delivery of Collections	23
Section 5.09	Payments from Principal and Interest Account	23
ARTICLE VI          REMEDIES UPON MISREPRESENTATION		23
Section 6.01	Repurchases of, or Substitution for, Loans for Breach of Representations and Warranties	23
Section 6.02	Reassignment of Repurchased or Substituted Loans	26
ARTICLE VII        INDEMNIFICATION BY THE ORIGINATOR		26
Section 7.01	Indemnification	26
Section 7.02	Liabilities to Obligors	27
Section 7.03	Operation of Indemnities	27
ARTICLE VIII       MISCELLANEOUS		27
Section 8.01	Amendment	27
Section 8.02	Governing Law	29
Section 8.03	Notices	29
Section 8.04	Severability of Provisions	30
Section 8.05	Third Party Beneficiaries	30
Section 8.06	Counterparts	30
Section 8.07	Headings	30
Section 8.08	No Bankruptcy Petition; Disclaimer	31
Section 8.09	Jurisdiction	31
Section 8.10	Prohibited Transactions with Respect to the Issuer	31
Section 8.11	No Partnership	31
Section 8.12	Successors and Assigns	31
Section 8.13	Duration of Agreement	32
Section 8.14	Limited Recourse	32

COMMERCIAL LOAN SALE AGREEMENT

THIS COMMERCIAL LOAN SALE AGREEMENT, dated as of July 7, 2006 (as amended, modified, restated, waived, or supplemented from time to time, the “Agreement”), is between ARES CAPITAL CORPORATION, a Maryland corporation (together with its successors and assigns, “Ares Capital”, and in its capacity as originator, together with its successors and assigns, the “Originator”), and ARCC CLO 2006 LLC, a Delaware limited liability company (together with its successors and assigns, the ‘“Trust Depositor”).

WHEREAS, in the regular course of its business, the Originator originates and/or otherwise acquires Loans;

WHEREAS, the Trust Depositor desires to acquire the Initial Loans from the Originator and may acquire from time to time thereafter certain Substitute Loans;

WHEREAS, during the Ramp-Up Period and the Replenishment Period, ARCC Commercial Loan Trust 2006, a Delaware statutory trust (the “Issuer”) intends to acquire Additional Loans from the Trust Depositor from time to time using the proceeds of Draws under the Class A-2 Notes, amounts on deposit in the Class A-2 Funding Account and Principal Collections with respect to the Loan Assets; and the Trust Depositor wishes to convey any such Additional Loans to the Issuer;

WHEREAS, it is a condition to the Trust Depositor’s acquisition of the Initial Loans, any Additional Loans and any Substitute Loans from the Originator that the Originator make certain representations and warranties regarding the Loan Assets for the benefit of the Trust Depositor as well as the Issuer;

WHEREAS, the Trust Depositor is willing to purchase and accept assignment of the Loan Assets from the Originator pursuant to the terms hereof; and

WHEREAS, on the Closing Date, the Trust Depositor will grant a subparticipation (or a participation in a subparticipation) interest in the Initial Loan Assets to the Issuer, pursuant to a Sale and Servicing Agreement, dated as of the date hereof (as amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time, the “Sale and Servicing Agreement”), among Ares Capital, as the originator and the servicer, the Trust Depositor, as the trust depositor, the Issuer, as the issuer, U.S. Bank National Association, as the trustee and as the collateral administrator, Lyon Financial Services, Inc. (d/b/a U.S. Bank Portfolio Services) as the backup servicer, and Wilmington Trust Company as the owner trustee.

NOW, THEREFORE, based upon the above recitals, the mutual promises and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01         Definitions.

Capitalized terms used but not defined in this Agreement shall have the meanings attributed to such terms in the Sale and Servicing Agreement, unless the context otherwise requires.  In addition, as used herein, the following defined terms, unless the context otherwise requires, shall have the following meanings:

“Additional Loan Assets” means any assets to be acquired by the Trust Depositor from the Originator during the Ramp-Up Period and the Replenishment Period pursuant to Section 2.05(a), which assets shall include the Originator’s right, title and interest in the following:

(i)                   the Additional Loans listed in the related Subsequent List of Loans, all payments paid in respect thereof and all monies due, to become due or paid in respect thereof accruing on and after the applicable Cut-Off Date and all Liquidation Proceeds and recoveries thereon, in each case as they arise after the applicable Cut-Off Date;

(ii)                  all security interests and Liens and Related Property subject thereto from time to time purporting to secure payment by Obligors under such Loans;

(iii)                 all guaranties, indemnities and warranties, Asset Specific Swaps, and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Loans;

(iv)                all collections and records (including Computer Records) with respect to the foregoing;

(v)                 all documents relating to the applicable Loan Files; and

(vi)                all income, payments, proceeds and other benefits of any and all of the foregoing, including but not limited to, all accounts, cash and currency, chattel paper, electronic chattel paper, tangible chattel paper, copyrights, copyright licenses, equipment, fixtures, general intangibles, instruments, commercial tort claims, deposit accounts, inventory, investment property, letter of credit rights, software, supporting obligations, accessions, and other property consisting of, arising out of, or related to the foregoing, but excluding any Excluded Amount with respect thereto.

“Elevation” has the meaning provided in Section 8.15(b).

“Elevation Date” has the meaning provided in Section 8.15(b).

“Initial Loan Assets” means any assets to be acquired by the Trust Depositor from the Originator on the Closing Date pursuant to Section 2.01, which assets shall include the Originator’s right, title and interest in the following:

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(i)                   the Initial Loans, all payments paid in respect thereof and all monies due, to become due or paid in respect thereof accruing on and after the Closing Date;

(ii)                  all security interests and Liens and Related Property subject thereto from time to time purporting to secure payment by Obligors under such Loans;

(iii)                 all guaranties, indemnities and warranties, Asset Specific Swaps, and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Loans;

(iv)                the Transaction Accounts together with all cash and investments in each of the foregoing;

(v)                 all collections and records (including Computer Records) with respect to the foregoing;

(vi)                all documents relating to the applicable Loan Files; and

(vii)               all income, payments, proceeds and other benefits of any and all of the foregoing, including but not limited to, all accounts, cash and currency, chattel paper, electronic chattel paper, tangible chattel paper, copyrights, copyright licenses, equipment, fixtures, general intangibles, instruments, commercial tort claims, deposit accounts, inventory, investment property, letter of credit rights, software, supporting obligations, accessions, and other property consisting of, arising out of, or related to the foregoing, but excluding any Excluded Amount with respect thereto.

“Investment”:  With respect to any Person, any direct or indirect loan, advance or investment by such Person in any other Person, whether by means of share purchase, capital contribution, loan or otherwise, excluding the acquisition of Loans pursuant to the Sale Agreement.

“Loan Assets” means, collectively and as applicable, the Initial Loan Assets, the Substitute Loan Assets and the Additional Loan Assets, as applicable.

“Participated Portion” has the meaning provided in Section 8.15(a).

“Participation” has the meaning provided in Section 8.15(b).

“Participation Period” has the meaning provided in Section 8.15(b).

“Subsidiary”  means, as to any Person, a corporation, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly, through one or more intermediaries, or both, by such Person.

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“Substitute Loan Assets” means any assets to be acquired by the Trust Depositor in connection with a substitution of one or more Substitute Loans pursuant to Section 2.04, which assets shall include the Originator’s right, title and interest in the following:

(i)                   the Substitute Loans listed in the related Subsequent List of Loans, all payments paid in respect thereof and all monies due, to become due or paid in respect thereof accruing on and after the applicable Cut-Off Date and all Liquidation Proceeds and recoveries thereon, in each case as they arise after the applicable Cut-Off Date;

(ii)                  all security interests and Liens and Related Property subject thereto from time to time purporting to secure payment by Obligors under such Loans;

(iii)                 all guaranties, indemnities and warranties, Asset Specific Swaps, and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Loans;

(iv)                all collections and records (including Computer Records) with respect to the foregoing;

(v)                 all documents relating to the applicable Loan Files; and

(vi)                all income, payments, proceeds and other benefits of any and all of the foregoing, including but not limited to, all accounts, cash and currency, chattel paper, electronic chattel paper, tangible chattel paper, copyrights, copyright licenses, equipment, fixtures, general intangibles, instruments, commercial tort claims, deposit accounts, inventory, investment property, letter of credit rights, software, supporting obligations, accessions, and other property consisting of, arising out of, or related to the foregoing, but excluding any Excluded Amount with respect thereto.

Section 1.02         Other Terms.

All accounting terms used but not specifically defined herein shall be construed in accordance with generally accepted accounting principles.  The symbol “$” shall mean the lawful currency of the United States of America.  All terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9.

Section 1.03         Computation of Time Periods.

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

Section 1.04         Interpretation.

In this Agreement, unless a contrary intention appears:

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(i)            the singular number includes the plural number and vice versa;

(ii)           reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by the Transaction Documents;

(iii)          reference to any gender includes each other gender;

(iv)          reference to day or days without further qualification means calendar days;

(v)           unless otherwise stated, reference to any time means New York, New York time;

(vi)          references to “writing” include printing, typing, lithography, electronic or other means of reproducing words in a visible form;

(vii)         reference to any agreement (including any Transaction Document), document or instrument means such agreement, document or instrument as amended, modified, supplemented, replaced, restated, waived or extended and in effect from time to time in accordance with the terms thereof and, if applicable, the terms of the other Transaction Documents, and reference to any promissory note includes any promissory note that is an extension or renewal thereof or a substitute or replacement therefor; and

(viii)        reference to any law or statute, including any Applicable Law means such law, statute or Applicable Law as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder and reference to any Section or other provision of any Applicable Law means that provision of such Applicable Law from time to time in effect and constituting the substantive amendment, modification, codification, replacement or reenactment of such Section or other provision.

Section 1.05         References.

All section references (including references to the Preamble), unless otherwise indicated, shall be to Sections (and the Preamble) in this Agreement.

Section 1.06         Calculations.

Except as otherwise provided herein, all interest rate and basis point calculations hereunder will be made on the basis of a 360 day year and the actual days elapsed in the relevant period and will be carried out to at least three decimal places.

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ARTICLE II

TRANSFER OF LOAN ASSETS

Section 2.01         Transfer of Loan Assets.

(a)           The Originator shall sell, assign and convey Loan Assets to the Trust Depositor pursuant to the terms and provisions hereof.

(b)           Subject to and upon the terms and conditions set forth herein (including, without limitation, Section 8.15), the Originator hereby sells, transfers, assigns, sets over and otherwise conveys to the Trust Depositor without recourse, for a purchase price consisting of $308,054,888.70 in cash, all the right, title and interest of the Originator in and to the Initial Loan Assets and proceeds hereof.

To the extent the purchase price paid to the Originator for any Loan Asset conveyed under this Agreement is less than the fair market value of such Loan, the difference between such fair market value and the purchase price shall be deemed to be a capital contribution made by the Originator to the Trust Depositor on the Closing Date in the case of the Initial Loans and on the applicable Cut-Off Date, in the case of any Additional Loans or Substitute Loans.

(c)           The Originator and the Trust Depositor each acknowledge with respect to itself that the representations and warranties of the Originator in Sections 3.01 through 3.04 and in Section 3.06 will run to and be for the benefit of the Issuer and the Trustee, and the Issuer and the Trustee may enforce directly (without joinder of the Trust Depositor when enforcing against the Originator), the repurchase obligations of the Originator or the Trust Depositor, as applicable, with respect to breaches of such representations and warranties as set forth in the Sale and Servicing Agreement or in this Agreement.

(d)           The sale, transfer, assignment, set-over and conveyance of the Loan Assets by the Originator to the Trust Depositor pursuant to this Agreement does not constitute and is not intended to result in a creation or an assumption by the Trust Depositor or the Issuer of any obligation of the Originator as lead agent, collateral agent or paying agent under any Agented Loan.

(e)           The Originator and the Trust Depositor intend and agree that (i) the transfer of the Loan Assets by the Originator to the Trust Depositor is intended to be a sale, conveyance and transfer of ownership of the applicable Loan Assets, as the case may be, rather than the mere granting of a security interest to secure a borrowing and (ii) such Loan Assets, as applicable, shall not be part of the Originator’s estate in the event of a filing of a bankruptcy petition or other action by or against such Person under any Insolvency Law.  In the event, however, that notwithstanding such intent and agreement, such transfers are deemed to be a mere grant of a security interest to secure indebtedness, the Originator shall be deemed to have granted (and as of the Closing Date hereby grants to) the Trust Depositor a perfected first priority security interest within the meaning of Article 9 of the UCC in all right, title and interest of the Originator in such Loan Assets, and this Agreement shall constitute a security agreement under Applicable Law, securing the repayment of a loan deemed to have been in an amount equal to the aggregate purchase price paid hereunder, in the order of priorities, and subject to the other terms and conditions of, this Agreement, the Sale and Servicing Agreement, the Indenture and the Trust Agreement, together with such other obligations or interests as may arise hereunder and thereunder in favor of the parties hereto and thereto.

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(f)            If any such transfer of the Loan Assets is deemed to be a mere grant of a security interest to secure a borrowing, the Trust Depositor may, to secure the Trust Depositor’s own borrowing under the Sale and Servicing Agreement (to the extent that the transfer of the Loan Assets thereunder is deemed to be a mere grant of a security interest to secure a borrowing), repledge and reassign (i) all or a portion of the Loan Assets pledged to the Trust Depositor by the Originator and with respect to which the Trust Depositor has not released its security interest at the time of such pledge and assignment, and (ii) all proceeds thereof.  Such repledge and reassignment may be made by the Trust Depositor with or without a repledge and reassignment by the Trust Depositor of its rights under any agreement with the Originator, and without further notice to or acknowledgment from the Originator.  The Originator waives, to the extent permitted by Applicable Law, all claims, causes of action and remedies, whether legal or equitable (including any right of setoff), against the Trust Depositor or any assignee of the Trust Depositor relating to such action by the Trust Depositor in connection with the transactions contemplated by this Agreement and the Transaction Documents.

Section 2.02         Conditions to Transfer of Loan Assets to the Trust Depositor.

On or before the Closing Date, the Originator shall deliver or cause to be delivered to the Trust Depositor, the Owner Trustee and the Trustee each of the documents, certificates and other items as follows:

(i)            an Officer’s Certificate of the Originator substantially in the form of Exhibit C to the Sale and Servicing Agreement;

(ii)           copies of resolutions of the board of directors of the Originator and the Servicer or of the executive committee of the board of directors of the Originator and the Servicer approving the execution, delivery and performance of this Agreement, the Transaction Documents to which it is a party and the transactions contemplated hereunder, certified in each case by a Responsible Officer of the Originator and the Servicer;

(iii)          officially certified evidence dated within 30 days prior to the Closing Date of due formation and good standing of the Originator under the laws of the State of New York;

(iv)          the initial List of Loans, certified by a Responsible Officer of the Originator, together with the delivery of any instruments and Loan Files as required under Section 2.07;

(v)           a letter from KPMG LLP or another nationally recognized accounting firm, addressed to the Originator and the Trust Depositor (with a copy to Moody’s and S&P), stating that such firm has reviewed a sample of the Initial Loans and performed specific procedures for such sample with respect to certain loan terms and that identifies those Initial Loans that do not conform;

(vi)          evidence of proper filing with appropriate offices in the State of Delaware of a UCC financing statement listing the Originator, as debtor, naming the Trustee as total assignee and identifying the Loan Assets as collateral;

7

(vii)         an Officer’s Certificate from the Servicer’s listing the Servicing Officers;

(viii)        evidence of deposit in the Principal and Interest Account of all Principal Collections received with respect to the Initial Loans on and after the Closing Date, together with an Officer’s Certificate from the Servicer to the effect that such amount is correct; and

(ix)           a fully executed copy of each of the Transaction Documents.

Section 2.03         Acceptance by the Trust Depositor.

Within three Business Days after the Closing Date, if the conditions set forth in Section 2.02 have been satisfied, the Originator shall deliver, on behalf of the Trust Depositor, to the Trustee the Initial Loan Assets and such delivery to and acceptance by the Issuer shall be deemed to be delivery to and acceptance by the Trust Depositor.

Section 2.04         [Reserved]

Section 2.05         Conveyance of Additional Loans.

(a)           The Trust Depositor may, at any time during the Ramp-Up Period and the Replenishment Period and subject to the conditions set forth in this Section 2.05, purchase Additional Loan Assets from the Originator.  The purchase price paid by the Issuer for any Additional Loan shall be an amount equal to (x) in the case of a Loan originated by the Originator, the Outstanding Loan Balance thereof or (y) in the case of a Loan acquired by the Originator from a third party, the purchase price paid for such Loan, as applicable, plus, in each case, accrued and unpaid interest thereon.

(b)           Upon the acquisition of any Additional Loan Assets pursuant to and in accordance with this Section 2.05, the Trust Depositor will convey such Additional Loan Assets to the Issuer pursuant to the Sale and Servicing Agreement and, upon the pledge by the Issuer of such Loan Assets to the Trustee for the benefit of the Noteholders, such Additional Loan Assets shall become part of the Collateral subject to the Lien of the Indenture.

(c)           The Originator shall transfer to the Trust Depositor and the Trust Depositor shall transfer to the Issuer the Additional Loans and the Loan Assets related thereto only upon the satisfaction of each of the following conditions on or prior to the related Cut-Off Date (and the delivery of a related Loan Asset Certificate by the Trust Depositor shall be deemed a representation and warranty by the Issuer, Trust Depositor and the Originator that such conditions are satisfied as of the related Cut-Off Date):

(i)            the Trust Depositor shall have provided the Issuer and the Trustee with a timely Loan Asset Certificate complying with the definition thereof contained herein, which Loan Asset Certificate shall be delivered no later than 11:00 a.m. on the related Cut-Off Date;

(ii)           with respect to the acquisition of any Additional Loan, after giving effect to the sale of the applicable Additional Loan Assets to the Issuer under the Sale and

8

Servicing Agreement and the inclusion of such Loan in the Collateral, the Portfolio Acquisition and Disposition Requirements and, solely with respect to such acquisitions effected during the Replenishment Period, the Portfolio Criteria are satisfied; provided that if any component of the Portfolio Criteria is not satisfied prior to giving effect to the acquisition of any such Additional Loan effected during the Replenishment Period, the Portfolio Criteria shall be deemed satisfied with respect to such component if the component is maintained or improved by the inclusion of such Additional Loans;

(iii)          the Originator shall have deposited or caused to be deposited in the Principal and Interest Account all Collections received with respect to the Additional Loans on and after the related Cut-Off Date;

(iv)          as of each Cut-Off Date, the Originator was Solvent and it will not be rendered insolvent by the transfer of the applicable Additional Loan Assets to the Trust Depositor on such Cut-Off Date nor is it aware of any pending insolvency;

(v)           no selection procedures believed by the Originator to be adverse to the interests of the Holders shall have been utilized in selecting the Additional Loans; and

(vi)          each of the representations and warranties made by the Trust Depositor pursuant to Section 3.02 (including without limitation that each such Additional Loan is an Eligible Loan and Section 3.04 applicable to the Additional Loans shall be true and correct as of the related Cut-Off Date.

(d)           The Originator shall, at its own expense, on or prior to the related Cut-Off Date, indicate in its Computer Records that ownership of the applicable Additional Loans identified on the applicable Subsequent List of Loans has been sold by the Originator to the Trust Depositor, pursuant to this Agreement, and by the Trust Depositor to the Issuer, pursuant to the Sale and Servicing Agreement.

(e)           The Originator shall deliver prior written notice of the inclusion of an Additional Loan to Moody’s and S&P.

Section 2.06         Release of Excluded Amounts.

The parties acknowledge and agree that the Trust Depositor has no interest in the Excluded Amounts.  Immediately upon the release to the Trust Depositor by the Trustee of the Excluded Amounts, the Trust Depositor hereby irrevocably agrees to release to the Originator such Excluded Amounts, which release shall be automatic and require no further action by the Trust Depositor; provided that the Trust Depositor shall execute and deliver such instruments of release and assignment, or otherwise confirming the foregoing release of any Excluded Amounts, as may be reasonably requested by the Originator.

Section 2.07         Delivery of Documents in the Loan File; Recording of Assignments of Mortgage.

(a)           Subject to the delivery requirements set forth in Section 2.07(b), the Originator shall deliver, on behalf of the Trust Depositor, possession of all the Loan Files to the Trustee on

9

behalf of and for the account of the Noteholders.  The Originator shall also identify on the List of Loans (including any deemed amendment thereof associated with any Additional Loans or Substitute Loans), whether by attached schedule or marking or other effective identifying designation, all Loans that are evidenced by such instruments.

(b)           With respect to each Loan in the Collateral, on or before the Closing Date in the case of the Initial Loans and on or before the related Cut-Off Date in the case of any Additional Loans or Substitute Loans, the Originator, on behalf of the Trust Depositor, will deliver or cause to be delivered to the Trustee, to the extent not previously delivered, each of the documents in the Loan File with respect to such Loan, except that (i) to the extent required to be delivered pursuant to the Sale and Servicing Agreement as part of the Required Loan Documents with respect to such Loan, the original recorded Mortgage, in those instances where a copy thereof certified by the Originator was delivered to the Trustee as a Required Loan Document pursuant to clause (b)(iii)(x) of the definition thereof, will be delivered or caused to be delivered within ten Business Days after receipt thereof, and in any event within one year after the Closing Date in the case of the Initial Loans and the related Cut-Off Date in the case of any Additional Loans or Substitute Loans, and (ii) to the extent required to be delivered pursuant to the Sale and Servicing Agreement as part of the Required Loan Documents with respect to such Loan, any intervening Assignments of Mortgage, in those instances where copies thereof certified by the Originator were delivered to the Trustee as a Required Loan Document pursuant to clause (b)(iii)(x) of the definition thereof, will be delivered or caused to be delivered within ten Business Days after the receipt thereof, and in any event, within one year after the Closing Date in the case of the Initial Loans and the related Cut-Off Date in the case of any Additional Loans of Substitute Loans.  Notwithstanding the foregoing in clauses (i) and (ii) of this Section 2.07(b), in those instances where the public recording office retains the original Mortgage or the intervening Assignments of Mortgage after it has been recorded, the Originator shall be deemed to have satisfied its obligations hereunder upon delivery to the Trustee of a copy of such Mortgage or Assignments of Mortgage certified by the public recording office to be a true copy of the recorded original thereof.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

The Originator makes, and upon transferring any Additional Loan or Substituted Loan is deemed to make, the representations and warranties in Section 3.01 through Section 3.04, on which the Trust Depositor will rely in conveying the Initial Loan Assets on the Closing Date to the Issuer, and on which the Issuer and the Securityholders will rely.  The Trust Depositor acknowledges that such representations and warranties are being made by the Originator for the benefit of the Issuer and the Securityholders.

Such representations and warranties are given as of the execution and delivery of this Agreement and as of the Closing Date (or Cut-Off Date, as applicable), but shall survive the sale, transfer and assignment of the Loan Assets to the Issuer.  The repurchase obligation or substitution obligation of the Originator set forth in Section 6.01 constitutes the sole remedy available for a breach of a representation or warranty of the Originator set forth in Section 3.01, through Section 3.04 and no Servicer Default or other default may result therefrom.

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Section 3.01         Representations and Warranties Regarding the Originator.

By its execution of this Agreement the Originator represents and warrants that:

(a)           Organization and Good Standing.  The Originator is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland and has the power to own its assets and to transact the business in which it is currently engaged.  The Originator is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the character of the business transacted by it or properties owned or leased by it requires such qualification and in which the failure so to qualify would have a Material Adverse Effect with respect to the Originator.

(b)           Authorization; Valid Sale; Binding Obligations.  The Originator has the power and authority to make, execute, deliver and perform this Agreement and the other Transaction Documents to which it is a party and all of the transactions contemplated under this Agreement and the other Transaction Documents to which it is a party, and to create the Trust Depositor and cause it to make, execute, deliver and perform its obligations under this Agreement and the other Transaction Documents to which it is a party and has taken all necessary corporate action to authorize the execution, delivery and performance of this Agreement and the other Transaction Documents to which it is a party and to cause the Trust Depositor to be created.  This Agreement shall effect a valid sale, transfer and assignment of or grant of a security interest in the Loan Assets from the Originator to the Trust Depositor, enforceable against the Originator and creditors of and purchasers from the Originator.  This Agreement and the other Transaction Documents to which the Originator is a party constitute the legal, valid and binding obligation of the Originator enforceable in accordance with their terms, except as enforcement of such terms may be limited by applicable Insolvency Laws and general principles of equity, whether considered in a suit at law or in equity.

(c)           No Consent Required.  The Originator is not required to obtain the consent of any other party (other than those that it has already obtained) or any consent, license, approval or authorization from, or registration or declaration with, any Governmental Authority (other than those that it has already obtained) in connection with the execution, delivery, performance, validity or enforceability of this Agreement or the other Transaction Documents to which it is a party.

(d)           No Violations.  The execution, delivery and performance of this Agreement and the other Transaction Documents to which it is a party by the Originator, and the consummation of the transactions contemplated hereby and thereby, will not violate any Applicable Law applicable to the Originator, or conflict with, result in a default under or constitute a breach of the Originator’s organizational documents or the Contractual Obligations to which the Originator is a party or by which the Originator or any of the Originator’s properties may be bound, or result in the creation or imposition of any Lien of any kind upon any of its properties pursuant to the terms of any such Contractual Obligations, other than as contemplated by the Transaction Documents.

(e)           Litigation.  No litigation or administrative proceeding of or before any court, tribunal or governmental body is currently pending, or to the knowledge of the Originator

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threatened, against the Originator or any of its properties or with respect to this Agreement, the other Transaction Documents to which it is a party or the Securities (1) that, if adversely determined, would in the reasonable judgment of the Originator be expected to have a Material Adverse Effect on the business, properties, assets or condition (financial or otherwise) of the Originator or the transactions contemplated by this Agreement or the other Transaction Documents to which the Originator is a party or (2) seeking to adversely affect the federal income tax or other federal, state or local tax attributes of the Certificate or Notes.

(f)            Solvency.  The Originator, at the time of and after giving effect to each conveyance of Loan Assets hereunder, is Solvent on and as of the date thereof.

(g)           Taxes.  The Originator has filed or caused to be filed all tax returns which, to its knowledge, are required to be filed and has paid all taxes shown to be due and payable on such returns or on any assessments made against it or any of its property and all other taxes, fees other charges imposed on it or any of its property by any Governmental Authority (other any amount of tax due, the validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in accordance with generally accepted accounting principles have been provided on the books of the Originator); no tax Lien has been filed and, to the Originator’s knowledge, no claim is being asserted, with respect to any such tax, fee or other charge.

(h)           Place of Business; No Changes.  The Originator’s location (within the meaning of Article 9 of the UCC) is the State of New York.  The Originator has not changed its name, whether by amendment of its Articles of Incorporation, by reorganization or otherwise, and has not changed its location within the four months preceding the Closing Date.

(i)            Not an Investment Company.  Neither the Originator nor the pool of Loan Assets are registered or are required to be registered, as an “investment company” within the meaning of the 1940 Act.

(j)            Sale Treatment.  Other than for accounting and tax purposes, the Originator has treated the transfer of Loan Assets to the Trust Depositor for all purposes as a sale and purchase on all of its relevant books and records.

(k)           Security Interest.

(i)            This Agreement creates a valid and continuing security interest (as defined in the applicable UCC) in favor of the Trust Depositor in all right, title and interest of Originator in the Loan Assets, which security interest is prior to all other Liens (except for Permitted Liens), and is enforceable as such against creditors of and purchasers from the Originator;

(ii)           the Loans, along with the related Loan Files, constitute either a “general intangible,” an “instrument,” an “account,” “investment property,” or “chattel paper,” within the meaning of the applicable UCC;

(iii)          the Originator owns and has, and upon the sale and transfer thereof by the Originator to the Trust Depositor, the Trust Depositor will have good and marketable title

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to such Loan Assets free and clear of any Lien (other than Permitted Liens), claim or encumbrance of any Person;

(iv)          the Originator has received all consents and approvals required by the terms of the Loan Assets to the sale of the Loan Assets hereunder to the Trust Depositor;

(v)           the Originator has caused the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under Applicable Law in order to perfect the security interest in such Loan Assets granted to the Trust Depositor under this Agreement in the name of the Trustee, for the benefit of, and as agent for, the Securityholders;

(vi)          other than the security interest granted to the Trust Depositor pursuant to this Agreement, the Originator has not pledged, assigned, sold, granted a security interest in or otherwise conveyed any of such Loan Assets.  The Originator has not authorized the filing of and is not aware of any financing statements naming the Originator as debtor that include a description of collateral covering such Loan Assets other than any financing statement (A) relating to the security interest granted to the Trust Depositor under this Agreement, or (B) that has been terminated.  The Originator is not aware of the filing of any judgment or tax Lien filings against the Originator;

(vii)         all original executed copies of each Underlying Note (if any) that constitute or evidence the Loan Assets have been delivered to the Trustee and, in the case of Noteless Loans, the documents required pursuant to clause (ii)(a)(2) of the definition of Required Loan Documents have been delivered to the Trustee;

(viii)        except with respect to Noteless Loans, the Originator has received a written acknowledgment from the Trustee that the Trustee or its bailee is holding any Underlying Notes that constitute or evidence any Loan Assets solely on behalf of and for the benefit of the Securityholders; and

(ix)           none of the Underlying Notes that constitute or evidence any Loan Assets has any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than the Trust Depositor and the Trustee.

(l)            Value Given.  The cash payment and the corresponding increase in the Originator’s equity interest in the Trust Depositor received by the Originator in respect of the purchase price the Loans sold hereunder constitutes the fair market value of such Loan and the Originator has received the reasonably equivalent value in consideration for the transfer to the Trust Depositor of such Loan under this Agreement, such transfer was not made for or on account of an antecedent debt owed by the Originator to the Trust Depositor, and such transfer was not and is not voidable or subject to avoidance under any Insolvency Law.

(m)          No Defaults.  The Originator is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or governmental agency, which default might have consequences that would materially and adversely affect the condition (financial or otherwise) or operations of the Originator or its respective properties or might have consequences that would materially and adversely affect its performance hereunder.

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(n)           Bulk Transfer Laws.  The transfer, assignment and conveyance of the Loans by the Originator pursuant to this Agreement are not subject to the bulk transfer laws or any similar statutory provisions in effect in any applicable jurisdiction.

(o)           Origination and Collection Practices.  The origination and collection practices used by the Originator and any of its Affiliates with respect to each Loan have been consistent with the Servicing Standard and comply in all material respects with the Credit and Collection Policy.

(p)           Nonconsolidation.  Each of the Trust Depositor and the Originator conducts its affairs such that the Trust Depositor or the Originator would not be substantively consolidated in the estate of the other and their respective separate existences would not be disregarded in the event of the Originator’s bankruptcy.  Without limitation to any of the foregoing, each of the Trust Depositor and the Originator has not and shall not:

(i)            engage in any business or activity other than the purchase and receipt of Collateral and related assets under the Loan Sale Agreement, the sale and pledge of Collateral under the Transaction Documents, and such other activities as are incidental thereto;

(ii)           acquire or own any material assets other than (a) the Collateral and related assets and (b) incidental property as may be necessary for the operation of either the Trust Depositor or the Originator and the performance of its obligations under the Transaction Documents;

(iii)          merge into or consolidate with any Person or dissolve, terminate or liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure, or jurisdiction of formation;

(iv)          fail to preserve its existence as an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization or formation, amend, modify, terminate or fail to comply with the provisions of its operating agreement, or fail to observe limited liability company formalities;

(v)           own any Subsidiary or make any Investment in any Person;

(vi)          except as permitted by this Agreement, commingle its assets with the assets of any of its Affiliates, or of any other Person;

(vii)         incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than indebtedness incurred under the Transaction Documents; provided that such debt is not evidenced by a note and is paid when due;

(viii)        become insolvent or fail to pay its debts and liabilities from its assets as the same shall become due;

(ix)           fail to maintain its records, books of account and bank accounts separate and apart from those of any other Person;

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(x)            enter into any contract or agreement with any Person, except upon terms and conditions that are commercially reasonable and intrinsically fair and substantially similar to those that would be available on an arms-length basis with third parties other than such Person;

(xi)           seek its dissolution or winding up in whole or in part;

(xii)          fail to correct any known misunderstandings regarding the separate identity of Trust Depositor and the Originator or any principal or Affiliate thereof or any other Person;

(xiii)         guarantee, become obligated for, or hold itself out to be responsible for the debt of another Person;

(xiv)        make any loan or advances to any third party, including any principal or Affiliate, or hold evidence of indebtedness issued by any other Person (other than the Loans and cash);

(xv)         fail to file its own separate tax return, or file a consolidated federal income tax return with any other Person, except as may be required by the Code and regulations;

(xvi)        fail either to hold itself out to the public as a legal entity separate and distinct from any other Person or to conduct its business solely in its own name in order not (a) to mislead others as to the identity with which such other party is transacting business, or (b) to suggest that it is responsible for the debts of any third party (including any of its principals or Affiliates);

(xvii)       fail to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations;

(xviii)      file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any applicable insolvency, bankruptcy, liquidation or reorganization statute, or make an assignment for the benefit of creditors;

(xix)         except as may be required by the Code and regulations, share any common logo with or hold itself out as or be considered as a department or division of (a) any of its principals or Affiliates, (b) any Affiliate of a principal or (c) any other Person;

(xx)          permit any transfer (whether in any one or more transactions) of any direct or indirect ownership interest in the Trust Depositor or the Originator to the extent it has the ability to control the same, unless the Trust Depositor or the Originator delivers to the Trustee an acceptable non-consolidation opinion;

(xxi)         fail to maintain separate financial statements, showing its assets and liabilities separate and apart from those of any other Person;

(xxii)        fail to pay its own liabilities and expenses only out of its own funds;

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(xxiii)       fail to pay the salaries of its own employees, if any, in light of its contemplated business operations;

(xxiv)       acquire the obligations or securities of its Affiliates or stockholders;

(xxv)        guarantee any obligation of any person, including an Affiliate;

(xxvi)       fail to allocate fairly and reasonably any overhead expenses that are shared with an Affiliate, including paying for office space and services performed by any employee of an Affiliate;

(xxvii)      fail to use separate invoices and checks bearing its own name;

(xxviii)     fail to have a separate telephone number, stationery and other business forms from those, if any, of the Trust Depositor;

(xxix)       pledge or permit the pledge of its assets or ownership interests in the Trust Depositor for the benefit of any other Person, other than with respect to payment of the indebtedness to the Secured Parties hereunder;

(xxx)        fail at any time to have at least one independent manager (an “Independent Manager”) who is not currently a director, officer, employee, trade creditor shareholder, manager or member (or spouse, parent, sibling or child of the foregoing) of (a) the Servicer, (b) the Trust Depositor, (c) any principal of the Servicer, (d) any Affiliate of the Servicer, or (e) any Affiliate of any principal of the Servicer; provided that such Independent Manager may be an independent manager or an independent director of another special purpose entity affiliated with the Servicer or fail to ensure that all limited liability company action relating to the selection, maintenance or replacement of the Independent Manager are duly authorized by the unanimous vote of the board of managers (including the Independent Managers);

(xxxi)       fail to provide that the unanimous consent of all members (including the consent of the Independent Manager) is required for the Trust Depositor to (a) dissolve or liquidate, in whole or part, or institute proceedings to be adjudicated bankrupt or insolvent, (b) institute or consent to the institution of bankruptcy or insolvency proceedings against it, (c) file a petition seeking or consent to reorganization or relief under any applicable federal or state law relating to bankruptcy or insolvency, (d) seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar official for the Trust Depositor, (e) make any assignment for the benefit of the Trust Depositor’s creditors, (f) admit in writing its inability to pay its debts generally as they become due, or (g) take any action in furtherance of any of the foregoing; and

(xxxii)      take or refrain from taking, as applicable, each of the activities specified in the non-consolidation opinion of Latham & Watkins LLP, dated as of the date hereof, upon which the conclusions expressed therein are based.

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(xxxiii)     The Trust Depositor has received in writing from the Originator confirmation that the Originator will not cause the Trust Depositor to file a voluntary petition under the Bankruptcy Code or Insolvency Laws.

(q)           Lack of Intent to Hinder, Delay or Defraud.  Neither the Originator nor any of its Affiliates sold, or will sell, any interest in any Loan with any intent to hinder, delay or defraud any of their respective creditors.

(r)            Accuracy of Information.  All written factual information heretofore furnished by the Originator for purposes of or in connection with this Agreement or the other Transaction Documents to which Originator is a party, or any transaction contemplated hereby or thereby is, and all such written factual information hereafter furnished by the Originator to any party to the Transaction Documents will be, true and accurate in all material respects, on the date such information is stated or certified.

The representations and warranties set forth in Section 3.01(k) may not be waived by any Person and shall survive the termination of this Agreement.  The Originator and Trust Depositor (i) shall not waive any breach of the representations and warranties in Section 3.01(k), and (ii) shall provide S&P with prompt written notice of any breach of the representations and warranties set out in Section 3.01(k).

Section 3.02Representations and Warranties Regarding Each Loan and as to Certain Loans in the Aggregate.

The Originator represents and warrants (x) with respect to Section 3.02(a), Section 3.02(b) and Section 3.02(d) as to each Loan as of the Closing Date, and as of each Cut-Off Date with respect to each Additional Loan and each Substitute Loan, as applicable, and (y) with respect to Section 3.02(c), as to the Collateral in the aggregate as of the Closing Date, and as of each Cut-Off Date with respect to Additional Loans and Substitute Loans (after giving effect to the addition of such Additional Loans and Substitute Loans to the Collateral), that:

(a)           List of Loans.  The information set forth in the List of Loans attached to the Sale and Servicing Agreement as Exhibit G (as the same may be amended or deemed amended in respect of a conveyance of Additional Loans or Substitute Loans on a Cut-Off Date) is true, complete and correct as of the Closing Date, in the case of the Initial Loans, or the applicable Cut-Off Date in the case of Additional Loans or Substitute Loans.

(b)           Eligible Loan.  Such Loan satisfies the criteria for the definition of Eligible Loan as of the date of its conveyance hereunder.

(c)           Loans Secured by Real Property.  To the Originator’s best knowledge after reasonable inquiry, less than 40% of the Aggregate Outstanding Loan Balance of the Collateral as of the Closing Date consists of Loans principally secured by real property and the Originator will not effectuate the transfer of an Additional Loan or Substitute Loan if the Originator knows after reasonable inquiry that such transfer would cause more than 40% of the Aggregate Outstanding Loan Balance of the Collateral as of any Cut-Off Date to consist of Loans principally secured by real property; provided that, for this purpose, a Loan will be considered

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principally secured by real property if the Originator knows that the fair market value of the interest in real property securing the Loan exceeds 50% of its Outstanding Loan Balance.

(d)           Participated Loans.  Any Participated Loan included in the Collateral (other than a Qualified Participated Loan) shall be converted to a full assignment within 60 days following the Closing Date.

Section 3.03         [Reserved]

Section 3.04         Representations and Warranties Regarding the Required Loan Documents.

The Originator represents and warrants on the Closing Date with respect to the Initial Loans (or as of the related Cut-Off Date, with respect to Additional Loans and Substitute Loans), that except as otherwise provided in Section 2.07, the Required Loan Documents and each other item identified on each Loan Checklist with respect to the Loan File for each Loan are in the possession of the Trustee.

Section 3.05         [Reserved].

Section 3.06         Representations and Warranties Regarding the Trust Depositor.

By its execution of this Agreement the Trust Depositor represents and warrants to the Originator that:

(a)           Organization and Good Standing.  The Trust Depositor is a limited liability company duly organized, validly existing and in good standing under the laws of Delaware and has the power to own its assets and to transact the business in which it is currently engaged.  The Trust Depositor is duly qualified to do business as a foreign entity and is in good standing in each jurisdiction in which the character of the business transacted by it or properties owned or leased by it requires such qualification and in which the failure so to qualify would have a Material Adverse Effect on the business, properties, assets or condition (financial or other) of the Trust Depositor or the Issuer.

(b)           Authorization; Valid Sale; Binding Obligations.  The Trust Depositor has the power and authority to make, execute, deliver and perform this Agreement and the other Transaction Documents to which it is a party and all of the transactions contemplated under this Agreement and the other Transaction Documents to which it is a party, and to create the Issuer and cause it to make, execute, deliver and perform its obligations under this Agreement and the other Transaction Documents to which the Issuer is a party, and the Trust Depositor has taken all necessary limited liability company action to authorize the execution, delivery and performance of this Agreement and the other Transaction Documents to which it is a party and to cause the Issuer to be created.  This Agreement shall effect a valid sale, transfer and assignment of or grant a security interest in the Loan Assets from the Trust Depositor to the Issuer.  This Agreement and the other Transaction Documents to which the Trust Depositor is a party constitute the legal, valid and binding obligation of the Trust Depositor enforceable in accordance with their respective terms, except as enforcement of such terms may be limited by applicable Insolvency Laws and general principles of equity, whether considered in a suit at law or in equity.

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(c)           No Consent Required.  The Trust Depositor is not required to obtain the consent of any other party (other than those that it has already obtained) or any consent, license, approval or authorization from, or registration or declaration with, any Governmental Authority (other than those that it has already obtained) in connection with the execution, delivery, performance, validity or enforceability of this Agreement or the other Transaction Documents to which it is a party.

(d)           No Violations.  The execution, delivery and performance of this Agreement and the other Transaction Documents to which it is a party by the Trust Depositor, and the consummation of the transactions contemplated hereby and thereby, will not violate any Applicable Law applicable to the Trust Depositor, or conflict with, result in a default under or constitute a breach of the Trust Depositor’s organizational documents or any Contractual Obligations to which the Trust Depositor is a party or by which the Trust Depositor or any of the Trust Depositor’s properties may be bound, or result in the creation or imposition of any Lien of any kind upon any of its properties pursuant to the terms of any such Contractual Obligations, other than as contemplated by the Transaction Documents.

(e)           Litigation.  No litigation or administrative proceeding of or before any court, tribunal or governmental body is currently pending, or to the knowledge of the Trust Depositor threatened, against the Trust Depositor or any of its properties or with respect to this Agreement, the other Transaction Documents to which it is a party or the Securities (i) that, if adversely determined, would in the reasonable judgment of the Trust Depositor be expected to have a Material Adverse Effect on the business, properties, assets or condition (financial or otherwise) of the Trust Depositor or the Issuer or the transactions contemplated by this Agreement or the other Transaction Documents to which the Trust Depositor is a party or (ii) seeking to adversely affect the federal income tax or other federal, state or local tax attributes of the Securities.

(f)            Solvency.  The Trust Depositor, at the time of, and after giving effect to each conveyance of Loan Assets under the Sale and Servicing Agreement, is as of the date hereof and as of such other dates, Solvent.

(g)           Taxes.  The Trust Depositor has filed or caused to be filed all tax returns which, to its knowledge, are required to be filed and has put all taxes shown to be due and payable on such returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than any amount of tax due, the validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in accordance with generally accepted accounting principles have been provided on the books of the Trust Depositor); no tax Lien has been filed and, to the Trust Depositor’s knowledge, no claim is being asserted, with respect to any such tax, fee or other charge.

(h)           Place of Business; No Changes.  The Trust Depositor’s location (within the meaning of Article 9 of the UCC) is the State of Delaware.  The Trust Depositor has not changed its name, whether by amendment of its certificate of formation, by reorganization or otherwise, and has not changed its location, within the four months preceding the Closing Date.

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(i)            Not an Investment Company.  The Trust Depositor is not and, after giving effect to the transactions contemplated by the Transaction Documents, will not be required to be registered as an “investment company” within the meaning of the 1940 Act.

(j)            Sale Treatment.  Other than for accounting and tax purposes, the Trust Depositor has treated the transfer of Loan Assets to the Issuer for all purposes as a sale and purchase on all of its relevant books and records and other applicable documents.

ARTICLE IV

PERFECTION OF TRANSFER AND
PROTECTION OF SECURITY INTERESTS

Section 4.01         Custody of Loans.

The contents of each Loan File shall be held in the custody of the Trustee under the terms of the Sale and Servicing Agreement for the benefit of, and as agent for, the Securityholders.

Section 4.02         Filing.

On or prior to the Closing Date, the Originator shall cause the UCC financing statement(s) referred to in Section 2.02(vi) to be filed.  Notwithstanding the obligations of the Originator set forth in the preceding sentence, the Originator hereby authorizes the Servicer to prepare and file, at the expense of the Servicer, UCC financing statements (including but not limited to renewal, continuation or in lieu statements) and amendments or supplements thereto or other instruments as the Servicer may from time to time deem necessary or appropriate in order to perfect and maintain the security interest granted hereunder in accordance with the UCC.

Section 4.03         Changes in Name, Corporate Structure or Location.

(a)           During the term of this Agreement, the Originator shall not change its name, form of organization, existence, state of formation or location without first giving at least 30 days’ prior written notice to the Trust Depositor and Servicer.

(b)           If any change in the Originator’s name, form of organization, existence, state of formation, location or other action would make any financing or continuation statement or notice of ownership interest or Lien relating to any Loan Asset seriously misleading within the meaning of applicable provisions of the UCC or any title statute, the Originator, or the Servicer on its behalf, no later than five Business Days after the effective date of such change, shall file such amendments as may be required to preserve and protect the Trust Depositor’s and the Issuer’s interests in the Loan Assets and the proceeds thereof.  Promptly after taking any of the foregoing actions, the Originator, or the Servicer on its behalf, shall deliver to the Owner Trustee and the Trustee an Opinion of Counsel reasonably acceptable to the Owner Trustee and the Trustee stating that, in the opinion of such counsel, all financing statements or amendments necessary to preserve and protect the Trustee’s security interest in the Loan Assets have been filed, and reciting the details of such filing.

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Section 4.04         Sale Treatment.

Other than for accounting and tax purposes, the Originator shall treat the transfer of Loan Assets made hereunder for all purposes as a sale and purchase on all of its relevant books and records.

Section 4.05         Separateness from Trust Depositor.

The Originator agrees to take or refrain from taking or engaging in with respect to the Trust Depositor, each of the actions or activities specified in the “substantive consolidation” opinion of Latham & Watkins, LLP (including any certificates of the Originator attached thereto) delivered on the Closing Date, upon which the conclusions therein are based.

ARTICLE V

COVENANTS OF THE ORIGINATOR

Section 5.01         Corporate Existence.

During the term of this Agreement, the Originator will keep in full force and effect its existence, rights and franchises as a corporation under the laws of the jurisdiction of its formation and will obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement, the other Transaction Documents and each other instrument or agreement necessary or appropriate to the proper administration of this Agreement and the transactions contemplated hereby.  In addition, all transactions and dealings between the Originator and the Trust Depositor will be conducted on an arm’s-length basis.

Section 5.02         Loans Not to Be Evidenced by Promissory Notes.

The Originator will take no action to cause any Loan not originally evidenced by an Underlying Note to be evidenced by an instrument (as defined in the UCC), except in connection with the enforcement or collection of such Loan.

Section 5.03         Security Interests.

(a)           The Originator will not sell, pledge, assign or transfer to any Person other than the Trust Depositor, or grant, create, incur, assume or suffer to exist any Lien on any Loan in the Collateral or its interest in any Related Property, other than the Lien granted to the Trust Depositor, whether now existing or hereafter transferred to the Trust Depositor, or any interest therein.  The Originator will immediately notify the Trust Depositor of the existence of any Lien on any Loan in the Collateral or its interest in any Related Property; and the Originator shall defend the right, title and interest of the Trust Depositor in, to and under the Loans in the Collateral and the Trust Depositor’s interest in any Related Property, against all claims of third parties; provided that nothing in this Section 5.03(a) shall prevent or be deemed to prohibit the Originator from suffering to exist Permitted Liens upon any of the Loans in the Collateral or its interest in any Related Property.

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(b)           The Originator will not sell, pledge, assign or transfer to Person other than the Trust Depositor, or grant, create, incur, assume or suffer to exist any Lien on any warrants and equity instruments issued in the name of the Originator or its Affiliates in connection with or related to any Loan in the Collateral, other than the Lien granted to the Trust Depositor, whether now existing or hereafter transferred to the Trust Depositor.  The Originator will immediately notify the Trust Depositor of the existence of any Lien on any warrants and equity instruments issued in the name of the Originator or its Affiliates in connection with or related to any Loan in the Collateral; provided that nothing in this Section 5.03(b) shall prevent or be deemed to prohibit the Originator from suffering to exist Permitted Liens on any warrants and equity instruments issued in the name of the Originator or its Affiliates in connection with or related to any Loan in the Collateral.

Section 5.04         Compliance with Law.

The Originator hereby agrees to comply in all material respects with all Applicable Law applicable to the Originator except where the failure to do so would not have a Material Adverse Effect on the Securityholders.

Section 5.05         Liability of Originator.

The Originator shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Originator under this Agreement.

Section 5.06         Limitation on Liability of Originator and Others.

The Originator and any director, officer, employee or agent of the Originator may rely in good faith on any document of any kind, prima facie properly executed and submitted by any Person respecting any matters arising hereunder.  The Originator and any director, officer, employee or agent of the Originator shall be reimbursed by the Trust Depositor for any liability or expense incurred by reason of the Trust Depositor’s willful misfeasance, bad faith or negligence (except errors in judgment) in the performance of its respective duties hereunder, or by reason of reckless disregard of its obligations and duties hereunder.  The Originator shall not be under any obligation to appear in, prosecute or defend any legal action that shall not be incidental to its obligations under this Agreement, and that in its opinion may involve it in any expense or liability.

Section 5.07         Merger or Consolidation of Originator; Change-in-Control.

(a)           The Originator will keep in full force and effect its existence, rights and franchise as a Maryland corporation, and the Originator will obtain and preserve its qualification to do business as a foreign corporation in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement and of any of the Loans and to perform its duties under this Agreement.

(b)           Any Person into which the Originator may be merged or consolidated, or any entity resulting from such merger, conversion or consolidation to which the Originator is a party, or any Person succeeding by acquisition or transfer to substantially all of the assets and the business of the Originator shall be the successor to the Originator hereunder, without execution

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or filing of any paper or any further act on the part of any of the parties hereto, notwithstanding anything herein to the contrary; provided no such merger, conversion or consolidation of the Originator or transfer of substantially all of its assets and its business shall be permitted hereunder unless the Rating Agency Condition is satisfied with respect thereto.

(c)           Upon the occurrence of a change-in-control (including any merger or consolidation of the Originator or transfer of substantially all of its assets and its business, the Originator shall (i) provide the Trust Depositor, the Trustee and the Rating Agencies with notice of such change-in-control within 30 days after completion of the same, and (ii) satisfy the Rating Agency Condition after completion of the same.

Section 5.08         Delivery of Collections.

The Originator agrees to deliver to the Servicer promptly (but in no event later than two Business Days after receipt) all Collections received by the Originator in respect of a Loan, for application in accordance with Section 7.05 of the Sale and Servicing Agreement.

Section 5.09         Payments from Principal and Interest Account.

The Originator agrees not to make, or consent to, any change in the direction of, or instructions with respect to, any payments to be made by an Obligor in any manner that would diminish, impair, delay or otherwise materially adversely effect the timing or receipt of such payments into the Principal and Interest Account without the prior written consent of the Trustee and with the consent of the Majority Noteholders.

ARTICLE VI

REMEDIES UPON MISREPRESENTATION

Section 6.01Repurchases of, or Substitution for, Loans for Breach of Representations and Warranties.

(a)           In the event that the Trust Depositor determines that a Loan is an Ineligible Loan then the Originator must either repurchase such Ineligible Loan or substitute for such Ineligible Loan a Substitute Loan.  The repurchase price for such Ineligible Loan shall be the Transfer Deposit Amount.  In the event that the Originator substitutes a Substitute Loan for such Ineligible Loan at any time after the Effective Date, after giving effect to such substitution, the Portfolio Criteria must be satisfied for the applicable Substitute Loan to become part of the Collateral (or, if any component of the Portfolio Criteria was not satisfied prior to giving effect to such substitution, compliance with such component shall be maintained or improved after giving effect to such substitution).  In addition, the substitution of any Substitute Loan into the Collateral will be subject to the following requirements:

(i)            each Substitute Loan must have an Outstanding Loan Balance, or if more than one Substitute Loan will be added in replacement of a Loan to be reassigned by the Trust Depositor to the Originator the sum of the Outstanding Loan Balances of such Substitute Loans must be, equal to or greater than that of the Loan being substituted; and

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(ii)           all actions or additional actions (if any) necessary to perfect the security interest and assignment of such Loan being substituted and Related Property to the Originator, and of such Substitute Loan and Related Property to the Trust Depositor, shall have been taken as of or prior to the date of substitution of such Loan.

(b)           A substitution may be accomplished by either (a) a contemporaneous substitution of a Substitute Loan meeting the criteria specified above for the Loan being replaced or (b) a deposit by the Servicer into the Principal and Interest Account of the Transfer Deposit Amount with respect to the Loan being replaced and then, within 90 days, the sale by the Originator to the Trust Depositor of one or more Substitute Loans in exchange for the funds so deposited.  In the event that the full Transfer Deposit Amount is not used to purchase Substitute Loans within the 90 day period, then the remaining amount of such funds previously deposited as described above will be distributed from the Principal and Interest Account and distributed, in accordance with the Priority of Payments, on the next Distribution Date, provided that, with respect to any such amounts constituting Principal Collections, no such distribution shall be made during the Replenishment Period unless the conditions for payment of a Special Redemption Amount by the Issuer are not satisfied with respect to such amount.  The price paid (or, in the case of a contemporaneous conveyance of a Substitute Loan pursuant to this Agreement, deemed paid) by the Trust Depositor for any Substitute Loan shall be an amount equal to (i) in the case of a Loan originated by the Originator, the Outstanding Loan Balance thereof and (ii) in the case of a Loan acquired by the Originator from a third party, the purchase price paid for such Loan, plus, in each case, accrued and unpaid interest thereon, which price may equal, exceed or be less than the fair market value of such Substitute Loan as of the related Cut-Off Date.

(c)           In the case of any substitution to be effected after the Replenishment Period, the Originator must provide written notice to each Rating Agency.

(d)           Prior to any substitution or repurchase effected pursuant to this Section 6.01, the Servicer shall deliver a written notice to the Trustee setting forth (1) the Originator’s intent to effect such a substitution or repurchase, (2) the specific Loan or Loans to be substituted or repurchased and (3) the reasons for such substitution or repurchase.

(e)           With respect to any Substitute Loans to be conveyed to the Trust Depositor by the Originator pursuant to this Agreement, the Originator shall sell, transfer, assign, set over and otherwise convey to the Trust Depositor, without recourse other than as expressly provided herein and therein (and the Trust Depositor shall be required to purchase through cash payment or by exchange of one or more related Loans released by the Issuer to the Trust Depositor on the related Cut-Off Date), all the right, title and interest of the Originator in and to the Substitute Loan Assets.  To the extent the purchase price paid to the Originator for any Substitute Loan is less than the fair market value, as determined by the Servicer, of such Substitute Loan, the difference between such fair market value and the purchase price shall be deemed to be a capital contribution made by the Originator to the Trust Depositor on the relevant Cut-Off Date.

(f)            Subject to the conditions set forth in Section 6.01(g), the Originator shall sell, transfer, assign, set over and otherwise convey to the Trust Depositor, without recourse

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other than as expressly provided herein, (i) all the right, title and interest of the Originator in and to the Substitute Loans purchased pursuant to this Section 6.01, and (ii) all other rights and property interests consisting of Substitute Loan Assets related to such Substitute Loans (the property in clauses (i) and (ii) above, upon such transfer, becoming part of the Collateral).

(g)           The Originator shall transfer to the Trust Depositor and the Trust Depositor shall transfer to the Issuer the Substitute Loans and the other property and rights related thereto described in Sections 6.01(e) and (f) only upon the satisfaction of each of the following conditions on or prior to the related Cut-Off Date (and the delivery of a related Loan Asset Certificate by the Trust Depositor and by the Originator shall be deemed a representation and warranty by the Trust Depositor and by the Originator that such conditions have been or will be, as of the related Cut-Off Date, satisfied):

(i)            the Trust Depositor and the Originator shall have provided the Owner Trustee and the Trustee with a timely Loan Asset Certificate complying with the definition thereof contained herein (a copy of which shall be provided to S&P promptly after it is delivered to the Owner Trustee), which Loan Asset Certificate shall be delivered no later than 11:00 a.m. (New York City time) on the date which is ten Business Days prior to the related Cut-Off Date;

(ii)           the conveyance of the Substitute Loans satisfies the Substitute Loan Qualification Conditions and the Portfolio Acquisition and Disposition Requirements;

(iii)          with respect to any substitution effected after the Effective Date, after giving effect to the inclusion of the applicable Substitute Loans in the Collateral, the Portfolio Criteria are satisfied; provided that if any component of the Portfolio Criteria is not satisfied prior to giving effect to such inclusion of a Substitute Loan, the Portfolio Criteria shall be deemed satisfied with respect to such component if the component is maintained or improved by the inclusion of such Substitute Loan;

(iv)          the Originator shall have delivered to the Trust Depositor, and the Trust Depositor shall have delivered to the Issuer, a duly updated Subsequent List of Loans listing the Substitute Loans; provided that each such Subsequent List of Loans shall separately identify (by attached schedule, or marking or other effective identifying designation) the related Loan or Loans being removed from the Issuer and replaced by the Substitution Loans, such replaced Loans being deleted from the List of Loans by virtue of the delivery of such Subsequent List of Loans;

(v)           the Trust Depositor shall have deposited or caused to be deposited in the Principal and Interest Account all Collections received with respect to the Substitute Loan on and after the related Cut-Off Date;

(vi)          each of the representations and warranties made by the Trust Depositor pursuant to Section 3.02 (including without limitation that each such Substitute Loan is an Eligible Loan and that less than 40% of the Aggregate Outstanding Loan Balance of the Collateral after such substitution shall consist of Loans principally secured by real property) and

25

Section 3.04 applicable to the Substitute Loan shall be true and correct as of the related Cut-Off Date;

(vii)         the Originator shall bear all incidental transaction costs incurred in connection with a substitution effected pursuant to this Agreement and shall, at its own expense, on or prior to the related Cut-Off Date and indicate in its Computer Records that ownership of each Substitute Loan identified on the Subsequent List of Loans has been sold by the Originator to the Trust Depositor and by the Trust Depositor to the Issuer pursuant to the Loan Sale Agreement and this Agreement, respectively; and

(viii)        the Originator shall provide written notice to each Rating Agency.

(h)           The Servicer, the Trust Depositor and the Trustee shall execute and deliver such instruments, consents or other documents and perform all acts reasonably requested by the Servicer in order to effect the transfer and release of any of the Trust Depositor’s interests in the Loans that are being substituted.

Section 6.02         Reassignment of Repurchased or Substituted Loans.

Upon receipt by the Trustee (i) for deposit in the Principal Collection Account of any amounts described in Section 6.01, (or upon the Cut-Off Date related to a Substitute Loan in case of a contemporaneous substitution described in Section 6.01) or (ii) of a Substitute Loan or Substitute Loans as contemplated by such Section 6.01, and upon receipt of an Officer’s Certificate of the Servicer in the form attached as Exhibit F to the Sale and Servicing Agreement, the Trustee shall assign to the Trust Depositor and the Trust Depositor shall assign to the Originator all of the Issuer’s (or Trust Depositor’s, as applicable) right, title and interest in the repurchased or substituted Loan and related Loan Assets without recourse, representation or warranty.  Such reassigned Loan shall no longer thereafter be included in any calculations of Outstanding Loan Balances or otherwise be deemed a part of the Issuer.

ARTICLE VII

INDEMNIFICATION BY THE ORIGINATOR

Section 7.01         Indemnification.

The Originator agrees to indemnify, defend and hold the Trust Depositor, its officers, directors, employees and agents (any one of which is an “Indemnified Party”) harmless from and against any and all claims, losses, penalties, fines, forfeitures, reasonable legal fees and related costs, judgments (provided that any indemnification for damages is limited to actual damages, not consequential, special or punitive damages), reasonable legal fees and related costs and any other reasonable costs, fees and expenses that such Person may sustain as a result of the Originator’s gross negligence, willful misconduct or fraud in the performance of its duties hereunder, except to the extent such damages arise from the gross negligence, willful misconduct or fraud on the part of the Person claiming indemnification.  Any Person seeking indemnification hereunder shall promptly notify the Originator if such Person receives a complaint, claim, compulsory process or other notice of any loss, claim, damage or liability giving rise to a claim of indemnification hereunder but failure to provide such notice shall not relieve the Originator of

26

its indemnification obligations hereunder unless the Originator is deprived of material, substantive or procedural rights or defenses as a result thereof.  The Originator shall assume (with the consent of the Indemnified Party, such consent not to be unreasonably withheld) the defense and any settlement of any such claim and promptly pay, discharge and satisfy any judgment or decree which may be entered against the Indemnified Party in respect of such claim.  If the consent of the Indemnified Party required in the immediately preceding sentence is unreasonably withheld, the Originator is relieved of its indemnification obligations hereunder with respect to such Person.  The parties agree that the provisions of this Section 7.01 shall not be interpreted to provide recourse to the Originator against loss by reason of the bankruptcy, insolvency or lack of creditworthiness of an Obligor with respect to a Loan.  The Originator shall have no liability for making indemnification hereunder to the extent any such indemnification constitutes recourse for uncollectible or uncollected Loans.

Section 7.02         Liabilities to Obligors.

Except with respect to the funding commitment assumed by the Issuer with respect to any Delayed Draw Term Loan or Revolving Loan, no obligation or liability to any Obligor under any of the Loans is intended to be assumed by the Trustees, the Issuer or the Securityholders under or as a result of this Agreement and the transactions contemplated hereby.

Section 7.03         Operation of Indemnities.

If the Originator has made any indemnity payments to the Trust Depositor or the Securityholders pursuant to this Article VII and the Trust Depositor or the Securityholders thereafter collect any such amounts from others, the Trust Depositor or the Securityholders, as applicable, will repay such amounts collected to the Originator, except that any payments received by the Trust Depositor or the Securityholders from an insurance provider as a result of the events under which the Originator’s indemnity payments arose shall be repaid prior to any repayment of the Originator’s indemnity payment.

ARTICLE VIII

MISCELLANEOUS

Section 8.01         Amendment.

(a)           This Agreement may be amended from time to time by the parties hereto by written agreement, with the prior written consent of the Trustee but without notice to or consent of the Securityholders, to cure any ambiguity, to correct or supplement any provisions herein, to comply with any changes in the Code, or to make any other provisions with respect to matters or questions arising under this Agreement which shall not be inconsistent with the provisions of this Agreement; provided that such action shall not, as evidenced by an Opinion of Counsel delivered to the Trustee, materially adversely affect the interests of any Securityholder, which Opinion of Counsel may rely upon an officer’s certificate with respect to the effect of any such amendment on the economic interests of any Securityholder; and provided further that no such amendment shall reduce in any manner the amount of, or delay the timing of, any amounts received on Loans which are required to be distributed on any Note or Certificate without the consent of the Holder

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of such Note or Certificate, or change the rights or obligations of any other party hereto without the consent of such party.

(b)           Except as provided in Section 8.01(a), this Agreement may be amended from time to time by the parties hereto by written agreement, with the prior written consent of the Trustee and with the consent of the Majority Noteholders adversely affected thereby, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of the Holders of the Notes or Certificates; provided that (i) no such amendment shall reduce in any manner the amount of, or delay the timing of, any amounts which are required to be distributed on any Note or Certificate without the consent of the Holder of such Note or Certificate or reduce the percentage of Holders of any Note or Certificate which are required to consent to any such amendment without the consent of the Holders of 100% of the Notes affected thereby and (ii) no amendment affecting only one Class shall require the approval of the Holders of any other Class.

(c)           Fifteen days prior to the execution of any such amendment or consent (other than any amendment to the List of Loans), the Originator shall cause the Trustee to furnish written notification of the substance of such amendment or consent, together with a copy thereof, to each applicable Rating Agency.  In addition, prior to the execution of any such amendment or consent, the Originator shall cause the Trustee to obtain written confirmation from each of Moody’s and S&P that entry into such amendment or consent satisfies the Moody’s Rating Condition and the S&P Rating Condition, respectively.

(d)           Promptly after the execution of any such amendment or consent, the Originator shall cause written notification of the substance of such amendment or consent to be furnished to the Noteholders by the Trustee and to the Certificateholders by the Owner Trustee.  It shall not be necessary for the consent of any Securityholders required pursuant to Section 8.01(b) to approve the particular form of any proposed amendment or consent, but it shall be sufficient if such consent shall approve the substance thereof.  The manner of obtaining such consents and of evidencing the authorization by the Securityholders of the execution thereof shall be subject to such reasonable requirements as the Trustee may prescribe for the Noteholders and as the Owner Trustee may prescribe for the Certificateholders.

(e)           Notwithstanding the above, any amendment to this Agreement that would have the effect of amending or modifying the Portfolio Criteria shall be subject to the following requirements and restrictions: (a) only clauses (b) through (i) of the definition of Portfolio Criteria may be amended, (b) such amendment shall satisfy the Rating Agency Condition, (c) such amendment shall not, as evidenced by an officer’s certificate of the Servicer delivered to the Trustee, materially adversely affect the interests of any Securityholder and (d) the Issuer shall deliver to the Noteholders the proposed amendment and the Majority Noteholders shall not have objected to such amendment within ten Business Days from the receipt thereof; provided that any amendment that would have the effect of modifying the calculation of clauses (b) through (i) of the definition of Portfolio Criteria in order to correspond to written changes in the guidelines, methodology or standards established by the Rating Agencies shall only be subject to satisfaction of the Rating Agency Condition.

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(f)            Prior to the execution of any amendment to this Agreement, other than any amendment to the List of Loans, the Owner Trustee and the Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement.  Each Trustee may, but shall not be obligated to, consent to any such amendment that affects such Trustee’s own rights, duties or immunities under this Agreement or otherwise.

(g)           It shall not be necessary for the Noteholders to approve the particular form of any proposed amendment, but it shall be sufficient if such consent shall approve the substance thereof.

Section 8.02         Governing Law.

(a)           THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES UNDER THE AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

(b)           EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT.  EACH PARTY HERETO (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.02(b).

Section 8.03         Notices.

All notices, demands, certificates, requests and communications hereunder (“notices”) shall be in writing and shall be effective (a) upon receipt when sent through the U.S. mails, registered or certified mail, return receipt requested, postage prepaid, with such receipt to be effective the date of delivery indicated on the return receipt, (b) one Business Day after delivery to an overnight courier, (c) on the date personally delivered to a Responsible Officer of the party to which sent, or (d) on the date transmitted by legible telecopier or electronic mail transmission with a confirmation of receipt, in all cases addressed to the recipient as follows:

(a)           if to the Originator:

Ares Capital Corporation
280 Park Avenue, 22nd Floor, Building East
New York, New York 10017
Attention: Michael J. Arougheti
Facsimile No.: (212) 750-1777

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with a copy to:

Ares Capital Management LLC
1999 Avenue of the Stars, Suite 1900
Los Angeles, California 90067
Attention: Daniel F. Nguyen
Facsimile No.: (312) 201-4189

(b)           if to the Trust Depositor:

ARCC CLO 2006 LLC
280 Park Avenue, 22nd Floor, Building East
New York, New York 10017
Attention: Michael J. Arougheti
Facsimile No.: (212) 750-1777

with a copy to:

Ares Capital Management LLC
1999 Avenue of the Stars, Suite 1900
Los Angeles, California 90067
Attention: Daniel F. Nguyen
Facsimile No.: (312) 201-4189

Each party hereto may, by notice given in accordance herewith to each of the other parties hereto, designate any further or different address to which subsequent notices shall be sent.

Section 8.04         Severability of Provisions.

If one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever prohibited or held invalid or unenforceable, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement, the Notes or Certificates or the rights of the Securityholders, and any such prohibition, invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant, agreement, provision or term in any other jurisdiction.

Section 8.05         Third Party Beneficiaries.

Except as otherwise specifically provided herein, the parties hereto hereby manifest their intent that no third party (other than the Issuer, the Trustee and the Owner Trustee) shall be deemed a third party beneficiary of this Agreement, and specifically that the Obligors are not third party beneficiaries of this Agreement.

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Section 8.06         Counterparts.

This Agreement may be executed by facsimile signature and in several counterparts, each of which shall be an original and all of which shall together constitute but one and the same instrument.

Section 8.07         Headings.

The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof.

Section 8.08         No Bankruptcy Petition; Disclaimer.

(a)           Each of the Originator and the Trust Depositor covenants and agrees that, prior to the date that is one year and one day (or, if longer, the preference period then in effect and one day) after the payment in full of all amounts owing in respect of all outstanding Classes of Notes rated by any Rating Agency, it will not institute against the Trust Depositor (in the case of the Originator), or the Issuer, or join any other Person in instituting against the Trust Depositor or the Issuer, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceedings under the laws of the United States or any state of the United States.  This Section 8.08 will survive the termination of this Agreement.

(b)           The provisions of this Section 8.08 shall be for the third party benefit of those entitled to rely thereon, including the Securityholders, and shall survive the termination of this Agreement.

Section 8.09         Jurisdiction.

Any legal action or proceeding with respect to this Agreement may be brought in the courts of the United States for the Southern District of New York, and by execution and delivery of this Agreement, each party hereto consents, for itself and in respect of its property, to the non-exclusive jurisdiction of those courts.  Each such party irrevocably waives any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens, which it may now or hereafter have to the bringing of any action or proceeding in such jurisdiction in respect of this Agreement or any document related hereto.

Section 8.10 Prohibited Transactions with Respect to the Issuer.

The Originator shall not:

(a)           Provide credit to any Noteholder or Certificateholder for the purpose of enabling such Noteholder or Certificateholder to purchase Notes or Certificates, respectively;

(b)           Purchase any Notes or Certificates in an agency or trustee capacity; or

(c)           Except in its capacity as Servicer as provided in the Sale and Servicing Agreement, lend any money to the Issuer.

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Section 8.11         No Partnership.

Nothing herein contained shall be deemed or construed to create a co-partnership or joint venture between the parties hereto.

Section 8.12         Successors and Assigns.

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

Section 8.13         Duration of Agreement.

This Agreement shall continue in existence and effect until the termination of the Sale and Servicing Agreement.

Section 8.14         Limited Recourse.

The obligations of the Trust Depositor and the Originator under this Agreement and the other Transaction Documents are solely the corporate obligations of the Trust Depositor and the Originator, respectively.  No recourse shall be had for the payment of any amount owing by the Trust Depositor or the Originator or otherwise under this Agreement, any other Transaction Document or for the payment by the Trust Depositor or the Originator of any fee in respect hereof or thereof or any other obligation or claim of or against the Trust Depositor or the Originator arising out of or based upon this Agreement or any other Transaction Document, against any Affiliate, shareholder, partner, manager, member, director, officer, employee, representative or agent of the Trust Depositor or the Originator or of any Affiliate of such Person.  The provisions of this Section 8.14 shall survive the termination of this Agreement.

Section 8.15.        Temporary Participation and Elevation.

(a)           The parties hereto acknowledge that, as of the date hereof, the Originator holds a participation interest in and to that portion of the Initial Loan Assets (the “Participated Portion”) that are the subject matter of that certain Master Participation Agreement dated as of the date hereof between Ares Capital CP Funding LLC (“Ares CP”) and the Originator.  The parties hereto hereby expressly agree that, notwithstanding any provision contained in this Agreement or the other Transaction Documents to the contrary, but subject to the terms, conditions and restrictions, if any, contained in the credit documentation in respect of each of the Initial Loans, during the period from the date hereof to the Elevation Date with respect to each Initial Loan (the “Participation Period”), (i) the Trust Depositor shall be deemed to have purchased from the Originator, and the Originator shall be deemed to have sold and granted to the Trust Depositor, pursuant to this Agreement, in consideration of the purchase price set forth in Section 2.01(b), an undivided 100% participation interest (or, in the case of the Participated Portion, an undivided 100% subparticipation interest) in and to the Initial Loan Assets (the “Participation”) but otherwise on the same terms and conditions set forth herein, and the terms hereof shall be construed accordingly, mutatis mutandis.  For the avoidance of doubt, during the Participation Period with respect to an Initial Loan, such Initial Loan shall be deemed to be a Participated Loan for purposes of this Agreement.  The parties hereto shall cooperate to deliver such notices, obtain such consents, and/or fulfill such other requirements as may be necessary in connection

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with a participation (or, as applicable, subparticipation) of each Initial Loan pursuant to the terms of the credit documentation in respect of such Initial Loan.

(b)           From and after the date hereof, the parties hereto shall use commercially reasonable efforts to cause the Issuer or its designee to become the record lender in respect of, and holder of legal title to, each of the Initial Loans, in accordance with the terms of the credit documentation in respect of such Initial Loan (an “Elevation,” and the date of an Elevation, an “Elevation Date”).  On the Elevation Date with respect to each Initial Loan, without any further action by any entity, the Participation shall terminate and shall be of no further force or effect with respect to such Initial Loan (except that each party shall remain liable for any liabilities and obligations under this Section 8.15 that arose before such Elevation Date), and the Originator shall be deemed to have granted and conveyed the corresponding Initial Loan Assets by assignment to the Trust Depositor or its designee (as applicable).  Without limiting the generality of the foregoing, (i) the Originator agrees to use commercially reasonable efforts to cause Ares CP to enter into such assignment documentation with the Trust Depositor or its designee as may be required by the credit documentation in respect of any Initial Loan included in the Participated Portion in order to cause the Elevation with respect to such Initial Loan to occur, and (ii) the parties hereto agree to use commercially reasonable efforts to cause the Elevation with respect to each Initial Loan to occur within 60 days following the Closing Date.

(c)           The Originator shall not be held to the standard of care of a fiduciary or agent and shall not be a fiduciary or agent for the Trust Depositor but shall exercise only the same care in the administration of the Participation as if it had retained such interest beneficially for its own account.  Without limiting the generality of the foregoing, (i) the Originator shall not be liable for any error in judgment or for any action taken or omitted to be taken by it hereunder except for its gross negligence or willful misconduct and (ii) the Originator may rely on legal counsel, independent public accountants and other experts selected or accepted by the Originator and shall not be liable for any action taken or omitted to be taken in good faith by the Originator in accordance with the advice of such counsel, accountants or experts.  For the avoidance of doubt, (i) this Section 8.15(c) shall apply only to responsibilities of, and actions taken by, the Originator exclusively as a result of its status as grantor of the Participation pursuant to this Section 8.15, and (ii) nothing contained in this Section 8.15 shall relieve the Originator of its obligation to comply with the terms and provisions of this Agreement or from any liability for any breach of its representations, warranties, covenants or agreements contained herein.

[Remainder of Page Intentionally Left Blank.]

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

ARES CAPITAL CORPORATION, as the originator
By:	/s/ Michael Arougheti
Name:	Michael Arougheti
Title:	President
ARES CLO 2006 LLC, as the Trust Depositor
By:	ARES CAPITAL CORPORATION, its sole member
By:	/s/ Michael Arougheti
Name:	Michael Arougheti
Title:	President

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EX-10.4

Exhibit 10.4

INDENTURE

by and between

ARCC COMMERCIAL LOAN TRUST 2006,
as the Issuer,

and

U.S. BANK NATIONAL ASSOCIATION,
as the Trustee

Dated as of July 7, 2006

ARCC Commercial Loan Trust 2006 Notes, Series 2006-1
Class A-1A, Class A-1A VFN, Class A-1B, Class A-2A,
Class A-2B, Class B, Class C, Class D, and Class E Notes

TABLE OF CONTENTS

			Page
ARTICLE I	DEFINITIONS		2
Section 1.01.		Definitions	2
Section 1.02.		Rules of Construction	10
ARTICLE II	THE NOTES		11
Section 2.01.		Form	11
Section 2.02.		Execution, Authentication and Delivery	12
Section 2.03.		Opinions of Counsel	13
ARTICLE III	COVENANTS		13
Section 3.01.		Collection of Payments on Loans; Transaction Accounts and Class A-1A VFN Accounts	13
Section 3.02.		Maintenance of Office or Agency	13
Section 3.03.		Money for Payments To Be Held in Trust; Paying Agent	14
Section 3.04.		Existence; Separate Legal Existence	15
Section 3.05.		Payment of Principal and Interest	16
Section 3.06.		Protection of Indenture Collateral	16
Section 3.07.		Opinions as to Indenture Collateral	18
Section 3.08.		Furnishing of Rule 144A Information	18
Section 3.09.		Performance of Obligations; Sale and Servicing Agreement	19
Section 3.10.		Negative Covenants	19
Section 3.11.		Annual Statement as to Compliance	21
Section 3.12.		[Reserved]	21
Section 3.13.		Representations and Warranties Concerning the Loans	21
Section 3.14.		Trustee’s Review of Loan Files	21
Section 3.15.		Indenture Collateral; Related Documents	21
Section 3.16.		Amendments to Sale and Servicing Agreement	22
Section 3.17.		[Reserved]	22
Section 3.18.		Investment Company Act	22
Section 3.19.		Issuer May Consolidate, etc., Only on Certain Terms	22
Section 3.20.		Successor or Transferee	24
Section 3.21.		No Other Business	24
Section 3.22.		No Borrowing; Use of Proceeds	24
Section 3.23.		Guarantees, Loans, Advances and Other Liabilities	24
Section 3.24.		Capital Expenditures	25
Section 3.25.		Representations and Warranties of the Issuer	25
Section 3.26.		Restricted Payments	27
Section 3.27.		Notice of Events of Default, Amendments and Waivers	27
Section 3.28.		Further Instruments and Acts	28
Section 3.29.		Statements to Noteholders	28
Section 3.30.		Grant of Additional Loans and Substitute Loans	28

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Section 3.31.		Determination of LIBOR; Note Interest Rate; Interest Distributable	28
Section 3.32.		Reserved	29
Section 3.33.		Reserved	29
Section 3.34.		Maintenance of Listing	29
ARTICLE IV	THE NOTES; SATISFACTION AND DISCHARGE OF INDENTURE		29
Section 4.01.		The Notes	29
Section 4.02.		Registration of Transfer and Exchange of Notes	29
Section 4.03.		Mutilated, Destroyed, Lost or Stolen Notes	40
Section 4.04.		Payment of Principal and Interest and Class A-1A VFN Commitment Fee; Defaulted Interest	41
Section 4.05.		Tax Treatment	42
Section 4.06.		Satisfaction and Discharge of Indenture	43
Section 4.07.		Application of Trust Money	44
Section 4.08.		Repayment of Moneys Held by Paying Agent	44
ARTICLE V	REMEDIES		45
Section 5.01.		Events of Default	45
Section 5.02.		Acceleration of Maturity; Rescission and Annulment	47
Section 5.03.		Collection of Indebtedness and Suits for Enforcement by Trustee	47
Section 5.04.		Remedies; Priorities	50
Section 5.05.		Reserved	51
Section 5.06.		Limitation of Suits	51
Section 5.07.		Unconditional Rights of Noteholders To Receive Principal, Interest, and Class A-1A VFN Commitment Fee	52
Section 5.08.		Restoration of Rights and Remedies	52
Section 5.09.		Rights and Remedies Cumulative	52
Section 5.10.		Delay or Omission Not a Waiver	52
Section 5.11.		Control by Noteholders	52
Section 5.12.		Waiver of Past Defaults	53
Section 5.13.		Undertaking for Costs	53
Section 5.14.		Waiver of Stay or Extension Laws	53
Section 5.15.		Sale of Indenture Collateral	54
Section 5.16.		Action on Notes	55
Section 5.17.		Performance and Enforcement of Certain Obligations	55
ARTICLE VI	THE TRUSTEE		56
Section 6.01.		Duties of Trustee	56
Section 6.02.		Rights of Trustee	57

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Section 6.03.		Individual Rights of Trustee	58
Section 6.04.		Trustee’s Disclaimer	59
Section 6.05.		Notice of Event of Default	59
Section 6.06.		Reports by Trustee to Holders	59
Section 6.07.		Compensation and Indemnity	59
Section 6.08.		Replacement of Trustee	61
Section 6.09.		Successor Trustee by Merger	62
Section 6.10.		Appointment of Co-Trustee or Separate Trustee	62
Section 6.11.		Eligibility; Disqualification	63
Section 6.12.		Representations, Warranties and Covenants of the Trustee	64
Section 6.13.		Directions to Trustee	65
Section 6.14.		Conflicts	65
Section 6.15.		Account Property	66
ARTICLE VII	NOTEHOLDERS’ LISTS AND REPORTS		67
Section 7.01.		Issuer To Furnish Trustee Names and Addresses of
		Noteholders	67
Section 7.02.		Preservation of Information; Communications to Noteholders	67
Section 7.03.		Fiscal Year	68
Section 7.04.		Reports to Irish Stock Exchange, Etc	68
Section 7.05.		Reports to S&P	68
ARTICLE VIII	TRANSACTION ACCOUNTS, DISBURSEMENTS AND RELEASES		68
Section 8.01.		Collection of Money	68
Section 8.02.		Transaction Accounts	68
Section 8.03.		Officer’s Certificate	69
Section 8.04.		Termination Upon Distribution to Noteholders	69
Section 8.05.		Release of Indenture Collateral	69
Section 8.06.		Surrender of Notes Upon Final Payment	70
ARTICLE IX	SUPPLEMENTAL INDENTURES		70
Section 9.01.		Supplemental Indentures Without Consent of Noteholders	70
Section 9.02.		Supplemental Indentures With Consent of Noteholders	72
Section 9.03.		Execution of Supplemental Indentures	74
Section 9.04.		Effect of Supplemental Indenture	74
Section 9.05.		Reference in Notes to Supplemental Indentures	74
Section 9.06.		Consent of the Servicer and the Backup Servicer	74
ARTICLE X	OPTIONAL REPURCHASE AND REFINANCING OF NOTES; CLASS A-1A VFN NOTE MECHANICS		75
Section 10.01.		Optional Repurchase	75

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Section 10.02.		Notes Payable on Repurchase Date	75
Section 10.03.		Optional Refinancing	76
Section 10.04.		Form of Refinancing Notice by the Issuer	76
Section 10.05.		Form of Repurchase or Refinancing Notice by the Trustee	77
Section 10.06.		Draws and Repayments of Class A-1A VFN Notes	77
Section 10.07.		Class A-1A VFN Noteholder Rating Criteria	78
Section 10.08.		Class A-1A VFN Holder Collateral Account	79
Section 10.09.		Class A-1A VFN Funding Account	81
ARTICLE XI	MISCELLANEOUS		82
Section 11.01.		Confidentiality	82
Section 11.02.		Form of Documents Delivered to Trustee	83
Section 11.03.		Acts of Noteholders	84
Section 11.04.		Notices, etc., to Trustee and Others	84
Section 11.05.		Notices to Noteholders; Waiver	86
Section 11.06.		Alternate Payment and Notice Provisions	86
Section 11.07.		Effect of Headings	87
Section 11.08.		Successors and Assigns	87
Section 11.09.		Severability	87
Section 11.10.		Benefits of Indenture	87
Section 11.11.		Legal Holidays	87
Section 11.12.		GOVERNING LAW	87
Section 11.13.		Counterparts	88
Section 11.14.		Issuer Obligation	88
Section 11.15.		No Petition; Limited Recourse	88
Section 11.16.		Inspection; Confidentiality	89
Section 11.17.		Limitation of Liability	89
Section 11.18.		Disclaimer and Subordination	90

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EXHIBITS

Exhibit A–1	—	Form of Class A-1A Note
Exhibit A–2	—	Form of Class A-1A VFN Note
Exhibit A–3	—	Form of Class A-1B Note
Exhibit A–4	—	Form of Class A-2A Note
Exhibit A–5	—	Form of Class A-2B Note
Exhibit A–6	—	Form of Class B Note
Exhibit A–7	—	Form of Class C Note
Exhibit A–8	—	Form of Class D Note
Exhibit A–9	—	Form of Class E Note
Exhibit B	—	List of Loans
Exhibit C	—	Form of Wiring Instructions
Exhibit D–1	—	Form of Transferee Letter [Non-Rule 144A]
Exhibit D–2	—	Form of Rule 144A Certification
Exhibit E	—	Form of Transfer Certificate for Rule 144A Global Note to Regulation S Global Note during Distribution Compliance Period
Exhibit F	—	Form of Transfer Certificate for Rule 144A Global Note to Regulation S Global Note after Distribution Compliance Period
Exhibit G	—	Form of Transfer Certificate for Regulation S Global Note to Rule 144A Global Note during Distribution Compliance Period
Exhibit H	—	Form of Transfer Certificate for Regulation S Global Note during Distribution Compliance Period

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INDENTURE

THIS INDENTURE, dated as of July 7, 2006 (as amended, modified, restated, supplemented or waived from time to time, this “Indenture”), is by and between ARCC Commercial Loan Trust 2006, a Delaware statutory trust, as the issuer (together with its successors and assigns, in such capacity, the “Issuer”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association, not in its individual capacity, except as expressly set forth herein, but solely in its capacity as the trustee (together with its successors and assigns, in such capacity, the “Trustee”).

Each party hereto agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Issuer’s Notes.

GRANTING CLAUSE

The Issuer hereby Grants to the Trustee, on behalf of and for the benefit of the Holders of the Notes (the “Secured Parties”), without recourse, subject to the terms of this Indenture and the other Transaction Documents, a continuing security interest in and lien on all of its right, title and interest in and to all accounts, cash and currency, chattel paper, electronic chattel paper, tangible chattel paper, copyrights, copyright licenses, equipment, fixtures, general intangibles, instruments, commercial tort claims, deposit accounts, inventory, investment property, letter of credit rights, software, supporting obligations, accessions, and other property, including, without limitation, (i) the Loans and all other assets included or to be included from time to time in the Loan Assets, whether now existing or hereafter arising or acquired, as it may exist from time to time and (ii) all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing and all payments on or under and all proceeds of every kind and nature whatsoever in respect of any or all of the foregoing, including all proceeds of the conversion, voluntary or involuntary, into cash or other liquid property, all cash proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts, insurance proceeds, condemnation awards, rights to payment of any and every kind and other forms of obligations and receivables, instruments and other property which at any time constitute all or part of or are included in the proceeds of any of the foregoing (collectively, the “Indenture Collateral”); provided that all right, title and interest of the Issuer in and to each Excluded Amount, the Certificate Account, and any and all proceeds of any Excluded Amount or the Certificate Account (collectively, the “Excluded Property”) shall be excluded from the foregoing Grant by the Issuer.

The foregoing Grant is made in trust to secure (x) the payment of principal of and interest on, and any other amounts owing in respect of, the Notes and all other sums owing by the Issuer hereunder or under any other Transaction Document, and (y) to secure compliance with the covenants and agreement in this Indenture and the other Transaction Documents.

The Trustee, on behalf of the Noteholders, (i) acknowledges such Grant and (ii) accepts the trusts under this Indenture in accordance with this Indenture and agrees to perform its duties required in this Indenture to the best of its ability to the end that the interests of the Noteholders may be adequately and effectively protected.

ARTICLE I
DEFINITIONS

Section 1.01.                Definitions.

Certain defined terms used throughout this Indenture are defined above or in this Section 1.01.  In addition, except as otherwise expressly provided herein or unless the context otherwise requires, capitalized terms used but not otherwise defined herein shall have the meanings given to such terms in the Sale and Servicing Agreement (as defined below), which are incorporated by reference herein.

“Account Property” means all amounts and investments held from time to time in (a) any Transaction Account (whether in the form of deposit accounts, physical property, book-entry securities, Uncertificated Securities or otherwise) and (b) all proceeds of the foregoing, other than Excluded Property.

“Act” has the meaning provided in Section 11.03(a).

“Applicable Procedures” has the meaning provided in Section 4.02(l)(i).

“Beneficial Owner” means, with respect to a Note, the Person who is the beneficial owner of such Note, as reflected on the books of DTC or on the books of a Person maintaining an account with such Depository (directly or as an indirect participant, in accordance with the rules of such Depository), as the case may be.

“Certificate Registrar” means initially, the Trustee, and thereafter, any successor appointed pursuant to the Trust Agreement.

“Certificated Security” has the meaning provided in Section 8-102(a)(4) of the UCC.

“Class A-1A VFN Funding Account” has the meaning provided in Section 10.09(a).

“Class A-1A VFN Holder Collateral Account” has the meaning provided in Section 10.08(a).

“Class A-1A VFN Permitted Investments” has the meaning provided in Section 10.08(e).

“Clearing Corporation” means any entity included within the meaning of “clearing corporation” under the UCC.

“Clearing Corporation Security” means a Financial Asset that is (a) in bearer form or (b) registered in the name of a Clearing Corporation or the nominee of such Clearing Corporation and, if a Certificated Security, is in either case held in custody of such Clearing Corporation.

“Clearstream” means Clearstream Banking, société anonyme, a limited liability company organized under the laws of Luxembourg.

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“Confidential Information” means any and all information concerning any Disclosing Party disclosed by, or at the request or on behalf of, any Disclosing Party to any Receiving Party or its representatives pursuant to this Agreement, excluding, however, any information that at the time of disclosure:  (a) was generally available to the public, other than as a result of a disclosure by any Receiving Party or its representatives in violation of this Agreement; (b) was available to any Receiving Party on a non-confidential basis from a source other than the Disclosing Party or its representatives; (c) was already known to the Receiving Party and not subject to restrictions on use or disclosure; or (d) was independently developed by or on behalf of the Receiving Party (other than at the request of or for the benefit of the Disclosing Party) by individuals who did not directly or indirectly receive Confidential Information.

“Corporate Trust Office” means in the case of the Owner Trustee:  Wilmington Trust Company, 1100 North Market Street, Wilmington, Delaware 19890, Attention:  Corporate Trust Administration and in the case of the Trustee:  U.S. Bank National Association, One Federal Street, Boston, Massachusetts 02110, Attention:  CDO Unit, Reference ARCC Series 2006-1, or at such other address as the Owner Trustee or the Trustee may designate from time to time by notice to the Issuer, or the principal corporate trust office of any successor Owner Trustee or Trustee at the address designated by such successor by notice to the Issuer.

“Default” means any occurrence that is, or with notice or the lapse of time or both would become, an Event of Default.

“Deferred Assignment Effective Date” means, with respect to any Participated Loan, other than in the case of Participated Loans representing not more than 5% of the Aggregate Outstanding Loan Balance, the effective date of the assignment of such Participated Loan from the Originator to the Trust Depositor and from the Trust Depositor to the Issuer, which shall in no event be a date later than 60 calendar days after the Closing Date or, with respect to any Additional Loan or Substitute Loan, the Cut-Off Date with respect thereto.

“Definitive Note” means any Note in permanent certificated definitive form registered in the name of a Holder other than DTC or its nominee.

“Deliver” or “Delivered” means 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 referred to in clause (g) below), (i) causing the delivery of such Certificated Security or Instrument to an Intermediary registered in the name of the Intermediary or its affiliated nominee or endorsed to an Intermediary or in blank, (ii) causing the Intermediary to continuously identify on its books and records that such Certificated Security or Instrument is credited to the relevant Transaction Account and (iii) causing 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), (i) causing such Uncertificated Security to be continuously registered on the books of the obligor thereof to an Intermediary and (ii) causing the Intermediary to continuously identify on its books and records that such Uncertificated Security is credited to the relevant Transaction Account;

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

(d)           in the case of any Financial Asset that is a book-entry security held through the Federal Reserve System pursuant to Federal book-entry regulations, causing (i) the continuous crediting of such Financial Asset to a securities account of an Intermediary at any Federal Reserve Bank and (ii) the Intermediary to continuously identify on its books and records that such Financial Asset is credited to the relevant Transaction Account;

(e)           in the case of cash or money (within the meaning of Section 1-201(24) of the UCC), causing (i) the delivery of such cash or money to an Intermediary, (ii) the Intermediary to treat such cash or money as a Financial Asset maintained by such Intermediary for credit to the relevant Transaction Account in accordance with the provisions of Article 8 of the UCC, and (iii) the Intermediary to continuously indicate by book entry that such Cash or Money is credited to the relevant Transaction Account;

(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 an Intermediary in accordance with applicable law and regulation and causing the Intermediary to continuously credit such Financial Asset to the relevant Transaction Account;

(g)           in the case of each general intangible (including any participation interest that is not, or the debt underlying which is not, evidenced by an Instrument or Certificated Security) by notifying the obligor thereunder of the Grant to the Trustee (unless no applicable law requires such notice) and either:

(i)            causing the Issuer to become and remain the owner thereof and causing a UCC-1 financing statement describing the Collateral and naming the Issuer as debtor and the Trustee as secured party to be filed (and remain effective) by the Issuer with the Secretary of State of the State of Delaware within ten days after the Closing Date, or

(ii)           causing (1) an Intermediary to become and remain the owner thereof, (2) the Intermediary to agree to treat such general intangible as a Financial Asset and (3) the Intermediary to continuously credit such general intangible to the relevant Transaction Account;

(h)           in the case of each Participation as to which the underlying Loan is represented by an Underlying Note, obtaining the acknowledgment of the Person in possession of such Underlying Note (which may not be the Issuer) that it holds such Underlying Note solely on behalf and for the benefit of the Trustee;

(i)            in the case of any “deposit account” as defined in Article 9 of the UCC, causing the institution with which such deposit account is maintained to agree in an authenticated record to comply with the instructions originated by the Trustee directing disposition of the funds without further consent by the Issuer; and

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(j)            in all cases, the filing of an appropriate Financing Statement in the appropriate filing office in accordance with the UCC as in effect in any relevant jurisdiction.

Notwithstanding the foregoing, any property or asset will also be “Delivered” for purposes of this definition if it is delivered in a method specified in an Opinion of Counsel as sufficient to result in a first priority perfected security interest in favor of the Trustee.

“Direct Participant” means any broker-dealer, bank or other financial institution for whom the nominee of DTC holds an interest in any Note.

“Disclosing Party” means each of the Issuer, the Trust Depositor, the Servicer and the Originator and “Disclosing Parties” means collectively all such parties.

“Distribution Compliance Period” means the 40 day period prescribed by Regulation S commencing on the later of (a) the date upon which Notes are first offered to Persons other than the Initial Purchaser and any other distributor (as such term is defined in Regulation S) of the Notes and (b) the Closing Date.

“DTC” means The Depository Trust Company, and its successors.

“DTC Custodian” means the Trustee as a custodian for DTC.

“DTC Participant” means a Person for whom, from time to time, DTC effects book-entry transfers and pledges of securities deposited with DTC.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor legislation thereto and the regulations promulgated and the rulings issued thereunder.

“Euroclear” means Euroclear Bank S.A./N.V. as operator of the Euroclear System.

“Event of Default” has the meaning provided in Section 5.01.

“Excluded Property” has the meaning provided in the Granting Clause.

“Financial Asset” has the meaning provided in Section 8-102(a)(9) of the UCC.

“Financing Statement” has the meaning provided in the UCC.

“Global Note” means any Note registered in the name of DTC or its nominee, beneficial interests in which are reflected on the books of DTC or on the books of a Person maintaining any account with such Depository (directly or as an indirect participant in accordance with the rules of such Depository).  The term “Global Note” shall include the Rule 144A Global Notes and the Regulation S Global Notes.

“Grant” means to mortgage, pledge, sell, bargain, warrant, alienate, remise, release, convey, assign, transfer, create, and grant a lien upon and a security interest in and right of set-off against, deposit, set over and confirm pursuant to this Indenture.  A Grant of Indenture

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Collateral or of any other agreement or instrument shall include all rights, powers and options (but none of the obligations) of the granting party thereunder, including the immediate and continuing right to claim for, collect, receive and give receipt for principal and interest payments in respect of such collateral or other agreement or instrument and all other moneys payable thereunder, to give and receive notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring 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.

“Holder Subaccount” has the meaning provided in Section 10.08(a).

“Indenture Collateral” has the meaning provided in the Granting Clause.

“Indirect Participant” means any financial institution for whom any Direct Participant holds an interest in any Note.

“Initial Purchaser” means Wachovia Capital Markets, LLC.

“Institutional Accredited Investor” means any Person meeting the requirements of Rule 501(a)(1)—(3) or (7) of Regulation D under the Securities Act.

“Instrument” has the meaning provided in Section 9-102(47) of the UCC.

“Interim Distribution Date” has the meaning provided in Section 10.06(b).

“Intermediary” means a “securities intermediary” as defined in Section 8-102(a)(14) of the UCC.

“Issuer” has the meaning provided in the Preamble.

“Issuer Documents” has the meaning provided in Section 3.25(a).

“Issuer Order” means a written order or request signed in the name of the Issuer or by the Servicer on behalf of the Issuer and delivered to the Trustee.

“Letter of Representations” means the Letter of Representations, dated as of July 7, 2006 by and among the Issuer and DTC.

“Massachusetts UCC” has the meaning provided in Section 6.15(a).

“Note” means any one of the notes of the Issuer of any Class executed and authenticated in accordance with this Indenture.

“Note Register” has the meaning provided in Section 4.02(a).

“Note Registrar” has the meaning provided in Section 4.02(a).

“Optional Repurchase” has the meaning provided in Section 10.01.

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“Outstanding” means as of the date of determination, all Notes theretofore executed, authenticated and delivered under this Indenture except:

(k)           Notes in exchange for or in lieu of which other Notes have been executed, authenticated and delivered pursuant to this Indenture unless proof satisfactory to the Trustee is presented that any such Notes are held by a holder in due course;

(l)            Notes to be repurchased or refinanced in connection with an Optional Repurchase or an Optional Refinancing and in respect of which money in the necessary amount to pay the Repurchase Price or the Refinancing Price, as applicable, has been theretofore deposited with the Trustee in trust for the Noteholders (provided that notice of such repurchase has been duly given pursuant to Section 10.05 hereof); and

(m)          Notes theretofore canceled by the Note Registrar or delivered to the Trustee for cancellation.

“Owner” means each Holder of a Note.

“Owner Trustee” means Wilmington Trust Company, not in its individual capacity but solely as owner trustee under the Trust Agreement, and any successor Owner Trustee thereunder.

“Participant” means a Person that has an account with DTC.

“Paying Agent” means, with respect to the Notes, any paying agent or co-paying agent appointed pursuant to Section 3.03 hereof, which initially shall be (a) the Trustee and (b) with respect to the payment of principal and interest on the Listed Notes, JP Morgan Bank (Ireland) PLC.  With respect to the Trust Certificates, any paying agent or co-paying agent appointed pursuant to Section 3.09 of the Trust Agreement which initially shall be U.S. Bank National Association.

“Percentage Interest” means, (a) with respect to any Class of Notes, the fraction, expressed as a percentage, the numerator of which is the denomination represented by such Class of Notes and the denominator of which is the then current Outstanding Principal Balance of such Class of Notes (treating the Class A-1A VFN Notes as fully drawn to the extent of the Maximum Class A-1A VFN Commitments as of the Closing Date for purposes of this determination) and (b) with respect to a Trust Certificate, the percentage set forth on the face thereof.

“Placement Agent” means Wachovia Capital Markets, LLC, in its capacity as placement agent with respect to the Class A-1A VFN Notes.

“Plan” has the meaning provided in Section 4.02(y).

“Pledged Accounts” has the meaning provided in Section 6.15(a).

“Proceeding” means any suit in equity, action at law or other judicial or administrative proceeding.

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“Qualified Institutional Buyer” has the meaning provided in Rule 144A under the Securities Act.

“Rating Criteria” means, with respect to any Holder of Class A-1A VFN Notes, criteria that will be satisfied on any date if:

(a)           the short-term debt, deposit or similar obligations of such Holder are rated “P-1” and not on watch for possible downgrade by Moody’s and at least “A-1” by S&P and the long-term debt obligations of such Class A-1A VFN Noteholder are rated at least “AA-” by S&P;

(b)           the obligations of such Holder under the Class A-1A VFN Purchase Agreement are guaranteed by an entity meeting the Rating Criteria set forth in (a) above; or

(c)           such Holder is then entitled under a Liquidity Facility to borrow from, or sell an interest in assets to, one or more Liquidity Providers so long as:

(i)            the short-term debt, deposit or similar obligations of each such Liquidity Provider are on such date rated “P-1” and not on watch for possible downgrade by Moody’s and at least “A-1” by S&P and the long-term debt obligations of such Liquidity Provider are rated at least “AA-” by S&P; and

(ii)           the aggregate amount of commitments to make loans or purchase interests in assets under such Liquidity Facility held by Liquidity Providers whose short-term debt, deposit or similar obligations are on such date rated “P-1” and not on watch for possible downgrade by Moody’s and at least “A-1” by S&P is not less than the Class A-1A VFN Commitment in respect of the Class A-1A VFN Notes held by such Holder.

“Receiving Party” means each Holder of an Offered Note or Class D Note, the Trustee, the Owner Trustee and the Back-Up Servicer.

“Refinancing” has the meaning provided in Section 10.03(a).

“Refinancing Date” means, in the case of a refinancing of the Notes pursuant to Section 10.03, any Distribution Date on or after the Distribution Date occurring in June, 2010 which is specified by the Issuer in the notice given pursuant to Section 10.05, as amended by any subsequent notice given pursuant to such Section.

“Regulation S” means Regulation S under the Securities Act.

“Regulation S Global Notes” means the Notes sold in offshore transactions in reliance on Regulation S and represented by one or more Global Notes deposited with the Trustee as custodian for DTC, and, prior to the expiration of the Distribution Compliance Period and compliance with the certification requirements of Rule 903(b)(3)(ii)(B) under the Securities Act in compliance with Sections 2.01(b) and 4.02(m), means Temporary Regulation S Global Notes.

“Regulation S Investor” means the holder of a beneficial interest in a Regulation S Global Note.

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“Replacement Notes” has the meaning provided in Section 10.03(b).

“Repurchase Date” means in the case of a repurchase of the Notes pursuant to Section 10.01, the Distribution Date specified by the Issuer in the notice given pursuant to Section 10.05, as amended by any subsequent notice given pursuant to such Section.

“Rule 144A” means Rule 144A under the Securities Act.

“Rule 144A Certification” means a letter substantially in the form attached to its Indenture as Exhibit D–2.

“Rule 144A Global Notes” means the Notes sold within the United States to U.S. Persons (within the meaning of Regulation S) who are Qualified Institutional Buyers, issued in the form of beneficial interests in one or more Global Notes, deposited with the Trustee as custodian for DTC.

“Sale” has the meaning provided in Section 5.15(a).

“Sale and Servicing Agreement” means the Sale and Servicing Agreement, dated as of the Closing Date, by and among ARCC Commercial Loan Trust 2006, as the Issuer, ARCC CLO 2006 LLC, as the Trust Depositor, Ares Capital Corporation, as the Originator and as the Servicer, U.S. Bank National Association, as the Trustee, Lyon Financial Services, Inc. (d/b/a U.S. Bank Portfolio Services), as the Backup Servicer, and Wilmington Trust Company, as the Owner Trustee.

“Secured Parties” has the meaning provided in the Granting Clause.

“Securities Legend” means, with respect to any Class of Notes, the legend for such Class set forth in the related form of Note attached hereto as Exhibit A–1, A–2, A–3, A–4, A–5, A–6, or A–7 as applicable.

“Series” means 2006-1.

“Similar Law” has the meaning provided in Section 4.02(y).

“Stated Maturity Date” means December 20, 2019.

“Temporary Regulation S Global Note” has the meaning provided in Section 2.01(b).

“TIA” means the Trust Indenture Act of 1939, as amended.

“Transfer” has the meaning provided in Section 4.02(w).

“Transferee Letter” means the letter set forth in Exhibit D–1 to this Indenture.

“Trust Certificate” means a certificate evidencing the beneficial interest of a Certificateholder in the Issuer, substantially in the form of Exhibit A attached to the Trust Agreement.

9

“Trustee” has the meaning provided in the Preamble.

“Uncertificated Security” has the meaning provided in Section 8-102(a)(18) of the UCC.

“U.S. Person” means a person that is a citizen or resident of the United States, a corporation or partnership (except as provided in applicable Treasury regulations) created or organized in or under the laws of the United States, any State or the District of Columbia, including any entity treated as a corporation or partnership for federal income tax purposes, an estate whose income is subject to United States federal income tax regardless of its source, or a trust if a court within the United States is able to exercise primary supervision over the administration of such trust, and one or more such U.S. Persons have the authority to control all substantial decisions of such trust (or, to the extent provided as applicable Treasury regulations, certain trusts in existence on August 20, 1996 which are eligible to elect to be treated as a U.S. Person).

“USA PATRIOT Act” means the United States Uniting and Strengthening America By Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, signed into law on and effective as of October 26, 2001, which, among other things, requires that financial institutions, a term that includes banks, broker-dealers and investment companies, establish and maintain compliance programs to guard against money laundering activities.

Section 1.02.                Rules of Construction.

Unless the context otherwise requires:

(a)           a term has the meaning given to it;

(b)           an accounting term not otherwise defined has the meaning given to it in accordance with generally accepted accounting principles;

(c)           “or” is not exclusive;

(d)           “including” means including without limitation;

(e)           words in the singular include the plural and words in the plural include the singular;

(f)            any pronouns shall be deemed to cover all genders; and

(g)           any agreement, instrument or statute defined or referred to herein or in any instrument or certificate delivered in connection herewith means such agreement, instrument or statute as from time to time amended, modified, waived or supplemented and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein; references to a Person are also to its permitted successors and assigns.

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ARTICLE II
THE NOTES

Section 2.01.                Form.

(a)           The Notes, together with the Trustee’s certificate of authentication, shall be in substantially the forms set forth as Exhibits A–1 through A–7 to this Indenture 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, consistently herewith, be determined by the appropriate Responsible Officers executing such Notes, as evidenced by their execution of the Notes.  Any portion of the text of any Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Note.  The Notes shall be typewritten, printed, lithographed or engraved or produced by any combination of these methods (with or without steel engraved borders), all as determined by the Responsible Officers executing such Notes, as evidenced by their execution of such Notes.  The terms of the Notes set forth in Exhibits A–1 through A–7 are part of the terms of this Indenture.

(b)           The Class A-1A Notes, Class A-1B Notes, Class A-2A Notes, Class A-2B Notes, Class B Notes and Class C Notes sold on the Closing Date outside the United States to persons who are not “U.S. persons” (as defined in Regulation S) in reliance on Regulation S shall be issued initially in the form of one or more temporary global securities in definitive, fully registered form without interest coupons, with the applicable legends set forth in Exhibits A-1, A-3, A-4, A-5, and A-6 to this Indenture, respectively, added to the form of such Notes (each a “Temporary Regulation S Global Note”), which shall be deposited on behalf of the subscribers of the Notes represented thereby with the DTC Custodian and registered in the name of a nominee of DTC for the respective accounts of Euroclear and Clearstream, 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 or the commencement of the offering of the Notes, interests in a Temporary Regulation S 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 Regulation S Global Note are owned by persons who are not U.S. persons (as defined in Regulation S).  Upon the exchange of a Temporary Regulation S Global Note for a Regulation S Global Note, the Regulation S Global Note will be deposited with the DTC Custodian and registered in the name of a nominee of DTC for the respective accounts of Euroclear and Clearstream, duly executed by the Issuer and authenticated by the Trustee as hereinafter provided.

(c)           The Class A-1A Notes, Class A-1B Notes, Class A-2A Notes, Class A-2B Notes, Class B Notes and Class C Notes sold on the Closing Date in reliance on Rule 144A shall be issued initially in the form of one or more Rule 144A Global Notes, with the applicable legends set forth in Exhibits A-1, A-3, A-4, A-5, and A-6 respectively, added to the form of such Notes, which shall be deposited on behalf of the subscribers of the Notes represented thereby with the DTC Custodian and registered in the name of a nominee of DTC, duly executed by the Issuer and authenticated by the Trustee as hereinafter provided.  The Class A-1A Notes, Class A-1B Notes, Class A-2A Notes, Class A-2B Notes, Class B Notes, Class C Notes and Class D Notes sold on the Closing Date to an Institutional Accredited Investor that is not a Qualified

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Institutional Buyer, if any, shall be issued initially in the form of one or more Definitive Notes, duly executed by the Issuer and authenticated by the Trustee as herein provided.

(d)           The Class A-1A VFN Notes, Class D Notes and the Class E Notes sold in reliance on Rule 144A or another available exemption from the registration requirements of the Securities Act shall be issued in the form of Definitive Notes, with the applicable legends set forth in Exhibits A-2 and A-7 to this Indenture, respectively, added to the form of such Notes, which shall be registered in the name of the beneficial owner or a nominee thereof, duly executed by the Issuer and authenticated by the Trustee as hereinafter provided.

(e)           Except as provided in Sections 4.02(f) and 4.02(m), owners of beneficial interests in Global Notes will not be entitled to receive physical delivery of Definitive Notes.

Section 2.02.                Execution, Authentication and Delivery.

The Notes shall be executed on behalf of the Issuer by any Responsible Officer of the Owner Trustee.  The signature of any such Responsible Officer on the Notes may be manual or facsimile.

Notes bearing the manual or facsimile signature of individuals who were at any time Responsible Officers of the Issuer shall bind the Issuer, notwithstanding 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 such Notes.

The Trustee shall upon receipt of an Issuer Order authenticate and deliver Class A-1A Notes for original issue in an aggregate amount equal to the Initial Class A-1A Principal Balance, Class A-1A VFN Notes for original issue in an aggregate amount equal to the Initial Class A-1A VFN Principal Balance, Class A-1B Notes for original issue in an aggregate amount equal to the Initial Class A-1B Principal Balance, Class A-2A Notes for original issue in an aggregate amount equal to the Initial Class A-2A Principal Balance, Class A-2B Notes for original issue in an aggregate amount equal to the Initial Class A-2B Principal Balance, Class B Notes for original issue in an aggregate amount equal to the Initial Class B Principal Balance, Class C Notes for original issue in an aggregate amount equal to the Initial Class C Principal Balance, Class D Notes for original issue in an aggregate amount equal to the Initial Class D Principal Balance, and Class E Notes for original issue in an aggregate amount equal to the Initial Class E Principal Balance.

Each Note shall be dated the date of its authentication.  The Notes shall be issuable in fully registered form in minimum denominations of $250,000 and integral multiples of $1,000 in excess thereof; provided that one Note of each Class may be issued in an incremental denomination of less than $1,000.

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 by the manual signature of one of its 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.

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Section 2.03.                Opinions of Counsel.

On the Closing Date, the Trustee shall have received:  (a) an Opinion of Counsel, with respect to securities law matters; (b) an Opinion of Counsel, with respect to the tax status of the arrangement created by this Indenture and the tax treatment of the Class A-1A Notes, the Class A-1A VFN Notes, the Class A-1B Notes, the Class A-2A Notes, the Class A-2B Notes, the Class B Notes and the Class C Notes; and (c) an Opinion of Counsel to the Issuer, with respect to the due authorization, valid execution and delivery of this Indenture and the other Transaction Documents to which the Issuer is a party and with respect to its binding effect on the Issuer.

ARTICLE III
COVENANTS

Section 3.01.                Collection of Payments on Loans; Transaction Accounts and Class A-1A VFN Accounts.

The Servicer shall establish with the Trustee and cause to be maintained as required therein or herein, as applicable, each of the Transaction Accounts specified in Section 7.01 of the Sale and Servicing Agreement and the accounts specified in Sections 10.08 and 10.09.  The Trustee shall ensure that the Class A-1A VFN Holder Collateral Account, each Holder Subaccount and each of the Transaction Accounts is established and maintained as an Eligible Deposit Account with a Qualified Institution.  If any institution with which any of the Transaction Accounts, the Class A-1A VFN Holder Collateral Account and each Holder Subaccount are established ceases to be a Qualified Institution, the Servicer, or if the Servicer fails to do so, the Trustee (as the case may be) shall within ten Business Days after notice of such event establish a replacement account at a Qualified Institution.  Subject to the Priority of Payments, the Trustee shall make all payments of principal of and interest on the Notes and, with respect to the Class A-1A VFN Notes, the Class A-1A VFN Commitment Fee and any Class A-1A VFN Increased Costs or Class A-1A VFN Breakage Costs, subject to Section 3.03 and as provided in Section 3.05 herein, from moneys on deposit in the Note Distribution Account.  The Trustee shall be permitted to rely on a certificate from the related Class A-1A VFN Noteholder regarding the amount of any Class A-1A VFN Increased Costs or Class A-1A VFN Breakage Costs.

Section 3.02.                Maintenance of Office or Agency.

The Issuer will maintain with the Trustee an office or agency where, subject to satisfaction of conditions set forth herein, Notes may be surrendered for registration of transfer or exchange, and where notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be served.  The Issuer hereby initially appoints the Trustee to serve as its agent for the foregoing purposes.  The Issuer will give prompt written notice to the Trustee of the location, and of any change in the location, of any such office or agency.  If at any time the Issuer shall fail to maintain any such office or agency or shall fail to furnish the Trustee with the address thereof, such surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Issuer hereby appoints the Trustee as its agent to receive all such surrendered Notes, notices and demands.

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Section 3.03.                Money for Payments To Be Held in Trust; Paying Agent.

The Issuer hereby appoints the Trustee as Paying Agent for the payment of principal and interest on the Notes and, with respect to the Class A-1A VFN Notes, the Class A-1A VFN Commitment Fee and any Class A-1A VFN Increased Costs or Class A-1A VFN Breakage Costs.  As provided in Section 3.01, all payments of amounts due and payable with respect to any Notes that are to be made from amounts withdrawn from the Note Distribution Account pursuant to Section 3.01 shall be made on behalf of the Issuer by the Trustee (or the Servicer on its behalf) or by another Paying Agent, and no amounts so withdrawn from the Note Distribution Account for payments on the Notes shall be paid over to the Issuer except as provided in this Section 3.03.

The Issuer may at any time and from time to time vary or terminate the appointment of any such agent or appoint any additional agents for any or all of such purposes; provided that (a) no Paying Agent shall be appointed in a jurisdiction that subjects payments on the Notes to withholding tax and (b) so long as any Notes are listed on the Irish Stock Exchange and the rules of such exchange so require, the Issuer will maintain in Ireland a Paying Agent and an office or agency where notices and demands to or upon the Issuer in respect of such securities and this Indenture may be served and where such Notes may be surrendered for registration of transfer or exchange.  The Issuer shall give prompt written notice to the Trustee, the Rating Agencies, the Class A-1A VFN Agent and the Noteholders 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 has appointed JP Morgan Bank (Ireland) PLC as Paying Agent for the payment of principal and interest with respect to only the Listed Notes.

On or before the Business Day immediately preceding each Distribution Date, Repurchase Date and Refinancing Date, as applicable, the Issuer shall deposit or cause to be deposited in the Note Distribution Account from amounts on deposit in the Principal and Interest Account an aggregate sum sufficient to pay the amounts then becoming due, such sum to be held in trust for the benefit of the Persons entitled thereto and (unless the Paying Agent is the Trustee) shall promptly notify the Trustee in writing of its action or failure so to act.

The Issuer will 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 3.03, that such Paying Agent will:

(a)           hold all sums held by it for the payment of amounts due with respect to the Notes or in trust 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;

(b)           give the Trustee notice of any default by the Issuer in the making of any payment required to be made with respect to the Notes;

(c)           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;

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(d)           immediately resign as Paying Agent and forthwith pay to the Trustee all sums held by it in trust for the payment of Notes or if at any time it ceases to meet the standards required to be met by a Paying Agent at the time of its appointment; and

(e)           comply with all requirements of the Code with respect to the withholding from any payments made by it on any Notes or of any applicable withholding taxes imposed thereon and with respect to any applicable reporting requirements in connection therewith.

The Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, by Issuer Order direct any Paying Agent to pay to the Trustee all sums held in trust by such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which the sums were held by 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.

Subject to applicable laws with respect to escheat of funds, any money held by the Trustee or any Paying Agent in trust for the payment of any amount due with respect to any Note and remaining unclaimed for two years after such amount has become due and payable shall be discharged from such trust and be paid to the Issuer on an Issuer Order; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Issuer for payment thereof (but only to the extent of the amounts so paid to the Issuer), and all liability of the Trustee or such Paying Agent with respect to such trust money shall thereupon cease; provided that the Trustee or such Paying Agent, before being required to make any such repayment, shall at the expense and direction of the Issuer cause to be published once, in a newspaper of general circulation in the Borough of Manhattan, the City of New York, printed in the English language and customarily published on each Business Day, whether or not published on Saturdays, Sundays or holidays, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Issuer.  The Trustee shall also adopt and employ, at the expense and direction of the Issuer, any other reasonable means of notification of such repayment (including, but not limited to, mailing notice of such repayment to Holders whose Notes have been called but have not been surrendered for repurchase or whose right to or interest in moneys due and payable but not claimed is determinable from the records of the Trustee or of any Paying Agent, at the last address of record for each such Holder).

Section 3.04.                Existence; Separate Legal Existence.

(a)           The Issuer will keep in full effect its existence, rights and franchises as a statutory trust under the laws of the State of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes, organized under the laws of any other state or of the United States, in which case the Issuer will keep in full effect its existence, rights and franchises under the laws of such other jurisdiction) and will obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Indenture, the Notes, the other Transaction Documents, the Indenture Collateral and each other instrument or agreement included in the Indenture Collateral.

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(b)           The Issuer shall:

(i)            Maintain its own deposit account or accounts, separate from those of any Affiliate, with commercial banking institutions and in accordance with the terms of this Indenture.  The funds of the Issuer will not be diverted to any other Person or for other than authorized uses of the Issuer.

(ii)           Ensure that it is at all times in compliance with Section 4.01 of the Trust Agreement.

(iii)          Ensure that, to the extent that it jointly contracts with any of its members or Affiliates to do business with vendors or service providers or to share overhead expenses, the costs incurred in so doing shall be allocated fairly among such entities, and each such entity shall bear its fair share of such costs.  To the extent that the Issuer contracts or does business with vendors or service providers when the goods and services provided are partially for the benefit of any other Person, the costs incurred in so doing shall be fairly allocated to or among such entities for whose benefit the goods and services are provided, and each such entity shall bear its fair share of such costs.  All material transactions between Issuer and any of its Affiliates shall be only at fair market value on an arm’s length basis.

(iv)          Conduct its affairs strictly in accordance with its organizational documents and observe all necessary, appropriate and customary statutory trust formalities, including, but not limited to, holding all regular and special board of trustees meetings appropriate to authorize all statutory trust action, keeping separate and accurate minutes of its meetings, passing all resolutions or consents necessary to authorize actions taken or to be taken, and maintaining accurate and separate books, records and accounts, including, but not limited to, payroll and intercompany transaction accounts.

Section 3.05.                Payment of Principal and Interest.

The Issuer will duly and punctually pay (a) the principal of and interest on the Notes and, in the case of the Class A-1A VFN Notes, the Class A-1A VFN Commitment Fee and any Class A-1A VFN Increased Costs or Class A-1A VFN Breakage Costs, in accordance with the terms of such Notes, this Indenture, the Purchase Agreement and the Sale and Servicing Agreement and (b) all amounts payable under in accordance with the terms thereof, subject at all times to the Priority of Payments.  The Issuer will cause to be distributed all amounts on deposit in the Note Distribution Account on a Distribution Date deposited therein pursuant to the Sale and Servicing Agreement for the benefit of the Notes to the applicable Noteholders.  Amounts properly withheld under the Code or any applicable state law by any Person from a payment to any Noteholder of interest and/or principal shall be considered as having been paid by the Issuer to such Noteholder for all purposes of this Indenture.

Section 3.06.                Protection of Indenture Collateral.

The Issuer intends the security interest Granted pursuant to this Indenture in favor of the Trustee on behalf of the Noteholders to be prior to all other liens in respect of the Indenture Collateral, and the Issuer shall take or shall cause the Servicer to take all actions necessary to

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obtain and maintain, for the benefit of the Trustee on behalf of the Noteholders, a first lien on and a first priority, perfected security interest in the Indenture Collateral.  In connection therewith, pursuant to Section 2.08 of the Sale and Servicing Agreement, the Issuer shall cause to be delivered into the possession of the Trustee as pledgee hereunder, indorsed in blank, any “instruments” (within the meaning of the UCC), not constituting part of chattel paper, evidencing any Loan which is part of the Indenture Collateral and all other portions of the Loan Files.  The Trustee acknowledges and agrees that (a) it holds the Loan Assets delivered to it under the Loan Sale Agreement for the benefit of the Trust Depositor, (b) it holds the Loan Assets delivered to it under the Sale and Servicing Agreement for the benefit of the Issuer, and (c) it holds the Indenture Collateral delivered to it pursuant to this Indenture for the benefit of the Noteholders.  The Trustee agrees to maintain continuous possession of such delivered instruments and the Loan Files as pledgee hereunder until this Indenture shall have terminated in accordance with its terms or until, pursuant to the terms hereof or of the Sale and Servicing Agreement, the Trustee is otherwise authorized to release such instrument from the Indenture Collateral.  The Issuer will or will cause the Servicer from time to time to authorize, prepare (or shall cause to be prepared), execute and deliver all such supplements and amendments hereto and all such financing statements, continuation statements, instruments of further assurance and other instruments, and will take such other action necessary or advisable to:

(i)            maintain or preserve the lien and security interest (and the priority thereof) of this Indenture or carry out more effectively the purposes hereof;

(ii)           perfect, publish notice of or protect the validity of any Grant made or to be made by this Indenture;

(iii)          enforce any of the Loans transferred to the Issuer as and to the extent commercially reasonable and in accordance with the Sale and Servicing Agreement; or

(iv)          preserve and defend title to the Indenture Collateral and the rights of the Trustee and the Noteholders in such Indenture Collateral against the claims of all persons and parties.

Except as otherwise provided in or permitted by the Sale and Servicing Agreement or this Indenture, the Trustee shall not remove any portion of the Indenture Collateral held by it that consists of money or is evidenced by an instrument, certificate or other writing from the jurisdiction in which it was held at the date of the most recent Opinion of Counsel delivered pursuant to Section 3.07 (or from the jurisdiction in which it was held as described in the Opinion of Counsel delivered at the Closing Date pursuant to Section 3.07(a), if no Opinion of Counsel has yet been delivered pursuant to Section 3.07(b)) unless the Trustee shall have first received an Opinion of Counsel to the effect that the lien and security interest created by this Indenture with respect to such property will continue to be maintained after giving effect to such action or actions.

The Issuer hereby (a) authorizes the Trustee at any time and from time to time to file financing statements, continuation statements and amendments thereto that describe the Collateral as all assets of the Issuer, all assets of the Issuer other than Excluded Property or words of similar effect (regardless of whether any particular asset described in such financing

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statements falls within the granting clause of this Indenture) and that contain any other information required by Part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance of any financing statement, continuation statement or amendment, including whether the Issuer is an organization, the type of organization and any organization identification number issued to the Issuer, and (b) ratifies such authorization to the extent that the Trustee has filed any such financing or continuation statements, or amendments thereto prior to the date hereof.

The Issuer hereby designates the Trustee its agent and attorney-in-fact to execute or authorize any financing statement, continuation statement or other instrument required to be executed pursuant to this Section 3.06.

Notwithstanding anything in this Section 3.06 or any other provision in the Transaction Documents to the contrary, the Trustee shall not be obligated to monitor any financing statement, continuation statement or amendment thereto or to execute, authorize or file such instruments except upon written instruction from the Servicer or the Issuer to execute or authorize such instruments, except that such instruction need not be in writing if delivered with respect to financing statements relating to the Indenture Collateral to be authorized by the Trustee on the Closing Date.

Section 3.07.                Opinions as to Indenture Collateral.

(a)           On or before the Closing Date, the Issuer shall furnish to the Trustee an Opinion of Counsel either stating that, in the opinion of such counsel, such action has been taken with respect to the delivery of the Underlying Notes (or, in the case of Noteless Loans, the applicable Required Loan Documents) and any other requisite documents, and with respect to the execution and filing of any financing statements and continuation statements, as are necessary to perfect and make effective the lien and security interest of this Indenture and reciting the details of such action, or stating that, in the opinion of such counsel, no such action is necessary to make such lien and security interest effective.

(b)           On or before July 7 on each fifth anniversary thereof (or in the case of an amendment of any applicable UCC provisions), beginning in 2006, the Servicer on behalf of the Issuer will furnish to the Trustee an Opinion of Counsel at the expense of the Issuer either stating that, in the opinion of such counsel, such action has been taken with respect to any other requisite documents and with respect to the execution and filing of any financing statements and continuation statements as is necessary to maintain the perfection of the lien and security interest created by this Indenture and reciting the details of such action or stating that in the opinion of such counsel no such action is necessary to maintain the perfection of such lien and security interest.  Such Opinion of Counsel shall also describe any other requisite documents and the execution and filing of any financing statements and continuation statements that will, in the opinion of such counsel, be required to maintain the lien and security interest of this Indenture until December 31 in the following five year period.

Section 3.08.                Furnishing of Rule 144A Information.

The Issuer will furnish, upon the written request of any Noteholder or of any owner of a beneficial interest therein, such information as is specified in paragraph (d)(4) of Rule 144A

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under the Securities Act (a) to such Noteholder or beneficial owner, (b) to a prospective purchaser of such Note or interest therein who is a Qualified Institutional Buyer designated by such Noteholder or beneficial owner, or (c) to the Trustee for delivery to such Noteholder, beneficial owner or prospective purchaser, in order to permit compliance by such Noteholder or beneficial owner with Rule 144A in connection with the resale of such Note or beneficial interest therein by such Noteholder or beneficial owner in reliance on Rule 144A unless, at the time of such request, the Issuer is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, or exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act.

Section 3.09.                Performance of Obligations; Sale and Servicing Agreement.

(a)           The Issuer will punctually perform and observe all of its obligations and agreements contained in this Indenture, the Transaction Documents and in the instruments and agreements included in the Indenture Collateral.

(b)           The Issuer may contract with other Persons to assist it in performing its duties under this Indenture, the Transaction Documents and in the instruments and agreements included in the Indenture Collateral, and any performance of such duties by a Person identified to the Trustee in an Officer’s Certificate of the Issuer shall be deemed to be action taken by the Issuer.  Initially, the Issuer has contracted with the Servicer to assist the Issuer in performing its duties under this Indenture, the Transaction Documents and in the instruments and agreements included in the Indenture Collateral.

(c)           The Issuer will not take any action or permit any action to be taken by others which would release any Person from any of such Person’s covenants or obligations under any of the documents relating to the Loans or under any instrument included in the Indenture Collateral, or which would result in the amendment, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of, any of the documents relating to the Loans or any such instrument, except such actions as the Servicer is expressly permitted to take in the Transaction Documents.

(d)           If a Responsible Officer of the Issuer shall have knowledge of the occurrence of a Servicer Default, the Issuer shall promptly notify in writing the Trustee, the Backup Servicer, the Class A-1A VFN Agent and the Rating Agencies thereof, and shall specify in such notice the action, if any, the Issuer is taking in respect of such Servicer Default.  If such Servicer Default arises from the failure of the Servicer to perform any of its duties or obligations under the Sale and Servicing Agreement with respect to the Loans, the Issuer may remedy such failure.  So long as any such Servicer Default shall be continuing, the Trustee may exercise its remedies set forth in Section 8.02 of the Sale and Servicing Agreement.  Unless granted or permitted by the majority of Holders of the Notes to the extent provided in Section 8.07 of the Sale and Servicing Agreement, the Issuer may not waive any such Servicer Default or terminate the rights and powers of the Servicer under the Sale and Servicing Agreement.

Section 3.10.                Negative Covenants.

So long as any Notes are Outstanding, the Issuer shall not:

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(a)           except as expressly permitted by this Indenture or any other Transaction Document, sell, transfer, exchange or otherwise dispose of the Indenture Collateral, unless directed to do so by the Trustee;

(b)           claim any credit on, or make any deduction from the principal or interest payable in respect of, the Notes or, in the case of the Class A-1A VFN Notes, the Class A-1A VFN Commitment Fee and any Class A-1A VFN Increased Costs or Class A-1A VFN Breakage Costs (other than, in each case, amounts properly withheld from such payments under the Code or applicable state law), or assert any claim against any present or former Noteholder (other than a Holder of a Class E Note) by reason of the payment of the taxes levied or assessed upon any part of the Indenture Collateral;

(c)           permit the validity or effectiveness of this Indenture to be impaired, or permit the lien of this Indenture to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations with respect to the Notes or under this Indenture except as may be expressly permitted hereby, permit any lien, charge, excise, claim, security interest, mortgage or other encumbrance (other than the Lien created by this Indenture or any other Transaction Document) to be created on or extend to or otherwise arise upon or encumber the Indenture Collateral or any part thereof or any interest therein or the proceeds thereof or permit the Lien created by this Indenture not to constitute a valid first priority security interest in the Indenture Collateral;

(d)           except as permitted by the Transaction Documents, dissolve or liquidate in whole or in part;

(e)           enter into any agreement which does not contain non-petition and limited recourse provisions substantially to the effect of Section 11.15 hereof and will not consent to any amendment or waiver of such provisions;

(f)            create any subsidiaries;

(g)           make any payment or distribution with respect to the Certificate other than as permitted under this Indenture and the other Transaction Documents;

(h)           have any employees;

(i)            pay any dividends;

(j)            fail to correct any known misunderstanding regarding the Issuer’s status as a separate entity; or

(k)           conduct any business in a name other than “ARCC Commercial Loan Trust 2006”.

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Section 3.11.                Annual Statement as to Compliance.

The Issuer will deliver to the Trustee and the Rating Agencies, within 90 days after the end of each calendar year (commencing with the calendar year ending 2006), an Officer’s Certificate stating, as to the Person signing such Officer’s Certificate, that:

(a)           a review of the activities of the Issuer during such year and of its performance under this Indenture has been made under such Person’s supervision or direction; and

(b)           to the best of such Person’s knowledge, based on such review, the Issuer has complied with all conditions and covenants under this Indenture throughout such year, or, if there has been such a default in its compliance with any such condition or covenant, specifying each such default known to such Person and the nature and status thereof.

Section 3.12.                [Reserved].

Section 3.13.                Representations and Warranties Concerning the Loans.

The Issuer has pledged to the Trustee for the benefit of the Noteholders all of its rights under the Loan Sale Agreement and the Sale and Servicing Agreement (except for the Excluded Property) and the Trustee has the benefit of the representations and warranties made by the Originator and the Trust Depositor in such documents concerning the Loans transferred into the Loan Assets and the right to enforce any remedy against the Originator and the Trust Depositor provided in the Loan Sale Agreement and the Sale and Servicing Agreement, to the same extent as though such representations and warranties were made directly to the Trustee.

Section 3.14.                Trustee’s Review of Loan Files.

The Trustee agrees, for the benefit of the Noteholders, to review the Loan Files as provided in Section 2.10 of the Sale and Servicing Agreement.

Section 3.15.                Indenture Collateral; Related Documents.

(a)           When instructed in writing to do so by the Issuer or the Servicer, the Trustee shall execute instruments to release property from the lien of this Indenture, or convey the Trustee’s interest in the same, in a manner and under circumstances which are not inconsistent with the provisions of this Indenture or the Sale and Servicing Agreement.  No party relying upon an instrument executed by the Trustee as provided in this Article III shall be bound to ascertain the Trustee’s authority, inquire into the satisfaction of any conditions precedent or see to the application of any moneys.

(b)           In order to facilitate the servicing of the Loans, the Trustee and the Issuer authorize the Servicer in the name and on behalf of the Trustee and the Issuer, to perform their respective duties and obligations under the Sale and Servicing Agreement and the rights of the Trustee pursuant to the third sentence of Section 8.01 and the Trustee agrees to perform its express obligations under the Sale and Servicing Agreement in accordance with the terms thereof.

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(c)           The Trustee shall, at such time as the Outstanding Principal Balance of the Notes has been reduced to zero, release all of the Indenture Collateral to the Issuer (other than any cash held for the payment of the Notes or pursuant to Sections 3.03 or 4.06), subject, however, to the rights of the Trustee under Section 6.07.

Section 3.16.                Amendments to Sale and Servicing Agreement.

The Trustee may enter into any amendment or supplement to the Sale and Servicing Agreement only in accordance with Section 13.01 of the Sale and Servicing Agreement.  The Trustee may, in its reasonable discretion, decline to enter into or consent to any such supplement or amendment if its own rights, duties or immunities shall be adversely affected in any material respect.

Section 3.17.                [Reserved].

Section 3.18.                Investment Company Act.

The Issuer shall not and the Trustee shall not knowingly take any action that would cause the Issuer or the pool of Collateral to be required to register as an “investment company” under the Investment Company Act of 1940, as amended (or any successor or amendatory statute).

Section 3.19.                Issuer May Consolidate, etc., Only on Certain Terms.

(a)           The Issuer shall not consolidate or merge with or into any other Person, unless:

(i)            the Person (if other than the Issuer) formed by or surviving such consolidation or merger shall be a Person organized and existing under the laws of the United States or any state or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee and in form satisfactory to the Trustee, the due and punctual payment of the principal of and interest on all Notes, all amounts payable under and in the case of the Class A-1A VFN Notes, the Class A-1A VFN Commitment Fee, and the performance or observance of every agreement and covenant of this Indenture, the Trust Certificates and each other Transaction Document on the part of the Issuer to be performed or observed, all as provided herein and therein;

(ii)           immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing;

(iii)          prior written notice of the transaction has been provided to Moody’s, and S&P shall have notified the Trust Depositor and the Trustee in writing that such transaction will not result in a Ratings Effect;

(iv)          the Issuer shall have received an Opinion of Counsel (and shall have delivered copies thereof to the Trustee on which the Trustee shall be entitled to rely) to the effect that such transaction will not have any material adverse tax consequence or other adverse regulatory consequences to the Issuer, any Noteholder, or any Certificateholder;

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(v)           any action that is necessary to maintain the lien and security interest created by this Indenture shall have been taken (as evidenced by an Opinion of Counsel); and

(vi)          the Issuer shall have delivered to the Trustee an Officers’ Certificate and Opinion of Counsel (which may conclusively rely on the Officers’ Certificate with respect to Sections 3.19(a)(ii) and 3.19(a)(iii) above and as to the taking of any action required by such Opinion of Counsel as it relates to Section 3.9(a)(v) above) each stating that such consolidation or merger comply with this Section 3.19 and that all conditions precedent herein provided for relating to such transaction have been complied with.

(b)           Except as otherwise permitted hereunder or under the Transaction Documents, the Issuer shall not convey or transfer all or substantially all of its properties or assets, including those included in the Indenture Collateral, to any Person, unless:

(i)            the Person that acquires by conveyance or transfer the properties and assets of the Issuer the conveyance or transfer of which is hereby restricted (A) shall be a United States citizen or a Person organized and existing under the laws of the United States or any state, (B) expressly assumes, by an indenture supplemental hereto, executed and delivered to the Trustee and in form and substance reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and interest on all Notes, the amounts payable under and, in the case of the Class A-1A VFN Notes, the Class A-1A VFN Commitment Fee, and the performance of each other Transaction Document, and the performance or observance of every agreement and covenant of this Indenture and on the part of the Issuer to be performed or observed, all as provided herein, (C) expressly agrees by means of such supplemental indenture that all right, title and interest so conveyed or transferred shall be subject and subordinate to the rights of the Holders of the Notes, unless otherwise provided in such supplemental indenture, and (D) expressly agrees to indemnify, defend and hold harmless the Issuer against and from any loss, liability or expense arising under or related to this Indenture and the Notes arising from such conveyance or transfer;

(ii)           immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing;

(iii)          prior written notice of the transaction has been provided to Moody’s and S&P shall have notified the Trust Depositor and the Trustee in writing that such transaction will not result in a Ratings Effect;

(iv)          the Issuer shall have received an Opinion of Counsel (and shall have delivered copies thereof to the Trustee on which the Trustee shall be entitled to reply) to the effect that such transaction will not have any material adverse tax consequence or other adverse regulatory consequences to the Issuer, any Noteholder, and any Certificateholder;

(v)           any action that is necessary to maintain the lien and security interest created by this Indenture shall have been taken; and

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(vi) the Issuer shall have delivered to the Trustee an Officers’ Certificate and Opinion of Counsel (which may conclusively rely on a certificate of the transferee as to the transferor’s citizenship, if applicable, and on the Officer’s Certificate with respect to Sections 3.19(b)(ii) and 3.19(b)(iii) above and to the taking of any action required by such Opinion of Counsel as it relates to Section 3.19(b)(v) above) each stating that such conveyance or transfer, and such supplemental indenture, comply with this Section 3.19 and that all conditions precedent herein provided for relating to such transaction have been complied with.

Section 3.20.                Successor or Transferee.

(a)           Upon any consolidation or merger of the Issuer in accordance with Section 3.19(a), the Person formed by or surviving such consolidation or merger (if other than the Issuer) shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer under this Indenture with the same effect as if such Person had been named as the Issuer herein.

(b)           Upon a conveyance or transfer of all or substantially all of the assets and properties of the Issuer pursuant to Section 3.19(b), the Issuer will be released from every covenant and agreement of this Indenture to be observed or performed on the part of the Issuer with respect to the Notes or immediately upon the delivery of written notice to the Trustee and the Class A-1A VFN Agent stating that the Issuer is to be so released.

Section 3.21.                No Other Business.

The Issuer shall not engage in any business other than financing, purchasing, owning, selling, managing and enforcing the Loans in the manner contemplated by this Indenture and the Transaction Documents, issuing the Notes and the Trust Certificate, entering into and performing its obligations under the Transaction Documents and as otherwise expressly permitted in the Trust Agreement.

Section 3.22.                No Borrowing; Use of Proceeds.

The Issuer shall not issue, incur, assume, guarantee or otherwise become liable, directly or indirectly, for any indebtedness except for the Notes and any other indebtedness permitted by the Transaction Documents.  The proceeds from the initial sale of the Notes and the Trust Certificate shall be used exclusively to fund the Issuer’s purchase of the Loans and other assets specified in the Sale and Servicing Agreement and to pay the organizational and transactional expenses of the Issuer.

Section 3.23.                Guarantees, Loans, Advances and Other Liabilities.

Except as contemplated by this Indenture or the other Transaction Documents, the Issuer shall not make any loan or advance or credit to, or guarantee (directly or indirectly or by an instrument having the effect of assuring another’s payment or performance on any obligation or capability of so doing or otherwise), endorse or otherwise become contingently liable, directly or indirectly, in connection with the obligations, stocks or dividends of, or own, purchase,

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repurchase or acquire (or agree contingently to do so) any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other Person.

Section 3.24.                Capital Expenditures.

The Issuer shall not make any expenditure (by long-term or operating lease or otherwise) for capital assets (either realty or personalty), unless otherwise permitted by the Transaction Documents.

Section 3.25.                Representations and Warranties of the Issuer.

The Issuer represents and warrants as of the date hereof and as of the date of any Subsequent Transfer Agreement, as follows:

(a)           Power and Authority.  It has full power, authority and legal right to execute, deliver and perform its obligations as Issuer under this Indenture and the Notes (the foregoing documents, the “Issuer Documents”) and under each of the other Transaction Documents to which the Issuer is a party.

(b)           Due Authorization and Binding Obligation.  The execution and delivery of the Issuer Documents and the Transaction Documents to which the Issuer is a party, and the consummation of the transactions provided for therein have been duly authorized by all necessary action on its part.  Each of the Issuer Documents and the other Transaction Documents to which the Issuer is a party constitutes the legal, valid and binding obligation of the Issuer and is enforceable in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally and by the availability of equitable remedies.

(c)           No Conflict.  The execution and delivery of the Issuer Documents and the other Transaction Documents to which the Issuer is a party, the performance of the transactions contemplated thereby and the fulfillment of the terms thereof will not conflict with, result in any breach of any of the materials terms and provisions of, or constitute (with or without notice or lapse of time or both) a default under, any indenture, contract, agreement, mortgage, deed of trust, or other instrument to which the Issuer is a party or by which it or any of its property is bound.

(d)           No Violation.  The execution and delivery of the Issuer Documents and the other Transaction Documents to which the Issuer is a party, the performance of the transactions contemplated thereby and the fulfillment of the terms thereof will not conflict with or violate, in any material respect, any Applicable Law.

(e)           All Consents Required.  All approvals, authorizations, consents, orders or other actions of any Person or any Governmental Authority required in connection with the execution and delivery of the Issuer Documents and the other Transaction Documents to which the Issuer is a party, the performance of the transactions contemplated thereby and the fulfillment of the terms thereof have been obtained.

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(f)            No Proceedings.  No litigation or administrative proceeding of or before any court, tribunal or governmental body is currently pending, or to the knowledge of the Issuer, threatened, against the Issuer or any of its respective properties or with respect to the Issuer Documents or any other Transaction Document to which the Issuer is a party that, if adversely determined, would have a Material Adverse Effect.

(g)           Organization and Good Standing.  The Issuer is a statutory trust duly organized, validly existing and in good standing under the laws of Delaware and has the requisite power to own its assets and to transact the business in which it is currently engaged, and had at all relevant times, and now has, all necessary power, authority and legal right under its organizational documents and under Applicable Law to acquire, own and pledge the Indenture Collateral.

(h)           1940 Act.  The Issuer is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

(i)            Location.  The Issuer is located (within the meaning of Article 9 of the UCC) in Delaware.  The Issuer agrees that it will not change its location (within the meaning of Article 9 of the UCC) without at least 30 days prior written notice to the Originator, the Servicer, the Trustee, the Class A-1A VFN Agent and the Rating Agencies.

(j)            Security Interest in Collateral.

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

(ii)           such Indenture Collateral constitutes either a “general intangible,” an “instrument,” an “account,” “investment property,” or “chattel paper,” within the meaning of the applicable UCC;

(iii)          the Issuer owns and has good and marketable title to such Indenture Collateral free and clear of any Lien (other than Permitted Liens), claim or encumbrance of any Person;

(iv)          the Issuer has received all consents and approvals required by the terms of the Indenture Collateral to the pledge of the Indenture Collateral hereunder to the Trustee;

(v)           the Issuer has caused the filing of all appropriate Financing Statements in the proper filing office in the appropriate jurisdictions under Applicable Law in order to perfect the security interest in such Indenture Collateral granted to the Trustee under this Indenture;

(vi)          other than the security interest granted by the Issuer pursuant to this Indenture, the Issuer has not pledged, assigned, sold, granted a security interest in or otherwise conveyed any of such Indenture Collateral.  The Issuer has not authorized the filing of and is not aware of any Financing Statements against the Issuer that include a

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description of collateral covering such Indenture Collateral other than any Financing Statement (A) relating to the security interest granted by the Issuer under this Indenture, or (B) that has been terminated.  The Issuer is not aware of the filing of any judgment or tax Lien filings against the Issuer;

(vii)         all original executed copies of each Underlying Note and copies of each Loan Register, as applicable that constitute or evidence the Indenture Collateral have been delivered to and are in the possession of the Trustee;

(viii)        other than in the case of Noteless Loans, the Issuer has received a written acknowledgment from the Trustee that the Trustee or its bailee is holding the Underlying Notes that constitute or evidence the Indenture Collateral solely on behalf of and for the benefit of the Securityholders; and

(ix)           none of the Underlying Notes that constitute or evidence the Indenture Collateral has any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than the Issuer and the Trustee;

provided that, the foregoing Sections 3.25(j)(ii) and 3.25(j)(iii) shall not be applicable to any Participated Loans prior to the Deferred Assignment Effective Date and shall not be applicable to Qualified Participated Loans.

The representations and warranties in Section 3.25(j) shall survive the termination of this Agreement and such representations and warranties may not be amended or waived by any party hereto without satisfaction of the Rating Agency Condition with respect thereto.

Section 3.26.                Restricted Payments.

The Issuer shall not, directly or indirectly, (a) pay any dividend or make any distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, to the Owner Trustee or any owner of a beneficial interest in the Issuer or otherwise with respect to any ownership or equity interest or security in or of the Issuer, (b) redeem, purchase, retire or otherwise acquire for value any such ownership or equity interest or security or (c) set aside or otherwise segregate any amounts for any such purpose; provided that the Issuer may make, or cause to be made, (i) distributions to the Owner Trustee, the Trust Depositor and the Certificateholders as contemplated by, and to the extent funds are available for such purpose under the Trust Agreement and the Sale and Servicing Agreement, (ii) payments to the Servicer and/or Trust Depositor pursuant to the terms of the Sale and Servicing Agreement or the other Transaction Documents, (iii) payments to the Trustee pursuant to terms of the Sale and Servicing Agreement and (iv) distributions of Loans which have been released from the lien of this Indenture pursuant to Sections 2.04, 2.05 and 2.09 of the Sale and Servicing Agreement.  The Issuer will not, directly or indirectly, make payments to or distributions from the Note Distribution Account except in accordance with this Indenture and the Transaction Documents.

Section 3.27.                Notice of Events of Default, Amendments and Waivers.

Promptly upon a Responsible Officer having actual knowledge thereof, the Issuer shall give the Trustee and the Rating Agencies prompt written notice of each Event of Default

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hereunder and under the Trust Agreement and of each Servicer Default under the Sale and Servicing Agreement and of any default or breach of any Transaction Document and of any other amendment or waiver of any Transaction Document.

Section 3.28.                Further Instruments and Acts.

Upon request of the Trustee, the Issuer will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture (provided nothing herein shall be deemed to impose an obligation on the Trustee to so request).

Section 3.29.                Statements to Noteholders.

The Trustee shall forward, upon written request therefore, to each Noteholder and each other Person entitled thereto the documents and other materials delivered to it pursuant to Article IX of the Sale and Servicing Agreement for distributions to such Persons.  In addition, the Trustee may make available to the Noteholders, the parties to the Transaction Documents and the Rating Agencies, via the Trustee’s Internet website, each Quarterly Report and, with the consent or at the direction of the Trust Depositor, such other information regarding the Notes and/or the Loans as the Trustee may have in its possession, but only with the use of a password provided by the Trustee; provided the Trustee shall have no obligation to provide such information described in this Section 3.29 until it has received the requisite information from the Trust Depositor or the Servicer.  The Trustee will make no representation or warranties as to the accuracy or completeness of such documents and will assume no responsibility therefor.

The Trustee’s Internet website shall be initially located at “http://trustinvestorreporting.usbank.com” or at such other address as shall be specified by the Trustee from time to time in writing to the Noteholders, the parties to the Transaction Documents and the Rating Agencies.  In connection with providing access to the Trustee’s Internet website, the Trustee may require registration and the acceptance of a disclaimer.  The Trustee shall not be liable for the dissemination of information in accordance with this Agreement.

Section 3.30.                Grant of Additional Loans and Substitute Loans.

In consideration of the delivery on each Cut-Off Date pursuant to and in accordance with the terms of Section 2.04 or Section 2.06, as applicable, of the Sale and Servicing Agreement, the Issuer grants to the Trustee a security interest in all of its right, title and interest in the Loans transferred on such Cut-Off Date and simultaneously with the transfer of the Additional Loans or Substitute Loans, as applicable, to the extent of the availability thereof, the Issuer will cause the related Loan File to be delivered to the Trustee.

Section 3.31.                Determination of LIBOR; Note Interest Rate; Interest Distributable.

Until the Outstanding Principal Balance of each Class of Notes has been reduced to zero, the Trustee shall determine LIBOR for each Interest Period as provided in Section 7.06 of the Sale and Servicing Agreement, and based upon such determination of LIBOR, the Trustee shall calculate the Class A-1A Note Interest Rate, the Class A-1A VFN Note Interest Rate, the Class

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A-1B Note Interest Rate, the Class A-2A Note Interest Rate, the Class A-2B Note Interest Rate, the Class B Note Interest Rate, the Class C Note Interest Rate, and the Class D Note Interest Rate for such Interest Period, and shall inform the Issuer, the Trust Depositor and the Servicer at their respective email addresses given to the Trustee in writing thereof.  Any such determination by the Trustee of the amount of interest distributable on the Class A-1A Notes, the Class A-1A VFN Notes, the Class A-1B Notes, the Class A-2A Notes, the Class A-2B Notes, the Class B Notes, the Class C Notes and the Class D Notes shall be binding on the parties absent manifest error.

Section 3.32.                Reserved.

Section 3.33.                Reserved.

Section 3.34.                Maintenance of Listing.

So long as any of the Listed Notes remain Outstanding, the Issuer shall use all commercially reasonable efforts to maintain the listing of such Listed Notes on the Irish Stock Exchange.  If, despite such efforts, such listing cannot be maintained, the Issuer shall instead use reasonable efforts to promptly obtain and thereafter maintain a listing of such Listed Notes on any other stock exchange located within a member country of the European Union.

ARTICLE IV
THE NOTES; SATISFACTION AND DISCHARGE OF INDENTURE

Section 4.01.                The Notes.

Certain of the Class A-1A Notes, the Class A-1B Notes, the Class A-2A Notes, the Class A-2B Notes, the Class B Notes and the Class C Notes shall be registered initially in the name of Cede & Co.  Beneficial Owners will hold interests in the Class A-1A Notes, the Class A-1B Notes, the Class A-2A Notes, the Class A-2B Notes, the Class B Notes and the Class C Notes through the book-entry facilities of DTC.  Subject to Sections 4.02(b), 4.02(p), 4.02(q) and 4.02(r), the Class A-1A Notes, the Class A-1A VFN Notes, the Class A-1B Notes, the Class A-2A Notes, the Class A-2B Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes shall be issued in such names and denominations as may be set forth on an Issuer Order delivered to the Trustee.  The Class A-1A VFN Notes and the Class E Notes will only be issued in the form of Definitive Notes, as set forth in Section 2.01(d).  The Class D Notes shall initially be issued in the form of Definitive Notes, as set forth in Section 2.01(c).

The Notes shall, on original issue, be executed on behalf of the Issuer by the Owner Trustee, not in its individual capacity but solely as Owner Trustee, authenticated by the Note Registrar and delivered by the Trustee to or upon the order of the Issuer.

Section 4.02.                Registration of Transfer and Exchange of Notes.

(a)           The Trustee shall cause to be kept a Note Register (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 and exchanges of Notes as herein provided.  The Trustee shall be “Note Registrar” for the purpose of registering Notes and transfers of Notes

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as herein provided.  The Note Register shall contain the name, remittance instructions, Class of each Noteholder, as well as the Series and the number in the Series.

(b)           Each Class of Notes shall be issued in minimum denominations of $250,000 initial principal amount and integral multiples of $1,000 in excess thereof, except that one Note of each Class may be in a different denomination so that the sum of the denominations of all outstanding Notes of such Class shall equal the applicable Initial Class A-1A Principal Balance, the Initial Class A-1A VFN Principal Balance (treating the Class A-1A VFN Notes as fully drawn to the extent of the Class A-1A VFN Commitments for purposes of this determination), the Initial Class A-1B Principal Balance, the Initial Class A-2A Principal Balance, the Initial Class A-2B Principal Balance, the Initial Class B Principal Balance, the Initial Class C Principal Balance, the Initial Class D Principal Balance, and the Initial Class E Principal Balance, respectively.  On the Closing Date and pursuant to an Issuer Order, the Trustee will execute and authenticate (i) one or more Global Notes and/or (ii) Definitive Notes all in an aggregate principal amount that shall equal the Initial Class A-1A Principal Balance, the applicable Initial Class A-1A VFN Principal Balance, the Initial Class A-1B Principal Balance, the Initial Class A-2A Principal Balance, the Initial Class A-2B Principal Balance, the Initial Class B Principal Balance, the applicable Initial Class C Principal Balance, the Initial Class D Principal Balance, and the Initial Class E Principal Balance, as applicable.

(c)           The Global Notes (i) shall be delivered by the Issuer to DTC or, pursuant to DTC’s instructions, shall be delivered by the Issuer on behalf of DTC to and deposited with the DTC Custodian, and in each case shall be registered in the name of Cede & Co. and (ii) with respect to the Rule 144A Global Notes, shall bear a legend substantially to the following effect:

“Unless this Note is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the Note Registrar or its agent for registration of transfer, exchange or payment, and any Note issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.”

The Global Notes may be deposited with such other depository as the Issuer may from time to time designate, and shall bear such legend as may be appropriate; provided that such successor depository maintains a book-entry system that qualifies to be treated as “registered form” under Section 163(f)(3) of the Code.

The Issuer and the Trustee are hereby authorized to execute and deliver a Letter of Representations with DTC relating to the Notes.

(d)           With respect to Notes registered in the Note Register in the name of Cede & Co., as nominee of DTC, the Issuer, the Servicer, the Owner Trustee (as such and in its individual

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capacity) and the Trustee shall have no responsibility or obligation to Direct Participants or Indirect Participants or Beneficial Owners for which DTC holds Notes from time to time as a Depository.  Without limiting the immediately preceding sentence, the Issuer, the Servicer, the Owner Trustee, (as such and in its individual capacity), and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co., or any Direct Participants or Indirect Participant with respect to the ownership interest in the Notes, (ii) the delivery to any Direct Participants or Indirect Participant or any other Person, other than a registered Holder of a Note, (iii) the payment to any Direct Participants or Indirect Participant or any other Person, other than a registered Holder of a Note as shown in the Note Register, of any amount with respect to any distribution of principal or interest on the Notes or (iv) the making of book-entry transfers among Participants of DTC with respect to Notes registered in the Note Register in the name of the nominee of DTC.  No Person other than a registered Holder of a Note as shown in the Note Register shall receive a certificate evidencing such Note.

(e)           Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions hereof with respect to the payment of distributions by the mailing of checks or drafts to the registered Holders of Notes appearing as registered Owners in the Note Register on a Record Date, the name “Cede & Co.” in this Indenture shall refer to such new nominee of DTC.

(f)            In the event that (i)(A) DTC notifies the Trustee in writing that DTC is no longer willing or able to discharge properly its responsibilities as nominee and depositary with respect to the Global Notes and (B) a successor depositary operating a global book-entry system, as may be acceptable to the Servicer, is not appointed within 90 days, (ii)(A) DTC ceases to be registered as a clearing agency under the Exchange Act and (B) a successor depositary operating a global book-entry system, as may be acceptable to the Servicer, is not appointed within 90 days or (iii) the Issuer, at its option, notifies the Trustee that it elects to terminate the book-entry system through DTC, the Global Notes shall no longer be restricted to being registered in the Note Register in the name of Cede & Co. (or a successor nominee) as nominee of DTC.  At that time, upon surrender to the Note Registrar of the Global Notes by DTC, accompanied by the registration instructions from DTC for registration, the Trustee shall at the Servicer’s expense authenticate Definitive Notes.  Neither the Servicer nor the Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions.  Upon the issuance of Definitive Notes, the Trustee, the Note Registrar, the Servicer, any Paying Agent, the Class A-1A VFN Agent and the Issuer shall recognize the Holders of the Definitive Notes as Noteholders hereunder.  If an event specified in (i)(A) or (ii)(A) above occurs, and a successor depositary operating a global book-entry system acceptable to the Servicer is appointed within 90 days thereafter, the Global Notes shall no longer be restricted to being registered in the Note Register in the name of Cede & Co. (or a successor nominee) as nominee of DTC, and shall be registered in the name of, and deposited with, such successor depository or such depository’s agent or designee.

(g)           Notwithstanding any other provision of this Agreement to the contrary, so long as any Global Notes are registered in the name of Cede & Co., as nominee of DTC, all distributions of principal and interest on such Global Notes and all notices with respect to such Global Notes shall be made and given, respectively, in the manner provided in the Letter of Representations.

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(h)           Subject to the preceding paragraphs, upon surrender for registration of transfer of any Note at the office of the Note Registrar and, upon satisfaction of the conditions set forth below, the Issuer shall execute in the name of the designated transferee or transferees, a new Note or Notes of the same aggregate Percentage Interest and dated the date of authentication by the Trustee.  The Note Registrar shall notify the Issuer, the Servicer and the Trustee of any such transfer.

(i)            At the option of the Noteholders, subject to the provisions of this Indenture, Notes may be exchanged for other Notes in authorized denominations of a like Class, upon surrender of the Notes to be exchanged at such office.  Whenever any Notes are so surrendered for exchange, the Issuer shall execute the Notes which the Noteholder making the exchange is entitled to receive.  Every Note presented or surrendered for transfer or exchange shall be accompanied by wiring instructions, if applicable, in the form of Exhibit C.  The preceding provisions of this Section 4.02 notwithstanding, the Issuer shall not be required to make and the Note Registrar shall not register transfers or exchanges of Notes called for repurchase or refinancing.

(j)            No service charge shall be made for any transfer or exchange of Notes, but prior to transfer the Note Registrar may require payment by the transferor of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Notes.

All Notes surrendered for payment, transfer and exchange, repurchase or refinancing shall be marked canceled by the Note Registrar and retained for one year and destroyed thereafter.

(k)           By acceptance of a Definitive Note, whether upon original issuance or subsequent transfer, each Holder of such a Note acknowledges the restrictions on the transfer of such Note set forth in the Securities Legend and agrees that it will transfer such a Note only as provided herein.  In addition to the provisions of Section 4.02(m) and 4.20(n), the following restrictions shall apply with respect to the transfer and registration of transfer of a Definitive Note to a transferee that takes delivery in the form of a Definitive Note:

(i)            The Note Registrar shall register the transfer of a Definitive Note if the requested transfer is being made to a transferee who has provided the Note Registrar with a Rule 144A Certification or to a transferee who is an Affiliate of the Originator in a transfer which otherwise complies with Section 4.02(s); or

(ii)           The Note Registrar shall register the transfer of any Definitive Note if (A) such transfer is made to a transferee who is an Affiliate of the Originator and such transfer otherwise complies with Section 4.02(s), or (B) (1) the transferor has advised the Note Registrar in writing that the Note is being transferred to a Person that is an Institutional Accredited Investor; and (2) prior to the transfer the transferee furnishes to the Note Registrar a Transferee Letter; provided that, if based upon an Opinion of Counsel to the effect that the delivery of (1) and (2) above are not sufficient to confirm that the proposed transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable laws, the Note Registrar may as a condition of the registration of any such

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transfer require the transferor to furnish other certifications, legal opinions or other information prior to registering the transfer of a Definitive Note.

(l)            Subject to Section 4.02(n), so long as a Global Note remains outstanding and is held by or on behalf of DTC, transfers of beneficial interests in the Global Note, or transfers by Holders of Definitive Notes to transferees that take delivery in the form of beneficial interests in the Global Note, may be made only in accordance with this Section 4.02(l) and in accordance with the rules of DTC.

(i)            Rule 144A Global Note to Regulation S Global Note During the Distribution Compliance Period.  If, during the Distribution Compliance Period, a Beneficial Owner of an interest in a Rule 144A Global Note wishes at any time to transfer its beneficial interest in such Rule 144A Global Note to a Person who wishes to take delivery thereof in the form of a beneficial interest in a Regulation S Global Note, such Beneficial Owner may, in addition to complying with all applicable rules and procedures of DTC and Clearstream or Euroclear applicable to transfers by their respective participants (the “Applicable Procedures”), transfer or cause the transfer of such beneficial interest for an equivalent beneficial interest in the Regulation S Global Note only upon compliance with the provisions of this Section 4.02(l)(i).  Upon receipt by the Note Registrar at its Corporate Trust Office of (A) written instructions given in accordance with the Applicable Procedures from a DTC Participant directing the Note Registrar to credit or cause to be credited to another specified DTC Participant’s account a beneficial interest in the Regulation S Global Note in an amount equal to the denomination of the beneficial interest in the Rule 144A Global Note to be transferred, (B) a written order given in accordance with the Applicable Procedures containing information regarding the account of the DTC Participant (and the Euroclear or Clearstream account, as the case may be) to be credited with, and the account of the DTC Participant to be debited for, such beneficial interest, and (C) a certificate in the form of Exhibit E hereto given by the Beneficial Owner that is transferring such interest, the Note Registrar shall instruct DTC to reduce the denomination of the Rule 144A Global Note by the denomination of the beneficial interest in the Rule 144A Global Note to be so transferred and, concurrently with such reduction, to increase the denomination of the Regulation S Global Note by the denomination of the beneficial interest in the Rule 144A Global Note to be so transferred, and to credit or cause to be credited to the account of the Person specified in such instructions (who shall be a DTC Participant acting for or on behalf of Euroclear or Clearstream, or both, as the case may be) a beneficial interest in the Regulation S Global Note having a denomination equal to the amount by which the denomination of the Rule 144A Global Note was reduced upon such transfer.

(ii)           Rule 144A Global Note to Regulation S Global Note After the Distribution Compliance Period.  If, after the Distribution Compliance Period, a Beneficial Owner of an interest in a Rule 144A Global Note wishes at any time to transfer its beneficial interest in such Rule 144A Global Note to a Person who wishes to take delivery thereof in the form of a beneficial interest in a Regulation S Global Note, such Holder may, in addition to complying with all Applicable Procedures, transfer or cause the transfer of such beneficial interest for an equivalent beneficial interest in a Regulation S Global Note only upon compliance with the provisions of this

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Section 4.02(l)(ii).  Upon receipt by the Note Registrar at its Corporate Trust Office of (A) written instructions given in accordance with the Applicable Procedures from a DTC Participant directing the Note Registrar to credit or cause to be credited to another specified DTC Participant’s account a beneficial interest in the Regulation S Global Note in an amount equal to the denomination of the beneficial interest in the Rule 144A Global Note to be transferred, (B) a written order given in accordance with the Applicable Procedures containing information regarding the account of the DTC Participant (and, in the case of a transfer pursuant to and in accordance with Regulation S, the Euroclear or Clearstream account, as the case may be) to be credited with, and the account of the DTC Participant to be debited for, such beneficial interest, and (C) a certificate in the form of Exhibit F hereto given by the Beneficial Owner that is transferring such interest, the Note Registrar shall instruct DTC to reduce the denomination of the Rule 144A Global Note by the aggregate denomination of the beneficial interest in the Rule 144A Global Note to be so transferred and, concurrently with such reduction, to increase the denomination of the Regulation S Global Note by the aggregate denomination of the beneficial interest in the Rule 144A Global Note to be so transferred, and to credit or cause to be credited to the account of the Person specified in such instructions (who shall be a DTC Participant acting for or on behalf of Euroclear or Clearstream, or both, as the case may be) a beneficial interest in the Regulation S Global Note having a denomination equal to the amount by which the denomination of the Rule 144A Global Note was reduced upon such transfer.

(iii)          Regulation S Global Note to Rule 144A Global Note.  If the Beneficial Owner of an interest in a Regulation S Global Note wishes at any time to transfer its beneficial interest in such Regulation S Global Note to a Person who wishes to take delivery thereof in the form of a beneficial interest in the Rule 144A Global Note, such Holder may, in addition to complying with all Applicable Procedures, transfer or cause the transfer of such beneficial interest for an equivalent beneficial interest in the Rule 144A Global Note only upon compliance with the provisions of this Section 4.02(l)(iii).  Upon receipt by the Note Registrar at its Corporate Trust Office of (A) written instructions given in accordance with the Applicable Procedures from a DTC Participant directing the Note Registrar to credit or cause to be credited to another specified DTC Participant’s account a beneficial interest in the Rule 144A Global Note in an amount equal to the denomination of the beneficial interest in the Regulation S Global Note to be transferred, (B) a written order given in accordance with the Applicable Procedures containing information regarding the account of the DTC Participant to be credited with, and the account of the DTC Participant (or, if such account is held for Euroclear or Clearstream, the Euroclear or Clearstream account, as the case may be) to be debited for such beneficial interest, and (C) with respect to a transfer of a beneficial interest in the Regulation S Global Note for a beneficial interest in the related Rule 144A Global Note (1) during the Distribution Compliance Period, a certificate in the form of Exhibit G hereto given by the Beneficial Owner, or (2) after the Distribution Compliance Period, a Rule 144A Certification from the transferee of such interest to the effect that such transferee is a Qualified Institutional Buyer, the Note Registrar shall instruct DTC to reduce the denomination of the Regulation S Global Note by the denomination of the beneficial interest in the Regulation S Global Note to be transferred and, concurrently with such reduction, to increase the denomination of the Rule 144A Global Note by the

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aggregate denomination of the beneficial interest in the Regulation S Global Note to be so transferred, and to credit or cause to be credited to the account of the Person specified in such instructions (who shall be a DTC Participant acting for or on behalf of Euroclear or Clearstream, or both, as the case may be) a beneficial interest in the Rule 144A Global Note having a denomination equal to the amount by which the denomination of the Regulation S Global Note was reduced upon such transfer.

(iv)          Transfers Within Regulation S Global Notes During Distribution Compliance Period.  If, during the Distribution Compliance Period, the Beneficial Owner of an interest in a Regulation S Global Note wishes at any time to transfer its beneficial interest in such Regulation S Global Note to a Person who wishes to take delivery thereof in the form of a Regulation S Global Note, such Beneficial Owner may transfer or cause the transfer of such beneficial interest for an equivalent beneficial interest in such Regulation S Global Note only upon compliance with the provisions of this Section 4.02(l)(iv) and all Applicable Procedures.  Upon receipt by the Note Registrar at its Corporate Trust Office of (A) written instructions given in accordance with the Applicable Procedures from a DTC Participant directing the Note Registrar to credit or cause to be credited to another specified DTC Participant’s account a beneficial interest in such Regulation S Global Note in an amount equal to the denomination of the beneficial interest to be transferred, (B) a written order given in accordance with the Applicable Procedures containing information regarding the account of the DTC Participant to be credited with, and the account of the DTC Participant (or, if such account is held for Euroclear or Clearstream, the Euroclear or Clearstream account, as the case may be) to be debited for, such beneficial interest and (C) a certificate in the form of Exhibit H hereto given by the transferor, the Note Registrar shall instruct DTC to credit or cause to be credited to the account of the Person specified in such instructions (who shall be a DTC Participant acting for or on behalf of Euroclear or Clearstream, or both, as the case may be) a beneficial interest in the Regulation S Global Note having a denomination equal to the amount specified in such instructions by which the account to be debited was reduced upon such transfer.  The Note Registrar shall not be required to monitor compliance by Beneficial Owners of the provisions of this Section 4.02(l)(iv).

(m)          Transfers of Interests in Global Notes to Definitive Notes.  Any and all transfers from a Global Note to a transferee wishing to take delivery in the form of a Definitive Note will require the transferee to take delivery subject to the restrictions on the transfer of such Definitive Note described on the face of such Note, and such transferee agrees that it will transfer such Definitive Note only as provided therein and herein.  No such transfer shall be made and the Note Registrar shall not register any such transfer unless such transfer is made in accordance with this Section 4.02(m) or is made to an Affiliate of the Originator in a transfer which otherwise complies with Section 4.02(s).

(i)            Transfers of a beneficial interest in a Global Note to a Person who is an Institutional Accredited Investor will require delivery of such Note to the transferee in the form of a Definitive Note and the Note Registrar shall register such transfer only if prior to the transfer such transferee furnishes to the Note Registrar (A) a Transferee Letter to the effect that the transfer is being made to an Institutional Accredited Investor in accordance with an applicable exemption under the Securities Act, and (B) an Opinion of

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Counsel acceptable to the Trustee that such transfer is in compliance with the Securities Act.

(ii)           Transfers of a beneficial interest in a Global Note to a Qualified Institutional Buyer or a Regulation S Investor wishing to take delivery in the form of a Definitive Note will be registered by the Note Registrar only upon compliance with the provisions of Section 4.02(l) and if the Note Registrar is provided with a Rule 144A Certification or a Regulation S Transfer Certificate, as applicable.

(iii)          Notwithstanding the foregoing, no transfer of a beneficial interest in a Temporary Regulation S Global Note for one or more Definitive Notes pursuant to Sections 4.02(m)(i) or 4.02(m)(ii) above shall be made prior to the expiration of the Distribution Compliance Period and compliance with the certification requirements of Rule 903(b)(3)(ii)(B) under the Securities Act, in accordance with Section 2.01(b).

(iv)          Upon acceptance for exchange or transfer of a beneficial interest in a Global Note for a Definitive Note, as provided herein, the Note Registrar shall endorse on the schedule affixed to the related Global Note Registrar (or on a continuation of such schedule affixed to such Global Note Registrar and made a part thereof) an appropriate notation evidencing the date of such exchange or transfer and a decrease in the denomination of such Global Note Registrar equal to the denomination of such Definitive Note Registrar issued in exchange therefor or upon transfer thereof.  Unless determined otherwise by the Company in accordance with applicable law, a Definitive Note Registrar issued upon transfer of or exchange for a beneficial interest in the Global Note Registrar shall bear the Securities Legend.

(n)           Transfers of Definitive Note to the Global Notes.  If a Holder of a Definitive Note wishes at any time to transfer such Note to a Person who wishes to take delivery thereof in the form of a beneficial interest in the related Regulation S Global Note or the related Rule 144A Global Note, such transfer may be effected only in accordance with the Applicable Procedures, and this Section 4.02(n).  Upon receipt by the Note Registrar at the Corporate Trust Office of (A) the Definitive Note to be transferred with an instrument of assignment and transfer, (B) written instructions given in accordance with the Applicable Procedures from a DTC Participant directing the Note Registrar to credit or cause to be credited to another specified DTC Participant’s account a beneficial interest in such Regulation S Global Note or such Rule 144A Global Note, as the case may be, in an amount equal to the denomination of the Definitive Note to be so transferred, (C) a written order given in accordance with the Applicable Procedures containing information regarding the account of the DTC Participant (and, in the case of any transfer pursuant to Regulation S, the Euroclear or Clearstream account, as the case may be) to be credited with such beneficial interest, and (D) (1) if delivery is to be taken in the form of a beneficial interest in the Regulation S Global Note, a certificate in the form of Exhibit H hereto, given by the Beneficial Owner that is transferring such interest, if delivery is to be taken in the form of a beneficial interest in the Regulation S Global Note or (2) a Transferee Letter from the transferee to the effect that such transferee is a Qualified Institutional Buyer, if delivery is to be taken in the form of a beneficial interest in the Rule 144A Global Note, the Note Registrar shall cancel such Definitive Note, execute and deliver a new Definitive Note for that portion, if any, of the denomination of the Definitive Note not so transferred, registered in the name of the Holder,

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and the Note Registrar shall instruct DTC to increase the denomination of the Regulation S Global Note or the Rule 144A Global Note, as the case may be, by the denomination of the Definitive Note to be so transferred, and to credit or cause to be credited to the account of the Person specified in such instructions (who, in the case of any increase in the Regulation S Global Note during the Distribution Compliance Period, shall be a DTC Participant acting for or on behalf of Euroclear or Clearstream, or both, as the case may be) a corresponding denomination of the Rule 144A Global Note or the Regulation S Global Note, as the case may be.

It is the intent of the foregoing that under no circumstances may an Institutional Accredited Investor that is not a Qualified Institutional Buyer take delivery in the form of a beneficial interest in a Global Note and that no Class A-1A VFN Note shall be issued other than in the form of a Definitive Note.

(o)           An exchange of a beneficial interest in a Global Note for a Definitive Note or Notes, an exchange of a Definitive Note or Notes for a beneficial interest in a Global Note and an exchange of a Definitive Note or Notes for another Definitive Note or Notes (in each case, whether or not such exchange is made in anticipation of subsequent transfer, and in the case of the Global Notes, so long as the Global Notes remain outstanding and are held by or on behalf of DTC), may be made only in accordance with this Section 4.02 and in accordance with the rules of DTC and Applicable Procedures.

(p)           (i)            Upon acceptance for exchange or transfer of a Definitive Note for a beneficial interest in the Global Note as provided herein, the Note Registrar shall cancel such Definitive Note and shall (or shall request DTC to) endorse on the schedule affixed to the applicable Global Note (or on a continuation of such schedule affixed to the Global Note and made a part thereof) an appropriate notation evidencing the date of such exchange or transfer and an increase in the Note balance of the Global Note equal to the Note balance of such Definitive Note exchanged or transferred therefor.

(ii)           Upon acceptance for exchange or transfer of a beneficial interest in the Global Note for a Definitive Note as provided herein, the Note Registrar shall (or shall request DTC to) endorse on the schedule affixed to the Global Note (or on a continuation of such schedule affixed to the Global Note and made a part thereof) an appropriate notation evidencing the date of such exchange or transfer and a decrease in the Note balance of the Global Note equal to the Note balance of such Definitive Note issued in exchange therefor or upon transfer thereof.

(q)           The Securities Legend shall be placed on any Definitive Note issued in exchange for or upon transfer of another Definitive Note or of a beneficial interest in the Global Note.

(r)            Subject to the restrictions on transfer and exchange set forth in this Section 4.02, the Holder of any Definitive Note may transfer or exchange the same in whole or in part (in an initial Note balance equal to the minimum authorized denomination of $250,000 or any integral multiple of $1,000 in excess thereof) by surrendering such Note at the Corporate Trust Office of the Trustee, or at the office of any transfer agent, together with an executed instrument of assignment and transfer satisfactory in form and substance to the Note Registrar in the case of transfer and a written request for exchange in the case of exchange.  The holder of a beneficial

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interest in a Global Note may, subject to the rules and procedures of DTC, cause DTC (or its nominee) to notify the Note Registrar in writing of a request for transfer or exchange of such beneficial interest for a Definitive Note or Notes.  Following a proper request for transfer or exchange, the Note Registrar shall, within five Business Days of such request made at such Corporate Trust Office, cause the Trustee to authenticate and the Note Registrar to deliver at such Corporate Trust Office, to the transferee (in the case of transfer) or Holder (in the case of exchange) or send by first class mail at the risk of the transferee (in the case of transfer) or Holder (in the case of exchange) to such address as the transferee or holder, as applicable, may request, a Definitive Note or Notes, as the case may require, for a like aggregate Percentage Interest and in such authorized denomination or denominations as may be requested.  The presentation for transfer or exchange of any Definitive Note shall not be valid unless made at the Corporate Trust Office by the registered Holder in person, or by a duly authorized attorney-in-fact.

(s)           No transfer of any Note shall be made unless such transfer is exempt from the registration requirements of the Securities Act and any applicable securities and Blue Sky laws of any state or other jurisdiction of the United States or is made in accordance with the Securities Act and such laws.  No transfer of any Note shall be made if such transfer would require the Issuer to register as an “investment company” under the 1940 Act.  In the event of any such transfer, unless such transfer is made in reliance upon Rule 144A under the Securities Act or Regulation S under the Securities Act or is a transfer of Class E Notes, (i) the Trustee may require a written Opinion of Counsel acceptable to and in form and substance reasonably satisfactory to the Trustee that such transfer may be made pursuant to an exemption, describing the applicable exemption and the basis therefor, from said Act and laws or is being made pursuant to said Act and laws, which Opinion of Counsel shall not be an expense of the Trustee, the Issuer, or the Servicer and (ii) the Trustee shall require the transferee to execute a Transferee Letter certifying to the Issuer and the Trustee the facts surrounding such transfer, which Transferee Letter or certification shall not be delivered at the expense of the Trustee, the Issuer or the Servicer.  The Holder of a Note desiring to effect such transfer shall, and by accepting a Note and the benefits of this Indenture does hereby agree to, indemnify the Trustee, the Issuer, the Servicer and the Initial Purchaser against any liability that may result if the transfer is not so exempt or is not made in accordance with such federal and state laws.  None of the Issuer, the Trustee, the Servicer, the Trust Depositor or the Initial Purchaser intends or is obligated to register or qualify any Note under the Securities Act or any state securities laws.

(t)            No Class E Note may be acquired or owned by any Person that is classified for U.S. federal income tax purposes as a partnership, subchapter S corporation or grantor trust unless such Person represents in writing that (i) the value of the Class E Notes proposed to be transferred to such Person, together with the value of any Class E Notes and Trust Certificates already held by such Person, will not constitute substantially all of the value of the assets of such Person and (ii) such Person is not part of any arrangement the principal purpose of which is to cause the Class E Notes and Trust Certificates to be treated as owned by 100 persons or less within the meaning of Treas. Reg. § 1.7704-1(h)(1)(ii).

(u)           No Class E Note (or interest therein) may be acquired by any Person unless such Person represents that it has not acquired the Class E Notes pursuant to a trade on an “established securities market” and agrees that it will not trade any Class Notes on an “established securities

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market.” For this purpose, the term “established securities market” includes any national securities exchange registered under Section 6 of the Securities Exchange Act of 1934, as amended, or exempted from registration because of the limited volume; any foreign securities exchange that, under the laws of the jurisdiction where it is organized, satisfies regulatory requirements that are analogous to the regulatory requirements imposed under the Securities Exchange Act of 1934; any regional or local exchange; and any interdealer quotation system that regularly disseminates firm buy and sell quotations by identified brokers or dealers, by electronic means or otherwise.

(v)           Notwithstanding any other provision of this Indenture to the contrary, on the Closing Date, the Trustee shall authenticate in the name of, and deliver to, the Trust Depositor, the Class E Notes in the form of a single Definitive Note in an aggregate principal amount equal to the Initial Class E Principal Balance.  The Holder of the Class E Notes shall initially be the Trust Depositor.  No transfer, sale, pledge or other disposition of one or more Class E Notes (a “Transfer”) shall be made unless simultaneously with the Transfer (i) a proportionate amount of Trust Certificates are Transferred so that the Percentage Interest of the Trust Certificates so Transferred equals the Percentage Interest of the Class E Notes so Transferred, (ii) the Transfers of the Trust Certificates and Class E Notes referred to herein are made to the same Person, and (iii) the Percentage Interest of the Trust Certificates and Class E Notes, respectively, so Transferred is no less than ten (10%) percent.

(w)          The Class E Notes may only be owned by United States Persons (as defined in Section 7701(a)(30) of the Code) who are also Qualified Institutional Buyers as defined in Rule 144A under the Securities Act.

(x)            No Class A-1A Note, Class A-1B Note, Class A-2A Note, Class A-2B Note, Class B Note, Class C Note or Class D Note may be acquired directly or indirectly, by, for, on behalf of or with any assets of an employee benefit plan as defined in Section 3(3) of ERISA that is subject to Title I of ERISA, any plan described in and subject to Section 4975 of the Code (collectively, a “Plan”) or any other plan or arrangement subject to any federal, state, local, non-U.S. or other law substantively similar to the foregoing provisions of ERISA or the Code (“Similar Law”) unless it represents or is deemed to represent that its acquisition and holding of the Class A-1A Note, Class A-1B Note, Class A-2A Note, Class A-2B Note, Class B Note, Class C Note or (upon its transfer to a Person unaffiliated with Ares Capital) Class D Note will not constitute or result in a non-exempt prohibited transaction under Title I of ERISA or Section 4975 of the Code or a violation of Similar Law.  No Class A-1A VFN Note or Class E Note may be acquired directly or indirectly, by, for, on behalf of or with any assets of any Plan.  Further, no Class E Note may be acquired directly or indirectly, by, for, on behalf of or with any assets of any plan that is not subject to Similar Law unless it represents that its acquisition and holding of the Class E Note will not constitute or result in a violation of Similar Law, which representation shall be made in a certification from the transferee to the Trustee contained in a Transferee Letter in the form of Exhibit D-2; in the case of a Note other than a Definitive Note, the transferee shall be deemed to have made such representation.

(y)           No Class E Note or Class A-1A VFN Note in the form of a Definitive Note may be exchanged for an interest in a Global Note.

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(z)            The Trustee, Note Registrar and Certificate Registrar shall not be responsible for ascertaining whether any transfer complies with, or otherwise to monitor or determine compliance with, the requirements or terms of the Securities Act, applicable state securities laws, ERISA, the Code or the Investment Company Act; except that if a transfer certificate or opinion is specifically required by the terms of this Section 4.02 (or by the terms of the Trust Agreement, as applicable) to be provided to the Trustee, Note Registrar or Certificate Registrar by a prospective transferee or transferor, the Trustee, Note Registrar or Certificate Registrar, as applicable, shall be under a duty to receive and examine the same to determine whether it conforms substantially on its face to the applicable requirements of this Section 4.02 (or Trust Agreement, as applicable).

(aa)         If, notwithstanding the restrictions set forth in this Section 4.02, the Issuer determines that any Holder of Rule 144A Note or a Definitive Note that is not either (i) a U.S. Person that is either a Qualified Institutional Buyer or, in the case of Notes other than the Class E Notes, an Accredited Investor or (ii) a non-U.S. Person, the Issuer shall require, by notice to such Holder, that such Holder sell all of its right, title and interest to such Note to a Person that is both either (w) a U.S. Person that is either a Qualified Institutional Buyer or, in the case of Notes other than the Class E Notes, an Accredited Investor or (x) a non-U.S. Person, with such sale to be effected within 30 days after notice of such sale requirement is given.  If such Holder fails to effect the transfer required within such 30-day period, (1) the Issuer or the Servicer, shall cause, and is hereby irrevocably authorized by such Holder to cause, such interest in such Note to be transferred in a commercially reasonable sale (conducted by the Servicer, or an investment banking firm selected by the Issuer (whose fees are to be paid exclusively from the proceeds of such sale) in accordance with Section 9-610(b) of the UCC as in effect in the State of New York as applied to securities that are sold on a recognized market or that may decline speedily in value) to a Person that certifies to the Note Registrar, the Issuer and the Servicer, in connection with such transfer, that such Person is both either (y) a U.S. Person that is either a Qualified Institutional Buyer or, in the case of Notes other than the Class E Notes, an Accredited Investor or (z) a non-U.S. Person and (2) pending such transfer, no further payments will be made in respect of such Note, or beneficial interest and such Note or beneficial interest shall not be deemed to be Outstanding for the purpose of any vote or consent of the Noteholders.

(bb)         Each Noteholder that is not a United States Person (as defined in Section 7701(a)(30) of the Code) will be required to certify that it is not a “10-percent shareholder” (as defined in the Code) with respect to the sole owner of the Issuer or its affiliates, and that it is not a bank or a controlled foreign corporation for U.S. federal income tax purposes; provided that each Class E Noteholder must be a U.S. Person.

Section 4.03.                Mutilated, Destroyed, Lost or Stolen Notes.

If (a) any mutilated Note is surrendered to the Trustee, or the Trustee receives evidence to its reasonable satisfaction of the destruction, loss or theft of any Note, and (b) there is delivered to the Trustee such security or indemnity as may be required by it to hold the Issuer and the Trustee harmless, then, in the absence of notice to the Issuer, the Note Registrar or the Trustee that such Note has been acquired by a protected purchaser, the Issuer shall execute, and upon its request the Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a replacement Note; provided that if any such

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destroyed, lost or stolen Note, but not a mutilated Note, shall have become or within seven days shall be due and payable, or shall have been called for repurchase, instead of issuing a replacement Note, the Issuer may pay such destroyed, lost or stolen Note when so due or payable or upon the Repurchase Date without surrender thereof.  If, after the delivery of such replacement Note or payment of a destroyed, lost or stolen Note pursuant to the proviso to the preceding sentence, a protected purchaser of the original Note in lieu of which such replacement Note was issued presents for payment such original Note, the Issuer and the Trustee shall be entitled to recover such replacement Note (or such payment) from the Person to whom it was delivered or any Person taking such replacement Note from such Person to whom such replacement Note was delivered or any assignee of such Person, except a protected purchaser, 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 or the Trustee in connection therewith.

Upon the issuance of any replacement Note under this Section 4.03, the Issuer may require the payment by the Holder of such Note of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the fees and expenses of the Trustee) connected therewith.

Every replacement Note issued pursuant to this Section 4.03 in replacement of any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Issuer, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder.

The provisions of this Section 4.03 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.

Section 4.04.                Payment of Principal and Interest and Class A-1A VFN Commitment Fee; Defaulted Interest.

(a)           The Notes shall accrue interest during each Interest Period and the Class A-1A VFN Commitment Fee will accrue in accordance with the Class A-1A VFN Purchase Agreement, in each case on the basis of the actual number of days elapsed during such Interest Period and a year assumed to consist of 360 days.  Any installment of interest, principal or Class A-1A VFN Commitment Fee, if any, payable on any Note which is punctually paid or duly provided for by the Issuer on the applicable Distribution Date shall be paid to the Person in whose name such Note is registered on the Record Date, by check mailed first-class, postage prepaid, to such Person’s address as it appears on the Note Register on such Record Date, except that, unless Definitive Notes have been issued pursuant to Section 4.02, with respect to Notes registered on the Record Date in the name of the nominee of DTC (initially, such nominee to be Cede & Co.), such payment will be made by wire transfer in immediately available funds to the account designated by such Person and except for the final installment of principal payable with respect to such Note on a Distribution Date or on the Stated Maturity Date and except for the Repurchase Price or Refinancing Price for any Note called for repurchase or refinancing pursuant to Article X hereof which shall be payable as provided in Section 4.04(b) and Article X

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hereof, as applicable.  The funds represented by any such checks returned undelivered shall be held in accordance with Section 3.03.

(b)           The principal of each Note shall be payable in installments on each Distribution Date as provided in the Sale and Servicing Agreement.  Notwithstanding the foregoing, the entire unpaid principal amount of the Notes shall be due and payable, if not previously paid, on the date on which an Event of Default shall have occurred and be continuing, if the Trustee with the consent of the Majority Noteholders has declared the Notes to be immediately due and payable in the manner provided in Section 5.02.  The aggregate principal amount of a Class A-1A VFN Note may from time to time be increased or decreased by adjustments made on the records of the Class A-1A VFN Agent in accordance with the Class A-1A VFN Purchase Agreement.  All principal payments among the Classes of Notes shall be made in accordance with the Priority of Payments set forth herein and in the Sale and Servicing Agreement, and all principal payments on the Notes of the same Class shall be made pro rata to the Noteholders of such Class.  The Trustee shall notify the Person in whose name a Note is registered at the close of business on the Record Date preceding the Distribution Date on which the Issuer expects that the final installment of principal of and interest (and in the case of the Class A-1A VFN Notes, the Class A-1A VFN Commitment Fee) on such Note will be paid; provided that the Issuer or Servicer shall have provided the Trustee with timely notice of such expectation.  Such notice shall be mailed or transmitted by facsimile prior to such final Distribution Date and shall specify that such final installment will be payable only upon presentation and surrender of such Note and shall specify the place where such Note may be presented and surrendered for payment of such installment.  Notices in connection with the repurchase of Notes shall be mailed to Noteholders as provided in Section 10.02.

(c)           For so long as the Notes of any Class are listed on the Irish Stock Exchange and the rules of such exchange shall so require, the Issuer will maintain a paying agent and transfer agent for such securities in Ireland, and payments on and transfers or exchanges of interests in such Notes (including partial interests therein) may be effected through such paying and transfer agent (or any other paying and transfer agent); provided that all transfers and exchanges must be effected in accordance with this Indenture.  In addition, for so long as the Notes of any Class are listed on the Irish Stock Exchange and the rules of such exchange shall so require, in the case of a transfer or exchange of a physical instrument representing such security, a Holder thereof may obtain a new physical instrument from the paying agent and transfer agent in Ireland in accordance with this Indenture.

Section 4.05.                Tax Treatment.

(a)           The Issuer has entered into this Indenture, and the Notes will be issued, with the intention that, for federal, state and local income, business and franchise tax purposes, (a) the Notes (other than the Class E Notes) will qualify as indebtedness secured by the Indenture Collateral and (b) the Issuer shall not be treated as an association, taxable mortgage pool or publicly traded partnership taxable as a corporation.  The Issuer, by entering into this Indenture, and each Noteholder (other than the Class E Noteholders), by the acceptance of any such Note (and each beneficial owner of a Note, by its acceptance of an interest in the applicable Note), agree to treat such Notes for federal, state and local income and franchise tax purposes as indebtedness of the Issuer.  Each Holder of such Note (other than the Class E Noteholders)

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agrees that it will cause any beneficial owner of such Note acquiring an interest in a Note through it to comply with this Indenture as to treatment of indebtedness under applicable tax law, as described in this Section 4.05.  The parties hereto agree that they shall not cause or permit the making, as applicable, of any election under Treasury Regulation Section 301.7701—3 whereby the Issuer or any portion thereof would be treated as a corporation for federal income tax purposes and, except as required by the terms of this Indenture or applicable law, shall not file tax returns for the Issuer, but shall treat the Issuer as a disregarded entity for federal income tax purposes (unless the Issuer is treated as a partnership).  Further, the parties hereto agree to comply with the transfer restrictions with respect to the Class E Notes set forth in Section 3.31. The provisions of this Indenture shall be construed in furtherance of the foregoing intended tax treatment.

(b)           It is the intent of the Trust Depositor, the Servicer, the Class E Noteholders and the Certificateholders that, (a) in the event that the Trust Certificate and the Class E Note are owned by a single Holder, the Issuer will be treated as a disregarded entity for federal income tax purposes, and such Holder, by acceptance of the Trust Certificate and the Class E Notes, agrees to take no action inconsistent with such treatment and (b) in the event that the Trust Certificate and/or the Class E Notes are owned by more than one Holder, the Issuer will be treated as a partnership for federal income tax purposes, the partners of which shall be the Certificateholders and the Class E Noteholders, and each Certificateholder and Class E Noteholder, by acceptance of a Trust Certificate and the Class E Notes, respectively, shall agree to treat the Trust Certificate and the Class E Notes as equity and to take no action inconsistent with such tax treatment.

(c)           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 4.06.                Satisfaction and Discharge of Indenture.

This Indenture shall cease to be of further effect with respect to the Notes except with respect to the following, which shall survive the satisfaction and discharge of this Indenture:  (a) rights of registration of transfer and exchange, (b) substitution of mutilated, destroyed, lost or stolen Notes, (c) rights of Noteholders to receive payments of principal thereof and interest thereon and, in the case of the Class A-1A VFN Notes, the Class A-1A VFN Commitment Fee thereon, (d) Sections 3.03, 3.04, 3.06, 3.10, 3.19, 3.21, 3.22, 4.05, 6.07, 11.15 and the second sentence of 11.16 until the Notes are no longer outstanding, (e) the rights, obligations and immunities of the Trustee hereunder (including the rights of the Trustee under Section 6.07 and the obligations of the Trustee under Section 4.07) and (f) the rights of Noteholders as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them.  The Trustee, on written demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect to the Notes, when:

(i)            either

(1)           all Notes of such Series theretofore authenticated and delivered (other than (i) Notes that have been destroyed, lost or stolen and that have been replaced or

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paid as provided in Section 4.03 and (ii) Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from such trust, as provided in Section 3.03) have been delivered to the Trustee for cancellation; or

(A)          all Notes not theretofore delivered to the Trustee for cancellation

(i)            have become due and payable, or

(ii)           are to be called for repurchase within one year under arrangements satisfactory to the Trustee for the giving of notice of repurchase by the Trustee in the name, and at the expense, of the Issuer,

and the Issuer, in the case of (2)(i) or (ii) above, has irrevocably deposited or caused to be irrevocably deposited with the Trustee cash or direct obligations of or obligations guaranteed by the United States of America (which will mature prior to the date such amounts are payable), in trust for such purpose, in an amount sufficient to pay and discharge the entire indebtedness on such Notes not theretofore delivered to the Trustee for cancellation when due to the Stated Maturity Date therefor, Repurchase Date or Refinancing Date (if Notes shall have been called for repurchase or refinancing pursuant to Article X), as the case may be; and

(ii)           the Issuer has delivered to the Trustee an Officer’s Certificate meeting the applicable requirements of Section 11.01 and, subject to Section 11.01, stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture with respect to the Notes have been complied with.

Section 4.07.                Application of Trust Money.

All moneys deposited with the Trustee pursuant to Section 4.06 hereof shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent, as the Trustee may determine, to the Holders of Notes for the payment or repurchase of which such moneys have been deposited with the Trustee, of all sums due and to become due thereon for principal and interest and, in the case of the Class A-1A VFN Notes, the Class A-1A VFN Commitment Fee; but such moneys need not be segregated from other funds except to the extent required herein or in the Sale and Servicing Agreement or required by law.

Section 4.08.                Repayment of Moneys Held by Paying Agent.

In connection with the satisfaction and discharge of this Indenture with respect to the Notes, all moneys then held by any Paying Agent other than the Trustee under the provisions of this Indenture with respect to such Notes shall, upon demand of the Issuer, be paid to the Trustee to be held and applied according to Section 3.05 and thereupon such Paying Agent shall be released from all further liability with respect to such moneys.

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ARTICLE V
REMEDIES

Section 5.01.        Events of Default.

Any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body) shall constitute an “Event of Default”:

(a)           failure to pay all accrued interest on any Distribution Date and such failure continues unremedied for two Business Days (or, if such failure to pay occurs as a result of administrative error on the part of the Trustee, such failure continues unremedied for five or more Business Days after the Trustee receives written notice of or has received actual knowledge of such administrative error or omission);

(b)           failure to reduce the Outstanding Principal Balance of the Offered Notes and the Class D Notes to zero by the Stated Maturity Date;

(c)           failure to pay the Repurchase Price to the Noteholders on the Repurchase Date inthe event of an Optional Repurchase pursuant to Section 10.01, unless such Optional Repurchase has been validly withdrawn in accordance with Section 10.01 and the Sale and Servicing Agreement (or if such failure to pay occurs as a result of administrative error on the part of the Trustee, and such failure continues unremedied for two Business Days);

(d)           failure on the part of the Originator or the Trust Depositor to make any payment or deposit required under the Sale and Servicing Agreement within two Business Days after the date the payment or deposit is required to be made;

(e)           a default in the observance or performance in any material respect of any covenant or agreement of the Originator, the Trust Depositor or the Issuer made in the Sale and Servicing Agreement or this Indenture, and such default has a Material Adverse Effect on the Noteholders, which default (if susceptible to remedy) continues unremedied for a period of 30 days after the first to occur of (i) actual knowledge thereof by a Responsible Officer of the Originator or the Trust Depositor or (ii) the delivery to the Issuer by the Trustee or to the Issuer and the Trustee, by any Noteholder, a written notice specifying such default and requiring it to be remedied and stating that such notice is a notice of default hereunder;

(f)            any representation, warranty, certification or written statement of the Originator, the Trust Depositor or the Issuer in the Sale and Servicing Agreement or this Indenture shall prove to have been incorrect in any material respect when made, and such incorrect representation or warranty has a Material Adverse Effect on the Noteholders, and the continuation of such default for a period of 30 days after the first to occur of (i) actual knowledge thereof by a Responsible Officer of the Originator or the Trust Depositor or (ii) the delivery to the Issuer by the Trustee or to the Issuer and the Trustee, by any Noteholder, a written notice specifying such incorrect representation or warranty and requiring it to be remedied and stating that such notice is a notice of default hereunder;

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(g)           the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of the Trust Depositor, the Issuer or any substantial part of such Person’s property in an involuntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Trust Depositor, the Issuer or for any substantial part of such Person’s property, or an order for the winding up or liquidation of the Trust Depositor’s or the Issuer’s affairs, and such decree or order remains unstayed and in effect for a period of 30 consecutive days;

(h)           the commencement by the Trust Depositor or the Issuer of a voluntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by the Trust Depositor or the Issuer to the entry of an order for relief in an involuntary case under any such law, or the consent by the Trust Depositor or the Issuer to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Trust Depositor or the Issuer or for any substantial part of the assets of such Person, or the making by the Trust Depositor or the Issuer of any general assignment for the benefit of creditors, or the failure by the Trust Depositor or the Issuer generally to pay its debts as such debts become due, or the taking of any action by the Trust Depositor or the Issuer in furtherance of any of the foregoing;

(i)            the Trustee, on behalf of the Noteholders, shall fail to have a valid and perfected first priority security interest in the Indenture Collateral except as otherwise expressly permitted to be released in accordance with the applicable Transaction Document, and such failure to have a perfected first priority security interest shall have a Material Adverse Effect on the Noteholders;

(j)            any of the Issuer, the Indenture Collateral or the arrangements contemplated by the Transaction Documents is required to be registered as an “investment company” under the 1940 Act;

(k)           failure to pay the Refinancing Price to the Noteholders on the Refinancing Date in the event of a Refinancing pursuant to Section 10.03, unless (i) such Refinancing has been validly withdrawn in accordance with Section 10.04 and the Sale and Servicing Agreement or (ii) the Issuer is unable to complete a proposed Refinancing (or if such failure to pay occurs as a result of administrative error on the part of the Trustee, and such failure continues unremedied for two Business Days); or

(l)            failure of the Servicer, on behalf of the Issuer, to deliver to the Trustee and the Rating Agencies a statement in reasonable detail of a plan intended to result in compliance with the Portfolio Criteria as of the Effective Date following a failure by the Issuer to satisfy any of the Interim Tests on an Interim Test Date.

The Issuer shall deliver to the Trustee, the Class A-1A VFN Agent and the Rating Agencies, within two Business Days after the occurrence of a Default, written notice in the form of an Officer’s Certificate of the event which with the giving of notice and the lapse of time would become an Event of Default under clause (e) of the definition of “Event of Default,” its status and what action the Issuer is taking or proposes to take with respect thereto.

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Section 5.02.        Acceleration of Maturity; Rescission and Annulment.

If an Event of Default should occur and be continuing, other than an Event of Default specified in Sections 5.01(g) or 5.01(h), then and in every such case the Trustee may, and shall at the direction of the Majority Noteholders, or the Majority Noteholders may terminate all undrawn Class A-1A VFN Commitments and declare the Notes to be immediately due and payable, by a notice in writing to the Issuer, the Class A-1A VFN Agent and the Rating Agencies (and to the Trustee if given by Noteholders), and upon any such declaration the unpaid principal amount of such Notes, together with accrued and unpaid interest thereon and, in the case of the Class A-1A VFN Notes, the Class A-1A VFN Commitment Fee thereon, in each case through the date of acceleration, shall become immediately due and payable; provided that the undrawn Class A-1A VFN Commitments may not be reduced to the extent that the Class A-1A VFN Funding Test is not satisfied unless an Event of Default specified in Sections 5.01(g) or 5.01(h) has occurred and is continuing, in which cases the Class A-1A VFN Commitments may be reduced to zero without regard to compliance with the Class A-1A VFN Funding Test. If an Event of Default specified in Sections 5.01(g) or 5.01(h) occurs, all undrawn Class A-1A VFN Commitments will terminate automatically and the unpaid principal amount of the Notes, together with accrued and unpaid interest thereon and, in the case of the Class A-1A VFN Notes, the Class A-1A VFN Commitment Fee thereon, in each case through the date of acceleration, shall become immediately due and payable.

At any time after such 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 in this Article V provided the Majority Noteholders, by written notice to the Issuer and the Trustee and may rescind and annul such declaration and its consequences if:

(a)           the Issuer has paid or deposited with the Trustee a sum sufficient to pay:

(i)            all payments of principal of and interest on the Notes and, in the case of the Class A-1A VFN Notes, the Class A-1A VFN Commitment Fee, and all other amounts that would then be due hereunder, upon the Notes if the Event of Default giving rise to such acceleration had not occurred; and

(ii)           all 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

(b)           all Events of Default, other than the nonpayment of the principal of the Notes that has become due solely by such acceleration, have been cured or waived as provided in Section 5.12.

No such rescission or annulment shall affect any subsequent default or impair any right consequent thereto.

Section 5.03.        Collection of Indebtedness and Suits for Enforcement by Trustee.

(a)           The Issuer covenants that if (i) default is made in the payment of any interest or Class A-1A VFN Commitment Fee, as applicable, on any Note when the same becomes due and

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payable, and such default continues for a period of five Business Days, or (ii) default is made in the payment of the principal of or any installment of the principal of any Note when the same becomes due and payable, and such default continues for a period of two Business Days, the Issuer will, upon demand of the Trustee, pay to it, for the benefit of the Noteholders, the whole amount then due and payable on the Notes for principal, interest and Class A-1A VFN Commitment Fee, with interest upon the overdue principal, and in addition thereto such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents and counsel.

(b)           In case the Issuer shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, with the consent of the Majority Noteholders and subject to the provisions of Section 11.17 hereof may institute a Proceeding for the collection of the sums so due and unpaid, and may prosecute such Proceeding to judgment or final decree, and may enforce the same against the Issuer or other obligor upon the Notes and collect in the manner provided by law out of the Indenture Collateral, wherever situated, the moneys adjudged or decreed to be payable.

(c)           If an Event of Default occurs and is continuing, the Trustee, subject to the provisions of Sections 11.05 and 11.17 hereof, may, as more particularly provided in Section 5.04, in its discretion, proceed to protect and enforce its rights and the rights of the Noteholders and by such appropriate Proceedings as the Trustee shall deem most effective 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.

(d)           In case there shall be pending, relative to the Issuer or any other obligor upon the Notes or any Person having or claiming an ownership interest in the Indenture Collateral, Proceedings under Title 11 of the United States Code or any other applicable federal or state 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 property or such other obligor or Person, or in case of any other comparable judicial Proceedings relative to the Issuer or other obligor upon the Notes, or to the creditors or property of the Issuer or such other obligor, the Trustee, irrespective of whether the principal of any Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section 5.03, shall be entitled and empowered, by intervention in such Proceedings or otherwise:

(i)            to file and prove a claim or claims for the whole amount of principal, interest and Class A-1A VFN Commitment Fee, as applicable, owing and unpaid in respect 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 reasonable expenses and liabilities

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incurred, and all advances made, by the Trustee and each predecessor Trustee, except as a result of negligence or bad faith) and of the Noteholders allowed in such Proceedings;

(ii)           unless prohibited by applicable law and regulations, to vote on behalf of the Holders of Notes in any election of a trustee, a standby trustee or Person performing similar functions in any such Proceedings;

(iii)          to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute all amounts received with respect to the claims of the Noteholders and of the Trustee on their behalf;

(iv)          to file such proofs of claim and other papers or documents and take such other action as may be necessary or advisable in order to have the claims of the Trustee or the Noteholders allowed in any judicial proceedings relative to the Issuer, its creditors and its property; and

(v)           to participate as a member, voting or otherwise, of any official committee of creditors appointed in such matter;

and any trustee, receiver, liquidator, custodian or other similar official in any such Proceeding is hereby authorized by each of such Noteholders to make payments to the Trustee, and, in the event that the Trustee shall consent to the making of payments directly to such Noteholders, to pay to the Trustee such amounts as shall be sufficient to cover reasonable compensation to the Trustee, each predecessor Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of negligence or bad faith.

(e)           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 Noteholder 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 Noteholder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person.

(f)            All rights of action and of asserting claims under this Indenture, or under any of the Notes, may be enforced by the Trustee without the possession of any of the Notes or the production thereof in any trial or other Proceedings relative thereto, and any such action or proceedings instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Trustee, each predecessor Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders of the Notes.

(g)           In any Proceedings brought by the Trustee (and also any 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, and it shall not be necessary to make any Noteholder a party to any such Proceedings.

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Section 5.04.        Remedies; Priorities.

(a)           If an Event of Default shall have occurred and be continuing, subject to the provisions of Section 11.17 hereof, the Trustee may do one or more of the following (subject to Section 5.15):

(i)            institute Proceedings in its own name and as trustee of an express trust for the collection of all amounts then payable on the Notes or under this Indenture with respect thereto, whether by declaration or otherwise, and all amounts payable under the Sale and Servicing Agreement, enforce any judgment obtained, and collect from the Issuer and any other obligor upon such Notes moneys adjudged due;

(ii)           institute Proceedings from time to time for the complete or partial foreclosure of this Indenture with respect to the Indenture Collateral;

(iii)          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 Trustee, the Holders of the Notes; and

(iv)          sell the Indenture Collateral or any portion thereof or rights or interest therein;

provided that the Trustee may not sell or otherwise liquidate the Indenture Collateral following an Event of Default unless (A) the proceeds of such sale or liquidation are sufficient to discharge in full all amounts then due and unpaid upon the Notes for principal, interest and the Class A-1A VFN Commitment Fee, as applicable, to pay all amounts then due and payable to the Trustee and to reimburse the Servicer for any outstanding unreimbursed Servicer Advances and Scheduled Payment Advances or (B) the Majority Noteholders consent to such sale. In determining whether the proceeds of such sale or liquidation distributable to the Noteholders and the other parties entitled thereto are sufficient to discharge in full the amounts referenced in clause (A), the Trustee may, but need not, obtain and rely upon an opinion of an Independent investment banking firm of national reputation as to the feasibility of such proposed action and as to the sufficiency of the expected sales proceeds of the Collateral for such purpose.

(b)           If the Trustee collects any money or property pursuant to this Article V, it shall pay out the money or property (net of costs of collection) as set forth in Section 7.05 of the Sale and Servicing Agreement.

The Trustee may fix a Record Date and Distribution Date for any payment to Noteholders pursuant to this Section 5.04. At least five days before such record date, the Issuer shall mail to each Noteholder and the Trustee a notice that states the record date, the Distribution Date and the amount to be paid.

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Section 5.05.        Reserved.

Section 5.06.        Limitation of Suits.

No Holder of any Note shall have any right to institute any Proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless and subject to the provisions of Section 11.17 hereof:

(a)           such Holder has previously given written notice to the Trustee of a continuing Event of Default;

(b)           (i) prior to the payment in full of the Offered Notes and the Class D Notes, the Noteholders evidencing 25% of the aggregate Outstanding Principal Balance of all Offered Notes and Class D Notes have made written request to the Trustee to institute such Proceeding in respect of such Event of Default in its own name as Trustee hereunder and (ii) from and after the payment in full of the Offered Notes and the Class D Notes, the Class E Noteholders evidencing 25% of the aggregate Outstanding Principal Balance of the Class E Notes have made written request to the Trustee to institute such proceeding in respect of such Event of Default in its own name as Trustee hereunder;

(c)           such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in complying with such request;

(d)           the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute such Proceedings; and

(e)           (i) prior to the payment in full of the Offered Notes and the Class D Notes, no direction inconsistent with such written request has been given to the Trustee during such 60 day period by the Holders of a majority of the Outstanding Principal Balance of the Offered Notes and the Class D Notes and (ii) from and after payment in full of the Offered Notes and the Class D Notes, no direction inconsistent with such written request has been given to the Trustee during such 60 day period by the Holders of a majority of the Outstanding Principal Balance of the Class E Notes.

It is understood and intended that no one or more Holders of Notes 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 Notes or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided.

In the event the Trustee shall receive conflicting or inconsistent requests and indemnity from two or more groups of Holders of Notes, each representing less than a majority of the Aggregate Outstanding Principal Balance, the Trustee in its sole discretion may determine what action, if any, shall be taken, notwithstanding any other provisions of this Indenture.

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Section 5.07.        Unconditional Rights of Noteholders To Receive Principal, Interest, and Class A-1A VFN Commitment Fee.

Notwithstanding any other provisions in this Indenture, but subject to Section 11.15 hereof, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest (and Class A-1A VFN Commitment Fee, as applicable), if any, on such Note on or after the respective due dates thereof expressed in such Note or in this Indenture (or, in the case of repurchase, on or after the Repurchase Date) and such right shall not be impaired without the consent of such Holder.

Section 5.08.        Restoration of Rights and Remedies.

If the Trustee or any Noteholder 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 Noteholder, then and in every such case the Issuer, the Trustee and the Noteholders 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 Noteholders shall continue as though no such Proceeding had been instituted.

Section 5.09.        Rights and Remedies Cumulative.

No right or remedy herein conferred upon or reserved to the Trustee or to the Noteholders 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 at 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 5.10.        Delay or Omission Not a Waiver.

No delay or omission of the Trustee or any Holder of any Note to exercise any right or remedy accruing upon any Default or Event of Default shall impair any such right or remedy or constitute a waiver of any such Default or Event of Default or an acquiescence therein. Every right and remedy given by this Article V or by law to the Trustee or to the Noteholders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Noteholders, as the case may be.

Section 5.11.        Control by Noteholders.

The Majority Noteholders shall have the right to direct the time, method and place of conducting any Proceeding for any remedy available to the Trustee with respect to the Notes or exercising any trust 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)           subject to the express terms of Section 5.04 and Section 5.15, any direction to the Trustee to sell or liquidate the Indenture Collateral shall be directed by Holders of the Notes

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representing (i) prior to the payment in full of the Offered Notes and the Class D Notes, 100% of the aggregate Outstanding Principal Balance of all Offered Notes and Class D Notes and (ii) from and after the payment in full of the Offered Notes and the Class D Notes, amounts due under 100% of the aggregate Outstanding Principal Balance of the Class E Notes; and

(c)           the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction.

Notwithstanding the rights of Noteholders set forth in this Section 5.11, subject to Section 6.01, the Trustee need not take any action that it determines might involve it in liability or might materially adversely affect the rights of any Noteholders not consenting to such action.

Section 5.12.        Waiver of Past Defaults.

Prior to the declaration of the acceleration of the maturity of the Notes as provided in Section 5.02, the Majority Noteholders may waive any past Event of Default and its consequences except an Event of Default with respect to payment of principal, interest or Class A-1A VFN Commitment Fee, as applicable, on any of the Notes or in respect of a covenant or provision hereof which cannot be modified or amended without the consent of the Holder of each Note. In the case of any such waiver, the Issuer, the Trustee and the Noteholders shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereto.

Upon any such waiver, any Event of Default arising therefrom shall be deemed to have been cured and not to have occurred, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereto.

Section 5.13.        Undertaking for Costs.

All parties to this Indenture agree, and each Holder of any Note by such Holder’s 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, suffered 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 5.13 shall not apply to (a) any suit instituted by the Trustee, (b) any suit instituted by any Noteholder, or group of Noteholders, in each case holding in the aggregate more than 25% of the Aggregate Outstanding Principal Balance or (c) any suit instituted by any Noteholder for the enforcement of the payment of principal, interest, or Class A-1A VFN Commitment Fee, as applicable, on any Note on or after the respective due dates expressed in such Note and in this Indenture.

Section 5.14.        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, that may affect the

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covenants or the performance of 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 covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

Section 5.15.        Sale of Indenture Collateral.

(a)           The power to effect any sale or other disposition (a “Sale”) of any portion of the Indenture Collateral pursuant to Section 5.04 is expressly subject to the provisions of this Section 5.15. The power to effect any such Sale shall not be exhausted by any one or more Sales as to any portion of the Indenture Collateral remaining unsold, but shall continue unimpaired until the entire Indenture Collateral shall have been sold or all amounts payable on the Notes and under this Indenture shall have been paid. The Trustee hereby expressly waives its right to any amount fixed by law as compensation for any Sale.

(b)           The Trustee shall not in any private Sale sell the Indenture Collateral, or any portion thereof, unless the Majority Noteholders consent to or direct the Trustee to make such Sale and:

(i)            the proceeds of such Sale would be not less than the sum of the entire amount which would be payable to the Noteholders under the Notes under in full payment thereof on the Distribution Date next succeeding the date of such Sale and, so long as no Servicer Default has occurred and is continuing, the amount of any outstanding and unreimbursed Servicer Advances and Scheduled Payment Advances; or

(ii)           the Trustee determines, in its sole discretion, that the conditions for retention of the Indenture Collateral set forth in Section 5.04 cannot be satisfied (in making any such determination, the Trustee may rely upon an opinion of an Independent investment banking firm obtained and delivered as provided in Section 5.04, and the Majority Noteholders consent to such Sale, which consent will not be unreasonably withheld).

(c)           In connection with a Sale of all or any portion of the Indenture Collateral:

(i)            any Holder or Holders of Notes (other than the Trust Depositor) may bid for and purchase the property offered for Sale, and upon compliance with the terms of Sale may hold, retain and possess and dispose of such property, without further accountability, and may, in paying the purchase money therefor, deliver any Notes or claims for interest thereon in lieu of cash up to the amount which shall, upon distribution of the net proceeds of such Sale, be payable thereon, and such Notes, in case the amounts so payable thereon shall be less than the amount due thereon, shall be returned to the Holders thereof after being appropriately stamped to show such partial payment; provided that the Sale of any Loan, in any case, shall be subject to Section 2.05 of the Sale and Servicing Agreement;

(ii)           the Trustee may bid for and acquire the property offered for Sale in connection with any Sale thereof, and, subject to any requirements of, and to the extent

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permitted by, Applicable Law in connection therewith, may purchase all or any portion of the Indenture Collateral in a private sale, and, in lieu of paying cash therefor, may make settlement for the purchase price by crediting the gross Sale price against the sum of (A) the amount which would be distributable to the Holders of the Notes as a result of such Sale in accordance with Section 5.04(b) on the Distribution Date next succeeding the date of such Sale and (B) the expenses of the Sale and of any Proceedings in connection therewith which are reimbursable to it, without being required to produce the Notes in order to complete any such Sale or in order for the net Sale price to be credited against such Notes, and any property so acquired by the Trustee shall be held and dealt with by it in accordance with the provisions of this Indenture; provided that the Sale of any Loan, in any case, shall be subject to Section 2.05 of the Sale and Servicing Agreement;

(iii)          the Trustee shall execute and deliver an appropriate instrument of conveyance transferring its interest in any portion of the Indenture Collateral in connection with a Sale thereof;

(iv)          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 Indenture Collateral in connection with a Sale thereof, and to take all action necessary to effect such Sale; and

(v)           no purchaser or transferee at such a Sale shall be bound to ascertain the Trustee’s authority, inquire into the satisfaction of any conditions precedent or see to the application of any moneys.

Section 5.16.        Action on Notes.

The Trustee’s right to seek and recover judgment on the Notes or under this Indenture shall not be affected by the seeking, obtaining or application of 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 Noteholders 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 Indenture Collateral or upon any of the assets of the Issuer. Any money or property collected by the Trustee shall be applied in accordance with Section 5.04(b).

Section 5.17.        Performance and Enforcement of Certain Obligations.

(a)           Promptly following a request from the Trustee to do so, the Issuer shall take all such lawful action as the Trustee may request to compel or secure the performance and observance by the Trust Depositor and the Servicer, as applicable, of each of their obligations to the Issuer under or in connection with the Transaction Documents, and to exercise any and all rights, remedies, powers and privileges lawfully available to the Issuer under or in connection with the Transaction Documents to the extent and in the manner directed by the Trustee, including the transmission of notices of default on the part of the Trust Depositor or the Servicer thereunder and the institution of legal or administrative actions or proceedings to compel or secure performance by the Trust Depositor or the Servicer of each of their obligations under the Transaction Documents.

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(b)           If a Servicer Default has occurred and is continuing, the Trustee, at the direction (which direction shall be in writing or by telephone (confirmed in writing promptly thereafter)) of the Majority Noteholders shall exercise all rights, remedies, powers, privileges and claims of the Issuer against the Servicer under or in connection with the Sale and Servicing Agreement, including the right or power to take any action to compel or secure performance or observance by the Servicer, of its obligations to the Issuer thereunder and to give any consent, request, notice, direction, approval, extension or waiver under the Sale and Servicing Agreement, and any right of the Issuer to take such action shall not be suspended.

ARTICLE VI
THE TRUSTEE

Section 6.01.        Duties of Trustee.

(a)           If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs with respect to the Indenture Collateral.

(b)           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; however, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.

(c)           The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own fraud or willful misconduct, except that:

(i)            this paragraph does not limit the effect of Section 6.01(b);

(ii)           the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and

(iii)          the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 5.11.

(d)           Every provision of this Indenture that in any way relates to the Trustee is subject to Sections 6.01(a), 6.01(b), 6.01(c) and 6.01(g).

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(e)           The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Issuer.

(f)            Money held in trust by the Trustee shall be segregated from other funds to the extent required by law or the terms of this Indenture or the Sale and Servicing Agreement.

(g)           The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture, to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or to honor the request or direction of any of the Noteholders pursuant to this Indenture, unless such Noteholder or Noteholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses, and liabilities that might be incurred by it in compliance with the request or direction. Anything in this Indenture to the contrary notwithstanding, in no event shall the Trustee be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits).

(h)           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 6.01.

(i)            The Trustee shall not be deemed to have notice of any Event of Default or Servicer Default unless a Responsible Officer assigned to and working in the Trustee’s Corporate Trust Office has actual knowledge thereof or the Trustee has received written notice of such Event of Default or Servicer Default.

Section 6.02.        Rights of Trustee.

(a)           The Trustee may rely in good faith on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document.

(b)           Before the Trustee acts or refrains from acting, it may require an Officer’s Certificate as required by the terms of this Indenture or the other Transaction Documents. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on an Officer’s Certificate.

(c)           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 or a custodian or nominee, and the Trustee shall not be responsible for any misconduct or negligence on the part of, or for the supervision of, any such agent, attorney, custodian or nominee appointed with due care by it hereunder.

(d)           The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided that the Trustee’s conduct does not constitute willful misconduct, negligence, fraud or bad faith.

(e)           The Trustee may consult with counsel, and the advice or Opinion of Counsel with respect to legal matters relating to this Indenture and the Notes shall be full and complete

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authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with such advice or Opinion of Counsel.

(f)            The Trustee shall not be bound to make any investigation into the performance of the Issuer or the Servicer under this Indenture or any other Transaction Document or into the matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note or other document, but the Trustee, in its discretion, may make any further inquiry or investigation into those matters that it deems appropriate, and if the Trustee determines to inquire further, it shall be entitled to examine the books, records and premises of the Issuer and the Servicer, personally or by agent or attorney provided that any such examination shall be at a time acceptable to the Issuer or the Servicer in their reasonable judgment during normal business hours; provided further that each such party shall, and shall cause its agents, to hold in confidence any and all such information, except (i) to the extent disclosure may be required by law by any regulatory authority, (ii) to the extent that the Trustee, in its sole judgment, may determine that such disclosure is consistent with its obligations hereunder and (iii) a Noteholder may disclose such information obtained from the Trustee to any prospective transferee and to such Noteholder’s and transferee’s accountants, consultants, attorneys and similar agents; provided that all such persons agree in writing with the Issuer to hold such information as confidential.

(g)           If the Trustee is also acting as Paying Agent or as Note Registrar, the rights and protections afforded to the Trustee pursuant to the Article shall also be afforded to it in such additional capacities.

(h)           Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.

(i)            Except as expressly provided herein or in any other Transaction Document, nothing herein shall be construed to impose an obligation on the part of the Trustee to recalculate, evaluate or verify any report, certificate or information received by it from the Issuer or Servicer or to otherwise monitor the activities of the Issuer or Servicer.

(j)            In the event that the Trustee is also acting in the capacity of custodian, Paying Agent, Note Registrar or Certificate Registrar hereunder or under the other Transaction Documents, the rights, protections, immunities and indemnities afforded the Trustee pursuant to this Article VI shall also be afforded to the Trustee in such capacities.

(k)           Each Noteholder agrees, by acceptance of a Note, that prior to the Closing Date it will provide to the Trustee a duly completed copy of United States Internal Revenue Service Form W-8BEN, W-8ECI, W-8IMY, W-9 or other successor or required forms, as applicable, and such other forms and information as may be required to confirm the availability of any applicable exemption from United States federal, state or local withholding taxes.

Section 6.03.        Individual Rights of Trustee.

The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuer or its Affiliates with the same rights it would have

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if it were not Trustee. Any Note Registrar, co-registrar, Paying Agent or co-paying agent may do the same with like rights. However, the Trustee must comply with Section 6.11.

Section 6.04.        Trustee’s Disclaimer.

The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture, the Sale and Servicing Agreement, the Trust Agreement or any other Transaction Document, the validity or sufficiency of any security interest intended to be created or the characterization of the Notes for tax purposes or the Notes, it shall not be accountable for the Issuer’s use of the proceeds from the Notes, and it shall not be responsible for any statement of the Issuer in this Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Trustee’s certificate of authentication.

Section 6.05.        Notice of Event of Default.

The Trustee shall mail to each Noteholder, the Rating Agencies (so long as any of the Offered Notes or Class D Notes are Outstanding), the Class A-1A VFN Agent, the Servicer and the Owner Trustee notice of an Event of Default within 30 days after the Trustee has actual knowledge thereof in accordance with Section 6.01. Except in the case of an Event of Default in payment of principal, interest or Class A-1A VFN Commitment Fee, as applicable, on any Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of Noteholders.

Section 6.06.        Reports by Trustee to Holders.

The Trustee shall deliver to each Noteholder such information as may be required to enable such Noteholder to prepare its federal and state income tax returns within 30 days of the end of each preceding calendar year. In addition, upon the Issuer’s or a Noteholder’s written request, the Trustee shall promptly furnish information reasonably requested by the Issuer or such Noteholder that is reasonably available to the Trustee to enable the Issuer or such Noteholder to perform its federal and state income tax reporting obligations.

The Trustee shall not be responsible for any tax reporting, disclosure, record keeping or list maintenance requirements of the Issuer under Internal Revenue Code Sections 6011(a), 6111(d) or 6112, including, but not limited to, the preparation of IRS Form 8886 pursuant to Treasury Regulations Section 1.6011-4(d) or any successor provision and any required list maintenance under Treasury Regulations Section 301.6112-1 or any successor provision.

Section 6.07.        Compensation and Indemnity.

The Issuer shall pay to the Trustee on each Distribution Date such reasonable compensation for its services under this Indenture and the other Transaction Documents pursuant to a separate agreement dated as of the date hereof between the Trustee and the Issuer. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuer shall reimburse the Trustee for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee’s agents, counsel, accountants and experts. The Issuer shall

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indemnify the Trustee against any and all tax, penalty, loss, liability or expense (including attorneys’ fees) incurred by it in connection with the administration of this trust and the performance of its duties hereunder. The Trustee shall notify the Issuer and the Trust Depositor promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Issuer and the Trust Depositor shall not relieve the Issuer of its obligations hereunder or under the Trust Agreement. The Issuer need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee through the Trustee’s own willful misconduct, negligence or bad faith. The Issuer shall assume (with the consent of the Trustee, such consent not to be unreasonably withheld) the defense and any settlement of claim for indemnification hereunder and any settlement of any such claim and pay all expenses in connection therewith, including reasonable counsel fees. If the consent of the Trustee required in the immediately preceding sentence is unreasonably withheld, the Issuer is relieved of its indemnification obligations hereunder with respect thereto. The obligations of the Issuer set forth in this Section 6.07 are subject in all respects to Section 11.15(b).

The Trustee hereby agrees not to cause the filing of a petition in bankruptcy, insolvency, reorganization, moratorium, receivership, conservatorship or other similar laws now or hereafter in effect against the Issuer for the non-payment to the Trustee of any amounts provided by this Section 6.07 until at least one year and one day, or, if longer, the applicable preference period then in effect, after the payment in full of all Notes issued under this Indenture.

The amounts payable to the Trustee pursuant to this Section 6.07 shall not, except as provided by Section 7.05 of the Sale and Servicing Agreement, exceed on any Distribution Date the limitation on the amount thereof described in the Priority of Payments for such Distribution Date; provided that (a) the Trustee shall not institute any proceeding for payment of any amount payable hereunder except in connection with an action pursuant to Sections 5.03 or 5.04 for the enforcement of the lien of this Indenture for the benefit of the Secured Parties and (b) the Trustee may only seek to enforce payment of such amounts in conjunction with the enforcement of the rights of the Secured Parties in the manner set forth in Section 5.04.

The Trustee shall, subject to the Priority of Payments, receive amounts pursuant to this Section 6.07 and Section 7.05 of the Sale and Servicing Agreement, and only to the extent that the payment thereof would 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 6.08, the Trustee shall continue to serve as Trustee under this Indenture notwithstanding the fact that the Trustee shall not have received amounts due it hereunder and hereby agrees not to cause the filing of a petition in bankruptcy, insolvency, reorganization, moratorium, receivership, conservatorship or other similar laws now or hereafter in effect against the Issuer for the nonpayment to the Trustee of any amounts provided by this Section 6.07 until at least one year and one day, or, if longer, the applicable preference period then in effect, after the payment in full of all Notes issued under this Indenture.

The Issuer’s payment obligations to the Trustee pursuant to this Section 6.07 shall survive the discharge of this Indenture and resignation or removal of the Trustee. When the Trustee incurs expenses after the occurrence of an Event of Default specified in clauses (g) or (h) of the definition of “Event of Default” with respect to the Issuer, the expenses are intended to

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constitute expenses of administration under Title 11 of the United States Code or any other applicable federal or state bankruptcy, insolvency or similar law.

Section 6.08.        Replacement of Trustee.

No resignation or removal of the Trustee and no appointment of a successor Trustee shall become effective until the appointment of a successor Trustee pursuant to this Section 6.08 has become effective. The Trustee may resign upon at least 60 days’ notice at any time by so notifying the Issuer, the Trust Depositor and the Servicer. The Majority Noteholders or the Issuer, with the written consent of the Majority Noteholders, may remove the Trustee by so notifying the Trustee and the Rating Agencies in writing and may appoint a successor Trustee. The Issuer shall remove the Trustee if:

(a)           the Trustee fails to comply with Section 6.11;

(b)           the Trustee is adjudged as bankrupt or insolvent;

(c)           a receiver or other public officer takes charge of the Trustee or its property;

(d)           the Trustee otherwise becomes incapable of acting; or

(e)           the Trustee defaults in any of its obligations under the Transaction Documents and such default is not cured within 30 days after a Responsible Officer of the Trustee receives written notice of such default.

If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Issuer shall promptly appoint a successor Trustee.

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuer. Upon the appointment becoming effective, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. No successor Trustee shall accept appointment as provided in this Section 6.08 unless at the time of such appointment becoming effective such Person shall be eligible under the provisions of Section 6.11. The successor Trustee shall mail a notice of its succession to the Noteholders. The retiring Trustee shall promptly transfer all property (including all Indenture Collateral) held by it as Trustee to the successor Trustee and shall execute and deliver such instruments and such other documents as may reasonably be required to more fully and certainly vest and confirm in the successor Trustee all such rights, powers, duties and obligations.

If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the Majority Noteholders may petition any court of competent jurisdiction for the appointment of a successor Trustee.

If the Trustee fails to comply with Section 6.11, any Noteholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

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Notwithstanding the replacement of the Trustee pursuant to this Section 6.08, the Issuer’s obligations under Section 6.07 shall continue for the benefit of the retiring Trustee.

Upon the appointment of a successor Trustee as provided in this Section 6.08, the successor Trustee shall mail notice of such succession hereunder at the expense of the Issuer to all Holders of Notes at their addresses as shown in the Note Register at their addresses as shown on the register kept by the Issuer, as provided to the Trustee. If the resigning or removed Trustee fails to mail such notice within ten days after the appointment of a successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense of the Issuer.

Section 6.09.        Successor Trustee by Merger.

If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee; provided that, such corporation or banking association shall be otherwise qualified and eligible under Section 6.11. The Trustee shall provide the Rating Agencies prior written notice of any such transaction.

In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Notes or in this Indenture.

Section 6.10.        Appointment of Co-Trustee or Separate Trustee.

(a)           Notwithstanding any other provisions of this Indenture, at any time, for the purpose of meeting any legal requirement of any jurisdiction in which any part of the Indenture Collateral may at the time be located, the Trustee shall have the power and may execute and deliver all instruments to appoint one or more Persons, to act as a co-trustee or co-trustees, or separate trustee or separate trustees, of all or any part of the Indenture Collateral, and to vest in such Person or Persons, in such capacity and for the benefit of the Noteholders, such interest to the Indenture Collateral, or any part hereof, and, subject to the other provisions of this Section 6.10, such powers, duties, obligations, rights and trusts as the Trustee may consider necessary or desirable. No co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a successor Trustee under Section 6.11 and no notice to the Noteholders of the appointment of any co-trustee or separate trustee shall be required under Section 6.08 hereof; provided that the Trustee provide such notice to the Issuer and the Servicer. No appointment of a co-trustee or a separate trustee shall relieve the Trustee of its duties and obligations hereunder.

(b)           Every separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions:

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(i)            all rights, powers, duties and obligations conferred or imposed upon the Trustee shall be conferred or imposed upon and exercised or performed by the Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Indenture Collateral or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Trustee;

(ii)           no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; and

(iii)          the Trustee may at any time accept the resignation of or remove any separate trustee or co-trustee.

(c)           Any notice, request or other writing given to the Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this Indenture and the conditions of this Article VI. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Trustee or separately, as may be provided therein, subject to all the provisions of this Indenture, specifically including every provision of this Indenture relating to the conduct of, affecting the liability of, or affording protection to, the Trustee. Every such instrument shall be filed with the Trustee.

(d)           Any separate trustee or co-trustee may at any time constitute the Trustee, its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Indenture on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Trustee, to the extent permitted by law, without the appointment of a new or successor trustee.

Section 6.11.        Eligibility; Disqualification.

The Trustee hereunder shall at all times (a) be a national banking association or banking corporation or trust company duly organized, validly existing in good standing and doing business under the laws of the United States of America or of any state of the United States, (b) be authorized under such laws to exercise corporate trust powers, (c) have a combined capital and surplus of at least $200,000,000, (d) have unsecured and unguaranteed long-term debt obligations rated at least Baa3 by Moody’s and BBB by S&P, and (e) be subject to supervision or examination by a federal or state banking authority. If such banking 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 6.11 its combined capital and surplus shall be deemed to be as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the

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provisions of this Section 6.11, the Trustee shall (i) give prompt notice to the Issuer, the Owner Trustee, the Trust Depositor, the Servicer, the Noteholders, the Class A-1A VFN Agent and the Rating Agencies that it has so ceased to be eligible to be the Trustee and (ii) resign, upon the request of the Majority Noteholders in the manner and with the effect specified in Section 6.08.

Section 6.12.        Representations, Warranties and Covenants of the Trustee.

The Trustee hereby makes the following representations, warranties and covenants on which the Issuer, the Trust Depositor, the Servicer, the Noteholders, and the Class A-1A VFN Agent shall rely:

(a)           The Trustee is a national banking association and trust company duly organized, validly existing and in good standing under the laws of the United States.

(b)           The Trustee satisfies the criteria specified in Section 6.11.

(c)           The Trustee has full power, authority and legal right to execute, deliver and perform this Indenture and the other Transaction Documents to which it is a party and shall have taken all necessary action to authorize the execution, deliver and performance by it of this Indenture and the other Transaction Documents to which it is a party.

(d)           The execution, delivery and performance by the Trustee of this Indenture and the other Transaction Documents to which it is a party shall not (i) violate any provision of any law or any order, writ, judgment or decree of any court, arbitrator or governmental authority applicable to it or any of its assets, (ii) violate any provision of the corporate charter or by-laws of the Trustee, or (iii) violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of any lien on any properties included in the Indenture Collateral pursuant to the provisions of, any mortgage, indenture, contract, agreement or other undertaking to which it is a party, which violation, default or lien could reasonably be expected to materially and adversely affect the Trustee’s performance or ability to perform its duties under this Indenture and the other Transaction Documents to which each is a party or the transactions contemplated in this Indenture and the other Transaction Documents to which each is a party.

(e)           The execution, delivery and performance by the Trustee of this Indenture and the other Transaction Documents to which it is a party shall not require the authorization, consent or approval of, the giving of notice to, the filing or registration with or the taking of any other action in respect of any governmental authority or agency regulating the banking and corporate trust activities of the Trustee.

(f)            This Indenture and the other Transaction Documents to which it is a party has been duly executed and delivered by the Trustee and constitute the legal, valid and binding agreements of the Trustee enforceable in accordance with their respective terms, subject to the effect of bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally or the application of equitable principles in any proceeding, whether at law or in equity. The Trustee hereby agrees and covenants that it will not at any time in the future, deny that this Indenture and the other Transaction Documents to which it is a party constitute its legal, valid and binding agreement.

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(g)           The Trustee shall not take any action, or fail to take any action, if such action or failure to take action will materially interfere with the enforcement of any rights of the Noteholders under this Indenture or the other Transaction Documents.

(h)           The Trustee is not affiliated, as that term is defined in Rule 405 under the Securities Act, with the Issuer or with any Person involved in the organization or operation of the Issuer.

(i)            There is no charge, investigation, action, suit or proceeding before or by any court pending or, to the best knowledge of the Corporate Trust Office of the Trustee, threatened that, if determined adversely to the Trustee, would have a Material Adverse Effect upon the performance by the Trustee of its duties under, or on the validity or enforceability of, this Indenture.

(j)            The Trustee is not in breach or violation of or in default under any contract or agreement to which it is a party or by which it or any of its property may be bound, or any applicable statute or any rule, regulation or order of any court, government agency or body having jurisdiction over the Trustee or its properties, the breach or violation of which or default under which would have a Material Adverse Effect on the validity or enforceability of this Indenture or the performance by the Trustee of its duties hereunder.

Section 6.13.        Directions to Trustee.

The Trustee is hereby directed and authorized:

(a)           to accept a collateral assignment of the Loans and hold the assets of the Indenture Collateral as security for the Noteholders;

(b)           to authenticate and deliver the Notes substantially in the form prescribed by Exhibit A in accordance with the terms of this Indenture;

(c)           to execute and deliver the Transaction Documents to which it is a party; and

(d)           to take all other actions as shall be required to be taken by it by the terms of this Indenture and the other Transaction Documents.

For the avoidance of doubt, in entering into and performing under the Transaction Documents to which it is a party, the Trustee shall be subject to the protections, rights, indemnities and immunities afforded it under Article VI.

Section 6.14.        Conflicts.

If a Default occurs and is continuing and the Trustee is deemed to have a “conflicting interest” (as defined in the TIA) as a result of acting as trustee for the Offered Notes, the Class D Notes and the Class E Notes, the Issuer, at its expense, shall appoint a successor Trustee for the Offered Notes and the Class D Notes and a successor for the Class E Notes so that there will be separate Trustees for the Offered Notes and the Class D Notes on the one hand, and for the

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Class E Notes on the other hand. No such event shall alter the voting rights of the Noteholders under this Indenture or under any of the other Transaction Documents.

Section 6.15.        Account Property.

(a)           Without limiting the scope or effect of the Granting Clause, the Trustee shall possess all right, title and interest in all funds on deposit from time to time in the Transaction Accounts, other than Excluded Property, and in all proceeds thereof (including all Investment Earnings) and all such funds, investments, proceeds and income shall be part of the Indenture Collateral. Except as otherwise provided herein, (i) the Transaction Accounts, other than the Certificate Account (such accounts, the “Pledged Accounts”), and (ii) all funds on deposit from time to time in the Pledged Accounts, and all investments, proceeds and income therein or therefrom, shall be under the control (as defined in Section 8-106 of the UCC as in effect in Massachusetts (the “Massachusetts UCC”)) of the Trustee for the benefit of the Secured Parties; provided that the Trustee shall have right, title and interest in, and control (as defined in Section 8-106 of the Massachusetts UCC) over the Lockbox Account, any funds on deposit from time to time therein, and any investments, proceeds and income therein or therefrom, solely to the extent of the Trustee’s interest in the Loans and all other assets included or to be included in the Loan Assets.

(b)           If any institution with which any of the Pledged Accounts are established pursuant to the Sale and Servicing Agreement ceases to be a Qualified Institution, the Trustee shall, if the Servicer fails to do so, within ten Business Days establish a replacement Pledged Account at a Qualified Institution after notice of such event and shall transfer any cash and/or any investments to such new Account. In no event shall the Trustee be responsible for monitoring whether such institution shall remain a Qualified Institution.

(c)           With respect to the Account Property, the Trustee agrees that:

(i)            any Account Property shall be held solely in Eligible Deposit Accounts; and, except as otherwise provided herein, each such Eligible Deposit Account shall be subject to the exclusive custody and control of the Trustee, and the Trustee shall have sole signature authority with respect thereto;

(ii)           any Account Property that constitutes physical property, when Delivered to the Trustee, shall be held, pending maturity or disposition, solely by the Trustee or an Intermediary acting solely for the Trustee;

(iii)          any Account Property that is a book-entry security held through the Federal Reserve System pursuant to Federal book-entry regulations, when Delivered, shall be maintained by the Trustee, pending maturity or disposition, through continued book-entry registration of such Account Property as described in clause (d) of the definition of “Deliver”;

(iv)          any Account Property that is an Uncertificated Security and that is not governed by clause (iii) above, when Delivered, shall be maintained by the Trustee, pending maturity or disposition, through continued registration of the Trustee’s (or its nominee’s) ownership of such Uncertificated Security;

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(v)           the Servicer shall have the power, revocable by the Majority Noteholders or, with the consent of the Majority Noteholders and by the Trustee, to instruct the Trustee to make withdrawals and payments from the Transaction Accounts for the purpose of permitting the Servicer and the Trustee to carry out their respective duties hereunder and under the other Transaction Documents; and

(vi)          any Transaction Account held by it hereunder shall be maintained as a “securities account” as defined in the Massachusetts UCC, and that it shall be acting as an Intermediary for the Trustee itself as the “entitlement holder” (as defined in Section 8-102(a)(7) of the Massachusetts UCC) with respect to each such Account. The parties hereto agree that each Transaction Account shall be governed by the laws of the State of Massachusetts, and regardless of any provision in any other agreement, the “securities intermediary’s jurisdiction” (within the meaning of Section 8-110 of the Massachusetts UCC) shall be the State of Massachusetts. The Trustee acknowledges and agrees that (A) each item of property (whether investment property, financial asset, security, instrument or cash) credited to the Transaction Accounts shall be treated as a “financial asset” within the meaning of Section 8-102(a)(9) of the Massachusetts UCC and (B) notwithstanding anything to the contrary, if at any time the Trustee (in its capacity as securities intermediary) shall receive any order from the Trustee directing transfer or repurchase of any financial asset relating to the Accounts, the Trustee shall comply with such entitlement order without further consent by the Issuer, the Depositor or any other person. In the event of any conflict of any provision of this Section 6.15(c)(vi) with any other provision of this Indenture or any other agreement or document, the provisions of this Section 6.15(c)(vi) shall prevail.

ARTICLE VII
NOTEHOLDERS’ LISTS AND REPORTS

Section 7.01.        Issuer To Furnish Trustee Names and Addresses of Noteholders.

The Issuer will furnish or cause to be furnished to the Trustee (a) within one day after each Record Date, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Notes as of such Record Date and (b) at such other times as the Trustee may reasonably request in writing, within 30 days after receipt by the Issuer of any such request, a list of similar form and content as of a date not more than ten days prior to the time such list is furnished; provided that so long as the Trustee is the Note Registrar, no such list shall be required to be furnished.

Section 7.02.        Preservation of Information; Communications to Noteholders.

(a)           The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of the Holders of Notes contained in the most recent list furnished to the Trustee as provided in Section 7.01 and the names and addresses of Holders of Notes received by the Trustee in its capacity as Note Registrar. The Trustee may destroy any list furnished to it as provided in such Section 7.01 upon receipt of a new list so furnished.

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(b)           The Trustee shall furnish to the Noteholders promptly upon receipt of a written request therefor, duplicates or copies of all reports, notices, requests, demands, certificates and financial statements of the Issuer or of the Servicer furnished to the Trustee under the Transaction Documents.

Section 7.03.        Fiscal Year.

Unless the Issuer otherwise determines, the fiscal year of the Issuer shall end on December 31 of each year. The Issuer shall notify the Trustee of any change in its fiscal year.

Section 7.04.        Reports to Irish Stock Exchange, Etc.

In the event of a change in the Trustee, any paying agent or any transfer agent in Ireland, the Issuer will cause notification thereof to be published in the Irish Stock Exchange’s Daily Official List or as otherwise required by the rules of the Irish Stock Exchange.

Section 7.05.        Reports to S&P.

In addition to the information and reports specifically required to be provided to S&P pursuant to the terms of this Indenture or the other Transaction Documents, the Issuer, or the Servicer on behalf of the Issuer, shall compile and the Issuer shall then provide S&P with all information or reports delivered to the Trustee hereunder, and such additional information as S&P may from time to time reasonably request and the Issuer shall reasonably determine may be obtained and provided without unreasonable burden or expense.

ARTICLE VIII
TRANSACTION ACCOUNTS, DISBURSEMENTS AND RELEASES

Section 8.01.        Collection of Money.

Except as otherwise expressly provided herein, the Trustee may demand payment or delivery of, and shall receive and collect, directly and without intervention or assistance of any fiscal agent or other intermediary, all money and other property payable to or receivable by the Trustee pursuant to this Indenture. The Trustee shall apply all such money received by it as provided in this Indenture. Except as otherwise expressly provided in this Indenture, if any default occurs in the making of any payment or performance under any agreement or instrument that is part of the Indenture Collateral, the Trustee may take such action as may be appropriate to enforce such payment or performance, including the institution and prosecution of appropriate Proceedings. Any such action shall be without prejudice to any right to claim a Default or Event of Default under this Indenture and any right to proceed thereafter as provided in Article V.

Section 8.02.        Transaction Accounts.

(a)           On or prior to the Closing Date, the Servicer on behalf of the Issuer shall establish and maintain, in the name of the Trustee, for the benefit of the Noteholders and the Certificateholders, the Transaction Accounts (other than the Principal and Interest Accounts which shall be in the name of the Servicer) as provided in Section 7.01 of the Sale and Servicing Agreement.

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(b)           All funds required to be deposited in the Principal and Interest Account with respect to the preceding Due Period will be deposited in the Principal and Interest Account as provided in Section 7.01 of the Sale and Servicing Agreement. On or before each Determination Date, the Collections with respect to the preceding Due Period will be transferred from the Principal and Interest Account to the Note Distribution Account as provided in Section 7.05 of the Sale and Servicing Agreement.

(c)           On each Distribution Date, the Trustee shall distribute all amounts on deposit in the Note Distribution Account to Noteholders in respect of each Class of Notes and any other parties specified in the Priority of Payments, and to the Paying Agent under the Trust Agreement, for distribution to the Holders of the Trust Certificates in accordance with the Priority of Payments.

(d)           All moneys deposited from time to time in the Note Distribution Account pursuant to the Sale and Servicing Agreement and all deposits therein pursuant to this Indenture are for the benefit of the Noteholders and all investments made with such moneys including all income or other gain from such investments are for the benefit of the Noteholders as provided by the Sale and Servicing Agreement.

(e)           The Repurchase Price described in Section 10.01 hereof and the Refinancing Price described in Section 10.03 hereof shall be deposited in the Note Distribution Account.

The Trustee shall invest any funds in the Note Distribution Account as provided in the Sale and Servicing Agreement.

Section 8.03.        Officer’s Certificate.

Except for releases or conveyances required or permitted by the Sale and Servicing Agreement and the other Transaction Documents, the Trustee shall receive at least two Business Days’ notice when requested by the Issuer to take any action pursuant to Section 8.05(a), accompanied by copies of any instruments to be executed, and the Trustee shall also require, as a condition to such action, an Officer’s Certificate, in form and substance satisfactory to the Trustee, stating the effect of any such action, outlining the steps required to complete the same, and concluding that all conditions precedent to the taking of such action have been complied with and such action will not materially and adversely impair the security for the Notes or the rights of the Noteholders in contravention of the provisions of this Indenture.

Section 8.04.        Termination Upon Distribution to Noteholders.

Subject to Section 4.06, this Indenture and the respective obligations and responsibilities of the Issuer and the Trustee created hereby shall terminate upon the distribution to the Noteholders, the Trustee and the Backup Servicer of all amounts required to be distributed to such parties pursuant to Article III and the Sale and Servicing Agreement.

Section 8.05.        Release of Indenture Collateral.

(a)           Subject to the payment of its fees and reasonable expenses, the Trustee may, and when required by the provisions of this Indenture shall, execute instruments to release property

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from the lien of this Indenture, or convey the Trustee’s interest in the same, in a manner and under circumstances that are not inconsistent with the provisions of this Indenture, Section 5.08 of the Sale and Servicing Agreement and the other Transaction Documents. No party relying upon an instrument executed by the Trustee as provided in Article IV hereunder shall be bound to ascertain the Trustee’s authority, inquire into the satisfaction of any conditions precedent, or see to the application of any moneys.

(b)           Upon satisfaction and discharge of this Indenture pursuant to Section 4.06, the Trustee shall release any remaining portion of the Indenture Collateral that secured the Notes from the lien of this Indenture. The Trustee shall release property from the lien of this Indenture pursuant to this Section 8.05(b) only upon receipt of a request from the Issuer accompanied by an Officer’s Certificate and an Opinion of Counsel stating that all conditions precedent to such release have been satisfied.

Section 8.06.        Surrender of Notes Upon Final Payment.

By acceptance of any Note, the Holder thereof agrees to surrender such Note to the Trustee promptly, prior to such Noteholder’s receipt of the final payment thereon.

ARTICLE IX
SUPPLEMENTAL INDENTURES

Section 9.01.        Supplemental Indentures Without Consent of Noteholders.

(a)           Without the consent of the Holders of any Notes or the Class A-1A VFN Agent but with prior notice to the Rating Agencies, the Backup Servicer (if adversely affected thereby) and the Class A-1A VFN Agent, and with prior written consent of the Servicer (which consent shall not be unreasonably withheld) the Issuer and the Trustee, when authorized by an Issuer Order, at any time and from time to time, may enter into one or more supplemental indentures, in form satisfactory to the Trustee, for any of the following purposes; provided that the Issuer shall only enter into a supplemental indenture hereunder in compliance with Section 4.01(d) of the Trust Agreement and Section 9.06 hereof:

(i)            to correct or amplify the description of any property at any time subject to the lien of this Indenture, or better to assure, convey and confirm unto the Trustee any property subject or required to be subjected to the lien of this Indenture, or to subject to the lien of this Indenture additional property;

(ii)           to evidence the succession, in compliance with the applicable provisions hereof, of another person to the Issuer, and the assumption by any such successor of the covenants of the Issuer herein and in the Notes contained;

(iii)          to add to the covenants of the Issuer, for the benefit of the Holders of the Notes, or to surrender any right or power herein conferred upon the Issuer;

(iv)          to convey, transfer, assign, mortgage or pledge any property to or with the Trustee;

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(v)           to cure any ambiguity, to correct or supplement any provision herein or in any supplemental indenture that may be inconsistent with any other provision herein, in any supplemental indenture or in the Offering Memorandum or to make any other provisions with respect to matters or questions arising under this Indenture or in any supplemental indenture provided that, such action shall not, as evidenced by an Officer’s Certificate delivered to the Trustee, adversely affect the interests of the Noteholders or of the Class A-1A VFN Agent;

(vi)          to evidence and provide for the acceptance of the appointment hereunder by a successor trustee with respect to the Notes and to add to or change any of the provisions of this Indenture as shall be necessary to facilitate the administration of the trusts hereunder by more than one trustee, pursuant to the requirements of Article VI;

(vii)         to add to the conditions, limitations and restrictions on the authorized amount, terms and purposes of the issuance, authentication and delivery of any Class of Notes, as herein set forth, additional conditions, limitations and restrictions thereafter to be observed;

(viii)        to modify the restrictions on and procedures for resales and other transfers of the Notes to reflect any changes in Applicable Law or regulations (or the interpretation thereof) or to enable the Issuer or the Trustee to rely upon the exemption from registration under the Securities Act or the 1940 Act or to remove restrictions on resale or transfer to the extent required hereunder;

(ix)           to make such amendments to this Indenture or the Notes (other than an amendment of the type described in Section 9.02) as the Issuer, in its reasonable discretion, may deem necessary or advisable in order for the Class A-1A Notes, the Class A-1B Notes, the Class A-2A Notes, the Class A-2B Notes, the Class B Notes and the Class C Notes to qualify for or maintain their listing on the Irish Stock Exchange;

(x)            to evidence or implement any change to this Indenture required by regulations or guidelines enacted to support the USA PATRIOT Act; and

(xi)           to evidence or implement the issuance of Replacement Notes in connection with any Refinancing; and

(xii)          to make any amendment that will minimize the risk of an entity level tax being imposed on the Issuer or any amendment that pertains to minimizing the risk or incidence of a withholding tax or charge being imposed on any Noteholders or on payments made to the Issuer.

The Trustee is hereby authorized to join in the execution of any such supplemental indenture and to make any further appropriate agreements and stipulations that may be therein contained.

(b)           The Issuer and the Trustee, when authorized by an Issuer Order, may, also without the consent of any of the Holders of the Notes, but with prior notice to the Rating Agencies and the Class A-1A VFN Agent, and with prior written consent of the Servicer (which

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consent shall not be unreasonably withheld) enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the Holders of the Notes under this Indenture; provided that the consent of the Holders of the Notes shall be required unless the Issuer delivers an Officer’s Certificate stating that such action shall not (i) materially adversely affect the interests of any Noteholder, or (ii) cause the Issuer to be subject to an entity level tax or be classified as a publicly traded partnership within the meaning of Section 7704(b) of the Code or a taxable mortgage pool within the meaning of Section 7701(i) of the Code; provided further that such Officer’s Certificate with respect to clause (b)(ii) shall be based on the advice of nationally recognized tax counsel.

(c)           Notwithstanding any provision contained herein to the contrary, prior to entering into any supplemental indenture pursuant to Section 9.01, the Issuer and Trustee shall give prior written notice of such supplemental indenture to Moody’s and obtain written confirmation from S&P that entry by the Issuer and Trustee into such supplemental indenture satisfies the S&P Rating Condition.

Section 9.02.        Supplemental Indentures With Consent of Noteholders.

(a)           The Issuer and the Trustee, when authorized by an Issuer Order, also may, with prior notice to the Rating Agencies and the Backup Servicer (if adversely affected thereby) and with the consent of the Class A-1A VFN Agent (if adversely affected thereby), the Servicer and the Majority Noteholders by Act of such Holders (if adversely affected thereby), enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the Holders of the Notes under this Indenture; provided that (x) the Issuer shall only enter into a supplemental indenture hereunder in compliance with Section 4.01(c) of the Trust Agreement and Section 9.06 hereof, and (y) no such supplemental indenture shall, without the consent of (1) the Holder of each Note adversely affected thereby and (2) the Class A-1A VFN Agent (if adversely affected thereby):

(i)            change the Stated Maturity Date or the due date of any payment of any installment of principal or interest or Class A-1A VFN Commitment Fee, as applicable, in respect of any Note, reduce the principal amount of any Note or any rate of interest, or the Class A-1A VFN Commitment Fee or the portion of any of the Repurchase Price or of the Refinancing Price payable to the Holders of the Offered Notes and the Class D Notes, change the earliest date on which any Note may be repurchased or refinanced, change the Priority of Payments or any other provision of this Indenture or the Sale and Servicing Agreement that affects the application of collections on, or the proceeds of the sale of, any Loan Assets to the payment of principal, interest, Class A-1A VFN Commitment Fee, Class A-1A VFN Increased Costs, Class A-1A VFN Breakage Costs or of distributions pursuant to the Sale and Servicing Agreement, change any place of payment where, or the coin or currency in which, any Note or the principal thereof, or interest, Class A-1A VFN Commitment Fee, Class A-1A VFN Increased Costs, or Class A-1A VFN Breakage Costs are payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity Date (or, in the case of repurchase, on or after the applicable Repurchase Date);

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(ii)           reduce the percentage of the Aggregate Outstanding Principal Balance, the consent of the Holders of which is required for any such supplemental indenture, or the consent of the Holders of which is required for any waiver of compliance with any provision of this Indenture or defaults hereunder and their consequences as provided for in this Indenture;

(iii)          modify or alter the provisions of the proviso to the definition of the term “Outstanding” or modify or alter the exception in the definition of the term “Holder”;

(iv)          reduce the percentage of the Aggregate Outstanding Principal Balance or of the consent of the Holders required to direct the Trustee to direct the Issuer to sell or liquidate the Indenture Collateral pursuant to Section 5.04;

(v)           modify any provision of this Section 9.02 except to increase any percentage specified herein or to provide that certain additional provisions of this Indenture or the Transaction Documents cannot be modified or waived without the consent of the Holder of each Note affected thereby; or

(vi)          permit the creation of any lien ranking prior to or on a parity with the lien of this Indenture with respect to any part of the Indenture Collateral or, except as otherwise permitted or contemplated herein, terminate the lien of this Indenture on any property at any time subject hereto or deprive any Noteholder of the security provided by the lien of this Indenture.

(b)           Notwithstanding any provision contained herein to the contrary, prior to entering into any supplemental indenture effecting any change specified in clauses (a)(i) through (a)(vi) above, the Issuer shall deliver to the Trustee an Opinion of Counsel to the effect that such action shall not cause the Issuer to be subject to an entity level tax or be classified as a publicly traded partnership within the meaning of Section 7704(b) of the Code or a taxable mortgage pool within the meaning of Section 7701(i) of the Code.

(c)           The Trustee may rely in good faith upon an Officer’s Certificate as to whether such supplemental indenture will adversely affect any Holder of Notes, the Class A-1A VFN Agent, the Servicer or the Backup Servicer.

(d)           It shall not be necessary for any Act of Noteholders under this Section 9.02 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

(e)           Promptly after the execution by the Issuer and the Trustee of any supplemental indenture pursuant to this Section 9.02, the Trustee shall mail to the Rating Agencies, the Servicer, the Class A-1A VFN Agent, the Holders of the Notes to which such amendment or supplemental indenture relates a copy of such supplemental Indenture or a notice setting forth in general terms the substance of such supplemental indenture. Any failure of the Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

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(f)            Notwithstanding any provision contained herein to the contrary, prior to entering into any supplemental indenture pursuant to this Section 9.02, the Issuer and Trustee shall obtain written confirmation from each of Moody’s and S&P that entry by the Issuer and Trustee into such supplemental indenture satisfies the Moody’s Rating Condition and the S&P Rating Condition, respectively.

Section 9.03.        Execution of Supplemental Indentures.

In executing, or permitting the additional trusts created by, any supplemental indenture permitted by this Article IX or the modification thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and subject to Sections 6.01 and 6.02, shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture which Opinion of Counsel may rely upon an Officer’s Certificate with respect to the effect of any such supplemental indenture on the economic interests of the Holders of the Notes and the Class A-1A VFN Agent. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Trustee’s own rights, duties, liabilities or immunities under this Indenture or otherwise. The Trustee shall provide copies of each supplemental indenture to the Rating Agencies.

Section 9.04.        Effect of Supplemental Indenture.

Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and shall be deemed to be modified and amended in accordance therewith with respect to the Notes affected thereby, and the respective rights, limitations of rights, obligations, duties, liabilities and immunities under this Indenture of the Trustee, the Issuer and the Noteholders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

Section 9.05.        Reference in Notes to Supplemental Indentures.

Notes authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may, and if required by the Trustee shall, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Issuer or the Trustee shall so determine, new Notes so modified as to conform, in the opinion of the Trustee and the Issuer, to any such supplemental indenture may be prepared and executed by the Issuer and authenticated and delivered by the Trustee in exchange for Outstanding Notes.

Section 9.06.        Consent of the Servicer and the Backup Servicer.

The Issuer agrees that it will not permit to become effective any supplemental indenture that adversely affects the obligations or rights of the Servicer or, to the extent that such supplemental indenture would adversely affect the Backup Servicer in its capacity as successor Servicer, the Backup Servicer or the amount or priority or payment of any fees or other amounts payable to the Servicer or Backup Servicer unless, in each such case the Servicer or, as applicable, the Backup Servicer, has been given prior written notice of such supplemental indenture and has consented thereto in writing.

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ARTICLE X
OPTIONAL REPURCHASE AND REFINANCING OF NOTES; CLASS A-1A VFN
NOTE MECHANICS

Section 10.01.      Optional Repurchase.

At any time after the date on which the Aggregate Outstanding Loan Balance is less than 15% of the Expected Aggregate Outstanding Loan Balance or, if less, the Aggregate Outstanding Loan Balance as of the Effective Date, the Issuer may effect an Optional Repurchase of the Offered Notes and the Class D Notes in whole, but not in part, at the direction of the Holders of at least 66 2/3% of the Outstanding Principal Balance of the Class E Notes (an “Optional Repurchase”), on any Distribution Date specified in a written notice from such Holders to the Issuer and the Trustee of their election to cause the Issuer to repurchase the Offered Notes and the Class D Notes which directs the Issuer to deposit in full in the Note Distribution Account an amount equal to the Repurchase Price; provided that such notice shall be delivered at least 15 Business Days prior to the proposed Repurchase Date. Thereafter, the Servicer or the Issuer shall furnish notice of such election to the Trustee, the Owner Trustee, the Class A-1A VFN Agent and the Rating Agencies no later than ten Business Days prior to the proposed Repurchase Date and the Issuer shall deposit by no later than 1:00 p.m. (New York time) on the Repurchase Date with the Trustee in the Note Distribution Account the Repurchase Price of the Notes to be repurchased on the Repurchase Date, and all such Notes shall be due and payable on the Repurchase Date and all Class A-1A VFN Commitments shall terminate on the Repurchase Date, after the furnishing of the notice to each Holder of Notes as required by Section 10.05. The Issuer may withdraw any notice of repurchase or specify a new Repurchase Date at any time prior to the proposed Repurchase Date set forth in any prior notice of repurchase by providing written notice to the Trustee, the Owner Trustee, the Class A-1A VFN Agent and the Rating Agencies by no later than the second Business Day preceding such Repurchase Date.

Section 10.02.      Notes Payable on Repurchase Date.

(a)           The Notes to be repurchased shall, following notice of repurchase as required by Section 10.05, and unless the Issuer shall have provided written notice to the Trustee of its election to withdraw such notice of repurchase as contemplated in Section 10.01, become due and payable on the Repurchase Date at the Repurchase Price and all Class A-1A VFN Commitments shall terminate on the related Repurchase Date and (unless the Issuer shall default in payment of the Repurchase Price) no interest shall accrue on the Repurchase Price for any period after the date to which accrued interest is calculated for purposes of calculating the Repurchase Price. Following the repurchase in whole of the Offered Notes and the Class D Notes, the Class E Notes will be repurchased in whole whether or not any amounts are available to the Issuer for distribution to the Holders of the Class E Notes in connection with such repurchase.

(b)           The portion of the Repurchase Price constituting payment of principal of the Offered Notes and the Class D Notes shall be distributed to Noteholders in accordance with Section 7.05(c) of the Sale and Servicing Agreement and all other amounts included in the Repurchase Price shall be distributed in accordance with Section 7.05(a) of the Sale and Servicing Agreement.

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(c)           On the Repurchase Date, the Indenture Collateral (other than the Transaction Accounts) shall cease to constitute assets of the Issuer and the Noteholders shall have no interest therein nor any claim to any distributions in respect of the Indenture Collateral (other than the Transaction Accounts).

Section 10.03.      Optional Refinancing.

(a)           The Issuer may effect a Refinancing of the Offered Notes and the Class D Notes at the direction of the Holders of at least 66-2/3% of the Outstanding Principal Balance of the Class E Notes (a “Refinancing”), in whole but not in part, on any Refinancing Date by payment of the Refinancing Price to the Holders of the Offered Notes and the Class D Notes and other Persons entitled thereto. To effect a Refinancing, such Holders shall deliver a written notice to the Issuer and the Trustee of their election to cause the Issuer to effect a Refinancing; provided that such notice shall be delivered at least 15 Business Days prior to the proposed Refinancing Date. Thereafter, the Issuer shall deposit in the Note Distribution Account by no later than 1:00 p.m. (New York time) on the Business Day immediately preceding the applicable Refinancing Date an amount equal to the Refinancing Price and shall comply with the provisions of this Section 10.03 and Section 10.04.

(b)           Any Refinancing shall be permitted only in connection with an issuance of additional notes (such notes, the “Replacement Notes”), the proceeds of which will be used to fully prepay all Classes of Offered Notes and the Class D Notes. Upon receipt of a notice of Refinancing, the Servicer will cause the Issuer to issue and the Trustee shall, upon receipt of an Issuer Order, authenticate and deliver Replacement Notes having the terms, priorities and conditions set forth in a supplemental indenture to this Indenture approved by the Holders of at least 66-2/3% of the Aggregate Outstanding Principal Balance of the Class E Notes and approved by the Servicer. No Refinancing shall be permitted hereunder unless, after giving effect thereto, the Offered Notes and the Class D Notes shall be prepaid in full. The issue of the Replacement Notes, and the prepayment of the Offered Notes and the Class D Notes, will be contingent on receipt by the Issuer of sufficient funds from the issuance of the Replacement Notes to prepay in full the Offered Notes and the Class D Notes and pay certain other amounts by payment in full of the Refinancing Price.

(c)           The portion of the Refinancing Price constituting payment of principal of the Offered Notes and the Class D Notes shall be distributed to Noteholders in accordance with Section 7.05(c) of the Sale and Servicing Agreement and all other amounts included in the Refinancing Price shall be distributed in accordance with Section 7.05(a) of the Sale and Servicing Agreement.

(d)           Offered Notes in the form of Definitive Notes called for prepayment must be surrendered at the place specified in the notice of Refinancing given pursuant to Section 10.05 in order for the Holder to receive its ratable portion of the Refinancing Price.

Section 10.04.      Form of Refinancing Notice by the Issuer.

Notice of a Refinancing will be given by the Issuer to the Trustee, the Owner Trustee, the Class A-1A VFN Agent, and the Rating Agencies not less than ten Business Days prior to the

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proposed Refinancing Date. The Issuer will have the option to withdraw any notice of Refinancing at any time prior to the scheduled Refinancing Date by written notice to the Trustee, the Servicer, the Owner Trustee, the Class A-1A VFN Agent, and the Rating Agencies delivered at least two Business Days prior to the proposed Refinancing Date. A withdrawal of such notice of Refinancing or the inability of the Issuer to complete Refinancing of the Offered Notes and the Class D Notes will not constitute an Event of Default.

Section 10.05.      Form of Repurchase or Refinancing Notice by the Trustee.

(a)           Notice of repurchase under Section 10.01 or refinancing under Section 10.03 shall be given by the Trustee to each Holder of Notes by facsimile, electronic mail, overnight courier or by first-class mail, postage prepaid, and may also be transmitted or mailed prior to the applicable Repurchase Date or Refinancing Date, as applicable, as of the close of business on the Record Date preceding the applicable Repurchase Date or Refinancing Date, as applicable, at each such Holder’s address appearing in the Note Register. In addition, for so long as any Notes are listed on the Irish Stock Exchange and so long as the rules of such exchange so require, notice of an Optional Repurchase or Refinancing will also be given by the Trustee to the Ireland Paying Agent for delivery to the Irish Stock Exchange.

(b)           All notices of repurchase or refinancing (including notice given by the Issuer pursuant to Section 10.01) shall state:

(i)            the Repurchase Date or Refinancing Date, as applicable;

(ii)           the Repurchase Price or Refinancing Price, as applicable;

(iii)          that the Record Date otherwise applicable to such Repurchase Date or Refinancing Date, as applicable, is not applicable and that payments shall be made only upon presentation and surrender of such Notes and the place where such Notes are to be surrendered for payment of the Repurchase Price or Refinancing Price, as applicable (which shall be the office or agency of the Issuer to be maintained as provided in Section 3.02); and

(iv)          that interest and Class A-1A VFN Commitment Fee, as applicable, on the Notes shall cease to accrue on the Repurchase Date or Refinancing Date, as applicable.

(c)           Notice of repurchase or refinancing of the Notes shall be given by the Trustee in the name and at the expense of the Issuer. Failure to give notice of repurchase or refinancing, or any defect therein, to any Holder of any Note shall not impair or affect the validity of the repurchase or refinancing of any other Note.

Section 10.06.      Draws and Repayments of Class A-1A VFN Notes.

(a)           Pursuant to the Class A-1A VFN Purchase Agreement and subject to compliance with the conditions set forth therein, the Issuer (or the Servicer on behalf of the Issuer) may request, and the Holders of the Class A-1A VFN Notes (or any Liquidity Provider with respect to such Holders) will be obligated to make, advances under the Class A-1A VFN Notes to acquire Additional Loans and/or to fund the Exposure Amounts relating to Revolving Loans and

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Delayed Draw Term Loans on any Business Day from and including the Closing Date and to but excluding the Commitment Termination Date with respect to the Class A-1A VFN Notes, in an aggregate amount not to exceed the Maximum Class A-1A VFN Commitment.

(b)           A Class A-1A VFN Prepayment may be made on any Distribution Date in accordance with the Priority of Payments or any Business Day other than a Distribution Date (the date of such a Class A-1A VFN Prepayment, an “Interim Distribution Date”). The Servicer on behalf of the Issuer shall provide not less than one Business Day’s notice to the Class A-1A VFN Agent (with a copy to the Trustee) in connection with any Class A-1A VFN Prepayment to be made on an Interim Distribution Date. Any Class A-1A VFN Breakage Costs shall be paid on the first Distribution Date following the applicable Interim Distribution Date in accordance with the Priority of Payments; provided that no Class A-1A VFN Breakage Costs shall be paid in connection with any Class A-1A VFN Prepayment made on a Permitted Prepayment Date. The aggregate principal amount of any Class A-1A VFN Prepayment (other than any prepayment of principal required to be made in accordance with the Priority of Payments) of the Class A-1A VFN Notes (taken as a whole) will be at least $250,000 (and integral multiples of $1,000 in excess thereof) (or, if the aggregate drawn amount is less than $250,000, such lesser amount). Any Class A-1A VFN Prepayment will be made by the Issuer pro rata to all of the outstanding Class A-1A VFN Notes.

(c)           Draws may be made by the Issuer from time to time in accordance with the procedures specified in the Class A-1A VFN Purchase Agreement.

(d)           On the Commitment Termination Date, the Issuer (or the Servicer on behalf of the Issuer) shall make a Draw under the Class A-1A VFN Notes in an amount equal to the undrawn amount of the Maximum Class A-1A VFN Commitments as of such date. The Trustee will (at the direction of the Servicer) upon receipt of such Draw, out of the proceeds of such Draw, deposit into the Class A-1A VFN Funding Account an amount sufficient to cause the Class A-1A VFN Funding Test to be satisfied and shall deposit the remaining proceeds of such Draw into the Principal and Interest Account where such amount shall be applied in accordance with the Priority of Payments as Principal Collections on the next Distribution Date, which, for the avoidance of doubt, shall be the next Business Day.

Section 10.07.      Class A-1A VFN Noteholder Rating Criteria.

If any Class A-1A VFN Noteholder at any time fails to satisfy the Rating Criteria such Noteholder shall be required to use all reasonable efforts to assign, within 30 days of such failure, all of its rights and obligations in respect of its Class A-1A VFN Notes to one or more Persons that satisfies, on the effective date of the proposed replacement, the Rating Criteria (unless such Holder again satisfies the Rating Criteria within 30 days after such failure); provided that any assignment of a Class A-1A VFN Noteholder’s interest in a Class A-1A VFN Note shall comply with the terms of this Indenture and of the Class A-1A VFN Purchase Agreement. If such Class A-1A VFN Noteholder is unable to make such assignment within 30 days after its failure to satisfy the Rating Criteria, the Issuer shall make a Draw in the amount of the entire undrawn portion of such Noteholder’s Class A-1A VFN Commitment and shall make a corresponding deposit of the proceeds of such Draw into the Class A-1A VFN Funding Account. The amount of such Draw will not bear interest, but the Issuer will pay the Class A-1A VFN

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Commitment Fee on the amount of such Draw until the date such Holder makes an assignment to a replacement Holder which satisfies the Rating Criteria. Upon the effectiveness of such assignment, the portion of such Draw remaining in the Class A-1A VFN Funding Account shall be repaid to the Class A-1A VFN Noteholder making such assignment. The purchase of Class A-1A VFN Notes (whether in connection with the initial placement or in a subsequent transfer) by any purchaser who does not satisfy the Rating Criteria set forth in clause (a) of the definition thereof at the time of such purchase but who is then entitled to the benefits of a Liquidity Facility described in clause (c) of such definition shall not be permitted unless the Rating Agency Condition is satisfied with respect to the acquisition of Class A-1A VFN Notes by such purchaser and such Liquidity Provider enters into an assignment and acceptance agreement agreeing to undertake and be bound by the provisions of the Class A-1A VFN Note Purchase Agreement applicable thereto.

Section 10.08.      Class A-1A VFN Holder Collateral Account.

(a)           Prior to the Closing Date, the Issuer shall establish initially with the Trustee and cause to be maintained a segregated securities account, in the name of the Trustee in trust for the benefit of the Issuer, the Securityholders and the applicable Class A-1A VFN Noteholders and in which no other Person shall have any legal or beneficial interest, which account shall be designated the Class A-1A VFN Holder Collateral Account (the “Class A-1A VFN Holder Collateral Account”). If at any time any Holder of a Class A-1A VFN Note shall be required to deposit funds into the Class A-1A VFN Holder Collateral Account pursuant to the terms of the Class A-1A VFN Purchase Agreement, then (i) the Servicer shall direct the Trustee to create, and the Trustee shall create, a segregated subaccount of the Class A-1A VFN Holder Collateral Account for such Class A-1A VFN Noteholder (each, a “Holder Subaccount”) and (ii) the Servicer shall deposit all funds received from such Holder into such Holder Subaccount. All payments of principal of or interest on the Class A-1A VFN Notes held by such Holder, and any payments of Class A-1A VFN Commitment Fee otherwise payable to such Holder, shall be deposited in such Holder Subaccount to the extent provided in the Class A-1A VFN Purchase Agreement. The only permitted withdrawal from or application of funds credited to a Holder Subaccount shall be, notwithstanding the occurrence of any Event of Default, to satisfy such Holder’s obligations under the Class A-1A VFN Purchase Agreement, as specified in this Section 10.08 and to return such amounts to such Holder in accordance with Sections 10.08(c) and 10.08(d).

(b)           The deposit of funds into a Holder Subaccount pursuant to Section 10.08(a) by any Holder of a Class A-1A VFN Note shall not constitute a Draw by the Issuer and shall not constitute a utilization of the Class A-1A VFN Commitment of such Holder, and the funds so deposited shall not constitute principal outstanding under such Class A-1A VFN Note. However, from and after the establishment of a Holder Subaccount with respect to any Holder of Class A-1A VFN Notes until otherwise provided below, (i) the obligation of such Holder to advance funds under its Class A-1A VFN Notes as part of any Draw under this Indenture and the Class A-1A VFN Purchase Agreement shall be satisfied by the Servicer withdrawing funds from such Holder Subaccount in the amount of such Holder’s share of such Draw (determined in accordance with the Priority of Payments and the Class A-1A VFN Purchase Agreement); provided that such Class A-1A VFN Noteholder shall remain obligated in respect of such Draw to the extent the amount thereof exceeds the amount on deposit in such Holder Subaccount, and

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(ii) all payments of principal with respect to advances made by such Holder under its Class A-1A VFN Notes (whether or not originally funded from such Holder Subaccount) and all payments of interest thereon shall be satisfied by the Servicer depositing or causing the deposit of the related funds into such Holder Subaccount (in an amount determined in accordance with the Class A-1A VFN Purchase Agreement), with notice of such deposit to the Class A-1A VFN Agent. The Servicer shall have full power and authority to withdraw funds (with notice of any such withdrawal to the Class A-1A VFN Agent) from each such Holder Subaccount at the time of, and in connection with, the making of any such Draw and to deposit funds (with notice of any such deposit to the Class A-1A VFN Agent) into each such Holder Subaccount, all in accordance with the terms of and for the purposes set forth in this Indenture and the related Class A-1A VFN Purchase Agreement.

(c)           If at any time the amount of funds on deposit in the Holder Subaccount relating to any Holder of Class A-1A VFN Notes, net of any reinvestment earnings in respect of Class A- 1A VFN Permitted Investments, exceeds the undrawn amount of the Class A-1A VFN Commitment of such Holder (whether due to a reduction in the Class A-1A VFN Commitment or otherwise), then the Servicer on behalf of the Issuer shall instruct the Trustee to remit to such Holder a specified portion of such funds then held in the related Holder Subaccount in an amount equal to such excess.

(d)           If at any time a Holder of Class A-1A VFN Notes is no longer required to deposit or maintain funds in the Class A-1A VFN Holder Collateral Account pursuant to the terms of the Class A-1A VFN Purchase Agreement to which such Holder is a party, then the Servicer shall notify the Trustee of such fact and direct the Trustee to remit all funds then held in the relevant Holder Subaccount (after giving effect to any Draw in respect of such Class A-1A VFN Notes to be made on such date) (other than reinvestment earnings in respect of Class A-1A VFN Permitted Investments which shall be remitted to such Holder as provided in Section 10.08(e)) to such Holder (with notice thereof to the Class A-1A VFN Agent), and thereafter all payments of principal and interest with respect to advances made by such Holder shall be paid directly to such Holder in accordance with the terms of this Indenture and the Class A-1A VFN Purchase Agreement.

(e)           For so long as any amounts are on deposit in a Holder Subaccount, the Trustee shall, at the written direction of the related Class A-1A VFN Noteholder (which may be in the form of standing instructions), invest and reinvest such funds in investments which satisfy the definition of the term “Permitted Investments” but which mature not later than the day following the date of acquisition thereof (collectively, “Class A-1A VFN Permitted Investments”). Investment earnings received during each Due Period in respect of Class A-1A VFN Permitted Investments in the Holder Subaccount of a Class A-1A VFN Noteholder will be paid to such Holder on the related Distribution Date. In the absence of such instructions, such funds will remain uninvested.

(f)            If the Class A-1A VFN Holder Collateral Account, any Holder Subaccount or any funds on deposit therein, or otherwise to the credit of any Holder Subaccount, shall become subject to any writ, order, judgment, warrant of attachment, execution or similar process, the Trustee shall give the Servicer, the Issuer and the related Holder immediate notice thereof.

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Section 10.09.      Class A-1A VFN Funding Account.

(a)           Prior to the Closing Date, the Servicer shall establish with the Trustee and cause to be maintained a segregated securities account, in the name of the Trustee in trust for the benefit of the Issuer and the Securityholders, which account shall be designated the “Class A-1A VFN Funding Account”. Amounts shall be deposited from time to time into the Class A-1A VFN Funding Account in accordance with the Priority of Payments and as described herein (including in connection with Section 10.07), and may be withdrawn therefrom by the Servicer on behalf of the Issuer to acquire Additional Loans and to fund Exposure Amounts with respect to Revolving Loans and Delayed Draw Term Loans and as further provided herein. The only permitted withdrawals from or applications of funds on deposit in, or otherwise to the credit of, the Class A-1A VFN Funding Account shall be (i) during the Ramp-Up Period and the Replenishment Period, to acquire Additional Loans, (ii) to fund Exposure Amounts with respect to Revolving Loans and Delayed Draw Term Loans and (iii) after the Commitment Termination Date, to deposit to the Note Distribution Account for distribution for the Noteholders in accordance with the Priority of Payments, any amounts in excess of the amount required to be maintained on deposit in the Class A-1A VFN Funding Account to cause the Class A-1A VFN Funding Test to be satisfied. If at any time during the Replenishment Period the Issuer receives a payment of principal with respect to a Revolving Loan and, after giving effect to such payment (and any corresponding increase in the Exposure Amount), the Class A-1A VFN Funding Test is not satisfied, the Servicer will transfer an amount of Principal Collections sufficient to cause the Class A-1A VFN Funding Test to be satisfied from the Principal Collection Account to the Class A-1A VFN Funding Account. Any interest earned on Permitted Investments held in the Class A- 1A VFN Funding Account shall be applied as Interest Collections, as directed by the Servicer in writing.

(b)           If the Class A-1A VFN Funding Account or any funds on deposit therein, or otherwise to the credit of the Class A-1A VFN Funding Account, shall become subject to any writ, order, judgment, warrant of attachment, execution or similar process, the Trustee shall give the Servicer and the Issuer immediate notice thereof. The Issuer shall not have any legal, equitable or beneficial interest in the Class A-1A VFN Funding Account other than in accordance with the Priority of Payments.

(c)           By Issuer Order (which may be in the form of standing instructions) or at the direction of the Servicer on behalf of the Issuer, the Issuer (or the Servicer on behalf of the Issuer) shall at all times direct the Trustee or if other than the Trustee, the Qualified Institution holding such account, to, and, upon receipt of such Issuer Order or direction from the Servicer, the Trustee shall, invest not less than fifty percent (50%) of all funds received into the Class A- 1A VFN Funding Account during a Due Period, and amounts received in prior Due Periods and retained in the Class A-1A VFN Funding Account, in Permitted Investments maturing no later than five Business Days following the date of such investment with the remainder of such funds to be invested in Permitted Investments maturing no later than thirty days following the date of such investment.

(d)           If, prior to the occurrence of a Servicer Default or an Event of Default, neither the Issuer nor the Servicer shall have given any investment directions pursuant to Section 10.09(c), the Trustee shall seek instructions from the Issuer or the Servicer within two Business Days after

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transfer of such funds to the Class A-1A VFN Funding Account. If (i) the Trustee does not receive written instructions from the Issuer or the Servicer within two Business Days after a request therefore as described in the preceding sentence or (ii) a Servicer Default or an Event of Default shall have occurred, the Trustee shall invest and reinvest the funds held in such Class A- 1A VFN Funding Account, as fully as practicable, but only in one or more Permitted Investments of the type described in clause (vi) of the definition thereof which are available no later than five Business Days following such investment or reinvestment. All interest and other income from such investments made pursuant to Section 10.09(c) or this Section 10.09(d) shall be deposited in the Principal and Interest Account, any gain realized from such investments shall be credited to the Class A-1A VFN Funding Account, and any loss resulting from such investments shall be charged to the Class A-1A VFN Funding Account. The Trustee shall not in any way be held liable by reason of any insufficiency of the Class A-1A VFN Funding Account resulting from any loss relating to any such investment, except with respect to investments in obligations of U.S. Bank National Association or any Affiliate thereof.

ARTICLE XI
MISCELLANEOUS

Section 11.01.      Confidentiality.

(a)           No Receiving Party shall use any Confidential Information except to the extent necessary to evaluate and monitor the transaction represented by the Transaction Documents. Each Receiving Party agrees (and each Holder of a Note is deemed to agree) that it will make available Confidential Information only to (i) its officers, employees, directors, affiliates, advisors, agents, shareholders, members, partners and managers who have a need to know such Confidential Information for the purpose of evaluating or monitoring the transaction, (ii) its accounting firms, legal counsel, and with respect to any Class A-1A VFN Noteholder, its Liquidity Provider (and their respective officers, employees, directors, agents, affiliates and advisors) and (iii) any prospective purchasers of a Note, in each case who have need to know such Confidential Information for the purposes of evaluating or monitoring the transaction (collectively, “representatives”), and that all persons to whom such Confidential Information is made available will be made aware of the confidential nature of such Confidential Information and agree to be bound by the restrictions imposed by this Agreement on the use of Confidential Information.

(b)           No Receiving Party or any of its representatives will disclose to any third party, except as shall be required by law, any Confidential Information.

(c)           Each Receiving Party acknowledges and agrees that the breach or threatened breach of this Section 11.01 by it may result in irreparable and continuing damage to the Disclosing Parties, for which there will be no adequate remedy at law. Accordingly, each Receiving Party agrees that the Disclosing Parties shall be entitled, without prejudice, to all the rights and remedies available to each of them, including an injunction or specific performance to prevent breaches or threatened breaches of any of the provisions of this Agreement by an action instituted in a court having proper jurisdiction.

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(d)           The confidentiality provisions of this Section 11.01 shall remain in effect for a period commencing on the date hereof and end two years after the Stated Maturity Date.

(e)           If any Receiving Party or any of its affiliates or representatives is required by legal process to disclose any of the Confidential Information, such Receiving Party shall provide the Disclosing Parties with notice of such requirement so that the Disclosing Parties may seek a protective order or other appropriate remedy or waive compliance with the provisions of this Agreement. If a protective order or other remedy is not obtained within a reasonable amount of time, such Receiving Party, its affiliates and representatives may, without violating this Agreement, disclose that portion of the Confidential Information that such party is legally required to disclose.

Section 11.02.      Form of Documents Delivered to Trustee.

In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

Any certificate or opinion of a Responsible Officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which the certificate or opinion is based are erroneous. Any such certificate of a Responsible Officer or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Servicer, the Issuer, the Trust Depositor, or other appropriate Person, stating that the information with respect to such factual matters is in the possession of the Servicer, the Issuer, the Trust Depositor or such other Person, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous.

Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

Whenever in this Indenture, in connection with any application or certificate or report to the Trustee, it is provided that the Issuer shall deliver any document as a condition of the granting of such application, or as evidence of the Issuer’s compliance with any term hereof, it is intended that the truth and accuracy in all material respects, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Issuer to have such application granted or to the sufficiency of such certificate or report. The foregoing shall not, however, be construed to affect the Trustee’s right to rely upon the truth and accuracy of any statement or opinion contained in any such document as provided in Article VI.

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Section 11.03.      Acts of Noteholders.

(a)           Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Noteholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Noteholders in person or by agents duly appointed in writing; and except as herein otherwise expressly provided such action shall become effective when such instrument or instruments are delivered to the Trustee, and, where it is hereby expressly required, to the Issuer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Noteholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.01) conclusive in favor of the Trustee and the Issuer, if made in the manner provided in this Section 11.03.

(b)           The fact and date of the execution by any person of any such instrument or writing may be proved in any manner that the Trustee deems sufficient.

(c)           The ownership of Notes shall be proved by the Note Register.

(d)           Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Notes shall bind the Holder of every Note issued upon the registration thereof or in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Note.

Section 11.04.      Notices, etc., to Trustee and Others.

(a)           Any request, demand, authorization, direction, notice, consent, waiver or Act of Noteholders or other documents provided or permitted by this Indenture shall be in writing and if such request, demand, authorization, direction, notice, consent, waiver or act of Noteholders is to be made upon, given or furnished to or filed with:

(i)            the Trustee by any Noteholder or by the Issuer, shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to and mailed, by certified mail, return receipt requested, hand delivered, sent by overnight courier service guaranteeing next day delivery or by telecopy in legible form, to the Trustee and received at the Corporate Trust Office;

(ii)           the Issuer by the Trustee or by any Noteholder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first class postage prepaid, hand delivered, sent by overnight courier service or by telecopy in legible form, to the Issuer addressed to ARCC Commercial Loan Trust 2006, c/o Wilmington Trust Company, 1110 North Market Street, Wilmington, DE 19890, Attention: Ian Monigle, Facsimile: (302) 636-4140, with a copy to the Servicer as provided in clause (iv) below or at any other address previously furnished in writing to the Trustee by the Issuer;

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(iii)          the Class A-1A VFN Agent by the Trustee or by the Issuer shall be sufficient for every purpose hereunder in writing and mailed, first class postage prepaid, hand delivered, sent by overnight courier service or by telecopy in legible form, to the Class A-1A VFN Agent addressed to it at U.S. Bank National Association, One Federal Street, Boston, Massachusetts 02110, Attention: CDO Unit, Reference ARCC 2006-1, Facsimile: 866-386-0156 or any other address previously furnished in writing to the Trustee by the Class A-1A VFN Note Agent;

(iv)          the Servicer by the Issuer or the Trustee shall be sufficient for every purpose hereunder if in writing and mailed, first class postage prepaid, hand delivered, sent by overnight courier service or by telecopy in legible form, to the Servicer addressed to Ares Capital Corporation, 780 Third Avenue, 96th Floor New York, NY 10017, Attention: Michael J. Arougheti, Facsimile: (212) 750-1777, with a copy to: Ares Capital Management, 1999 Avenue of the Stars, Suite 1900, Los Angeles, California 70067, Attention: Daniel F. Nguyen, Facsimile: (312) 201-4189, or at any other address previously furnished in writing to the Issuer or the Trustee by the Servicer;

(v)           the Ireland Paying Agent by the Issuer or the Trustee shall be sufficient for every purpose hereunder if in writing and mailed, first class postage prepaid, hand delivered, sent by overnight courier service in legible form, to the Ireland Paying Agent addressed to JP Morgan Bank (Ireland) PLC, JP Morgan House, ITS, Dublin 1, Ireland, Attention: [                   ], or at any other address previously furnished in writing to the Issuer or the Trustee by the Ireland Paying Agent;

(b)           Notices required to be given to the Rating Agencies by the Issuer, the Trustee or the Owner Trustee shall be in writing, personally delivered or mailed by certified mail, return receipt requested, to (i) in the case of S&P, at the following address: Standard and Poor’s Rating Service, 55 Water Street, 41st Floor, New York, New York 10007, Attention: Surveillance: Asset-Backed Services, and via electronic mail to CDO_Surveillance@sandp.com and (ii) in the case of Moody’s, at the following address: Moody’s Investors Service, CDO Monitoring Department, 99 Church Street, New York, New York 10007, cdomonitoring@moodys.com; or as to each of the foregoing, at such other address as shall be designated by written notice to the other parties; provided that no notice shall be required to be given to the Rating Agencies until a Class of Notes has been rated by such Rating Agency.

(c)           Delivery of any request, demand, authorization, direction, notice, consent, waiver or Act of Noteholders or other documents made as provided above will be deemed effective: (i) if in writing and delivered in Person or by overnight courier service, on the date it is delivered; (ii) if sent by facsimile transmission, on the date that transmission is received by the recipient in legible form (it being agreed that the burden of proving receipt will be on the sender and will not be met by a transmission report generated by the sender’s facsimile machine); and (iii) if sent by mail, on the date that mail is delivered or its delivery is attempted; in each case, unless the date of that delivery (or attempted delivery) or that receipt, as applicable, is not a Business Day or that communication is delivered (or attempted) or received, as applicable, after the close of business on a Business Day, in which case that communication shall be deemed given and effective on the first following day that is a Business Day.

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Section 11.05.      Notices to Noteholders; Waiver.

Where this Indenture provides for notice to Noteholders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, by nationally recognized overnight courier or by first-class, postage prepaid to each Noteholder affected by such event, at his address as it appears on the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Noteholders is given by mail, neither the failure to mail such notice nor any defect in any notice so mailed to any particular Noteholder shall affect the sufficiency of such notice with respect to other Noteholders, and any notice that is mailed in the manner herein provided shall conclusively be presumed to have been duly given.

The Trustee will deliver to each Noteholder shown on the Note Register any readily available information or notice requested to be so delivered, at the expense of the Issuer.

Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Noteholders shall be filed with the Trustee but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such a waiver.

In case, by reason of the suspension of regular mail service as a result of a strike, work stoppage or similar activity, it shall be impractical to mail notice of any event to Noteholders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice.

Where this Indenture provides for notice to the Rating Agencies, failure to give such notice shall not affect any other rights or obligations created hereunder, and shall not under any circumstance constitute an Event of Default.

In addition, for so long as any Class of Notes is listed on the Irish Stock Exchange and the rules thereof so require, notices to Holders of such Notes will also be given by publication in the Irish Stock Exchange’s Daily Official List or as otherwise required by the rules of the Irish Stock Exchange.

Section 11.06.      Alternate Payment and Notice Provisions.

Notwithstanding any provision of this Indenture or any of the Notes to the contrary, the Issuer may enter into any agreement with any Holder of a Note providing for a method of payment, or notice by the Trustee or any Paying Agent to such Holder, that is different from the methods provided for in this Indenture for such payments or notices. The Issuer will furnish to the Trustee a copy of each such agreement and the Trustee, at the expense of the Issuer, will cause payments to be made and notices to be given in accordance with such agreements.

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Section 11.07.      Effect of Headings.

The Article and Section headings herein are for convenience only and shall not affect the construction hereof.

Section 11.08.      Successors and Assigns.

All covenants and agreements in this Indenture and the Notes by the Issuer shall bind its successors and assigns, whether so expressed or not. All agreements of the Trustee in this Indenture shall bind its successors, co-trustees and agents.

Section 11.09.      Severability.

In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 11.10.      Benefits of Indenture.

Nothing in this Indenture or in the Notes, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Secured Parties, and any other Person with an ownership interest in any part of the Indenture Collateral, any benefit or any legal or equitable right, remedy or claim under this Indenture.

Section 11.11.      Legal Holidays.

In any case where the date on which any payment is due shall not be a Business Day, then (notwithstanding any other provision of the Notes or this Indenture) payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date on which nominally due, and no interest shall accrue for the period from and after any such nominal date; provided that, in the case of any Notes that accrue interest at a floating rate, interest on such Notes shall accrue from and including the immediately preceding Distribution Date to but excluding the next Business Day following the nominal Distribution Date.

Section 11.12.      GOVERNING LAW.

(a)           EXCEPT AS OTHERWISE STATED HEREIN, THIS INDENTURE, EACH SUPPLEMENT AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER (AND UNDER OR IN RESPECT OF ANY SUCH AFOREMENTIONED DOCUMENT) SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

(b)           NOTWITHSTANDING SECTION 11.12(a), ALL MATTERS ARISING UNDER OR IN RESPECT OF SECTION 6.15 HEREOF (AND WHETHER ARISING HEREUNDER OR IN RESPECT HEREOF OR IN RESPECT OF ANY SUPPLEMENT OR THE NOTES AND INCLUDING THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE

88

PARTIES HEREUNDER OR UNDER ANY SUCH DOCUMENT) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE MASSACHUSETTS UCC.

(c)           EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS INDENTURE. Each party hereto (i) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other parties hereto have been induced to enter into this Indenture by, among other things, the mutual waivers and certifications in this Section 11.12(b).

Section 11.13.      Counterparts.

This Indenture may be executed in any number of counterparts (including by facsimile), each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

Section 11.14.      Issuer Obligation.

No recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer, the Owner Trustee or the Trustee on the Notes or under this Indenture or any of the other Transaction Documents or any certificate or other writing delivered in connection herewith or therewith, against (a) the Trustee or the Owner Trustee in its individual capacity, (b) any of the Trust Depositor, the Originator, the Servicer and any holder of a Trust Certificate or (c) any partner, owner, beneficiary, stockholder, manager, member, agent, officer, director, employee or agent of any of the parties identified in clauses (a) and (b) or of any successor or assign of any such Person except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law and the applicable organizational documents for such entity, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity. For all purposes of this Indenture, in the performance of any duties or obligations of the Issuer hereunder, the Owner Trustee and the Trust Company shall be subject to, and entitled to the benefits of, the terms and provisions of the Trust Agreement.

Section 11.15.      No Petition; Limited Recourse.

(a)           The Trustee, by entering into this Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree that they will not prior to the date which is one year and one day or, if longer, the preference period then in effect after payment in full of each Class of Notes rated by any Rating Agency, institute against the Trust Depositor or the Issuer, or join in any institution against the Trust Depositor or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any United States federal or state bankruptcy or similar law in connection with any obligations relating to the Notes, this Indenture or any of the Transaction Documents.

(b)           Notwithstanding any other provisions of the Notes, this Indenture or any other Transaction Document, the obligations of the Issuer under the Notes and this Indenture and any other Transaction Document are limited recourse obligations of the Issuer payable solely from

89

the Indenture Collateral in accordance with the Priority of Payments and, following realization of the Indenture Collateral and distribution in accordance with the Priority of Payments, any claims of the Secured Parties, and any other parties to any Transaction Document shall be extinguished. No recourse shall be had against any officer, administrator, member, director, employee, security holder, holder of a beneficial interest in or incorporator of the Issuer or their respective successors or assigns for the payment of any amounts payable under the Notes, this Indenture or any other Transaction Document. It is understood that the foregoing provisions of this Section 11.15(b) shall not (i) prevent recourse to the Loan Assets for the sums due or to become due under any security, instrument or agreement which is part of the Loan Assets or (ii) constitute a waiver, release or discharge of any indebtedness or obligation evidenced by the Notes or secured by this Indenture or payable under any other Transaction Document until such Loan Assets have been realized and distributed in accordance with the Priority of Payments, whereupon any such outstanding indebtedness or obligation shall be extinguished.

(c)           The provisions of this Section 11.15 shall survive the termination of this Agreement.

Section 11.16.      Inspection; Confidentiality.

The Issuer agrees that, on reasonable prior notice, it will permit any representative of the Trustee, during the Issuer’s normal business hours, and in a manner that does not unreasonably interfere with the Issuer’s normal operations, to examine all the books of account, records, reports and other papers of the Issuer, to make copies and extracts therefrom, to cause such books to be audited by Independent certified public accountants, and to discuss the Issuer’s affairs, finances and accounts with the Issuer’s officers, employees, and Independent certified public accountants, all at such reasonable times, in such reasonable manner, and as often as may be reasonably requested. The Trustee shall and shall cause its representatives, its legal counsel and its auditors to hold in confidence all such information except to the extent disclosure may be required by law (and all reasonable applications for confidential treatment are unavailing) and except to the extent that the Trustee may reasonably determine that such disclosure is consistent with its obligations hereunder and under applicable law. Notwithstanding anything to the contrary contained in this Agreement, all parties to which this Indenture relates may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transaction and all materials of any kind (including opinions or other tax analyses) that are provided to such investors relating to such tax treatment and tax structure. For purposes of this paragraph, the terms “tax treatment,” “tax structure,” and “tax analyses” have the meaning given to such terms under Treasury Regulations Section 1.6011-4(c).

Section 11.17.      Limitation of Liability.

It is expressly understood and agreed by the parties hereto that (a) this Indenture is executed and delivered by Wilmington Trust Company, not individually or personally but solely as Owner Trustee on behalf of the Issuer under the Trust Agreement, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, undertakings and agreements by Wilmington Trust Company but is made and intended for the purpose of binding only the Issuer, (c) nothing herein contained shall be

90

construed as creating any liability on Wilmington Trust Company individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties to this Indenture and by any person claiming by, through or under them and (d) under no circumstances shall Wilmington Trust Company be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaking by the Issuer under this Indenture or any related documents.

Section 11.18.      Disclaimer and Subordination.

Each Noteholder by accepting a Note acknowledges and agrees that this Indenture and the Notes represent a debt obligation of the Issuer only and do not represent an interest in any assets (other than the Indenture Collateral) of the Trust Depositor or any holder of a Trust Certificate (including by virtue of any deficiency claim in respect of obligations not paid or otherwise satisfied from the Trust Assets and proceeds thereof). In furtherance of and not in derogation of the foregoing, each Noteholder by accepting a Note acknowledges and agrees that it shall have no right, title or interest in or to any assets (or interests therein) (other than the Indenture Collateral) conveyed or purported to be conveyed by the Trust Depositor to another securitization trust (i.e., other than the Issuer) or other Person or Persons in connection therewith (whether by way of a sale, capital contribution or by virtue of the granting of a Lien) (“Other Assets”). To the extent that, notwithstanding the agreements and provisions contained in the preceding sentences of this Section 11.18, any Noteholder either (a) asserts an interest in or claim to, or benefit from, Other Assets, whether asserted against or through the Trust Depositor or any other Person owned by the Trust Depositor, or (b) is deemed to have any such interest, claim or benefit in or from Other Assets, whether by operation of law, legal process, pursuant to applicable provisions of any applicable insolvency laws or otherwise (including without limitation by virtue of Section 111l(b) of the Bankruptcy Code or any successor provision having similar effect under the Bankruptcy Code or any successor provision having similar effect under the Bankruptcy Code), and whether deemed asserted against or through the Trust Depositor or any other Person owned by the Trust Depositor, then each Noteholder by accepting a Note further acknowledges and agrees that any such interest, claim or benefit in or from Other Assets is and shall be expressly subordinated to the indefeasible payment in full of all obligations and liabilities of the Trust Depositor which, under the terms of the relevant documents relating to the securitization of such Other Assets, are entitled to be paid from, entitled to the benefits of, or otherwise secured by such Other Assets (whether or not any such entitlement or security interest is legally perfected or otherwise entitled to a priority of distribution or application under applicable law, including any applicable insolvency laws, and whether asserted against the Trust Depositor or any other Person owned by the Trust Depositor), including, without limitation, the payment of post-petition interest on such other obligations and liabilities. This subordination agreement shall be deemed a subordination agreement within the meaning of Section 510(a) of the Bankruptcy Code. Each Noteholder further acknowledges and agrees that no adequate remedy at law exists for a breach of this Section 11.18 and that the terms and provisions of this Section 11.18 may be enforced by an action for specific performance.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the Issuer and the Trustee have caused their names to be signed hereto by their respective officers thereunto duly authorized, all as of the day and year first above written.

ARCC COMMERCIAL LOAN TRUST 2006
By:	WILMINGTON TRUST COMPANY, not in its individual capacity, but solely as Owner Trustee on behalf of the Trust
By:	/s/ Michele C. Harra
Name:	Michele C. Harra
Title:	Financial Services Office

STATE OF DELAWARE	)
	)	ss.:
COUNTY OF NEW CASTLE	)

On this 23 day of June, 2006, before me personally appeared Michele C. Harra, to me known, who being by me duly sworn, did depose and say, that (s)he resides at Wilmington, Delaware, that (s)he is the Financial Services Officer of the Owner Trustee, one of the corporations described in and which executed the above instrument; and that (s)he signed his/her name thereto by like order.

/s/ Amanda E. Gamble

/s/ Amanda E. Burger

Notary Public

My commission expires:	Amanda E. Gamble
	Amanda E. Burger
	Notary Public - State of Delaware
	My Comm. Expires March 7, 2007

ARCC Commercial Loan Trust 2006
Indenture

92

IN WITNESS WHEREOF, the Issuer and the Trustee have caused their names to be signed hereto by their respective officers thereunto duly authorized, all as of the day and year first above written.

U.S. BANK NATIONAL ASSOCIATION, not in its individual capacity, except as expressly set forth herein, but solely as the Trustee
By:	/s/ Joel D. Cough
Name:	Joel D. Cough
Title:	Assistant Vice President

STATE OF MASSACHUSETTS	)
	)  ss.:
COUNTY OF SUFFOLK	)

On this 29th day of June, 2006, before me personally appeared Joel D. Cough, to me known, who being by me duly sworn, did depose and say, that (s)he resides at Boston, MA, that (s)he is the Assistant Vice President of the Trustee, one of the corporations described in and which executed the above instrument; and the (s)he signed his/her name thereto by like order.

/s/ Ralph J. Creasia

Notary Public

My commission expires:	Ralph J. Creasia, Jr
	Notary public
	My commission expires Jan 12, 2007

93

EXHIBIT A–1

[FORM OF CLASS A-1A NOTE]

ARCC Commercial Loan Trust 2006

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY SECURITIES OR BLUE SKY LAW OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES.  THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES THAT THIS NOTE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A “QIB”), PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) IN CERTIFICATED DEFINITIVE FORM TO AN INSTITUTIONAL “ACCREDITED INVESTOR” (WITHIN THE MEANING OF RULE 501(a)(1)—(3) OR (7) UNDER THE SECURITIES ACT) PURCHASING FOR INVESTMENT AND NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, IN EACH CASE, SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE INDENTURE AND (B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS MADE IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND IN ACCORDANCE WITH ALL APPLICABLE SECURITIES AND BLUE SKY LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (4) PURSUANT TO ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES AND BLUE SKY LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, OR (5) PURSUANT TO A VALID REGISTRATION STATEMENT COMPLIANT WITH THE REQUIREMENTS OF THE SECURITIES ACT.  THE PURCHASE OF THIS NOTE WILL BE DEEMED A REPRESENTATION BY THE ACQUIRER THAT EITHER:  (I) IT IS NOT, AND IS NOT ACQUIRING OR HOLDING THIS NOTE, DIRECTLY OR INDIRECTLY, ON BEHALF OF OR WITH ANY ASSETS OF, AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”) THAT IS SUBJECT TO TITLE I OF ERISA, A “PLAN” DESCRIBED IN AND SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (COLLECTIVELY, A “PLAN”), OR OTHER PLAN OR ARRANGEMENT SUBJECT TO ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAW SUBSTANTIVELY SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE (“SIMILAR LAW”); OR (II) ITS ACQUISITION AND HOLDING OF THIS NOTE WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED

A-1-1

TRANSACTION FOR PURPOSES OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, OR A VIOLATION OF SIMILAR LAW.

[IF HELD BY DTC] [UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

[IF REGULATION S GLOBAL NOTE] [THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT AND, PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE COMMENCEMENT OF.  THE OFFERING AND THE ORIGINAL ISSUE DATE OF THE NOTES, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.]

THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.  ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

A-1-2

REGISTERED                        $                    

No. A—1A—                                                                                                                                                    
60;        July 7, 2006

SEE REVERSE FOR CERTAIN DEFINITIONS

[144A CUSIP NO.                           ]

[Reg S ISIN NO.                              ]

[Reg S CUSIP No.                           ]

[Common Code No.                        ]

ARCC Commercial Loan Trust 2006, a statutory trust organized and existing under the laws of the State of Delaware (herein referred to as the “Issuer”), for value received, hereby promises to pay to                               , or registered assigns, the principal sum of                                DOLLARS payable on each Distribution Date in an amount equal to the result obtained by multiplying (i) a fraction, the numerator of which is the initial principal balance of this Class A-1A Note and the denominator of which is the Initial Class A-1A Principal Balance by (ii) the aggregate amount, if any, payable from the Note Distribution Account in respect of principal on the Class A-1A Notes.

The principal of and interest on this Class A-1A Note are payable in such coin or currency of the United States as at the time of payment is legal tender for payment of public and private debts.  All payments made by the Issuer with respect to this Class A-1A Note shall be applied first to interest due and payable on this Class A-1A Note as provided above and then to the unpaid principal of this Class A-1A Note.

Reference is made to the further provisions of this Class A-1A Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Class A-1A Note.

Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual signature, this Class A-1A Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose.

A-1-3

IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or in facsimile, by its Responsible Officer as of the date set forth above.

ARCC COMMERCIAL LOAN TRUST 2006
By:	WILMINGTON TRUST COMPANY, not
	in its individual capacity but solely as
	Owner Trustee under the Trust Agreement
By:
	Authorized Signatory

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Class A-1A Notes of ARCC Commercial Loan Trust 2006 designated above and referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Trustee,
By:
	Authorized Signatory

A-1-4

[REVERSE OF NOTE]

This Class A-1A Note is one of a duly authorized issue of Class A-1A Notes of the Issuer, designated as its ARCC Commercial Loan Trust 2006 Notes, Series 2006-1, Class A-1A (herein called the “Class A-1A Notes”), all issued under an Indenture, dated as of July 7, 2006 (such indenture, as supplemented or amended, is herein called the “Indenture”), between the Issuer and U.S. Bank National Association, as Trustee (the “Trustee”, which term includes any successor Trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Trustee and the Holders of the Class A-1A Notes.  The Class A-1A Notes are subject to all terms of the Indenture.  All terms used in this Class A-1A Note that are defined in the Indenture, as supplemented or amended, shall have the meanings assigned to them in or pursuant to the Indenture, as so supplemented or amended.

Notwithstanding the foregoing, the entire unpaid principal amount of the Class A-1A Notes shall be due and payable on the date on which an Event of Default shall have occurred and be continuing and the Trustee, or the Majority Noteholders have declared the Class A-1A Notes to be immediately due and payable in the manner provided in Section 5.02 of the Indenture.  All principal payments on the Class A-1A Notes shall be made pro rata to the Class A-1A Noteholders entitled thereto.

Each Class A-1A Noteholder, by acceptance of a Class A-1A Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer under the Indenture on the Class A-1A Notes or under any certificate or other writing delivered in connection therewith, against any holder of a Trust Certificate, the Trust Depositor, the Servicer, the Trustee or the Owner Trustee in its individual capacity.

On each Distribution Date, commencing December 20, 2006, the Trustee or Paying Agent shall distribute to the Person in whose name this Class A-1A Note is registered at the close of business on the Record Date an amount equal to the product of the Percentage Interest of the Class A-1A Notes evidenced by this Class A-1A Note and the amount required to be distributed to Holders of Class A-1A Notes on such Distribution Date pursuant to Section 3.05 of the Indenture.

During each Interest Period, this Class A-1A Note will bear interest at the Class A-1A Note Interest Rate.

Distributions on this Class A-1A Note will be made by the Trustee or Paying Agent by check mailed to the address of the Person entitled thereto as such name and address shall appear on the Note Register or, upon written request to the Trustee, by wire transfer of immediately available funds to the account of the Person entitled thereto as shall appear on the Note Register without the presentation or surrender of this Note or the making of any notation thereon, at a bank or other entity having appropriate facilities therefor, and, in the case of wire transfers, at the expense of such Person unless such Person shall own of record Class A-1A Notes which have Initial Class A-1A Principal Balances aggregating at least $250,000.

A-1-5

Notwithstanding the above, the final distribution on this Class A-1A Note will be made after due notice by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Class A-1A Note at the office or agency maintained for that purpose by the Note Registrar in Boston, Massachusetts.

As provided in the Indenture and the Sale and Servicing Agreement, deposits and withdrawals from the Note Distribution Account, the Principal and Interest Account and the Reserve Fund may be made by the Trustee from time to time for purposes other than distributions to Class A-1A Noteholders, such purposes including reimbursement to the Servicer of advances made, or certain expenses incurred, by it, and investment in Permitted Investments.

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Class A-1A Note is registrable in the Note Register upon surrender of this Class A-1A Note for registration of transfer at the offices or agencies maintained by the Note Registrar in Boston, Massachusetts, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to, the Trustee, duly executed by the holder hereof or such holder’s attorney duly authorized in writing, and thereupon one or more new Class A-1A Notes in authorized denominations evidencing the same aggregate undivided Percentage Interest will be issued to the designated transferee or transferees.

This Class A-1A Note is issuable only as a registered Class A-1A Note.  As provided in the Indenture and subject to certain limitations therein set forth, this Class A-1A Note is exchangeable for a new Class A-1A Note evidencing the same undivided ownership interest, as requested by the holder surrendering the same.

No service charge will be made for any such registration of transfer or exchange, but the Note Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

The Servicer, the Trust Depositor, the Trustee and the Note Registrar, and any agent of any of the foregoing, may treat the person in whose name this Class A-1A Note is registered as the owner hereof for all purposes, and none of the foregoing shall be affected by notice to the contrary.

The obligations and responsibilities created by the Indenture shall terminate upon the payment to Class A-1A Noteholders of all amounts required to be paid to them pursuant to the Indenture and the Sale and Servicing Agreement and the disposition of all property held as part of the Indenture Collateral.

A-1-6

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE(1)

The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

	Amount of	Amount of	Principal Amount
	decrease in	increase in	of this Global	Signature of
	Principal Amount	Principal Amount	Note following	Responsible
Date of	of this Global	of this Global	such decrease (or	Officer of Note
Exchange	Note	Note	increase)	Registrar

(1)           This should be included only if the Note is issued in global form.

A-1-7

ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto                                                                  

                                                                                                                                                        ;                                                 

                                                                                                                                                        ;                                                 

(name and address of assignee)

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints                      , attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises.

Dated: (2)

Signature Guaranteed:

(2)  NOTE:  The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever.

A-1-8

EXHIBIT A–2

[FORM OF CLASS A-1A VFN NOTE]

ARCC Commercial Loan Trust 2006

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY SECURITIES OR BLUE SKY LAW OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES.  THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES THAT THIS NOTE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY IN CERTIFICATED DEFINITIVE FORM (1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A “QIB”), PURCHASING FOR ITS OWN ACCOUNT FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” (WITHIN THE MEANING OF RULE 501(a)(1)—(3) OR (7) UNDER THE SECURITIES ACT) PURCHASING FOR INVESTMENT AND NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, IN EACH CASE, SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE INDENTURE AND (B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS MADE IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND IN ACCORDANCE WITH ALL APPLICABLE SECURITIES AND BLUE SKY LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (4) PURSUANT TO ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES AND BLUE SKY LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, OR (5) PURSUANT TO A VALID REGISTRATION STATEMENT COMPLIANT WITH THE REQUIREMENTS OF THE SECURITIES ACT.  THE PURCHASE OF THIS NOTE WILL BE DEEMED A REPRESENTATION BY THE ACQUIRER THAT IT IS NOT, AND IS NOT DIRECTLY OR INDIRECTLY ACQUIRING THIS NOTE FOR, ON BEHALF OF OR WITH ANY ASSETS OF, AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF ERISA THAT IS SUBJECT TO TITLE I OF ERISA, A “PLAN” DESCRIBED IN AND SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (COLLECTIVELY, A “PLAN”), OR OTHER PLAN OR ARRANGEMENT SUBJECT TO ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAW SUBSTANTIVELY SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE (“SIMILAR LAW”).

A-2-1

THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN.  ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

ADDITIONAL AMOUNTS MAY BE BORROWED IN RESPECT OF A CLASS A-1A VFN NOTE AFTER THE DATE OF ISSUE THEREOF IN ACCORDANCE WITH THE INDENTURE AND THE CLASS A-1A VFN PURCHASE AGREEMENT DATED AS OF THE CLOSING DATE AMONG THE ISSUER AND THE HOLDERS OF CLASS A-1A VFN NOTES PARTY THERETO.

A-2-2

REGISTERED $

No. A—1A VFN— July 7, 2006

SEE REVERSE FOR CERTAIN DEFINITIONS

[144A CUSIP NO.	]
[Reg S ISIN NO.	]
[Reg S CUSIP No.	]
[Common Code No.	]

ARCC Commercial Loan Trust 2006, a statutory trust organized and existing under the laws of the State of Delaware (herein referred to as the “Issuer”), for value received, hereby promises to pay to                                          , or registered assigns, the principal sum of                                         up to [           ] DOLLARS (or such lesser amount that may be outstanding at such time) payable on each Distribution Date on which principal is required to be paid in an amount equal to the result obtained by multiplying (i) a fraction, the numerator of which is the initial maximum commitment amount of this Class A-1A VFN Note which is shown as the initial principal balance hereof and the denominator of which is the Initial Class A-1A VFN Principal Balance by (ii) the aggregate amount, if any, payable from the Note Distribution Account in respect of principal on the Class A-1A VFN Notes.

The principal of, interest, Class A-1A VFN Commitment Fee and any Class A-1A VFN Increased Costs and Class A-1A VFN Breakage Costs on this Class A-1A VFN Note are payable in such coin or currency of the United States as at the time of payment is legal tender for payment of public and private debts.  All payments made by the Issuer with respect to this Class A-1A VFN Note shall be applied first to interest and Class A-1A VFN Commitment Fee due and payable on this Class A-1A VFN Note as provided above and then to the unpaid principal of this Class A-1A VFN Note.

Reference is made to the further provisions of this Class A-1A VFN Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Class A-1A VFN Note.

Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual signature, this Class A-1A VFN Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose.

A-2-3

IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or in facsimile, by its Responsible Officer as of the date set forth above.

ARCC COMMERCIAL LOAN TRUST 2006
By:	WILMINGTON TRUST COMPANY, not
	in its individual capacity but solely as
	Owner Trustee under the Trust Agreement
By:
	Authorized Signatory

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Class A-1A VFN Notes of ARCC Commercial Loan Trust 2006 designated above and referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Trustee,
By:
	Authorized Signatory

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[REVERSE OF NOTE]

This Class A-1A VFN Note is one of a duly authorized issue of Class A-1A VFN Notes of the Issuer, designated as its ARCC Commercial Loan Trust 2006 Notes, Series 2006-1, Class A-1A VFN (herein called the “Class A-1A VFN Notes”), all issued under an Indenture, dated as of July 7, 2006 (such indenture, as supplemented or amended, is herein called the “Indenture”), between the Issuer and U.S. Bank National Association, as Trustee (the “Trustee”, which term includes any successor Trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Trustee and the Holders of the Class A-1A VFN Notes.  The Class A-1A VFN Notes are subject to all terms of the Indenture.  All terms used in this Class A-1A VFN Note that are defined in the Indenture, as supplemented or amended, shall have the meanings assigned to them in or pursuant to the Indenture, as so supplemented or amended.

Notwithstanding the foregoing, the entire unpaid principal amount of the Class A-1A VFN Notes shall be due and payable on the date on which an Event of Default shall have occurred and be continuing and the Trustee, or the Majority Noteholders have declared the Class A-1A VFN Notes to be immediately due and payable in the manner provided in Section 5.02 of the Indenture.  All principal payments on the Class A-1A VFN Notes shall be made pro rata to the Class A-1A VFN Noteholders entitled thereto.

Each Class A-1A VFN Noteholder, by acceptance of a Class A-1A VFN Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer under the Indenture on the Class A-1A VFN Notes or under any certificate or other writing delivered in connection therewith, against any holder of a Trust Certificate, the Trust Depositor, the Servicer, the Trustee or the Owner Trustee in its individual capacity.

On each Distribution Date, commencing December 20, 2006, the Trustee or Paying Agent shall distribute to the Person in whose name this Class A-1A VFN Note is registered at the close of business on the Record Date an amount equal to the product of the Percentage Interest of the Class A-1A VFN Notes evidenced by this Class A-1A VFN Note and the amount required to be distributed to Holders of Class A-1A VFN Notes on such Distribution Date pursuant to Section 3.05 of the Indenture.

During each Interest Period, this Class A-1A VFN Note will bear interest at the Class A-1A VFN Note Interest Rate and the Class A-1A VFN Commitment Fee will accrue in accordance with the definition of such term.

Distributions on this Class A-1A VFN Note will be made by the Trustee or Paying Agent by check mailed to the address of the Person entitled thereto as such name and address shall appear on the Note Register or, upon written request to the Trustee, by wire transfer of immediately available funds to the account of the Person entitled thereto as shall appear on the Note Register without the presentation or surrender of this Note or the making of any notation thereon, at a bank or other entity having appropriate facilities therefor, and, in the case of wire transfers, at the expense of such Person unless such Person shall own of record Class A-1A VFN Notes which have Initial Class A-1A VFN Principal Balances aggregating at least $250,000.

A-2-5

Notwithstanding the above, the final distribution on this Class A-1A VFN Note will be made after due notice by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Class A-1A VFN Note at the office or agency maintained for that purpose by the Note Registrar in Boston, Massachusetts.

As provided in the Indenture and the Sale and Servicing Agreement, deposits and withdrawals from the Note Distribution Account, the Principal and Interest Account, the Reserve Fund and the Class A-1A VFN Funding Account may be made by the Trustee from time to time for purposes other than distributions to Class A-1A VFN Noteholders, such purposes including reimbursement to the Servicer of advances made, or certain expenses incurred, by it, and investment in Permitted Investments.

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Class A-1A VFN Note is registrable in the Note Register upon surrender of this Class A-1A VFN Note for registration of transfer at the offices or agencies maintained by the Note Registrar in Boston, Massachusetts, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to, the Trustee, duly executed by the holder hereof or such holder’s attorney duly authorized in writing, and thereupon one or more new Class A-1A VFN Notes in authorized denominations evidencing the same aggregate undivided Percentage Interest will be issued to the designated transferee or transferees.

This Class A-1A VFN Note is issuable only as a registered Class A-1A VFN Note.  As provided in the Indenture and subject to certain limitations therein set forth, this Class A-1A VFN Note is exchangeable for a new Class A-1A VFN Note evidencing the same undivided ownership interest, as requested by the holder surrendering the same.

No service charge will be made for any such registration of transfer or exchange, but the Note Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

The Servicer, the Trust Depositor, the Trustee and the Note Registrar, and any agent of any of the foregoing, may treat the person in whose name this Class A-1A VFN Note is registered as the owner hereof for all purposes, and none of the foregoing shall be affected by notice to the contrary.

The obligations and responsibilities created by the Indenture shall terminate upon the payment to Class A-1A VFN Noteholders of all amounts required to be paid to them pursuant to the Indenture and the Sale and Servicing Agreement and the disposition of all property held as part of the Indenture Collateral.

A-2-6

ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

(name and address of assignee)

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints                                               , attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises.

Dated: (3)

Signature Guaranteed:

(3)           NOTE:  The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever.

A-2-7

EXHIBIT A–3

[FORM OF CLASS A-1B NOTE]

ARCC Commercial Loan Trust 2006

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY SECURITIES OR BLUE SKY LAW OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES THAT THIS NOTE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A “QIB”), PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) IN CERTIFICATED DEFINITIVE FORM TO AN INSTITUTIONAL “ACCREDITED INVESTOR” (WITHIN THE MEANING OF RULE 501(a)(1)-(3) OR (7) UNDER THE SECURITIES ACT) PURCHASING FOR INVESTMENT AND NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, IN EACH CASE, SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE INDENTURE AND (B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS MADE IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND IN ACCORDANCE WITH ALL APPLICABLE SECURITIES AND BLUE SKY LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (4) PURSUANT TO ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES AND BLUE SKY LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, OR (5) PURSUANT TO A VALID REGISTRATION STATEMENT COMPLIANT WITH THE REQUIREMENTS OF THE SECURITIES ACT. THE PURCHASE OF THIS NOTE WILL BE DEEMED A REPRESENTATION BY THE ACQUIRER THAT EITHER:  (I) IT IS NOT, AND IS NOT ACQUIRING OR HOLDING THIS NOTE, DIRECTLY OR INDIRECTLY, ON BEHALF OF OR WITH ANY ASSETS OF, AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”) THAT IS SUBJECT TO TITLE I OF ERISA, A “PLAN” DESCRIBED IN AND SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (COLLECTIVELY, A “PLAN”), OR OTHER PLAN OR ARRANGEMENT SUBJECT TO ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAW SUBSTANTIVELY SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE (“SIMILAR LAW”); OR (II) ITS ACQUISITION AND HOLDING OF THIS NOTE WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED

A-3-1

TRANSACTION FOR PURPOSES OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, OR A VIOLATION OF SIMILAR LAW.

[IF HELD BY DTC] [UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

[IF REGULATION S GLOBAL NOTE] [THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT AND, PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE COMMENCEMENT OF. THE OFFERING AND THE ORIGINAL ISSUE DATE OF THE NOTES, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.]

THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.  ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

A-3-2

REGISTERED	$
No. A-1B-		July 7, 2006

SEE REVERSE FOR CERTAIN DEFINITIONS

[144A CUSIP NO.
[Reg S ISIN NO.
[Reg S CUSIP No.
[Common Code No. ]
]
]
]

ARCC Commercial Loan Trust 2006, a statutory trust organized and existing under the laws of the State of Delaware (herein referred to as the “Issuer”), for value received, hereby promises to pay to                       , or registered assigns, the principal sum of                              DOLLARS payable on each Distribution Date in an amount equal to the result obtained by multiplying (i) a fraction, the numerator of which is the initial principal balance of this Class A-1B Note and the denominator of which is the Initial Class A-1B Principal Balance by (ii) the aggregate amount, if any, payable from the Note Distribution Account in respect of principal on the Class A-1B Notes.

The principal of and interest on this Class A-1B Note are payable in such coin or currency of the United States as at the time of payment is legal tender for payment of public and private debts.  All payments made by the Issuer with respect to this Class A-1B Note shall be applied first to interest due and payable on this Class A-1B Note as provided above and then to the unpaid principal of this Class A-1B Note.

Reference is made to the further provisions of this Class A-1B Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Class A-1B Note.

Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual signature, this Class A-1B Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose.

A-3-3

IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or in facsimile, by its Responsible Officer as of the date set forth above.

ARCC COMMERCIAL LOAN TRUST 2006
By:	WILMINGTON TRUST COMPANY, not
	in its individual capacity but solely as
	Owner Trustee under the Trust Agreement
By:
	Authorized Signatory

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Class A-1B Notes of ARCC Commercial Loan Trust 2006 designated above and referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Trustee,
By:
	Authorized Signatory

A-3-4

[REVERSE OF NOTE]

This Class A-1B Note is one of a duly authorized issue of Class A-1B Notes of the Issuer, designated as its ARCC Commercial Loan Trust 2006 Notes, Series 2006-1, Class A-1B (herein called the “Class A-1B Notes”), all issued under an Indenture, dated as of July 7, 2006 (such indenture, as supplemented or amended, is herein called the “Indenture”), between the Issuer and U.S. Bank National Association, as Trustee (the “Trustee”, which term includes any successor Trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Trustee and the Holders of the Class A-1B Notes.  The Class A-1B Notes are subject to all terms of the Indenture.  All terms used in this Class A-1B Note that are defined in the Indenture, as supplemented or amended, shall have the meanings assigned to them in or pursuant to the Indenture, as so supplemented or amended.

Notwithstanding the foregoing, the entire unpaid principal amount of the Class A-1B Notes shall be due and payable on the date on which an Event of Default shall have occurred and be continuing and the Trustee, or the Majority Noteholders have declared the Class A-1B Notes to be immediately due and payable in the manner provided in Section 5.02 of the Indenture.  All principal payments on the Class A-1B Notes shall be made pro rata to the Class A-1B Noteholders entitled thereto.

Each Class A-1B Noteholder, by acceptance of a Class A-1B Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer under the Indenture on the Class A-1B Notes or under any certificate or other writing delivered in connection therewith, against any holder of a Trust Certificate, the Trust Depositor, the Servicer, the Trustee or the Owner Trustee in its individual capacity.

On each Distribution Date, commencing December 20, 2006, the Trustee or Paying Agent shall distribute to the Person in whose name this Class A-1B Note is registered at the close of business on the Record Date an amount equal to the product of the Percentage Interest of the Class A-1B Notes evidenced by this Class A-1B Note and the amount required to be distributed to Holders of Class A-1B Notes on such Distribution Date pursuant to Section 3.05 of the Indenture.

During each Interest Period, this Class A-1B Note will bear interest at the Class A-1B Note Interest Rate.

Distributions on this Class A-1B Note will be made by the Trustee or Paying Agent by check mailed to the address of the Person entitled thereto as such name and address shall appear on the Note Register or, upon written request to the Trustee, by wire transfer of immediately available funds to the account of the Person entitled thereto as shall appear on the Note Register without the presentation or surrender of this Note or the making of any notation thereon, at a bank or other entity having appropriate facilities therefor, and, in the case of wire transfers, at the expense of such Person unless such Person shall own of record Class A-1B Notes which have Initial Class A-1B Principal Balances aggregating at least $250,000.

A-3-5

Notwithstanding the above, the final distribution on this Class A-1B Note will be made after due notice by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Class A-1B Note at the office or agency maintained for that purpose by the Note Registrar in Boston, Massachusetts.

As provided in the Indenture and the Sale and Servicing Agreement, deposits and withdrawals from the Note Distribution Account, the Principal and Interest Account and the Reserve Fund may be made by the Trustee from time to time for purposes other than distributions to Class A-1B Noteholders, such purposes including reimbursement to the Servicer of advances made, or certain expenses incurred, by it, and investment in Permitted Investments.

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Class A-1B Note is registrable in the Note Register upon surrender of this Class A-1B Note for registration of transfer at the offices or agencies maintained by the Note Registrar in Boston, Massachusetts, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to, the Trustee, duly executed by the holder hereof or such holder’s attorney duly authorized in writing, and thereupon one or more new Class A-1B Notes in authorized denominations evidencing the same aggregate undivided Percentage Interest will be issued to the designated transferee or transferees.

This Class A-1B Note is issuable only as a registered Class A-1B Note.  As provided in the Indenture and subject to certain limitations therein set forth, this Class A-1B Note is exchangeable for a new Class A-1B Note evidencing the same undivided ownership interest, as requested by the holder surrendering the same.

No service charge will be made for any such registration of transfer or exchange, but the Note Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

The Servicer, the Trust Depositor, the Trustee and the Note Registrar, and any agent of any of the foregoing, may treat the person in whose name this Class A-1B Note is registered as the owner hereof for all purposes, and none of the foregoing shall be affected by notice to the contrary.

The obligations and responsibilities created by the Indenture shall terminate upon the payment to Class A-1B Noteholders of all amounts required to be paid to them pursuant to the Indenture and the Sale and Servicing Agreement and the disposition of all property held as part of the Indenture Collateral.

A-3-6

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE(4)

The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

	Amount of	Amount of	Principal Amount
	decrease in	increase in	of this Global	Signature of
	Principal Amount	Principal Amount	Note following	Responsible
Date of	of this Global	of this Global	such decrease (or	Officer of Note
Exchange	Note	Note	increase)	Registrar

(4)           This should be included only if the Note is issued in global form.

A-3-7

ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

(name and address of assignee)

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints              , attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises.

Dated: (5)

Signature Guaranteed:

(5)           NOTE:  The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever.

A-3-8

EXHIBIT A–4

[FORM OF CLASS A-2A NOTE]

ARCC Commercial Loan Trust 2006

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY SECURITIES OR BLUE SKY LAW OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES THAT THIS NOTE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A “QIB”), PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) IN CERTIFICATED DEFINITIVE FORM TO AN INSTITUTIONAL “ACCREDITED INVESTOR” (WITHIN THE MEANING OF RULE 501(a)(1)—(3) OR (7) UNDER THE SECURITIES ACT) PURCHASING FOR INVESTMENT AND NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, IN EACH CASE, SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE INDENTURE AND (B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS MADE IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND IN ACCORDANCE WITH ALL APPLICABLE SECURITIES AND BLUE SKY LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (4) PURSUANT TO ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES AND BLUE SKY LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, OR (5) PURSUANT TO A VALID REGISTRATION STATEMENT COMPLIANT WITH THE REQUIREMENTS OF THE SECURITIES ACT. THE PURCHASE OF THIS NOTE WILL BE DEEMED A REPRESENTATION BY THE ACQUIRER THAT EITHER:  (I) IT IS NOT, AND IS NOT ACQUIRING OR HOLDING THIS NOTE, DIRECTLY OR INDIRECTLY, ON BEHALF OF OR WITH ANY ASSETS OF, AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”) THAT IS SUBJECT TO TITLE I OF ERISA, A “PLAN” DESCRIBED IN AND SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (COLLECTIVELY, A “PLAN”), OR OTHER PLAN OR ARRANGEMENT SUBJECT TO ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAW SUBSTANTIVELY SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE (“SIMILAR LAW”); OR (II) ITS ACQUISITION AND HOLDING OF THIS NOTE WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED

A-4-1

TRANSACTION FOR PURPOSES OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, OR A VIOLATION OF SIMILAR LAW.

[IF HELD BY DTC] [UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

[IF REGULATION S GLOBAL NOTE] [THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT AND, PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE COMMENCEMENT OF. THE OFFERING AND THE ORIGINAL ISSUE DATE OF THE NOTES, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.]

THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.  ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

A-4-2

REGISTERED	$
No. A—2A—		July 7, 2006

SEE REVERSE FOR CERTAIN DEFINITIONS

[144A CUSIP NO.                        ]
[Reg S ISIN NO.                           ]
[Reg S CUSIP No.                        ]
[Common Code No.                      ]

ARCC Commercial Loan Trust 2006, a statutory trust organized and existing under the laws of the State of Delaware (herein referred to as the “Issuer”), for value received, hereby promises to pay to                       , or registered assigns, the principal sum of                              DOLLARS payable on each Distribution Date in an amount equal to the result obtained by multiplying (i) a fraction, the numerator of which is the initial principal balance of this Class A-2A Note and the denominator of which is the Initial Class A-2A Principal Balance by (ii) the aggregate amount, if any, payable from the Note Distribution Account in respect of principal on the Class A-2A Notes.

The principal of and interest on this Class A-2A Note are payable in such coin or currency of the United States as at the time of payment is legal tender for payment of public and private debts.  All payments made by the Issuer with respect to this Class A-2A Note shall be applied first to interest due and payable on this Class A-2A Note as provided above and then to the unpaid principal of this Class A-2A Note.

Reference is made to the further provisions of this Class A-2A Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Class A-2A Note.

Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual signature, this Class A-2A Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose.

A-4-3

IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or in facsimile, by its Responsible Officer as of the date set forth above.

ARCC COMMERCIAL LOAN TRUST 2006
By:	WILMINGTON TRUST COMPANY, not
	in its individual capacity but solely as
	Owner Trustee under the Trust Agreement
By:
	Authorized Signatory

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Class A-2A Notes of ARCC Commercial Loan Trust 2006 designated above and referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Trustee,
By:
	Authorized Signatory

A-4-4

[REVERSE OF NOTE]

This Class A-2A Note is one of a duly authorized issue of Class A-2A Notes of the Issuer, designated as its ARCC Commercial Loan Trust 2006 Notes, Series 2006-1, Class A-2A (herein called the “Class A-2A Notes”), all issued under an Indenture, dated as of July 7, 2006 (such indenture, as supplemented or amended, is herein called the “Indenture”), between the Issuer and U.S. Bank National Association, as Trustee (the “Trustee”, which term includes any successor Trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Trustee and the Holders of the Class A-2A Notes.  The Class A-2A Notes are subject to all terms of the Indenture.  All terms used in this Class A-2A Note that are defined in the Indenture, as supplemented or amended, shall have the meanings assigned to them in or pursuant to the Indenture, as so supplemented or amended.

Notwithstanding the foregoing, the entire unpaid principal amount of the Class A-2A Notes shall be due and payable on the date on which an Event of Default shall have occurred and be continuing and the Trustee, or the Majority Noteholders have declared the Class A-2A Notes to be immediately due and payable in the manner provided in Section 5.02 of the Indenture.  All principal payments on the Class A-2A Notes shall be made pro rata to the Class A-2A Noteholders entitled thereto.

Each Class A-2A Noteholder, by acceptance of a Class A-2A Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer under the Indenture on the Class A-2A Notes or under any certificate or other writing delivered in connection therewith, against any holder of a Trust Certificate, the Trust Depositor, the Servicer, the Trustee or the Owner Trustee in its individual capacity.

On each Distribution Date, commencing December 20, 2006, the Trustee or Paying Agent shall distribute to the Person in whose name this Class A-2A Note is registered at the close of business on the Record Date an amount equal to the product of the Percentage Interest of the Class A-2A Notes evidenced by this Class A-2A Note and the amount required to be distributed to Holders of Class A-2A Notes on such Distribution Date pursuant to Section 3.05 of the Indenture.

During each Interest Period, this Class A-2A Note will bear interest at the Class A-2A Note Interest Rate.

Distributions on this Class A-2A Note will be made by the Trustee or Paying Agent by check mailed to the address of the Person entitled thereto as such name and address shall appear on the Note Register or, upon written request to the Trustee, by wire transfer of immediately available funds to the account of the Person entitled thereto as shall appear on the Note Register without the presentation or surrender of this Note or the making of any notation thereon, at a bank or other entity having appropriate facilities therefor, and, in the case of wire transfers, at the expense of such Person unless such Person shall own of record Class A-2A Notes which have Initial Class A-2A Principal Balances aggregating at least $250,000.

A-4-5

Notwithstanding the above, the final distribution on this Class A-2A Note will be made after due notice by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Class A-2A Note at the office or agency maintained for that purpose by the Note Registrar in Boston, Massachusetts.

As provided in the Indenture and the Sale and Servicing Agreement, deposits and withdrawals from the Note Distribution Account, the Principal and Interest Account and the Reserve Fund may be made by the Trustee from time to time for purposes other than distributions to Class A-2A Noteholders, such purposes including reimbursement to the Servicer of advances made, or certain expenses incurred, by it, and investment in Permitted Investments.

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Class A-2A Note is registrable in the Note Register upon surrender of this Class A-2A Note for registration of transfer at the offices or agencies maintained by the Note Registrar in Boston, Massachusetts, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to, the Trustee, duly executed by the holder hereof or such holder’s attorney duly authorized in writing, and thereupon one or more new Class A-2A Notes in authorized denominations evidencing the same aggregate undivided Percentage Interest will be issued to the designated transferee or transferees.

This Class A-2A Note is issuable only as a registered Class A-2A Note.  As provided in the Indenture and subject to certain limitations therein set forth, this Class A-2A Note is exchangeable for a new Class A-2A Note evidencing the same undivided ownership interest, as requested by the holder surrendering the same.

No service charge will be made for any such registration of transfer or exchange, but the Note Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

The Servicer, the Trust Depositor, the Trustee and the Note Registrar, and any agent of any of the foregoing, may treat the person in whose name this Class A-2A Note is registered as the owner hereof for all purposes, and none of the foregoing shall be affected by notice to the contrary.

The obligations and responsibilities created by the Indenture shall terminate upon the payment to Class A-2A Noteholders of all amounts required to be paid to them pursuant to the Indenture and the Sale and Servicing Agreement and the disposition of all property held as part of the Indenture Collateral.

A-4-6

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE(6)

The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

	Amount of	Amount of	Principal Amount
	decrease in	increase in	of this Global	Signature of
	Principal Amount	Principal Amount	Note following	Responsible
Date of	of this Global	of this Global	such decrease (or	Officer of Note
Exchange	Note	Note	increase)	Registrar

(6)  This should be included only if the Note is issued in global form.

A-4-7

ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto                                                                  

                                                                                                                                                        ;                                                 

(name and address of assignee)

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints              , attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises.

Dated: (7)

Signature Guaranteed:

(7)           NOTE:  The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever.

A-4-8

EXHIBIT A–5

[FORM OF CLASS A-2B NOTE]

ARCC Commercial Loan Trust 2006

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY SECURITIES OR BLUE SKY LAW OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES THAT THIS NOTE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A “QIB”), PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) IN CERTIFICATED DEFINITIVE FORM TO AN INSTITUTIONAL “ACCREDITED INVESTOR” (WITHIN THE MEANING OF RULE 501(a)(1)—(3) OR (7) UNDER THE SECURITIES ACT) PURCHASING FOR INVESTMENT AND NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, IN EACH CASE, SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE INDENTURE AND (B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS MADE IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND IN ACCORDANCE WITH ALL APPLICABLE SECURITIES AND BLUE SKY LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (4) PURSUANT TO ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES AND BLUE SKY LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, OR (5) PURSUANT TO A VALID REGISTRATION STATEMENT COMPLIANT WITH THE REQUIREMENTS OF THE SECURITIES ACT. THE PURCHASE OF THIS NOTE WILL BE DEEMED A REPRESENTATION BY THE ACQUIRER THAT EITHER:  (I) IT IS NOT, AND IS NOT ACQUIRING OR HOLDING THIS NOTE, DIRECTLY OR INDIRECTLY, ON BEHALF OF OR WITH ANY ASSETS OF, AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”) THAT IS SUBJECT TO TITLE I OF ERISA, A “PLAN” DESCRIBED IN AND SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (COLLECTIVELY, A “PLAN”), OR OTHER PLAN OR ARRANGEMENT SUBJECT TO ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAW SUBSTANTIVELY SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE (“SIMILAR LAW”); OR (II) ITS ACQUISITION AND HOLDING OF THIS NOTE WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED

A-5-1

TRANSACTION FOR PURPOSES OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, OR A VIOLATION OF SIMILAR LAW.

[IF HELD BY DTC] [UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

[IF REGULATION S GLOBAL NOTE] [THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT AND, PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE COMMENCEMENT OF. THE OFFERING AND THE ORIGINAL ISSUE DATE OF THE NOTES, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.]

THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.  ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

A-5-2

REGISTERED	$
No. A—2B—		July 7, 2006

SEE REVERSE FOR CERTAIN DEFINITIONS

[144A CUSIP NO.                        ]
[Reg S ISIN NO.                           ]
[Reg S CUSIP No.                        ]
[Common Code No.                     ]

ARCC Commercial Loan Trust 2006, a statutory trust organized and existing under the laws of the State of Delaware (herein referred to as the “Issuer”), for value received, hereby promises to pay to                       , or registered assigns, the principal sum of                              DOLLARS payable on each Distribution Date in an amount equal to the result obtained by multiplying (i) a fraction, the numerator of which is the initial principal balance of this Class A-2B Note and the denominator of which is the Initial Class A-2B Principal Balance by (ii) the aggregate amount, if any, payable from the Note Distribution Account in respect of principal on the Class A-2B Notes.

The principal of and interest on this Class A-2B Note are payable in such coin or currency of the United States as at the time of payment is legal tender for payment of public and private debts.  All payments made by the Issuer with respect to this Class A-2B Note shall be applied first to interest due and payable on this Class A-2B Note as provided above and then to the unpaid principal of this Class A-2B Note.

Reference is made to the further provisions of this Class A-2B Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Class A-2B Note.

Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual signature, this Class A-2B Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose.

A-5-3

IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or in facsimile, by its Responsible Officer as of the date set forth above.

ARCC COMMERCIAL LOAN TRUST 2006
By:	WILMINGTON TRUST COMPANY, not
	in its individual capacity but solely as
	Owner Trustee under the Trust Agreement
By:
	Authorized Signatory

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Class A-2B Notes of ARCC Commercial Loan Trust 2006 designated above and referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Trustee,
By:
	Authorized Signatory

A-5-4

[REVERSE OF NOTE]

This Class A-2B Note is one of a duly authorized issue of Class A-2B Notes of the Issuer, designated as its ARCC Commercial Loan Trust 2006 Notes, Series 2006-1, Class A-2B (herein called the “Class A-2B Notes”), all issued under an Indenture, dated as of July 7, 2006 (such indenture, as supplemented or amended, is herein called the “Indenture”), between the Issuer and U.S. Bank National Association, as Trustee (the “Trustee”, which term includes any successor Trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Trustee and the Holders of the Class A-2B Notes.  The Class A-2B Notes are subject to all terms of the Indenture.  All terms used in this Class A-2B Note that are defined in the Indenture, as supplemented or amended, shall have the meanings assigned to them in or pursuant to the Indenture, as so supplemented or amended.

Notwithstanding the foregoing, the entire unpaid principal amount of the Class A-2B Notes shall be due and payable on the date on which an Event of Default shall have occurred and be continuing and the Trustee, or the Majority Noteholders have declared the Class A-2B Notes to be immediately due and payable in the manner provided in Section 5.02 of the Indenture.  All principal payments on the Class A-2B Notes shall be made pro rata to the Class A-2B Noteholders entitled thereto.

Each Class A-2B Noteholder, by acceptance of a Class A-2B Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer under the Indenture on the Class A-2B Notes or under any certificate or other writing delivered in connection therewith, against any holder of a Trust Certificate, the Trust Depositor, the Servicer, the Trustee or the Owner Trustee in its individual capacity.

On each Distribution Date, commencing December 20, 2006, the Trustee or Paying Agent shall distribute to the Person in whose name this Class A-2B Note is registered at the close of business on the Record Date an amount equal to the product of the Percentage Interest of the Class A-2B Notes evidenced by this Class A-2B Note and the amount required to be distributed to Holders of Class A-2B Notes on such Distribution Date pursuant to Section 3.05 of the Indenture.

During each Interest Period, this Class A-2B Note will bear interest at the Class A-2B Note Interest Rate.

Distributions on this Class A-2B Note will be made by the Trustee or Paying Agent by check mailed to the address of the Person entitled thereto as such name and address shall appear on the Note Register or, upon written request to the Trustee, by wire transfer of immediately available funds to the account of the Person entitled thereto as shall appear on the Note Register without the presentation or surrender of this Note or the making of any notation thereon, at a bank or other entity having appropriate facilities therefor, and, in the case of wire transfers, at the expense of such Person unless such Person shall own of record Class A-2B Notes which have Initial Class A-2B Principal Balances aggregating at least $250,000.

A-5-5

Notwithstanding the above, the final distribution on this Class A-2B Note will be made after due notice by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Class A-2B Note at the office or agency maintained for that purpose by the Note Registrar in Boston, Massachusetts.

As provided in the Indenture and the Sale and Servicing Agreement, deposits and withdrawals from the Note Distribution Account, the Principal and Interest Account and the Reserve Fund may be made by the Trustee from time to time for purposes other than distributions to Class A-2B Noteholders, such purposes including reimbursement to the Servicer of advances made, or certain expenses incurred, by it, and investment in Permitted Investments.

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Class A-2B Note is registrable in the Note Register upon surrender of this Class A-2B Note for registration of transfer at the offices or agencies maintained by the Note Registrar in Boston, Massachusetts, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to, the Trustee, duly executed by the holder hereof or such holder’s attorney duly authorized in writing, and thereupon one or more new Class A-2B Notes in authorized denominations evidencing the same aggregate undivided Percentage Interest will be issued to the designated transferee or transferees.

This Class A-2B Note is issuable only as a registered Class A-2B Note.  As provided in the Indenture and subject to certain limitations therein set forth, this Class A-2B Note is exchangeable for a new Class A-2B Note evidencing the same undivided ownership interest, as requested by the holder surrendering the same.

No service charge will be made for any such registration of transfer or exchange, but the Note Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

The Servicer, the Trust Depositor, the Trustee and the Note Registrar, and any agent of any of the foregoing, may treat the person in whose name this Class A-2B Note is registered as the owner hereof for all purposes, and none of the foregoing shall be affected by notice to the contrary.

The obligations and responsibilities created by the Indenture shall terminate upon the payment to Class A-2B Noteholders of all amounts required to be paid to them pursuant to the Indenture and the Sale and Servicing Agreement and the disposition of all property held as part of the Indenture Collateral.

A-5-6

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE(8)

The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

	Amount of	Amount of	Principal Amount
	decrease in	increase in	of this Global	Signature of
	Principal Amount	Principal Amount	Note following	Responsible
Date of	of this Global	of this Global	such decrease (or	Officer of Note
Exchange	Note	Note	increase)	Registrar

(8)           This should be included only if the Note is issued in global form.

A-5-7

ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto                                                                   

                                                                                                                                                        ;                                                 

(name and address of assignee)

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints              , attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises.

Dated: (9)

Signature Guaranteed:

(9)NOTE:  The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever.

A-5-8

EXHIBIT A–6

[FORM OF CLASS B NOTE]

ARCC Commercial Loan Trust 2006

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY SECURITIES OR BLUE SKY LAW OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES THAT THIS NOTE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A “QIB”), PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) IN CERTIFICATED DEFINITIVE FORM TO AN INSTITUTIONAL “ACCREDITED INVESTOR” (WITHIN THE MEANING OF RULE 501(a)(1)—(3) OR (7) UNDER THE SECURITIES ACT) PURCHASING FOR INVESTMENT AND NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, IN EACH CASE, SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE INDENTURE AND (B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS MADE IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND IN ACCORDANCE WITH ALL APPLICABLE SECURITIES AND SECURITIES AND BLUE SKY LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (4) PURSUANT TO ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES AND BLUE SKY LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, OR (5) PURSUANT TO A VALID REGISTRATION STATEMENT COMPLIANT WITH THE REQUIREMENTS OF THE SECURITIES ACT.  THE PURCHASE OF THIS NOTE WILL BE DEEMED A REPRESENTATION BY THE ACQUIRER THAT EITHER:  (I) IT IS NOT, AND IS NOT ACQUIRING OR HOLDING THIS NOTE, DIRECTLY OR INDIRECTLY, ON BEHALF OF OR WITH ANY ASSETS OF, AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF ERISA THAT IS SUBJECT TO TITLE I OF ERISA, A “PLAN” DESCRIBED IN AND SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (COLLECTIVELY, A “PLAN”), OR OTHER PLAN OR ARRANGEMENT SUBJECT TO ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAW SUBSTANTIVELY SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE (“SIMILAR LAW”); OR (II) ITS ACQUISITION AND HOLDING OF THIS NOTE WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED

A-6-1

TRANSACTION FOR PURPOSES OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, OR OTHER PLAN OR A VIOLATION OF SIMILAR LAW.

[IF HELD BY DTC] [UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

[IF REGULATION S GLOBAL NOTE] [THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT AND, PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE COMMENCEMENT OF. THE OFFERING AND THE ORIGINAL ISSUE DATE OF THE NOTES, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.]

THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

A-6-2

REGISTERED		$
No. B—	[		]	[	]	, 2006

SEE REVERSE FOR CERTAIN DEFINITIONS

[144A CUSIP NO.                        ]
[Reg S ISIN NO.                           ]
[Reg S CUSIP No.                        ]
[Common Code No.                     ]

ARCC Commercial Loan Trust 2006, a statutory trust organized and existing under the laws of the State of Delaware (herein referred to as the “Issuer”), for value received, hereby promises to pay to                       , or registered assigns, the principal sum of                                                       DOLLARS payable on each Distribution Date on which principal is required to be paid in an amount equal to the result obtained by multiplying (i) a fraction, the numerator of which is the initial principal balance of this Class B Note and the denominator of which is the Initial Class B Principal Balance by (ii) the aggregate amount, if any, payable from the Note Distribution Account in respect of principal on the Class B Notes pursuant to Section 3.05 of the Indenture.

The principal of and interest on this Class B Note are payable in such coin or currency of the United States as at the time of payment is legal tender for payment of public and private debts.  All payments made by the Issuer with respect to this Class B Note shall be applied first to interest due and payable on this Class B Note as provided above and then to the unpaid principal of this Class B Note.

Reference is made to the further provisions of this Class B Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Class B Note.

Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual signature, this Class B Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose.

A-6-3

IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or in facsimile, by its Responsible Officer as of the date set forth above.

ARCC COMMERCIAL LOAN TRUST 2006
By:	WILMINGTON TRUST COMPANY, not
	in its individual capacity but solely as
	Owner Trustee under the Trust Agreement
By:
	Authorized Signatory

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Class B Notes of ARCC Commercial Loan Trust 2006 designated above and referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Trustee,
By:
	Authorized Signatory

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[REVERSE OF NOTE]

This Class B Note is one of a duly authorized issue of Class B Notes of the Issuer, designated as its ARCC Commercial Loan Trust 2006 Notes, Series 2006-1, Class B (herein called the “Class B Notes”), all issued under an Indenture, dated as of July 7, 2006 (such indenture, as supplemented or amended, is herein called the “Indenture”), between the Issuer and U.S. Bank National Association, as Trustee (the “Trustee”, which term includes any successor Trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Trustee and the Holders of the Class B Notes.  The Class B Notes are subject to all terms of the Indenture.  All terms used in this Class B Note that are defined in the Indenture, as supplemented or amended, shall have the meanings assigned to them in or pursuant to the Indenture, as so supplemented or amended.

Notwithstanding the foregoing, the entire unpaid principal amount of the Class B Notes shall be due and payable on the date on which an Event of Default shall have occurred and be continuing and the Trustee, or the Majority Noteholders have declared the Class B Notes to be immediately due and payable in the manner provided in Section 5.02 of the Indenture.  All principal payments on the Class B Notes shall be made pro rata to the Class B Noteholders entitled thereto.

Each Class B Noteholder, by acceptance of a Class B Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer under the Indenture on the Class B Notes or under any certificate or other writing delivered in connection therewith, against any holder of a Trust Certificate, the Trust Depositor, the Servicer, the Trustee or the Owner Trustee in its individual capacity or any of their Affiliates.

On each Distribution Date, commencing December 20, 2006, the Trustee or Paying Agent shall distribute to the Person in whose name this Class B Note is registered at the close of business on the Record Date an amount equal to the product of the Percentage Interest of the Class B Notes evidenced by this Class B Note and the amount required to be distributed to Holders of Class B Notes on such Distribution Date pursuant to Section 3.05 of the Indenture.

During each Interest Period, this Class B Note will bear interest at the Class B Note Interest Rate.

Distributions on this Class B Note will be made by the Trustee or Paying Agent by check mailed to the address of the Person entitled thereto as such name and address shall appear on the Note Register or, upon written request to the Trustee, by wire transfer of immediately available funds to the account of the Person entitled thereto as shall appear on the Note Register without the presentation or surrender of this Note or the making of any notation thereon, at a bank or other entity having appropriate facilities therefor, and, in the case of wire transfers, at the expense of such Person unless such Person shall own of record Class B Notes which have Initial Class B Principal Balances aggregating at least $250,000.

A-6-5

Notwithstanding the above, the final distribution on this Class B Note will be made after due notice by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Class B Note at the office or agency maintained for that purpose by the Note Registrar in Boston, Massachusetts.

As provided in the Indenture and the Sale and Servicing Agreement, deposits and withdrawals from the Note Distribution Account, the Principal and Interest Account and the Reverse Fund may be made by the Trustee from time to time for purposes other than distributions to Class B Noteholders, such purposes including reimbursement to the Servicer of advances made, or certain expenses incurred, by it, and investment in Permitted Investments.

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Class B Note is registrable in the Note Register upon surrender of this Class B Note for registration of transfer at the offices or agencies maintained by the Note Registrar in Boston, Massachusetts, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to, the Trustee, duly executed by the holder hereof or such holder’s attorney duly authorized in writing, and thereupon one or more new Class B Notes in authorized denominations evidencing the same aggregate undivided Percentage Interest will be issued to the designated transferee or transferees.

This Class B Note is issuable only as a registered Class B Note.  As provided in the Indenture and subject to certain limitations therein set forth, this Class B Note is exchangeable for a new Class B Note evidencing the same undivided ownership interest, as requested by the holder surrendering the same.

No service charge will be made for any such registration of transfer or exchange, but the Note Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

The Servicer, the Trust Depositor, the Trustee and the Note Registrar, and any agent of any of the foregoing, may treat the person in whose name this Class B Note is registered as the owner hereof for all purposes, and none of the foregoing shall be affected by notice to the contrary.

The obligations and responsibilities created by the Indenture shall terminate upon the payment to Class B Noteholders of all amounts required to be paid to them pursuant to the Indenture and the Sale and Servicing Agreement and the disposition of all property held as part of the Indenture Collateral.

A-6-6

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE(10)

The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

	Amount of	Amount of	Principal Amount
	decrease in	increase in	of this Global	Signature of
	Principal Amount	Principal Amount	Note following	Responsible
Date of	of this Global	of this Global	such decrease (or	Officer of Note
Exchange	Note	Note	increase)	Registrar

(10)This should be included only if the Note is issued in global form.

A-6-7

ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto                                                                   

                                                                                                                                                        ;                                                 

(name and address of assignee)

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints              , attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises.

Dated: (11)

Signature Guaranteed:

(11)NOTE:  The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever.

A-6-8

EXHIBIT A–7

[FORM OF CLASS C NOTE]

ARCC Commercial Loan Trust 2006

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY SECURITIES OR BLUE SKY LAW OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES THAT THIS NOTE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A “QIB”), PURCHASING FOR ITS OWN ACCOUNT FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) IN CERTIFICATED DEFINITIVE FORM TO AN INSTITUTIONAL “ACCREDITED INVESTOR” (WITHIN THE MEANING OF RULE 501(a)(1)—(3) OR (7) UNDER THE SECURITIES ACT) PURCHASING FOR INVESTMENT AND NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, IN EACH CASE, SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE INDENTURE AND (B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS MADE IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS IN ACCORDANCE WITH ALL APPLICABLE SECURITIES AND BLUE SKY LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (4) PURSUANT TO ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES AND BLUE SKY LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, OR (5) PURSUANT TO A VALID REGISTRATION STATEMENT COMPLIANT WITH THE REQUIREMENTS OF THE SECURITIES ACT.  THE PURCHASE OF THIS NOTE WILL BE DEEMED A REPRESENTATION BY THE ACQUIRER THAT EITHER:  (I) IT IS NOT, AND IS NOT ACQUIRING OR HOLDING THIS NOTE, DIRECTLY OR INDIRECTLY, ON BEHALF OF OR WITH ANY ASSETS OF, AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF ERISA THAT IS SUBJECT TO TITLE I OF ERISA, A “PLAN” DESCRIBED IN AND SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (COLLECTIVELY, A “PLAN”), OR OTHER PLAN OR ARRANGEMENT SUBJECT TO ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAW SUBSTANTIVELY SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE (“SIMILAR LAW”); OR (II) ITS ACQUISITION AND HOLDING OF THIS NOTE WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED

A-7-1

TRANSACTION FOR PURPOSES OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, OR OTHER PLAN OR A VIOLATION OF SIMILAR LAW.

[IF HELD BY DTC] [UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

[IF REGULATION S GLOBAL NOTE] [THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT AND, PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE COMMENCEMENT OF. THE OFFERING AND THE ORIGINAL ISSUE DATE OF THE NOTES, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.]

THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.  ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

A-7-2

REGISTERED	$
No. C—		July 7, 2006

SEE REVERSE FOR CERTAIN DEFINITIONS

[144A CUSIP NO.                        ]
[Reg S ISIN NO.                           ]
[Reg S CUSIP No.                        ]
[Common Code No.                      ]

ARCC Commercial Loan Trust 2006, a statutory trust organized and existing under the laws of the State of Delaware (herein referred to as the “Issuer”), for value received, hereby promises to pay to                       , or registered assigns, the principal sum of                                                         DOLLARS payable on each Distribution Date on which principal is required to be paid in an amount equal to the result obtained by multiplying (i) a fraction, the numerator of which is the initial principal balance of this Class C Note and the denominator of which is the Initial Class C Principal Balance by (ii) the aggregate amount, if any, payable from the Note Distribution Account in respect of principal on the Class C Notes pursuant to Section 3.05 of the Indenture.

The principal of and interest on this Class C Note are payable in such coin or currency of the United States as at the time of payment is legal tender for payment of public and private debts.  All payments made by the Issuer with respect to this Class C Note shall be applied first to interest due and payable on this Class C Note as provided above and then to the unpaid principal of this Class C Note.

Reference is made to the further provisions of this Class C Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Class C Note.

Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual signature, this Class C Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose.

A-7-3

IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or in facsimile, by its Responsible Officer as of the date set forth below.

ARCC COMMERCIAL LOAN TRUST 2006
By:	WILMINGTON TRUST COMPANY, not
	in its individual capacity but solely as
	Owner Trustee under the Trust Agreement
By:
	Authorized Signatory

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Class C Notes of ARCC Commercial Loan Trust 2006 designated above and referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Trustee,
By:
	Authorized Signatory

A-7-4

[REVERSE OF NOTE]

This Class C Note is one of a duly authorized issue of Class C Notes of the Issuer, designated as its ARCC Commercial Loan Trust 2006 Notes, Series 2006-1, Class C (herein called the “Class C Notes”), all issued under an Indenture, dated as of July 7, 2006 (such indenture, as supplemented or amended, is herein called the “Indenture”), between the Issuer and U.S. Bank National Association, as Trustee (the “Trustee”, which term includes any successor Trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Trustee and the Holders of the Class C Notes.  The Class C Notes are subject to all terms of the Indenture.  All terms used in this Class C Note that are defined in the Indenture, as supplemented or amended, shall have the meanings assigned to them in or pursuant to the Indenture, as so supplemented or amended.

Notwithstanding the foregoing, the entire unpaid principal amount of the Class C Notes shall be due and payable on the date on which an Event of Default shall have occurred and be continuing and the Trustee, or the Majority Noteholders have declared the Class C Notes to be immediately due and payable in the manner provided in Section 5.02 of the Indenture.  All principal payments on the Class C Notes shall be made pro rata to the Class C Noteholders entitled thereto.

Each Class C Noteholder, by acceptance of a Class C Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer under the Indenture on the Class C Notes or under any certificate or other writing delivered in connection therewith, against any holder of a Trust Certificate, the Trust Depositor, the Servicer, the Trustee or the Owner Trustee in its individual capacity or any of their Affiliates.

On each Distribution Date, commencing December 20, 2006, the Trustee or Paying Agent shall distribute to the Person in whose name this Class C Note is registered at the close of business on the Record Date an amount equal to the product of the Percentage Interest of the Class C Notes evidenced by this Class C Note and the amount required to be distributed to Holders of Class C Notes on such Distribution Date pursuant to Section 3.05 of the Indenture.

During each Interest Period, this Class C Note will bear interest at the Class C Note Interest Rate.

Distributions on this Class C Note will be made by the Trustee or Paying Agent by check mailed to the address of the Person entitled thereto as such name and address shall appear on the Note Register or, upon written request to the Trustee, by wire transfer of immediately available funds to the account of the Person entitled thereto as shall appear on the Note Register without the presentation or surrender of this Note or the making of any notation thereon, at a bank or other entity having appropriate facilities therefor, and, in the case of wire transfers, at the expense of such Person unless such Person shall own of record Class C Notes which have Initial Class C Principal Balances aggregating at least $250,000.

Notwithstanding the above, the final distribution on this Class C Note will be made after due notice by the Trustee of the pendency of such distribution and only upon presentation and

A-7-5

surrender of this Class C Note at the office or agency maintained for that purpose by the Note Registrar in Boston, Massachusetts.

As provided in the Indenture and the Sale and Servicing Agreement, deposits and withdrawals from the Note Distribution Account, the Principal and Interest Account and the Reserve Fund may be made by the Trustee from time to time for purposes other than distributions to Class C Noteholders, such purposes including reimbursement to the Servicer of advances made, or certain expenses incurred, by it, and investment in Permitted Investments.

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Class C Note is registrable in the Note Register upon surrender of this Class C Note for registration of transfer at the offices or agencies maintained by the Note Registrar in Boston, Massachusetts, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to, the Trustee, duly executed by the holder hereof or such holder’s attorney duly authorized in writing, and thereupon one or more new Class C Notes in authorized denominations evidencing the same aggregate undivided Percentage Interest will be issued to the designated transferee or transferees.

This Class C Note is issuable only as a registered Class C Note.  As provided in the Indenture and subject to certain limitations therein set forth, this Class C Note is exchangeable for a new Class C Note evidencing the same undivided ownership interest, as requested by the holder surrendering the same.

No service charge will be made for any such registration of transfer or exchange, but the Note Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

The Servicer, the Trust Depositor, the Trustee and the Note Registrar, and any agent of any of the foregoing, may treat the person in whose name this Class C Note is registered as the owner hereof for all purposes, and none of the foregoing shall be affected by notice to the contrary.

The obligations and responsibilities created by the Indenture with respect to this Class C Note shall terminate upon the payment to Class C Noteholders of all amounts required to be paid to them pursuant to the Indenture and the Sale and Servicing Agreement and the disposition of all property held as part of the Indenture Collateral with respect to this Class C Note.

A-7-6

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE(12)

The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

	Amount of	Amount of	Principal Amount
	decrease in	increase in	of this Global	Signature of
	Principal Amount	Principal Amount	Note following	Responsible
Date of	of this Global	of this Global	such decrease	Officer of Note
Exchange	Note	Note	(or increase)	Registrar

(12)This should be included only if the Note is issued in global form.

A-7-7

ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto                                                                   

                                                                                                                                                        ;                                                  

(name and address of assignee)

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints              , attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises.

Dated: (13)

Signature Guaranteed:

(13)         NOTE:  The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever.

A-7-8

EXHIBIT A–8

[FORM OF CLASS D NOTE]

ARCC Commercial Loan Trust 2006

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY SECURITIES OR BLUE SKY LAW OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES THAT THIS NOTE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A “QIB”), PURCHASING FOR ITS OWN ACCOUNT FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) IN CERTIFICATED DEFINITIVE FORM TO AN INSTITUTIONAL “ACCREDITED INVESTOR” (WITHIN THE MEANING OF RULE 501(a)(1)—(3) OR (7) UNDER THE SECURITIES ACT) PURCHASING FOR INVESTMENT AND NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, IN EACH CASE, SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE INDENTURE AND (B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS MADE IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS IN ACCORDANCE WITH ALL APPLICABLE SECURITIES AND BLUE SKY LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (4) PURSUANT TO ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES AND BLUE SKY LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, OR (5) PURSUANT TO A VALID REGISTRATION STATEMENT COMPLIANT WITH THE REQUIREMENTS OF THE SECURITIES ACT.  THE PURCHASE OF THIS NOTE WILL BE DEEMED A REPRESENTATION BY THE ACQUIRER THAT EITHER:  (I) IT IS NOT, AND IS NOT ACQUIRING OR HOLDING THIS NOTE, DIRECTLY OR INDIRECTLY, ON BEHALF OF OR WITH ANY ASSETS OF, AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF ERISA THAT IS SUBJECT TO TITLE I OF ERISA, A “PLAN” DESCRIBED IN AND SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (COLLECTIVELY, A “PLAN”), OR OTHER PLAN OR ARRANGEMENT SUBJECT TO ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAW SUBSTANTIVELY SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE (“SIMILAR LAW”); OR (II) ITS ACQUISITION AND HOLDING OF THIS NOTE WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED

A-8-1

TRANSACTION FOR PURPOSES OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, OR OTHER PLAN OR A VIOLATION OF SIMILAR LAW.

[IF HELD BY DTC] [UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

[IF REGULATION S GLOBAL NOTE] [THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT AND, PRIOR TO THE DATE THAT IS 40 DAYS AFTER THE LATER OF THE COMMENCEMENT OF. THE OFFERING AND THE ORIGINAL ISSUE DATE OF THE NOTES, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.]

THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.  ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

A-8-2

REGISTERED	$
No. D—		July 7, 2006

SEE REVERSE FOR CERTAIN DEFINITIONS

[144A CUSIP NO.                        ]

[Reg S ISIN NO.                           ]

[Reg S CUSIP No.                        ]

[Common Code No.                      ]

ARCC Commercial Loan Trust 2006, a statutory trust organized and existing under the laws of the State of Delaware (herein referred to as the “Issuer”), for value received, hereby promises to pay to                                        , or registered assigns, the principal sum of                                                                                                                     DOLLARS payable on each Distribution Date on which principal is required to be paid in an amount equal to the result obtained by multiplying (i) a fraction, the numerator of which is the initial principal balance of this Class D Note and the denominator of which is the Initial Class D Principal Balance by (ii) the aggregate amount, if any, payable from the Note Distribution Account in respect of principal on the Class D Notes pursuant to Section 3.05 of the Indenture.

The principal of and interest on this Class D Note are payable in such coin or currency of the United States as at the time of payment is legal tender for payment of public and private debts.  All payments made by the Issuer with respect to this Class D Note shall be applied first to interest due and payable on this Class D Note as provided above and then to the unpaid principal of this Class D Note.

Reference is made to the further provisions of this Class D Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Class D Note.

Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual signature, this Class D Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose.

A-8-3

IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or in facsimile, by its Responsible Officer as of the date set forth below.

ARCC COMMERCIAL LOAN TRUST 2006
By:		WILMINGTON TRUST COMPANY, not
		in its individual capacity but solely as
		Owner Trustee under the Trust Agreement
By:
	Authorized Signatory

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Class D Notes of ARCC Commercial Loan Trust 2006 designated above and referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Trustee,
By:
	Authorized Signatory

A-8-4

[REVERSE OF NOTE]

This Class D Note is one of a duly authorized issue of Class D Notes of the Issuer, designated as its ARCC Commercial Loan Trust 2006 Notes, Series 2006-1, Class D (herein called the “Class D Notes”), all issued under an Indenture, dated as of July 7, 2006 (such indenture, as supplemented or amended, is herein called the “Indenture”), between the Issuer and U.S. Bank National Association, as Trustee (the “Trustee”, which term includes any successor Trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Trustee and the Holders of the Class D Notes.  The Class D Notes are subject to all terms of the Indenture.  All terms used in this Class D Note that are defined in the Indenture, as supplemented or amended, shall have the meanings assigned to them in or pursuant to the Indenture, as so supplemented or amended.

Notwithstanding the foregoing, the entire unpaid principal amount of the Class D Notes shall be due and payable on the date on which an Event of Default shall have occurred and be continuing and the Trustee, or the Majority Noteholders have declared the Class D Notes to be immediately due and payable in the manner provided in Section 5.02 of the Indenture.  All principal payments on the Class D Notes shall be made pro rata to the Class D Noteholders entitled thereto.

Each Class D Noteholder, by acceptance of a Class D Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer under the Indenture on the Class D Notes or under any certificate or other writing delivered in connection therewith, against any holder of a Trust Certificate, the Trust Depositor, the Servicer, the Trustee or the Owner Trustee in its individual capacity or any of their Affiliates.

On each Distribution Date, commencing December 20, 2006, the Trustee or Paying Agent shall distribute to the Person in whose name this Class D Note is registered at the close of business on the Record Date an amount equal to the product of the Percentage Interest of the Class D Notes evidenced by this Class D Note and the amount required to be distributed to Holders of Class D Notes on such Distribution Date pursuant to Section 3.05 of the Indenture.

During each Interest Period, this Class D Note will bear interest at the Class D Note Interest Rate.

Distributions on this Class D Note will be made by the Trustee or Paying Agent by check mailed to the address of the Person entitled thereto as such name and address shall appear on the Note Register or, upon written request to the Trustee, by wire transfer of immediately available funds to the account of the Person entitled thereto as shall appear on the Note Register without the presentation or surrender of this Note or the making of any notation thereon, at a bank or other entity having appropriate facilities therefor, and, in the case of wire transfers, at the expense of such Person unless such Person shall own of record Class D Notes which have Initial Class D Principal Balances aggregating at least $250,000.

Notwithstanding the above, the final distribution on this Class D Note will be made after due notice by the Trustee of the pendency of such distribution and only upon presentation and

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surrender of this Class D Note at the office or agency maintained for that purpose by the Note Registrar in Boston, Massachusetts.

As provided in the Indenture and the Sale and Servicing Agreement, deposits and withdrawals from the Note Distribution Account, the Principal and Interest Account and the Reserve Fund may be made by the Trustee from time to time for purposes other than distributions to Class D Noteholders, such purposes including reimbursement to the Servicer of advances made, or certain expenses incurred, by it, and investment in Permitted Investments.

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Class D Note is registrable in the Note Register upon surrender of this Class D Note for registration of transfer at the offices or agencies maintained by the Note Registrar in Boston, Massachusetts, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to, the Trustee, duly executed by the holder hereof or such holder’s attorney duly authorized in writing, and thereupon one or more new Class D Notes in authorized denominations evidencing the same aggregate undivided Percentage Interest will be issued to the designated transferee or transferees.

This Class D Note is issuable only as a registered Class D Note.  As provided in the Indenture and subject to certain limitations therein set forth, this Class D Note is exchangeable for a new Class D Note evidencing the same undivided ownership interest, as requested by the holder surrendering the same.

No service charge will be made for any such registration of transfer or exchange, but the Note Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

The Servicer, the Trust Depositor, the Trustee and the Note Registrar, and any agent of any of the foregoing, may treat the person in whose name this Class D Note is registered as the owner hereof for all purposes, and none of the foregoing shall be affected by notice to the contrary.

The obligations and responsibilities created by the Indenture with respect to this Class D Note shall terminate upon the payment to Class D Noteholders of all amounts required to be paid to them pursuant to the Indenture and the Sale and Servicing Agreement and the disposition of all property held as part of the Indenture Collateral with respect to this Class D Note.

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SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE(14)

The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

	Amount of	Amount of	Principal Amount
	decrease in	increase in	of this Global	Signature of
	Principal Amount	Principal Amount	Note following	Responsible
Date of	of this Global	of this Global	such decrease	Officer of Note
Exchange	Note	Note	(or increase)	Registrar

(14)This should be included only if the Note is issued in global form.

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ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto                                                                   

(name and address of assignee)

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints                              , attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises.

Dated: (15)

Signature Guaranteed:

(15)NOTE:  The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever.

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EXHIBIT A–9

[FORM OF CLASS E NOTE]

ARCC Commercial Loan Trust 2006

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY SECURITIES OR BLUE SKY LAW OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES.  THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES THAT THIS NOTE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY IN CERTIFICATED DEFINITIVE FORM (1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A “QIB”), PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” (WITHIN THE MEANING OF RULE 501(a)(1)—(3) OR (7) UNDER THE SECURITIES ACT) PURCHASING FOR INVESTMENT AND NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, IN EACH CASE, SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE INDENTURE AND (B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS MADE IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND IN ACCORDANCE WITH ALL APPLICABLE SECURITIES AND BLUE SKY LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (4) PURSUANT TO ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES AND BLUE SKY LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, OR (5) PURSUANT TO A VALID REGISTRATION STATEMENT COMPLIANT WITH THE REQUIREMENTS OF THE SECURITIES ACT.

THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.  ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

THIS CLASS E NOTE IS A PRINCIPAL ONLY NOTE AND DOES NOT BEAR ANY INTEREST.

THIS CLASS E NOTE MAY NOT BE TRANSFERRED DIRECTLY OR INDIRECTLY TO ANY PERSON THAT IS, OR IS ACTING DIRECTLY OR INDIRECTLY

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FOR, ON BEHALF OF OR WITH ANY ASSETS OF, AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF ERISA THAT IS SUBJECT TO TITLE I OF ERISA, OR A “PLAN” DESCRIBED IN AND SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (COLLECTIVELY, A “PLAN”).  THIS CLASS E NOTE MAY NOT BE TRANSFERRED TO A PLAN THAT IS NOT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”) OR SECTION 4975 OF THE CODE UNLESS ITS ACQUISITION AND HOLDING OF THIS NOTE WILL NOT CONSTITUTE OR RESULT IN A VIOLATION OF ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAW SUBSTANTIVELY SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE (“SIMILAR LAW”).  IN CONNECTION WITH ITS ACQUISITION OF THIS NOTE, THE ACQUIROR REQUIRED TO REPRESENT THAT (I) IT IS NOT, AND IS NOT ACQUIRING OR HOLDING THIS NOTE, DIRECTLY OR INDIRECTLY, FOR, ON BEHALF OF OR WITH ANY ASSETS OF, A “PLAN”, AND (II) IF IT IS A PLAN THAT IS NOT SUBJECT TO TITLE I OF ERISA OR SECTION 4975 OF THE CODE, ITS ACQUISITION AND HOLDING OF THIS NOTE WILL NOT CONSTITUTE OR RESULT INA VIOLATION OF SIMILAR LAW.

THIS CLASS E NOTE MAY BE TRANSFERRED ONLY TO A UNITED STATES PERSON WITHIN THE MEANING OF SECTION 7701(a)(30) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.

THIS CLASS E NOTE MAY NOT BE ACQUIRED OR OWNED BY ANY PERSON THAT IS CLASSIFIED FOR U.S. FEDERAL INCOME TAX PURPOSES AS A PARTNERSHIP, SUBCHAPTER S CORPORATION OR GRANTOR TRUST UNLESS (I) THE VALUE OF THE CLASS E NOTES PROPOSED TO BE TRANSFERRED TO SUCH PERSON, TOGETHER WITH THE VALUE OF ANY CLASS E NOTES AND TRUST CERTIFICATES ALREADY FIELD BY SUCH PERSON, WILL NOT CONSTITUTE SUBSTANTIALLY ALL OF THE VALUE OF THE ASSETS OF SUCH PERSON AND (II) SUCH PERSON IS NOT PART OF ANY ARRANGEMENT THE PRINCIPAL PURPOSE OF WHICH IS TO CAUSE THE CLASS E NOTES AND TRUST CERTIFICATES TO BE TREATED AS OWNED BY 100 PERSONS OR LESS WITHIN THE MEANING OF TREAS. REG. § 1.7704-1(H)(1)(II).

THIS CLASS E NOTE (AND ANY INTEREST HEREIN) MAY NOT BE ACQUIRED, PURSUANT TO A TRADE ON AN “ESTABLISHED SECURITIES MARKET.” FOR THIS PURPOSE, THE TERM “ESTABLISHED SECURITIES MARKET” INCLUDES ANY NATIONAL SECURITIES EXCHANGE REGISTERED UNDER SECTION 6 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, OR EXEMPTED FROM REGISTRATION BECAUSE OF THE LIMITED VOLUME; ANY FOREIGN SECURITIES EXCHANGE THAT, UNDER THE LAWS OF THE JURISDICTION WHERE IT IS ORGANIZED, SATISFIES REGULATORY REQUIREMENTS THAT ARE ANALOGOUS TO THE REGULATORY REQUIREMENTS IMPOSED UNDER THE SECURITIES EXCHANGE ACT OF 1934; ANY REGIONAL OR LOCAL EXCHANGE; AND ANY INTERDEALER QUOTATION SYSTEM THAT REGULARLY DISSEMINATES FIRM BUY AND SELL QUOTATIONS BY IDENTIFIED BROKERS OR DEALERS, BY ELECTRONIC MEANS OR OTHERWISE.

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THIS CLASS E NOTE (AND ANY INTEREST HEREIN) MAY NOT BE TRANSFERRED IN AN AMOUNT LESS THAN THE MINIMUM DENOMINATION OF SUCH CLASS E NOTE.

NO TRANSFER, SALE, PLEDGE OR OTHER DISPOSITION OF ONE OR MORE CLASS E NOTE (A “TRANSFER”) SHALL BE MADE UNLESS SIMULTANEOUSLY WITH THE TRANSFER (1) A PROPORTIONATE AMOUNT OF TRUST CERTIFICATES ARE TRANSFERRED SO THAT THE PERCENTAGE INTEREST OF THE TRUST CERTIFICATES SO TRANSFERRED TO ALL TRUST CERTIFICATES EQUALS THE PERCENTAGE INTEREST OF THE CLASS E NOTE SO TRANSFERRED, (2) THE TRANSFERS OF THE TRUST CERTIFICATES AND CLASS E NOTE REFERRED TO HEREIN ARE MADE TO THE SAME PERSON, AND (3) THE PERCENTAGE INTEREST OF THE TRUST CERTIFICATES AND CLASS E NOTE, RESPECTIVELY, SO TRANSFERRED IS NO LESS THAN TEN (10%) PERCENT.

THE RIGHTS OF THE HOLDERS OF THIS CLASS E NOTE TO RECEIVE PRINCIPAL ARE SUBORDINATED TO THE RIGHTS OF THE HOLDERS OF THE CLASS A-1A NOTES, THE CLASS A-1A VFN NOTES, THE CLASS A-1B NOTES, THE CLASS A-2A NOTES, THE CLASS A-2B NOTES, THE CLASS B NOTES THE CLASS C NOTES, AND THE CLASS D NOTES TO RECEIVE PRINCIPAL AND INTEREST TO THE EXTENT SET FORTH IN THE SALE AND SERVICING AGREEMENT.

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REGISTERED	$
No. E—	July 7, 2006

SEE REVERSE FOR CERTAIN DEFINITIONS

ARCC Commercial Loan Trust 2006, a statutory trust organized and existing under the laws of the State of Delaware (herein referred to as the “Issuer”), for value received, hereby promises to pay to                                       , or registered assigns, the principal sum of                                                                                                             DOLLARS payable on each Distribution Date on which principal is required to be paid in an amount equal to the result obtained by multiplying (i) a fraction the numerator of which is the initial principal balance of this Class E Note and the denominator of which is the Initial Class E Principal Balance by (ii) the aggregate amount, if any, payable from the Note Distribution Account in respect of principal on the Class E Notes pursuant to Section 3.05 of the Indenture.

Distributions on this Class E Note are payable in such coin or currency of the United States as at the time of payment is legal tender for payment of public and private debts.

Reference is made to the further provisions of this Class E Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Class E Note.

Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual signature, this Class E Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose.

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IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or in facsimile, by its Responsible Officer as of the date set forth below.

ARCC COMMERCIAL LOAN TRUST 2006
By:	WILMINGTON TRUST COMPANY, not
	in its individual capacity but solely as
	Owner Trustee under the Trust Agreement
By:
	Authorized Signatory

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Class E Notes of ARCC Commercial Loan Trust 2006 designated above and referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Trustee,
By:
	Authorized Signatory

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[REVERSE OF NOTE]

This Class E Note is one of a duly authorized issue of Class E Notes of the Issuer, designated as its ARCC Commercial Loan Trust 2006 Notes, Series 2006-1, Class E (herein called the “Class E Notes”), all issued under an Indenture dated as of July 7, 2006 (such indenture, as supplemented or amended, is herein called the “Indenture”), between the Issuer and U.S. Bank National Association, as Trustee (the “Trustee”, which term includes any successor Trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Trustee and the Holders of the Class E Notes.  The Class E Notes are subject to all terms of the Indenture.  All terms used in this Class E Note that are defined in the Indenture, as supplemented or amended, shall have the meanings assigned to them in or pursuant to the Indenture, as so supplemented or amended.

Notwithstanding the foregoing, the entire unpaid principal amount of the Class E Notes shall be due and payable on the date on which an Event of Default shall have occurred and be continuing and the Trustee, or the Majority Noteholders have declared the Class E Notes to be immediately due and payable in the manner provided in Section 5.02 of the Indenture.  All principal payments on the Class E Notes shall be made pro rata to the Class E Noteholders entitled thereto.

Each Class E Noteholder, by acceptance of a Class E Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer under the Indenture on the Class E Notes or under any certificate or other writing delivered in connection therewith, against any holder of a Trust Certificate, the Trust Depositor, the Servicer, the Trustee or the Owner Trustee in its individual capacity or any of their Affiliates.

On each Distribution Date, commencing December 20, 2006, the Trustee or Paying Agent shall distribute to the Person in whose name this Class E Note is registered on the close of business on the Record Date an amount equal to the product of the Percentage Interest of the Class E Notes evidenced by this Class E Note and the amount required to be distributed to Holders of Class E Notes on such Distribution Date pursuant to Section 3.05 of the Indenture.

Distributions on this Class E Note will be made by the Trustee or Paying Agent by check mailed to the address of the Person entitled thereto as such name and address shall appear on the Note Register or, upon written request to the Trustee, by wire transfer of immediately available funds to the account of the Person entitled thereto as shall appear on the Note Register without the presentation or surrender of this Note or the making of any notation thereon, at a bank or other entity having appropriate facilities therefor, and, in the case of wire transfers, at the expense of such Person unless such Person shall own of record Class E Notes which have Initial Class E Principal Balances aggregating at least $250,000.

Notwithstanding the above, the final distribution on this Class E Note will be made after due notice by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Class E Note at the office or agency maintained for that purpose by the Note Registrar in Boston, Massachusetts.

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As provided in the Indenture and the Sale and Servicing Agreement, deposits and withdrawals from the Note Distribution Account, the Principal and Interest Account and the Reserve Fund may be made by the Trustee from time to time for purposes other than distributions to Class E Noteholders, such purposes including reimbursement to the Servicer of advances made, or certain expenses incurred, by it, and investment in Permitted Investments.

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Class E Note is registrable in the Note Register upon surrender of this Class E Note for registration of transfer at the offices or agencies maintained by the Note Registrar in Boston, Massachusetts, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to, the Trustee, duly executed by the holder hereof or such holder’s attorney duly authorized in writing, and thereupon one or more new Class E Notes in authorized denominations evidencing the same aggregate undivided Percentage Interest will be issued to the designated transferee or transferees.

This Class E Note is issuable only as a registered Class E Note.  As provided in the Indenture and subject to certain limitations therein set forth, this Class E Note is exchangeable for a new Class E Note evidencing the same undivided ownership interest, as requested by the holder surrendering the same.

No service charge will be made for any such registration of transfer or exchange, but the Note Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

The Servicer, the Trust Depositor, the Trustee and the Note Registrar, and any agent of any of the foregoing, may treat the person in whose name this Class E Note is registered as the owner hereof for all purposes, and none of the foregoing shall be affected by notice to the contrary.

The obligations and responsibilities created by the Indenture with respect to this Class E Note shall terminate upon the payment to Class E Noteholders of all amounts required to be paid to them pursuant to the Indenture and the Sale and Servicing Agreement and the disposition of all property held as part of the Indenture Collateral with respect to this Class E Note.

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ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto                                                                   

                                                                                                                                                        ;                                                  

(name and address of assignee)

the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints                                , attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises.

Dated: (16)

Signature Guaranteed:

(16)NOTE:  The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever.

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EXHIBIT B

LIST OF LOANS

See Exhibit G of the Sale and Servicing Agreement.

B-1

EXHIBIT C

WIRING INSTRUCTIONS FORM

, 2006

[Paying Agent]

Re:ARCC Commercial Loan Trust 2006 Notes, Series 2006-1, [Class A-1A] [Class A-1A VFN] [Class A-1B] [Class B] [Class C] [Class D] [Class E]

Dear Sir:

In connection with the sale of the above-captioned Note by                                        to                                                    , (“Transferee”) you, as Paying Agent, are instructed to make all remittances to Transferee as Noteholder as of                      ,                  by wire transfer.  For such wire transfer, the wiring instructions are as follows:

Transferee

Noteholder’s mailing address:

Name:

Address:

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EXHIBIT D–1

FORM OF TRANSFEREE LETTER

Ares Capital Corporation,
as the Servicer
280 Park Avenue, 22nd Floor, Building East
New York, New York 10017
Attention:  Michael J. Arougheti

U.S. Bank National Association,
as the Trustee
One Federal Street
Boston, Massachusetts 02110
Attention:  CDO Unit, Reference ARCC 2006-1

                 , 20    

Re:ARCC Commercial Loan Trust 2006 Notes, Series 2006-1

Class A-1A, Class A-1A VFN, Class A-1B, Class A-2A, Class A-2B, Class B, Class C, Class D and Class E

Ladies and Gentlemen:

In connection with our acquisition of the above-captioned Notes, we certify that (a) we understand that the Notes are not being registered under the Securities Act of 1933, as amended (the “Act”), or any state securities laws and are being transferred to us in a transaction that is exempt from the registration requirements of the Act and any such laws, (b) we are an “Institutional Accredited Investor” or, in the case of the Class E Notes, a “Qualified Institutional Buyer,” each as defined in the Indenture pursuant to which the Notes were issued (the “Indenture”), and have such knowledge and experience in financial and business matters that we are capable of evaluating the merits and risks of investments in the Notes, (c) we have had the opportunity to ask questions of and receive answers from the Originator, the Servicer and the Issuer concerning the purchase of the Notes and all matters relating thereto or any additional information deemed necessary to our decision to purchase the Notes, (d) we are acquiring the Notes for investment for our own account and not with a view to any distribution of such Notes (but without prejudice to our right at all times to sell or otherwise dispose of the Notes in accordance with clause (f) below), (e) we have not offered or sold any Notes to, or solicited offers to buy any Notes from, any person, or otherwise approached or negotiated with any person with respect thereto, or taken any other action which would result in a violation of Section 5 of the Act, (f) we will not sell, transfer or otherwise dispose of any Notes unless (1) such sale, transfer or other disposition is made pursuant to an effective registration statement under the Act or is exempt from such registration requirements, and if requested, we will at our expense provide an opinion of counsel satisfactory to the addressees of this certificate that such sale, transfer or other disposition may be made pursuant to an exemption from the Act, (2) the purchaser or transferee of such Note has executed and delivered to you a certificate to substantially the same effect as this certificate if required by the Indenture, and (3) the purchaser

D-1-1

or transferee has otherwise complied with any conditions for transfer set forth in the Indenture, (g) the purchaser is not, and is not acquiring or holding a Class A-1A Note, Class A-1A VFN Note, Class A-1B Note, Class A-2A Note, Class A-2B Note, Class B Note, Class C Note or Class D Note, directly or indirectly on behalf of or with any assets of an “employee benefit plan” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that is subject to Title I of ERISA, a “plan” described in and subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”) (collectively, a “Plan”) or other plan or arrangement subject to any federal, state, local, non-U.S. or other law substantively similar to the foregoing provisions of ERISA or the Code (“Similar Law”); or its acquisition and holding of the Class A-1A Note, Class A-1B Note, Class A-2A Note, Class A-2B Note, Class B Note, Class C Note or Class D Note will not constitute or result in a non-exempt prohibited transaction for purposes of Section 406 of ERISA or Section 4975 of the Code or a violation of Similar Law, (h) the purchaser is not, and is not acquiring or holding a Class E Note, directly or indirectly on behalf of or with any assets of, an employee benefit plan as defined in Section 3(3) of ERISA that is subject to Title I of ERISA or a “plan” described in and subject to Section 4975 of the Code, and if it is Plan that is not subject to Title I of ERISA or Section 4975 of the Code, its acquisition and holding of such Class E Note will not constitute or result in a violation of Similar Law, (i) if the purchaser is acquiring a Class A-1A VFN Note, the purchaser is a U.S. Person, as such term is defined in Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended, and (j) if the purchaser is acquiring a Class E Note, the purchaser also is acquiring Trust Certificates such that the ratio and the Percentage Interest of the Trust Certificates being acquired to all Trust Certificates and the ratio and the Percentage Interest of the Class E Notes being acquired to all Class E Notes are equal.

If the Purchaser is acquiring a Class A-1A Note, a Class A-1B Note, a Class B Note, a Class C Note or a Class D Note, the Purchaser is not a “10-percent shareholder” (as defined in the Code) with respect to the sole owner of the Issuer or its affiliates, and that it is not a bank or a controlled foreign corporation for U.S. federal income tax purposes, and will furnish the Issuer with either (a) a duly completed copy of United States Internal Revenue Service Form W-9, or (b) a duly completed copy of United States Internal Revenue Service Forms W-8BEN, W-8ECI or W-8IMY, with all appropriate attachments, as applicable.

If the Purchaser is acquiring a Class E Note for purposes of clauses (a)—(d) below:

(a)           the Purchaser either:

(1)           is not and will not become for U.S. federal income tax purposes a partnership, subchapter S corporation, grantor trust or other pass-through entity or

(2)           if it is or will become such an entity for U.S. federal income tax purposes, then:

(A)          the value of the Class E Notes proposed to be transferred to the Purchaser, together with the value of the Class E Notes and Trust Certificates already held by the Purchaser, will not constitute substantially all of the value of the assets of the Purchaser; and

D-1-2

(B)           the Purchaser is not part of any arrangement the principal purpose of which is to cause the Class E Notes and Trust Certificates to be treated as owned by 100 persons or less within the meaning of Treas. Reg. § 1.7704-1(h)(1)(ii);

(b)           The Purchaser is not acquiring and will not sell, transfer, assign, participate, pledge or otherwise dispose of any Class E Notes (or interest therein) or cause any Class E Notes (or interest therein) to be marketed on or through an “established securities market” within the meaning of Section 7704(b) of the Code, including, without limitation, an interdealer quotation system that regularly disseminates firm buy or sell quotations.

(c)           The Purchaser is (i) a citizen or resident of the United States, (ii) a corporation or partnership organized in or under the laws of the United States or any state (or the District of Columbia), (iii) an estate the income of which is subject to United States federal income tax, regardless of source or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of such trust or one or more persons described in this paragraph have the authority to control all substantial decisions of the trust (each of the foregoing being a “U.S. Person”).

(d)           The Purchaser understands and agrees not to transfer its interest in any Class E Note in an amount less than the minimum denomination of such Note and the Purchaser shall not transfer less than a 10% interest of the Class E Notes.

Very truly yours,

Print Name of Transferee

By:

Responsible Officer

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EXHIBIT D–2

FORM OF RULE 144A CERTIFICATION

Ares Capital Corporation,
as the Servicer
280 Park Avenue, 22nd Floor, Building East
New York, New York 10017
Attention:  Michael J. Arougheti

U.S. Bank National Association,
as the Trustee
One Federal Street
Boston, Massachusetts 02110
Attention:  CDO Unit ARCC 2006-1

                  , 20    

Re:          ARCC Commercial Loan Trust 2006 Notes, Series 2006-1

Class A-1A, Class A-1A VFN, Class A-1B, Class A-2A, Class A-2B, Class B, Class C, Class D and Class E

Ladies and Gentlemen:

In connection with our acquisition any of the above Notes we certify that (a) we understand that the Notes are not being registered under the Securities Act of 1933, as amended (the “Act”), or any state securities laws and are being transferred to us in a transaction that is exempt from the registration requirements of the Act and any such laws, (b) we have had the opportunity to ask questions of and receive answers from Originator, the Servicer and the Issuer concerning the purchase of the Notes and all matters relating thereto or any additional information deemed necessary to our decision to purchase the Notes, (c) we have not, nor has anyone acting on our behalf offered, transferred, pledged, sold or otherwise disposed of the Notes, any interest in the Notes or any other similar security to, or solicited any offer to buy or accept a transfer, pledge or other disposition of the Notes, any interest in the Notes or any other similar security from, or otherwise approached or negotiated with respect to the Notes, any interest in the Notes or any other similar security with, any person in any manner, or made any general solicitation by means of general advertising or in any other manner, or taken any other action, that would constitute a distribution of the Notes under the Act or that would render the disposition of the Notes a violation of Section 5 of the Act or require registration pursuant thereto, nor will act, nor has authorized or will authorize any person to act, in such manner with respect to the Notes, (d) we are a “Qualified Institutional Buyer” as that term is defined in Rule 144A under the Act and have completed the form of certification to that effect attached hereto as Annex 1, (e) we are not, and are not acquiring or holding a Class A-1A Note, Class A-1A VFN Note, Class A-1B Note, Class A-2A Note, Class A-2B Note, Class B Note, Class C Note or (upon transfer to a Person unaffiliated with Ares Capital Corporation) Class D Note, directly or indirectly on behalf of or with any assets of an employee benefit plan as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that is subject to Title I of

D-2-1

ERISA a “plan” described in and subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”) (collectively, a “Plan”) or other plan or arrangement subject to any federal, state, local, non-U.S. or other law substantively similar to the foregoing provisions of ERISA or the Code (“Similar Law”); or its acquisition and holding of the Class A-1A Note, Class A-1B Note, Class A-2A Note, Class A-2B Note, Class B Note, Class C Note or (upon transfer to a Person unaffiliated with Ares Capital Corporation) Class D Note will not constitute or result in a non-exempt prohibited transaction under Title I of ERISA or Section 4975 of the Code or a violation of Similar Law, (f) we are not, and are not acquiring or holding a Class E Note, directly or indirectly on behalf of or with any assets of, an employee benefit plan as defined in Section 3(3) of ERISA that is subject to Title I of ERISA or a “plan” described in and subject to Section 4975 of the Code, and if we are a plan that is not subject to Title I of ERISA or Section 4975 of the Code, our acquisition and holding of such Note will not constitute or result in a violation of Similar Law, (g) if we are acquiring a Class A-1A VFN Note or Class E Note, we are a U.S. Person, as such term is defined in Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended, and (h) if the purchaser is acquiring a Class E Note, we also are acquiring Trust Certificates such that the ratio and the Percentage Interest of the Trust Certificates being acquired to all Trust Certificates and the ratio and the Percentage Interest of the Class E Notes being acquired to all Class E Notes are equal.  We are aware that the sale to us is being made in reliance on Rule 144A.

We are acquiring the Notes for our own account or for resale pursuant to Rule 144A and further, understand that such Notes may be resold, pledged or transferred only (i) to a person reasonably believed to be a Qualified Institutional Buyer that purchases for its own account or for the account of a Qualified Institutional Buyer to whom notice is given that the resale, pledge or transfer is being made in reliance on Rule 144A, or (ii) pursuant to another exemption from registration under the Act.

If the Purchaser is acquiring (x) for purposes of clauses (a) (d) below, a Class E Note or (y) for purposes of clause (c) below, a Class A-1A VFN Note:

(e)           the Purchaser either:

(1)           is not and will not become for U.S. federal income tax purposes a partnership, subchapter S corporation, grantor trust or other pass-through entity or

(2)           if it is or will become such an entity for U.S. federal income tax purposes, then:

(A)          none of the direct or indirect beneficial owners of any interest in the Purchaser have or ever will have more than 50% of the value of its interest in the Purchaser attributable to the interest of the Purchaser in any Class E Notes or other interest (direct or indirect) in the Issuer; and

(B)           it is not and will not be a principal purpose of the arrangement involving the investment of the Purchaser in any Class E Notes to permit any partnership to satisfy the 100 partner limitation of Treas. Reg. § 1.7704-1(h)(1)(ii)

D-2-2

necessary for such partnership not to be classified as a publicly traded partnership under the Code;

(f)            The Purchaser is not acquiring and will not sell, transfer, assign, participate, pledge or otherwise dispose of any Class E Notes (or interest therein) or cause any Class E Notes (or interest therein) to be marketed on or through an “established securities market” within the meaning of Section 7704(b) of the Code, including, without limitation, an interdealer quotation system that regularly disseminates firm buy or sell quotations.

(g)           The Purchaser is (i) a citizen or resident of the United States, (ii) a corporation or partnership organized in or under the laws of the United States or any state (or the District of Columbia), (iii) an estate the income of which is subject to United States federal income tax, regardless of source or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of such trust or one or more persons described in this paragraph have the authority to control all substantial decisions of the trust (each of the foregoing being a “U.S. Person”).

(h)           The Purchaser understands and agrees not to transfer its interest in any Class E Note to any person that is not a U.S. Person and also is a Qualified Institutional Buyer, and agrees not to transfer an interest in an amount less than the minimum denomination of such Note.

Very truly yours,

Print Name of Transferee

By:

Responsible Officer

D-2-3

ANNEX 1 TO EXHIBIT D—2

[FORM OF CERTIFICATION]

[Date]

Ares Capital Corporation,
as the Servicer
280 Park Avenue, 22nd Floor, Building East 
New York, New York 10017
Attention:  Michael J. Arougheti

U.S. Bank National Association,
as the Trustee
One Federal Street
Boston, Massachusetts 02110
Attention:  CDO Unit ARCC 2006-1

Re:	ARCC Commercial Loan Trust 2006 Notes, Series 2006-1
	Class A-1A, Class A-1A VFN, Class A-1B, Class A-2A, Class A-2B, Class B, Class C, Class D, and Class E Notes

Ladies and Gentlemen:

In connection with our purchase of the Notes, the undersigned certifies to each of the parties to whom this letter is addressed that it is a Qualified Institutional Buyer (as defined in Rule 144A under the Securities Act of 1933, as amended (the “Act”)) as follows:

1.It owns and/or invests on a discretionary basis eligible securities (excluding affiliate’s securities, bank deposit notes and CD’s, loan participations, repurchase agreements, securities owned but subject to a repurchase agreement and currency, interest rate and commodity swaps), as described below:

Amount:  $                                 ; and

2.The dollar amount set forth above is:

a.greater than $100 million and the undersigned is one of the following entities:

(1)o     an insurance company as defined in Section 2(13) of the Act*; or

(2)o     [an investment company registered under the Investment Company Act of 1940 or any business development company as defined in Section 2(a)(48) of the Investment Company Act of 1940 or as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;] or

*A purchase by an insurance company for one or more of its separate accounts, as defined by section 2(a)(37) of the Investment Company Act of 1940, which are neither registered nor required to be registered thereunder, shall be deemed to be a purchase for the account of such insurance company.

D-2-4

(3)o     a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; or

(4)o     a plan (i) established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, the laws of which permit the purchase of securities of this type, for the benefit of its employees and (ii) the governing investment guidelines of which permit the purchase of securities of this type; or

(5)o     a corporation (other than a U.S. bank, savings and loan association or equivalent foreign institution), partnership, Massachusetts or similar statutory or business trust, or an organization described in Section 501(c)(3) of the Internal Revenue Code; or

(6)o     a U.S. bank, savings and loan association or equivalent foreign institution, which has an audited net worth of at least $25 million as demonstrated in its latest annual financial statements as of a date not more than 16 months preceding the date of sale in the case of a U.S. institution or 18 months in the case of a foreign institution; or

(7)o     an investment adviser registered under the Investment Advisers Act; or

b.o           greater than $25 million, and the undersigned is a broker-dealer registered with the SEC; or

c.o           [Reserved]

d.o           less than $100 million, and the undersigned is an investment company registered under the Investment Company Act of 1940, which, together with one or more registered investment companies having the same or an affiliated investment adviser, owns at least $100 million of eligible securities;] or

e.o           less than $100 million, and the undersigned is an entity, all the equity owners of which are Qualified Institutional Buyers.

The undersigned further certifies that it is purchasing Notes for its own account or for the account of others that independently qualify as “Qualified Institutional Buyers” as defined in Rule 144A. It is aware that the sale of the Notes is being made in reliance on its continued compliance with Rule 144A. It is aware that the transferor may rely on the exemption from the provisions of Section 5 of the Act provided by Rule 144A. The undersigned understands that the Notes may be resold, pledged or transferred pursuant to Rule 144A only to a person reasonably believed to be a Qualified Institutional Buyer that purchases for its own account or for the account of a Qualified Institutional Buyer to whom notice is given that the resale, pledge or transfer is being made in reliance in Rule 144A.

D-2-5

The undersigned agrees that if at some time before the expiration of the holding period described in Rule 144 it wishes to dispose of or exchange any of the Notes, it will not transfer or exchange any of the Notes to a Qualified Institutional Buyer without first obtaining a letter in the form hereof from the transferee and delivering such certificate to the addressees hereof.

IN WITNESS WHEREOF, this document has been executed by the undersigned who is duly authorized to do so on behalf of the undersigned Qualified Institutional Buyer on the           day of               ,        .

Name of Institution

Signature

Name

Title**

D-2-6

EXHIBIT E

FORM OF TRANSFER CERTIFICATE FOR RULE 144A GLOBAL NOTE TO REGULATION S GLOBAL NOTE DURING DISTRIBUTION COMPLIANCE PERIOD
(Pursuant to Section 4.02(l)(i) of the Indenture)

U.S. Bank National Association,
as the Trustee
One Federal Street
Boston, Massachusetts 02110
Attention:  CDO Unit ARCC 2006-1

Re: ARCC Commercial Loan Trust 2006 Notes, Series 2006-1
Class [A-1A], [A-2A], [A-2B], [B], [C], and [D]

Ladies and Gentlemen:

Reference is hereby made to the Indenture, dated as of July 7, 2006 (as amended, modified, waived, supplemented or restated from time to time, the “Agreement”), between ARCC Commercial Loan Trust 2006, as the issuer (together with its successors and assigns in such capacity, the “Issuer”), and U.S. Bank National Association, as the Trustee (together with its successors and assigns in such capacity, the “Trustee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Agreement.

This letter relates to US $[       ] aggregate current principal amount of Class    Notes (the “Notes”) which are held in the form of the Rule 144A Global Note (CUSIP No.          ) with DTC in the name of [insert name of transferor] (the “Transferor”). The Transferor has requested a transfer of such beneficial interest in the Notes for an interest in the Regulation S Global Note (CUSIP No.           ) to be held with [Euroclear] [Clearstream] (Common Code No.            ) through DTC.

In connection with such request and in respect of such Notes, the Transferor does hereby certify that such transfer has been effected in accordance with the transfer restrictions set forth in the Agreement and pursuant to and in accordance with Regulation S under the Securities Act of 1933, as amended (the “Securities Act”), and accordingly the Transferor does hereby certify that:

(1)the offer of the Notes was not made to a person in the United States,

(2)[at the time the buy order was originated, the transferee was outside the United States or the Transferor and any person acting on its behalf reasonably believed that the transferee was outside the United States] [the transaction was executed in, on or through the facilities of a designated offshore securities market and neither the Transferor nor any person acting on its behalf knows that the transaction was pre-arranged with a buyer in the United States],

(3)the transferee is not a U.S. Person within the meaning of Rule 902(o) of Regulation S nor a Person acting for the account or benefit of a U.S. Person,

E-1

(4)no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable,

(5)the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act, and

(6)upon completion of the transaction, the beneficial interest being transferred as described above will be held with DTC through [Euroclear] [Clearstream].

This certificate and the statements contained herein are made for your benefit and the benefit of the Trustee, the Issuer and the Initial Purchaser of the offering of the Notes.

	[Insert Name of Transferor]
	By:
	Name:
	Title:
Dated:

E-2

EXHIBIT F

FORM OF TRANSFER CERTIFICATE FOR RULE 144A GLOBAL NOTE TO REGULATION S GLOBAL NOTE AFTER DISTRIBUTION COMPLIANCE PERIOD
(Pursuant to Section 4.02(l)(ii) of the Indenture)

U.S. Bank National Association,
as the Trustee
One Federal Street
Boston, Massachusetts 02110
Attention:  CDO Unit ARCC 2006-1

Re: ARCC Commercial Loan Trust 2006 Notes, Series 2006-1
Class [A-1A], [A-2A], [A-2B], [B], [C], and [D]

Ladies and Gentlemen:

Reference is hereby made to the Indenture, dated as of July 7, 2006 (as amended, modified, waived, supplemented or restated from time to time, the “Agreement”), between ARCC Commercial Loan Trust 2006, as the issuer (together with its successors and assigns in such capacity, the “Issuer”), and U.S. Bank National Association, as the Trustee (the “Trustee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Agreement.

This letter relates to US $[        ] aggregate current principal amount of Class    Notes (the “Notes”) which are held in the form of the Rule 144A Global Note (CUSIP No.         ) with DTC in the name of [insert name of transferor] (the “Transferor”). The Transferor has requested a transfer of such beneficial interest in the Notes for an interest in the Regulation S Global Note (Common Code No.      ).

In connection with such request, and in respect of such Notes, the Transferor does hereby certify that such transfer has been effected in accordance with the transfer restrictions set forth in the Agreement and, (i) with respect to transfers made in reliance on Regulation S under the Securities Act of 1933, as amended (the “Securities Act”), the Transferor does hereby certify that:

(1)the offer of the Notes was not made to a person in the United States;

(2)[at the time the buy order was originated, the transferee was outside the United States or the Transferor and any person acting on its behalf reasonably believed that the transferee was outside the United States] [the transaction was executed in, on or through the facilities of a designated offshore securities market and neither the Transferor nor any person acting on its behalf knows that the transaction was pre-arranged with a buyer in the United States];

(3)no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; and

F-1

(4)the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act,

or (ii) with respect to transfers made in reliance on Rule 144 under the Securities Act, the Transferor does hereby certify that the Notes that are being transferred are not “restricted securities” as defined in Rule 144 under the Securities Act.

This certificate and the statements contained herein are made for your benefit and the benefit of the Trustee, the Issuer and the Placement Agent of the offering of the Notes.

	[Insert Name of Transferor]
	By:
	Name:
	Title:
Dated:

F-2

EXHIBIT G

FORM OF TRANSFER CERTIFICATE REGULATION S GLOBAL NOTE TO RULE 144A GLOBAL NOTE DURING DISTRIBUTION COMPLIANCE PERIOD
(Pursuant to Section 4.02(l)(iii)(3)(i) of the Indenture)

U.S. Bank National Association,
as the Trustee
One Federal Street Boston,
Massachusetts 02110
Attention:  CDO Unit ARCC 2006-1

Re: ARCC Commercial Loan Trust 2006 Notes, Series 2006-1
Class [A-1A], [A-2A], [A-2B], [B], [C], and [D]

Ladies and Gentlemen:

Reference is hereby made to the Indenture, dated as of July 7, 2006 (as amended, modified, waived, supplemented or restated from time to time, the “Agreement”), between ARCC Commercial Loan Trust 2006, as the issuer (together with its successors and assigns in such capacity, the “Issuer”), and U.S. Bank National Association, as the Trustee (together with its successors and assigns in such capacity, the “Trustee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Agreement.

This letter relates to US $[        ] aggregate current principal amount of Class    Notes (the “Notes”) which are held in the form of the Regulation S Global Note (CUSIP No.        ) with [Euroclear] [Clearstream] (Common Code No.          ) through DTC in the name of [insert name of transferor] (the “Transferor”). The Transferor has requested a transfer of such beneficial interest in the Notes for an interest in the Regulation 144A Global Note (CUSIP No.            ).

In connection with such request, and in respect of such Notes, the Transferor does hereby certify that such Notes are being transferred in accordance with (i) the transfer restrictions set forth in the Agreement and (ii) Rule 144A under the Securities Act to a transferee that the Transferor reasonably believes is purchasing the Notes for its own account with respect to which the transferee exercises sole investment discretion and the transferee and any such account is a “Qualified Institutional Buyer” within the meaning of Rule 144A, in each case 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 jurisdiction.

G-1

This certificate and the statements contained herein are made for your benefit and the benefit of the Trustee, the Issuer and the Initial Purchaser of the offering of the Notes.

	[Insert Name of Transferor]
	By:
	Name:
	Title:
Dated:

G-2

EXHIBIT H

FORM OF TRANSFER CERTIFICATE FOR REGULATION S
GLOBAL NOTE DURING DISTRIBUTION COMPLIANCE PERIOD
(Pursuant to Section 4.02(l)(iv)(3) of the Indenture)

U.S. Bank National Association,
as the Trustee
One Federal Street
Boston, Massachusetts 02110
Attention:  CDO Unit ARCC 2006-1

Re: ARCC Commercial Loan Trust 2006 Notes, Series 2006-1
Class [A-1A], [A-2A], [A-2B], [B], [C], and [D]

Ladies and Gentlemen:

This certificate is delivered pursuant to Section 4.02 of the Indenture, dated as of July 7, 2006 (as amended, modified, waived, supplemented or restated from time to time, the “Agreement”), between ARCC Commercial Loan Trust 2006, as the issuer (together with its successors and assigns in such capacity, the “Issuer”), and U.S. Bank National Association, as the Trustee (together with its successors and assigns in such capacity, the “Trustee”), in connection with the transfer by the undersigned (the “Transferor”) to                   (the “Transferee”) of $                   current principal amount of Class        Notes, in fully registered form (each, an “Definitive Note”), or a beneficial interest of such aggregate current principal amount in the Regulation S Global Note (the “Global Note”) maintained by The Depository Trust Company or its successor as depository under the Agreement (such transferred interest, in either form, being the “Transferred Interest”).

In connection with such transfer, the Transferor does hereby certify that such transfer has been effected in accordance with the transfer restrictions set forth in the Agreement and the Notes and (i) with respect to transfers made in accordance with Regulation S (“Regulation S”) promulgated under the Securities Act of 1933, as amended (the “Securities Act”), the Transferor does hereby certify that:

(1)the offer of the Transferred Interest was not made to a person in the United States;

(2)[at the time the buy order was originated, the Transferee was outside the United States or the Transferor and any person acting on its behalf reasonably believed that the Transferee was outside the United States] [the transaction was executed in, on or through the facilities of a designated offshore securities market and neither the undersigned nor any person acting on its behalf knows that the transaction was pre-arranged with a buyer in the United States];

(3)the transferee is not a U.S. Person within the meaning of Rule 902(o) of Regulation S nor a person acting for the account or benefit of a U.S. Person, and upon completion of the transaction, the Transferred Interest will be held with DTC through [Euroclear] [Clearstream];

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(4)no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; and

(5)the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act.

or (ii) with respect to transfers made in reliance on Rule 144 under the Securities Act, the Transferor does hereby certify that such Notes that are being transferred are not “restricted securities” as defined in Rule 144 under the Securities Act.

This certificate and the statements contained herein are made for your benefit and the benefit of the Trustee, the Issuer and the Initial Purchaser of the offering of the Notes.

	[Insert Name of Transferor]
	By:
	Name:
	Title:
Dated:

H-2

EX-10.5

Exhibit 10.5

AMENDED AND RESTATED TRUST AGREEMENT

by and between

ARCC CLO 2006 LLC,

as the Trust Depositor

WILMINGTON TRUST COMPANY,

as the Owner Trustee

and

U.S. BANK NATIONAL ASSOCIATION,

as the Certificate Registrar and Paying Agent

Dated as of July 7, 2006

ARCC Commercial Loan Trust 2006 Notes, Series 2006

Class A-1A, Class A-1A VFN, Class A-2B, Class A-2,A, Class A-2B,

Class B, Class C, Class D and Class E Notes

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS		1
Section 1.01	Definitions	1
Section 1.02	Other Terms	2
Section 1.03	Computation of Time Periods	2
Section 1.04	Interpretation	3
Section 1.05	References	3
Section 1.06	Calculations	3
ARTICLE II ORGANIZATION		4
Section 2.01	Name	4
Section 2.02	Office	4
Section 2.03	Purposes and Powers	4
Section 2.04	Appointment of Owner Trustee	5
Section 2.05	Initial Capital Contribution of Trust Estate	5
Section 2.06	Declaration of Trust	6
Section 2.07	Liability of the Certificateholders and the Owner Trust	6
Section 2.08	Title to Trust Property	6
Section 2.09	Situs of Trust	6
Section 2.10	Representations and Warranties of the Trust Depositor	7
Section 2.11	Federal Income Tax Allocations	8
Section 2.12	Covenant of Certificateholders	8
ARTICLE III CERTIFICATES AND TRANSFER OF INTERESTS		8
Section 3.01	Initial Ownership	8
Section 3.02	The Certificates	8
Section 3.03	Authentication of Certificates	9
Section 3.04	Registration of Transfer and Exchange of Certificates	9
Section 3.05	Mutilated, Destroyed, Lost or Stolen Certificates	10
Section 3.06	Persons Deemed Certificateholders	10
Section 3.07	Access to List of Certificateholders’ Names and Addresses	10
Section 3.08	Maintenance of Office or Agency	11
Section 3.09	Appointment of Paying Agent	11
Section 3.10	Transfer Restrictions	12
ARTICLE IV ACTIONS BY OWNER TRUSTEE		14
Section 4.01	Prior Notice to and Consent by Certificateholders with Respect to Certain Matters	14
Section 4.02	Action by Certificateholders with Respect to Bankruptcy	15
Section 4.03	Restrictions on Certificateholders’ Power	16
Section 4.04	Majority Control	16
ARTICLE V APPLICATION OF TRUST FUNDS; CERTAIN DUTIES		16
Section 5.01	Establishment of Trust Account	16

i

		Page
Section 5.02	Application of Trust Funds	17
Section 5.03	Method of Payment	17
Section 5.04	No Segregation of Moneys; No Interest	18
Section 5.05	Accounting and Reports to the Certificateholders, the Internal Revenue Service and Others	18
Section 5.06	Signature on Returns; Tax Matters Partner	18
ARTICLE VI AUTHORITY AND DUTIES OF OWNER TRUSTEE		19
Section 6.01	General Authority	19
Section 6.02	General Duties	19
Section 6.03	Action upon Instruction	20
Section 6.04	No Duties Except as Specified in this Agreement or in Instructions	21
Section 6.05	Restrictions	22
Section 6.06	No Action Except Under Specified Documents or Instructions	22
ARTICLE VII CONCERNING THE OWNER TRUSTEE		22
Section 7.01	Acceptance of Trusts and Duties	22
Section 7.02	Furnishing of Documents	24
Section 7.03	Representations and Warranties	24
Section 7.04	Reliance; Advice of Counsel	25
Section 7.05	Not Acting in Individual Capacity	25
Section 7.06	Owner Trustee Not Liable for Certificates or Loans	25
Section 7.07	Owner Trustee May Own Certificates and Notes	26
ARTICLE VIII COMPENSATION OF OWNER TRUSTEE		26
Section 8.01	Trust Company’s Fees and Expenses	26
Section 8.02	Indemnification	26
Section 8.03	Payments to the Owner Trustee	27
ARTICLE IX TERMINATION OF TRUST AGREEMENT		27
Section 9.01	Termination of Trust Agreement	27
ARTICLE X SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES		28
Section 10.01	Eligibility Requirements for Owner Trustee	28
Section 10.02	Resignation or Removal of Owner Trustee	29
Section 10.03	Successor Owner Trustee	29
Section 10.04	Merger or Consolidation of Owner Trustee	30
Section 10.05	Appointment of Co–Trustee or Separate Trustee	30
ARTICLE XI MISCELLANEOUS		32
Section 11.01	Supplements and Amendments	32
Section 11.02	No Legal Title to Trust Estate in Certificateholders	33

ii

		Page
Section 11.03	Limitations on Rights of Others	33
Section 11.04	Notices	33
Section 11.05	Severability	34
Section 11.06	Separate Counterparts	34
Section 11.07	Successors and Assigns	34
Section 11.08	No Petition	34
Section 11.09	No Recourse	35
Section 11.10	Headings	35
Section 11.11	GOVERNING LAW	35

iii

TRUST AGREEMENT

THIS AMENDED AND RESTATED TRUST AGREEMENT (such agreement as amended, modified, waived, supplemented or restated from time to time, the “Trust Agreement” or this “Agreement”), dated as of July 7, 2006, is between ARCC CLO 2006 LLC, a Delaware limited liability company, as trust depositor (the “Trust Depositor”), WILMINGTON TRUST COMPANY, as trust company (in its individual capacity, together with its successors and assigns, the “Trust Company”), and as owner trustee (solely in such capacity, the “Owner Trustee”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association, as certificate registrar (together with its successors and assigns, the “Certificate Registrar”) and as paying agent (together with its successors and assigns, the “Paying Agent”).

R E C I T A L S

WHEREAS, the Trust Depositor and the Owner Trustee established ARCC Commercial Loan Trust 2006 (the “Trust”), a Delaware statutory trust, pursuant to a Trust Agreement, dated as of June 21, 2006 (the “Original Trust Agreement”), and a Certificate of Trust filed with the Secretary of State on June 21, 2006;

WHEREAS, the Trust Depositor and the Owner Trustee hereby desire to continue the Trust and to amend and restate in its entirety the Original Trust Agreement;

WHEREAS, the Owner Trustee is willing to continue to serve as trustee of the Trust; and

WHEREAS, each of the Trust Depositor and the Owner Trustee consents to the amendment and restatement of the Original Trust Agreement pursuant to this agreement.

NOW, THEREFORE, based upon the above recitals, the mutual promises and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree to amend and restate the Original Trust Agreement as follows:

ARTICLE I

DEFINITIONS

Section 1.01           Definitions.

For all purposes of this Trust Agreement, except as otherwise expressly provided below or unless the context otherwise requires, capitalized terms used but not otherwise defined herein shall have the meanings given to such terms in the Sale and Servicing Agreement, dated as of July 7, 2006 (the “Sale and Servicing Agreement”), among ARCC CLO 2006 LLC, as the Trust Depositor, Ares Capital Corporation, as the Originator and as the Servicer, U.S. Bank National Association, as the Trustee and as the Collateral Administrator, Lyon Financial Services, Inc. (d/b/a U.S. Bank Portfolio Services), as the Backup Servicer, and ARCC Commercial Loan Trust 2006, as the Issuer and Wilmington Trust Company as the Owner Trustee.

“Bankruptcy Action” shall have the meaning given to such term in Section 4.02 of this Agreement.

“Certificate Account” shall have the meaning given to such term in Section 5.01 of this Trust Agreement.

“Certificate Register” shall mean the certificate register established and maintained in accordance with this Trust Agreement.

“Certificate of Trust” shall mean the certificate of trust duly executed and filed with the Secretary of State on June 21, 2006.

“Corporate Trust Office” means in the case of Owner Trustee:  Wilmington Trust Company, 1100 North Market Street, Wilmington, Delaware 19801 and in the case of the Trustee/Certificate Registrar:  U.S. Bank National Association, One Federal Street, 3rd Floor, Boston, Massachusetts 02110, or at such other address as the Owner Trustee or the Trustee may designate from time to time by notice to the Trust Depositor.

“Majority Certificateholders” means the Holder or Holders of Certificates evidencing an aggregate Percentage Interest in excess of 50%.

“Percentage Interest” shall mean (i) with respect to a Certificate, the percentage set forth on the face thereof, and (ii) with respect to a Class E Note, the fraction, expressed as a percentage, the numerator of which is the original principal balance of such Class E Note and the denominator of which is the aggregate original principal balance of all Class E Notes.

“Secretary of State” shall have the meaning given to such term in Section 2.02 of this Agreement.

“Trust Estate” shall mean all right, title and interest of the Trust in and to the Loan Assets and other property and rights assigned to the Trust pursuant to the Sale and Servicing Agreement, all funds on deposit from time to time in the Transaction Accounts and the Certificate Account, and all other property of the Trust from time to time, including any rights of the Owner Trustee and the Trust pursuant to the Transaction Documents.

Section 1.02           Other Terms.

All accounting terms used but not specifically defined herein shall be construed in accordance with generally accepted accounting principles. The symbol “$” shall mean the lawful currency of the United States of America. All terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9.

Section 1.03           Computation of Time Periods.

Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including”, the words

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“to” and “until” each mean “to but excluding”, and the word “within” means “from and excluding a specified date and to and including a later specified date”.

Section 1.04           Interpretation.

In this Agreement, unless a contrary intention appears:

(a)         the singular number includes the plural number and vice versa;

(b)        reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by the Transaction Documents;

(c)         reference to any gender includes each other gender;

(d)        reference to day or days without further qualification means calendar days;

(e)         unless otherwise stated, reference to any time means New York, New York time;

(f)         references to “writing” include printing, typing, lithography, electronic or other means of reproducing words in a visible form;

(g)        reference to any agreement (including any Transaction Document), document or instrument means such agreement, document or instrument as amended, modified, supplemented, replaced, restated, waived or extended and in effect from time to time in accordance with the terms thereof and, if applicable, the terms of the other Transaction Documents, and reference to any promissory note includes any promissory note that is an extension or renewal thereof or a substitute or replacement therefor; and

(h)        reference to any Applicable Law means such Applicable Law as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder and reference to any Section or other provision of any Applicable Law means that provision of such Applicable Law from time to time in effect and constituting the substantive amendment, modification, codification, replacement or reenactment of such Section or other provision.

Section 1.05           References.

All Section references (including references to the Preamble), unless otherwise indicated, shall be to Sections (and the Preamble) in this Agreement.

Section 1.06           Calculations.

Except as otherwise provided herein, all interest rate and basis point calculations hereunder will be made on the basis of a 360 day year and the actual days elapsed in the relevant period and will be carried out to at least three decimal places.

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ARTICLE II

ORGANIZATION

Section 2.01           Name.

The Trust created hereby shall be known as the “ARCC Commercial Loan Trust 2006,” in which name the Trust shall have power and authority and is hereby authorized and empowered, without the need for further action on the part of the Trust, and the Owner Trustee shall have power and authority, and is hereby authorized and empowered, to conduct the business of the Trust, make and execute contracts and other instruments on behalf of the Trust and sue and be sued for the use and benefit of the Certificateholders subject, however, to the provisions of the Indenture.

Section 2.02           Office.

The office of the Trust shall be in care of the Owner Trustee at the Corporate Trust Office or at such other address in the State of Delaware as the Owner Trustee may designate by written notice to the Certificateholders and the Trust Depositor. The Trust shall constitute a statutory trust within the meaning of Section 3801(a) of the Delaware Statutory Trust Act for which the Owner Trustee has filed the Certificate of Trust with the Secretary of State of the State of Delaware (the “Secretary of State”), pursuant to Section 3810(a) of the Delaware Statutory Trust Act (the “Delaware Statutory Trust Act”). The execution and filing of the Certificate of Trust by the Owner Trustee is hereby ratified, authorized, and approved. The Owner Trustee shall have power and authority, and is hereby authorized and empowered, to execute and file with the Secretary of State any other certificate required or permitted under the Delaware Statutory Trust Act to be filed with the Secretary of State. It is the intention of the parties hereto that this Trust Agreement constitute the governing instrument of such statutory trust.

Section 2.03           Purposes and Powers.

The purpose of the Trust is, and the Trust shall have the power and authority and is hereby authorized and empowered, without the need for further action on the part of the Trust or any other Person, and the Owner Trustee shall have power and authority, and is hereby authorized and empowered, in the name and on behalf of the Trust, to do or cause to be done all acts and things necessary, appropriate or convenient to cause the Trust, to engage in the following activities:

(a)         to execute, authenticate, deliver, perform and issue from time to time the Notes pursuant to the Indenture and the Certificates pursuant to this Trust Agreement and, if applicable, a supplement hereto, and to sell the Notes and to transfer the Certificates pursuant to such agreements and the other Transaction Documents;

(b)        with the proceeds of the sale of the Notes, to purchase the Loans, to pay the organizational, start–up and transactional expenses of the Trust and to fund the Transaction Accounts then permitted or required to be funded pursuant to the Sale and Servicing Agreement or the Indenture;

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(c)         as permitted under the Transaction Documents, to purchase, acquire, own, hold, receive, manage, exercise rights and remedies with respect to, sell, transfer and dispose of, the Trust Estate or any portion thereof;

(d)        to assign, grant, transfer, pledge, mortgage, convey and grant a security interest in the Trust Estate pursuant to the Indenture and to hold, manage, transfer and distribute to the Certificateholders pursuant to the terms of this Trust Agreement and the Sale and Servicing Agreement any portion of the Trust Estate released from the lien of, and remitted to the Trust pursuant to, the Indenture;

(e)         to enter into, execute, deliver and perform its obligations under the Transaction Documents and each agreement, document, instrument and other writing to which it is or becomes a party and to exercise its rights and remedies thereunder;

(f)         subject to compliance with the Transaction Documents, to engage in such other activities as may be required in connection with the conservation of the Trust Estate and the making of distributions to the Certificateholders, the Noteholders and others specified in the Transaction Documents; and

(g)        to engage in those activities, including entering into agreements, that are necessary, suitable or convenient to accomplish the foregoing or are incidental thereto or connected therewith.

The Trust is hereby authorized to engage in the foregoing activities. The Trust shall not engage in any activity other than in connection with the foregoing or other than as required or authorized by the terms of this Agreement or the other Transaction Documents. Nothing contained herein shall be deemed to authorize the Owner Trustee on behalf of the Trust to engage in any other business operations or any activities other than those set forth in this Section 2.03 or in any written instruction received from the Certificateholders. Specifically, the Owner Trustee shall have no authority on behalf of the Trust to engage in any business operations, or acquire any assets other than those specifically included in the Trust Estate, or otherwise vary the assets held by the Trust other than as provided in the Transaction Documents or in any written instruction received from the Certificateholders. Similarly, the Owner Trustee shall have no discretionary duties other than performing those ministerial acts set forth above necessary to accomplish the purpose of this Trust as set forth in this Section 2.03. Notwithstanding anything to the contrary contained herein, the Trust may hold the Notes prior to their sale by the Initial Purchaser.

Section 2.04           Appointment of Owner Trustee.

The Trust Depositor hereby appoints the Owner Trustee as trustee of the Trust effective as of the date hereof, to have all the rights, powers, authority and duties set forth herein, and the Owner Trustee hereby accepts such appointment.

Section 2.05           Initial Capital Contribution of Trust Estate.

The Trust Depositor hereby sells, assigns, transfers, conveys and sets over to the Owner Trustee, as of the date hereof, the sum of $10.00. The Owner Trustee hereby acknowledges receipt from the Trust Depositor, as of the date hereof, of the foregoing contribution, which shall

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constitute the initial Trust Estate (prior to giving effect to the conveyances described in the Sale and Servicing Agreement) and shall be deposited in the Certificate Account. The Trust Depositor shall pay organizational expenses of the Trust as they may arise or shall, upon the request of the Owner Trustee, promptly reimburse the Owner Trustee for any such expenses paid by the Owner Trustee.

Section 2.06           Declaration of Trust.

The Owner Trustee hereby declares that it will hold the Trust Estate in trust upon and subject to the conditions set forth herein for the use and benefit of the Certificateholders, subject to the obligations of the Trust under the Transaction Documents. It is the intention of the parties hereto that the Trust constitutes a statutory trust under the Delaware Statutory Trust Act and that this Trust Agreement constitute the governing instrument of such statutory trust. It is the intention of the parties hereto that, solely for federal income tax purposes, the Trust shall be treated as set forth in Section 2.11 of this Agreement. The parties agree that, unless otherwise required by appropriate tax authorities, the Trust will file or cause to be filed annual or other necessary returns, reports and other forms consistent with the characterization of the Trust as set forth in Section 2.11 of this Agreement. Effective as of the date hereof, the Owner Trustee shall have all rights, powers and authority set forth herein and in the Delaware Statutory Trust Act with respect to accomplishing the purposes of the Trust. Except as otherwise provided in this Agreement, the rights of the Certificateholders will be those of beneficial owners of the Trust.

Section 2.07           Liability of the Certificateholders and the Owner Trust.

Neither the Certificateholders nor the Owner Trustee shall have any personal liability for any liability or obligation of the Trust.

Section 2.08           Title to Trust Property.

Legal title to all of the Trust Estate shall be vested at all times in the Trust as a separate legal entity except where Applicable Law in any jurisdiction requires title to any part of the Trust Estate to be vested in a trustee or trustees, in which case title shall be deemed to be vested in the Owner Trustee, a co-trustee and/or a separate trustee, as the case may be. If any portion of the Trust Estate is deemed to be vested in the Owner Trustee, a co-trustee and/or a separate trustee, (a) the Owner Trustee, upon a Responsible Officer of the Owner Trustee having actual knowledge thereof, will immediately notify the Trustee and the Servicer and (b) the Servicer will cause to be filed such UCC financing statements and related filings, documents, or writings as are necessary (or as shall be reasonably requested by the Trustee) to maintain the Trustee’s security interest in the Collateral under the Sale and Servicing Agreement.

Section 2.09           Situs of Trust.

All bank accounts maintained by the Owner Trustee on behalf of the Trust shall be located in the State of Delaware or such other state in which the Corporate Trust Office may be located. The Trust shall not have any employees in any state other than Delaware; provided that nothing herein shall restrict or prohibit the Owner Trustee from having employees within or without the State of Delaware. Payments will be received by the Trust only in Delaware or such other state in which the Corporate Trust Office may be located, and payments will be made by

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the Trust only from Delaware or such other state in which the Corporate Trust Office may be located. The only office of the Trust will be at the Corporate Trust Office in Delaware.

Section 2.10           Representations and Warranties of the Trust Depositor.

The Trust Depositor hereby represents and warrants to the Owner Trustee that:

(a)         The Trust Depositor is duly organized and validly existing as a limited liability company in good standing under the laws of the State of Delaware, with power and authority to own its properties and to conduct its business as such properties are currently owned and such business is presently conducted.

(b)        The Trust Depositor has the power and authority to execute and deliver this Agreement and to carry out its terms. The Trust Depositor has full power and authority to sell and assign the property to be sold and assigned to and deposited with the Trust and the Trust Depositor has duly authorized such sale and assignment and deposit to the Trust by all necessary limited liability company action.

(c)         The execution, delivery and performance of this Agreement have been duly authorized by the Trust Depositor by all necessary limited liability company action.

(d)        This Agreement constitutes a legal, valid and binding obligation of the Trust Depositor enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization and similar laws relating to creditors’ rights generally and subject to general principles of equity.

(e)         The execution, delivery and performance of this Trust Agreement and the other Transaction Documents to which it is a party by the Trust Depositor, and the consummation of the transactions contemplated hereby and thereby, will not violate any material Applicable Law applicable to the Trust Depositor, or constitute a material breach of any mortgage, indenture, contract or other agreement to which the Trust Depositor is a party or by which the Trust Depositor or any of the Trust Depositor’s properties may be bound, or result in the creation or imposition of any security interest, lien, charge, pledge, preference, equity or encumbrance of any kind upon any of its properties pursuant to the terms of any such mortgage, indenture, contract or other agreement, other than as contemplated by the Transaction Documents.

(f)         To the Trust Depositor’s best knowledge, there are no proceedings or investigations pending, or to the Trust Depositor’s knowledge threatened, before any court, regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Trust Depositor or its properties:  (i) asserting the invalidity of this Trust Agreement, (ii) seeking to prevent the consummation of any of the transactions contemplated by this Trust Agreement or (iii) seeking any determination or ruling that might materially and adversely affect the performance by the Trust Depositor of its obligations under, or the validity or enforceability of, this Trust Agreement.

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Section 2.11           Federal Income Tax Allocations.

For purposes of federal income taxes, where partnership rules apply, partnership items shall be allocated in a manner that, to the extent possible and in compliance with the Code, results in the same allocation of income to the Class E Note Holders and the Certificateholders as if the partnership rules did not apply.

It is the intent of the Trust Depositor, the Class E Noteholders and the Certificateholders that, (i) in the event that the Certificates and the Class E Notes are owned by a single Holder, for federal income tax purposes, the Trust will be treated as a division of such Holder, and such Holder, by acceptance of the Certificates and the Class E Notes, agrees to take no action inconsistent with such treatment and (ii) in the event that the Certificates and/or the Class E Notes are owned by more than one Holder, for federal income tax purposes, the Trust will be treated as a partnership, the partners of which are the Certificateholders and the Class E Noteholders, and the Certificateholders and the Class E Noteholders, by acceptance of a Certificate and a Class E Note, respectively, agree to treat the Certificates and the Class E Notes as equity and to take no action inconsistent with such treatment.

Section 2.12           Covenant of Certificateholders.

Each Certificateholder agrees to be bound by the terms and conditions of the Trust Certificates and of this Trust Agreement, including any supplements or amendments hereto, and to perform the obligations of a Certificateholder as set forth therein or herein, in all respects as if it were a signatory hereto. This undertaking is made for the benefit of the Trust Depositor, the Trust, the Owner Trustee, the Trust Company, the Paying Agent and all other Certificateholders present and future.

Each Certificateholder agrees to make no transfers that would violate the transfer restrictions set out in this Agreement.

ARTICLE III

CERTIFICATES AND TRANSFER OF INTERESTS

Section 3.01           Initial Ownership.

Upon the formation of the Trust and the contribution made by the Trust Depositor pursuant to Section 2.05 and until the issuance of the Certificates, the Trust Depositor shall be the sole beneficiary of the Trust.

Section 3.02           The Certificates.

(a)         The Certificates shall be substantially in the form set forth in Exhibit A hereto, with such changes as may be specified in a supplement to this Trust Agreement. Except as otherwise set forth in a supplement to this Trust Agreement, the Certificates shall be issued in minimum Percentage Interests of 10% and integral multiples of 1% in excess thereof; provided that one Certificate may be issued in a different denomination. The Certificates shall be executed on behalf of the Trust by manual or facsimile signature of an authorized officer of the

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Owner Trustee. Certificates bearing the manual or facsimile signatures of individuals who were, at the time when such signatures shall have been affixed, authorized to sign on behalf of the Trust, shall be validly issued and entitled to the benefit of this Trust Agreement, notwithstanding that such individuals or any of them shall have ceased to be so authorized prior to the authentication and delivery of such Certificates or did not hold such offices at the date of authentication and delivery of such Certificates.

(b)        A transferee of a Certificate shall become a Certificateholder and shall be entitled to the rights and subject to the obligations of a Certificateholder hereunder upon such transferee’s acceptance of a Certificate duly registered in such transferee’s name pursuant to Section 3.04.

Section 3.03           Authentication of Certificates.

Concurrently with the initial transfer of the Loans to the Trust pursuant to the Sale and Servicing Agreement, the Trust shall issue the Certificates, in an aggregate Percentage Interest equal to 100%, executed by the Owner Trustee on behalf of the Trust, authenticated by the Owner Trustee or the Certificate Registrar in accordance with this Trust Agreement and delivered to or upon the written order of the Trust Depositor. No Certificate shall entitle its Holder to any benefit under this Agreement or be valid for any purpose unless there shall appear on such Certificate a certificate of authentication substantially in the form set forth in Exhibit A, executed by the Owner Trustee or the Certificate Registrar, by manual signature; such authentication shall constitute conclusive evidence that such Certificate has been duly and validly authorized, issued, authenticated and delivered hereunder and, subject to the terms of this Agreement, is fully paid and non–assessable. All Certificates shall be dated the date of their authentication.

Section 3.04           Registration of Transfer and Exchange of Certificates.

(a)         The Certificate Registrar shall keep or cause to be kept, at the office or agency maintained pursuant to Section 3.08, a Certificate Register in which, subject to such reasonable regulations as it may prescribe, the Certificate Registrar shall provide for the registration of Certificates and, subject to Section 3.10 hereof, of transfers and exchanges of Certificates as herein provided. The Trustee shall be the initial Certificate Registrar. Promptly upon written request therefor from the Owner Trustee, the Certificate Registrar shall provide to the Owner Trustee in writing such information regarding or contained in the Certificate Register as the Owner Trustee may reasonably request. The Owner Trustee shall be entitled to rely (and shall be fully protected in relying) on such information.

(b)        Upon surrender for registration of transfer of any Certificate at the office or agency maintained pursuant to Section 3.08, the Certificate Registrar shall cause the Owner Trustee to execute and the Owner Trustee or the Certificate Registrar, shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Certificates in authorized denominations of a like aggregate amount dated the date of authentication by the Owner Trustee or any authenticating agent. At the option of a Certificateholder, Certificates may be exchanged for other Certificates of authorized denominations of a like aggregate

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amount upon surrender of the Certificates to be exchanged at the office or agency maintained pursuant to Section 3.08.

(c)         Every Certificate presented or surrendered for registration of transfer or exchange shall be accompanied by a written instrument of transfer in form satisfactory to the Owner Trustee and the Certificate Registrar duly executed by the registered Certificateholder or such registered Certificateholder’s attorney duly authorized in writing. Each Certificate surrendered for registration of transfer or exchange shall be cancelled and subsequently disposed of by the Certificate Registrar in accordance with its customary practice.

(d)        No service charge shall be made for any registration of transfer or exchange of Certificates, but the Owner Trustee (as such or in its individual capacity) or the Certificate Registrar may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Certificates.

Section 3.05           Mutilated, Destroyed, Lost or Stolen Certificates.

If (a) any mutilated Certificate shall be surrendered to the Certificate Registrar, or if the Certificate Registrar and the Owner Trustee shall receive evidence to their satisfaction of the destruction, loss or theft of any Certificate, and (b) there shall be delivered to the Certificate Registrar and the Owner Trustee (as such and in its individual capacity) such security or indemnity as may be reasonably required by them to defend and save each of them harmless, then in the absence of notice to the Trust that such Certificate has been acquired by a protected purchaser, the Certificate Registrar shall cause the Owner Trustee on behalf of the Trust to execute and the Owner Trustee or the Certificate Registrar shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like tenor and denomination. The Holder of such Certificate shall pay the reasonable expenses and charges of the Certificate Registrar and the Owner Trustee in connection therewith. In connection with the issuance of any new Certificate under this Section, the Owner Trustee or the Certificate Registrar may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. Any duplicate Certificate issued pursuant to this Section shall constitute conclusive evidence of ownership of a beneficial interest in the Trust, as if originally issued, whether or not the lost, stolen or destroyed Certificate shall be found at any time.

Section 3.06           Persons Deemed Certificateholders.

Prior to due presentation of a Certificate for registration of transfer, the Owner Trustee, the Certificate Registrar or any Paying Agent or other agent thereof may treat the Person in whose name any Certificate is registered in the Certificate Register as the owner of such Certificate for the purpose of receiving distributions pursuant to Section 5.02 and for all other purposes whatsoever, and none of the Owner Trustee, the Certificate Registrar or any Paying Agent or other agent thereof shall be bound by any notice to the contrary.

Section 3.07           Access to List of Certificateholders’ Names and Addresses.

The Certificate Registrar shall furnish or cause to be furnished to the Paying Agent, the Owner Trustee, the Servicer and the Trust Depositor, on the Closing Date and thereafter within

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ten days after receipt by the Certificate Registrar of a written request therefor from the Paying Agent, the Owner Trustee, the Servicer or the Trust Depositor, a list, in such form as the Paying Agent, the Owner Trustee, the Servicer or the Trust Depositor may reasonably require, of the names and addresses of the Certificateholders as of the most recent Record Date. If three or more Certificateholders or one or more Holders of Certificates evidencing not less than 25% of the Percentage Interests apply in writing to the Certificate Registrar, and such application states that the applicants desire to communicate with other Certificateholders with respect to their rights under this Trust Agreement or under the Certificates and such application is accompanied by a copy of the communication that such applicants propose to transmit, then the Certificate Registrar shall, within five Business Days after the receipt of such application, afford such applicants access during normal business hours to the current list of Certificateholders. Upon receipt of any such application, the Certificate Registrar will promptly notify the Trust Depositor by providing a copy of such application and a copy of the list of Certificateholders produced in response thereto. Each Certificateholder, by receiving and holding a Certificate, shall be deemed to have agreed not to hold any of the Trust Depositor, the Certificate Registrar and the Owner Trustee (as such or in its individual capacity) accountable by reason of the disclosure of its name and address, regardless of the source from which such information was derived.

Section 3.08           Maintenance of Office or Agency.

The Certificate Registrar shall maintain an office or offices or agency or agencies where Certificates may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Certificate Registrar in respect of the Certificates and the Transaction Documents may be served. The Certificate Registrar initially designates the office of the Certificate Registrar at the Corporate Trust Office as its office for such purposes. The Certificate Registrar shall give prompt written notice to the Trust Depositor, any Paying Agent, the Owner Trustee and the Certificateholders of any change in the location of the Certificate Register or any such office or agency.

Section 3.09           Appointment of Paying Agent.

(a)         The Paying Agent shall make distributions to Certificateholders from the Certificate Account pursuant to Section 5.02 and shall report the amounts of such distributions to the Owner Trustee. Any Paying Agent shall have the revocable power to withdraw funds from the Certificate Account for the purpose of making the distributions referred to above. The Trust Depositor may revoke such power and remove the Paying Agent if the Trust Depositor determines in its sole discretion that the Paying Agent shall have failed to perform its obligations under this Trust Agreement in any material respect. The Paying Agent initially shall be U.S. Bank National Association, as Trustee under the Indenture (the “Paying Agent”). U.S. Bank National Association shall be permitted to resign as Paying Agent upon 30 days’ written notice to the Trust Depositor, the Owner Trustee and the Servicer. In the event that U.S. Bank National Association shall no longer be the Paying Agent, the Trust Depositor shall appoint a successor to act as Paying Agent (which shall be a bank or trust company). The Trust Depositor shall cause the Paying Agent and such successor Paying Agent or any additional Paying Agent appointed by the Trust Depositor to execute and deliver to the Trust Depositor an instrument in which the Paying Agent and such successor Paying Agent or additional Paying Agent shall agree with the Trust Depositor that, as Paying Agent, the Paying Agent and such

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successor Paying Agent or additional Paying Agent will hold all sums, if any, held by it for payment to the Certificateholders in trust for the benefit of the Certificateholders entitled thereto until such sums shall be paid to such Certificateholders. The Paying Agent shall return all unclaimed funds to the Trust and upon removal of a Paying Agent such Paying Agent shall also return all funds in its possession to the Trust. The provisions of Sections 7.01, 7.04, 7.05, 7.06, 8.01 and 8.02 shall apply to the Paying Agent and Certificate Registrar as if such Person were named in such Sections, for so long as U.S. Bank National Association or the Owner Trustee shall act as Paying Agent or Certificate Registrar and, to the extent applicable, to any other paying agent or certificate registrar appointed hereunder. Any reference in this Agreement to the Paying Agent shall include any co–paying agent unless the context requires otherwise.

(b)        Any Paying Agent agrees that it will be bound by the provisions of this Trust Agreement and the Sale and Servicing Agreement relating to the Paying Agent and shall:

(i)            hold all sums held by it for the payment of amounts due with respect to the Certificates in trust for the benefit of the Person entitled thereto until such sums shall be paid to such Person or otherwise disposed of as herein provided;

(ii)           give the Owner Trustee and the Trust Depositor notice of any default by the Paying Agent in the making of any payment required to be made hereunder or under the Sale and Servicing Agreement;

(iii)          at any time during the continuance of any such default, upon the written request of the Owner Trustee or the Trust Depositor, forthwith pay to the Trust all sums so held in trust by such Paying Agent;

(iv)          immediately resign as Paying Agent and forthwith pay to the Trust all sums held by it in trust for the payment of the Certificates if at any time it ceases to meet the standards under this Section 3.09 required to be met by the Paying Agent at the time of its appointment; and

(v)           not institute bankruptcy proceedings against the Trust in connection with this Trust Agreement.

Section 3.10           Transfer Restrictions.

The Certificates and the Class E Notes (the “Securities”) may not be offered, transferred or sold except to the Trust Depositor or an Affiliate thereof or to Qualified Institutional Buyers (“QIBs”) for purposes of Rule 144A under the Securities Act, and who are United States persons (as defined in Section 7701(a)(30) of the Code) in reliance on an exemption from the registration requirements of the Securities Act.

(a)         The Securities have not been registered or qualified under the Securities Act, or any state securities law. No transfer, sale, pledge or other disposition of any Securities shall be made unless such disposition is made in a transaction which does not require effective registration or qualification under applicable federal or state securities laws. No transfer of any Certificates shall be made if such transfer would require the Trust to register as an “investment

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company” under the 1940 Act. In the event that a transfer is to be made, the transferee shall execute and deliver to the Trust Depositor and the Certificate Registrar a certification substantially in the form of Exhibit C hereto. In the event that such transfer is to be made in reliance on the availability of an exemption under the Securities Act, the Certificate Registrar may require the prospective transferee to provide an Opinion of Counsel satisfactory to it that such transfer may be made pursuant to an exemption from the Securities Act, which Opinion of Counsel shall not be an expense of the Certificate Registrar (as such or in its individual capacity) or of the Trust.

(b)           Neither the Securities nor any beneficial interest in such Securities may be acquired or held, directly or indirectly, by, on behalf of or with any assets of any employee benefit plan as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and subject to Title I of ERISA or a “plan” as defined in and subject to Section 4975 of the Code (a “Benefit Plan”) and any such purported transfer shall not be effective. Each transferee of Securities shall be required to represent in a writing delivered to the Owner Trustee and the Certificate Registrar (i) that it is not a Benefit Plan and is not acquiring such Securities for, on behalf of or with any assets of a Benefit Plan and (ii) that if such Securities is subsequently deemed to be a plan asset of such a Benefit Plan, it will dispose of such Securities.

(c)           Each Certificate will bear the legends set forth in paragraph 9 of Exhibit C hereto.

(d)           No Certificate may be acquired or owned by any Person that is classified for U.S. federal income tax purposes as a partnership, subchapter S corporation or grantor trust unless such Person represents in writing that (i) the value of the Certificates and Class E Notes proposed to be transferred to such Person, together with the value of any Certificates and Trust Certificates already held by such Person, will not constitute substantially all of the value of the assets of such Person and (ii) such Person is not part of any arrangement the principal purpose of which is to cause the Certificates and Class E Notes to be treated as owned by 100 persons or less within the meaning of Treas. Reg. § 1.7704-1(h)(1)(ii).

(e)           No Certificate (or interest therein) may be acquired by any Person unless such Person represents that it has not acquired the Certificates pursuant to a trade on an “established securities market” and agrees that it will not trade any Certificates on an “established securities market.” For this purpose, the term “established securities market” includes any national securities exchange registered under Section 6 of the Securities Exchange Act of 1934, as amended, or exempted from registration because of the limited volume; any foreign securities exchange that, under the laws of the jurisdiction where it is organized, satisfies regulatory requirements that are analogous to the regulatory requirements imposed under the Securities Exchange Act of 1934; any regional or local exchange; and any interdealer quotation system that regularly disseminates firm buy and sell quotations by identified brokers or dealers, by electronic means or otherwise.

(f)            No transfer, sale, pledge or other disposition of one or more Certificates (a “Transfer”) shall be made unless simultaneously with the Transfer (i) a proportionate amount of Class E Notes are Transferred so that the Percentage Interest of the Trust Certificates so

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Transferred equals the Percentage Interest of the Class E Notes so Transferred, (ii) the Transfers of the Certificates and Class E Notes referred to herein are made to the same Person, and (iii) the Percentage Interest of the Certificates and the Class E Notes, respectively, so Transferred is no less than ten (10%) percent.

(g)        Notwithstanding any other provision herein or elsewhere, other than to determine that any certification delivered to the Owner Trustee or the Certificate Registrar, as the case may be, pursuant to subsection 3.10(a) hereof is substantially in the form of Exhibit C hereto and to determine (solely based on one or more certificates from the Person transferring such Certificate) that any transfer of a Certificate described in such certification delivered to the Owner Trustee complies with subsection 3.10(d), the Owner Trustee and the Certificate Registrar shall have no obligation to determine whether or not any transfer or exchange or proposed or purported transfer or exchange of a Certificate is permitted under or in accordance with this Agreement, and the Owner Trustee and the Certificate Registrar shall have no personal liability to any Person in connection with any transfer or exchange or proposed or purported transfer or exchange (and/or registration thereof); the Owner Trustee shall be entitled to rely (and shall be fully justified and protected (each as such and in its individual capacity) in so relying) on the Certificate Register as to the identity of the Certificateholders and as to the Certificates and the denominations thereof.

ARTICLE IV

ACTIONS BY OWNER TRUSTEE

Section 4.01           Prior Notice to and Consent by Certificateholders with Respect to Certain Matters.

With respect to the following matters, the Trust shall not take action unless at least five days before the taking of such action, the Owner Trustee shall have notified the Certificateholders and each Rating Agency in writing of the proposed action and the Certificateholders holding a Percentage Interest of not less than 66-2/3% shall not, prior to the fifth day after such notice is given, have notified the Owner Trustee in writing that such Certificateholders have withheld consent or provided alternative direction:

(a)         the initiation of any material claim or lawsuit by the Trust and the compromise of any material action, claim or lawsuit brought by or against the Trust;

(b)        the election by the Trust to file an amendment to the Certificate of Trust (unless such amendment is required to be filed under the Delaware Statutory Trust Act);

(c)         the amendment of the Indenture by a supplemental indenture in circumstances where the consent of any Noteholder is required;

(d)        the amendment of the Indenture by a supplemental indenture in circumstances where the consent of any Noteholder is not required and such amendment materially adversely affects the interest of the Certificateholders;

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(e)         the appointment pursuant to the Indenture of a successor Paying Agent or Trustee or pursuant to this Trust Agreement of a successor Certificate Registrar, or the consent to the assignment by the Paying Agent or Trustee or Certificate Registrar of its obligations under the Indenture or this Trust Agreement, as applicable;

(f)         the consent to the calling or waiver of any Event of Default of any Transaction Document;

(g)        the consent to the assignment of the Trustee or Servicer of their respective obligations under any Transaction Document;

(h)        except as provided in Article IX hereof, the dissolution, termination or liquidation of the Trust in whole or in part;

(i)          the merger or consolidation of the Trust with or into any other entity, or conveyance or transfer of all or substantially all of the Trust’s assets to any other entity;

(j)          the incurrence, assumption or guaranty by the Trust of any indebtedness other than as set forth in this Agreement or the Transaction Documents;

(k)         the doing of any act which would make it impossible to carry on the ordinary business of the Trust as described in Section 2.03 hereof;

(l)          the confession of a judgment against the Trust;

(m)        the possession of Loan Assets, or assignment of the Trust’s right to property, for other than a purpose permitted under Section 2.03;

(n)        the lending by the Trust of any funds to any entity, except as permitted or required under the Sale and Servicing Agreement with respect to the Loan Assets including the funding of any Delayed Draw Term Loan or any Revolving Loan;

(o)        the change in the Trust’s purpose and powers from those set forth in this Trust Agreement; or

(p)        the removal or replacement of the Servicer or the Trustee.

In addition, the Trust shall not commingle its assets with those of any other entity. The Trust shall maintain its financial and accounting books and records separate from those of any other entity. Except as expressly set forth herein, the Trust shall pay its indebtedness, operating expenses and liabilities from its own funds, and the Trust shall not pay the indebtedness, operating expenses and liabilities of any other entity.

Section 4.02           Action by Certificateholders with Respect to Bankruptcy.

The Trust shall not have the power, without the unanimous prior written approval of the Certificateholders, and to the extent otherwise consistent with the Transaction Documents, to (a) institute proceedings to have the Trust declared or adjudicated as bankrupt or insolvent,

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(b) consent to the institution of bankruptcy or insolvency proceedings against the Trust, (c) file a petition or consent to a petition seeking reorganization or relief on behalf of the Trust under any applicable federal or state law relating to bankruptcy, (d) consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or any similar official) of the Trust or a substantial portion of the property of the Trust, (e) make any assignment for the benefit of the Trust’s creditors, (f) cause the Trust to admit in writing its inability to pay its debts generally as they become due, or (g) take any action, or cause the Trust to take any action, in furtherance of any of the foregoing (any of the above, a “Bankruptcy Action”). So long as the Indenture remains in effect, no Certificateholder shall have the power to take and shall not take any Bankruptcy Action with respect to the Trust or direct the Owner Trustee to take any Bankruptcy Action with respect to the Trust.

Section 4.03           Restrictions on Certificateholders’ Power.

The Certificateholders shall not direct the Owner Trustee to take or to refrain from taking any action if such action or inaction would be contrary to any obligation of the Trust or the Owner Trustee under this Trust Agreement or any of the Transaction Documents or would cause a violation of any of the Transaction Documents or would be contrary to or inconsistent with Section 2.03, nor shall the Owner Trustee be obligated to follow any such direction, if given.

Section 4.04           Majority Control.

Except as expressly provided herein or in any supplement to this Trust Agreement, any action or direction that may be taken or given by the Certificateholders under this Trust Agreement may not be taken or given unless agreed to by the Holders of Certificates evidencing not less than a majority of the aggregate Percentage Interest. Except as expressly provided herein or in any supplement to this Trust Agreement, any written notice of the Certificateholders delivered pursuant to this Trust Agreement shall be effective if signed by Certificateholders holding Certificates evidencing not less than a majority of the aggregate Percentage Interest at the time of the delivery of such notice.

ARTICLE V

APPLICATION OF TRUST FUNDS; CERTAIN DUTIES

Section 5.01           Establishment of Trust Account.

(a)         For the benefit of the Certificateholders, the Paying Agent shall establish and maintain in the name of the Trust an Eligible Deposit Account with the Trustee (the “Certificate Account”), bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Certificateholders. Each Qualified Institution maintaining the Certificate Account shall agree in writing (and the Trustee does hereby so agree) to comply with all instructions originated by the Paying Agent or Owner Trustee directing the disposition of funds in the account without the further consent of the Trust.

(b)        The Trust shall possess all right, title and interest in all funds on deposit from time to time in the Certificate Account and in all proceeds thereof. Except as provided in Section 3.09 or as otherwise expressly provided herein, the Certificate Account shall be under

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the sole dominion and control of the Owner Trustee for the benefit of the Certificateholders. If, at any time, the Certificate Account ceases to be an Eligible Deposit Account, the Paying Agent shall within ten Business Days (or such longer period, not to exceed 30 calendar days, as to which each Rating Agency may consent) establish a new Certificate Account as an Eligible Deposit Account and shall transfer any cash and/or any investments to such new Certificate Account.

Section 5.02           Application of Trust Funds.

(a)         On each Distribution Date and at the instruction of the Servicer, the Paying Agent shall distribute to the Certificateholders, pro rata based on their respective Percentage Interests, the amounts deposited in the Certificate Account received from the Trustee pursuant to the Indenture or the Sale and Servicing Agreement.

(b)        On each Distribution Date, the Trustee shall, or shall cause the Paying Agent to, make available to each Certificateholder the statement or statements provided to the Trustee by the Servicer pursuant to the Indenture and the Sale and Servicing Agreement with respect to such Distribution Date.

(c)         In the event that any withholding tax is imposed on the Trust’s payment (or allocations of income) to a Certificateholder, such tax shall reduce the amount otherwise distributable to the Certificateholder in accordance with this Section 5.02. The Paying Agent is hereby authorized and directed to retain from amounts otherwise distributable to the Certificateholders sufficient funds for the payment of any tax that is legally owed by the Trust (but such authorization shall not prevent the Owner Trustee or the Paying Agent from contesting any such tax in appropriate proceedings, and withholding payment of such tax, if permitted by Applicable Law, pending the outcome of such proceedings). The amount of any withholding tax imposed with respect to a Certificateholder shall be treated as cash distributed to such Certificateholder at the time it is withheld by the Trust and remitted to the appropriate taxing authority. If there is a possibility that withholding tax is payable with respect to a distribution (such as a distribution to a non–U.S. Certificateholder), the Paying Agent may in its sole discretion withhold such amounts in accordance with this subparagraph (c). The Paying Agent and the Trustee shall provide to the Certificateholders written evidence of such tax liability of the Trust and any other supporting information reasonably requested by a Certificateholder. In the event that a Certificateholder wishes to apply for a refund of any such withholding tax, the Owner Trustee or the Paying Agent shall use best efforts to cooperate with such Certificateholder in making such claim so long as such Certificateholder agrees to reimburse the Owner Trustee and the Paying Agent for any out–of–pocket expenses incurred.

Section 5.03           Method of Payment.

Subject to Section 9.01(c), distributions required to be made to Certificateholders on any Distribution Date shall be made to each Certificateholder of record on the preceding Record Date either by wire transfer, in immediately available funds, to the account of such Certificateholder at a bank or other entity having appropriate facilities therefor, if such Certificateholder shall have provided to the Certificate Registrar and the Paying Agent appropriate written instructions at

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least five Business Days prior to such Distribution Date or, if not, by check mailed to such Certificateholder at the address of such holder appearing in the Certificate Register.

Section 5.04           No Segregation of Moneys; No Interest.

Subject to Sections 5.01 and 5.02, moneys received by the Owner Trustee or the Paying Agent hereunder need not be segregated in any manner except to the extent required by any Applicable Law or the Sale and Servicing Agreement and may be deposited under such general conditions as may be prescribed by any Applicable Law, and neither the Paying Agent, the Trust Company nor the Owner Trustee shall be liable for any interest thereon.

Section 5.05           Accounting and Reports to the Certificateholders, the Internal Revenue Service and Others.

The Owner Trustee shall (a) maintain (or cause to be maintained) the books of the Trust on a calendar year basis on the accrual method of accounting; provided that the Owner Trustee shall be entitled to rely upon the written directions provided by the Servicer or upon information as furnished by the Servicer, (b) deliver (or cause to be delivered) to each Certificateholder, as may be required by the Code and applicable Treasury Regulations, such information as may be required (including, if applicable, Schedule K–1) to enable each Certificateholder to prepare its federal and state income tax returns, to the extent the Owner Trustee has come into possession thereof, (c) pursuant to written directions provided by the Servicer, cause to be prepared, and file, or cause to be filed, all tax returns, if any, relating to the Trust (including, if applicable, a partnership information return, IRS Form 1065) and make such elections relating to the Trust as from time to time may be required or appropriate, as directed by the Trust Depositor, under any applicable state or federal statute or any rule or regulation thereunder so as to maintain the Trust’s characterization as a partnership for federal income tax purposes or an entity the existence of which is disregarded as separate from the Certificateholders under applicable Treasury Regulations depending on whether the Certificates are held by one owner or more than one owner, (d) pursuant to written directions provided by the Servicer, collect or cause to be collected any withholding tax as described in and in accordance with subsection 5.02(c) with respect to income or distributions to Certificateholders and (e) upon the request of the Trust, provide to necessary parties such reasonably current information, to the extent the Owner Trustee has come into possession thereof, or cause the Servicer to provide such reasonably current information, as is specified in paragraph (d)(4) of Rule 144A under the Securities Act. In performing the foregoing duties, the Owner Trustee shall rely entirely on the written directions of and the information furnished by the Servicer and shall have no personal liability for or in respect of performing any of the foregoing duties or the contents of such information provided by the Servicer. The Owner Trustee shall make all elections pursuant to this Section 5.05 as directed by the Trust Depositor in writing. In making such elections, the Owner Trustee shall rely entirely on the written directions of the Trust Depositor and shall have no personal liability for or in respect of such elections.

Section 5.06           Signature on Returns; Tax Matters Partner.

(a)         The Servicer shall sign on behalf of the Trust the tax returns of the Trust, and any other returns as may be required by law if any, as the same shall be furnished to it in

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execution form by the Trust Depositor, unless Applicable Law requires a Certificateholder to sign such documents, in which case such documents shall not be furnished to the Servicer, but shall be furnished to and signed by the Trust Depositor so long as it is a Certificateholder, in its capacity as “tax matters partner” (if applicable), or such other Certificateholder as may have been designated “tax matters partner” (if applicable). In executing any such return, the Servicer shall rely entirely upon, and shall have no personal liability for, information or calculations provided by the Trust Depositor.

(b)        In the event the Trust Depositor is a Certificateholder and the Trust is characterized as a partnership, the Trust Depositor shall be the “tax matters partner” of the Trust pursuant to the Code.

ARTICLE VI

AUTHORITY AND DUTIES OF OWNER TRUSTEE

Section 6.01           General Authority.

Each of the Owner Trustee, the Servicer and the Trust Depositor shall have power and authority, and each is hereby authorized and empowered, in the name and on behalf of the Trust, to execute and deliver the Transaction Documents to which the Trust is to be a party and each certificate or other document attached as an Exhibit to or contemplated by the Transaction Documents to which the Trust is to be a party and any amendment or other agreement or instrument, in each case, in such form as the Owner Trustee, the Servicer or the Trust Depositor shall approve, as evidenced conclusively by the Owner Trustee’s, the Servicer’s or the Trust Depositor’s execution thereof. In addition to the foregoing, the Owner Trustee shall have power and authority and hereby is further authorized to take all actions required of the Trust pursuant to the Transaction Documents and is hereby authorized to delegate such power and authority or any portion thereof to the Servicer. The Owner Trustee shall have power and authority and hereby is further authorized from time to time to take such action as the Servicer recommends with respect to the Transaction Documents.

Section 6.02           General Duties.

It shall be the duty of the Owner Trustee to discharge (or cause to be discharged) all of the duties and responsibilities expressly required to be performed by the Owner Trustee under the terms of this Agreement and the Transaction Documents and to administer the Trust in the interest of the Certificateholders, subject to the Transaction Documents and in accordance with the provisions of this Agreement and Transaction Documents. Notwithstanding the foregoing, the Owner Trustee shall be deemed to have discharged its duties and responsibilities hereunder and under the Transaction Documents to the extent the Trust Depositor has expressly agreed hereunder or the Servicer has expressly agreed in the Sale and Servicing Agreement to perform any act or to discharge any duty of the Owner Trustee or of the Trust, and the Owner Trustee shall not be held personally liable for the default or failure of the Trust Depositor or the Servicer to carry out its obligations under the Sale and Servicing Agreement or this Trust Agreement, as applicable.

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Notwithstanding anything in this Agreement or any Transaction Document to the contrary, the Owner Trustee shall have no duty or obligation to supervise or otherwise monitor any other party to this Agreement or any Transaction Document, or any other Person or any agents, employees or servants of any of the foregoing, nor shall the Owner Trustee (as such and in its individual capacity) have any liability for any act or omission of any other party to this Agreement or any Transaction Document, or any other Person or any agents, employees or servants thereof in preparing, executing, delivering or filing any document or otherwise carrying out such Person’s duties hereunder or under any Transaction Document.

Section 6.03           Action upon Instruction.

(a)         Subject to Article IV and Section 7.01 and in accordance with the terms of the Transaction Documents, the Certificateholders shall by written instruction direct the Owner Trustee in the management of the Trust. Such direction may be exercised at any time by written instruction of the Certificateholders evidencing not less than a majority of the aggregate Percentage Interest. The Certificateholder shall not instruct the Owner Trustee in a manner inconsistent with this Agreement, the Transaction Documents or Applicable Law. Notwithstanding the foregoing, the Owner Trustee shall, upon due authorization and consent by the Trust Depositor, execute and deliver such notices, consents to the service of process and other necessary registration forms as may be required to qualify the Trust under the securities laws of any jurisdiction in which the underwriters of the Trust’s securities may seek to qualify the Notes or Certificates for sale. The Trust is not hereby authorized without the express consent of the Trust Depositor to qualify the Trust Depositor as a foreign corporation or to execute on behalf of the Trust Depositor a general consent to service of process in any jurisdiction.

(b)        The Owner Trustee shall not be required to take any action hereunder or under any Transaction Document if the Owner Trustee shall have reasonably determined, or shall have been advised by counsel, that such action is likely to result in personal liability on the part of the Owner Trustee or is contrary to the terms hereof or of any Transaction Document or is otherwise contrary to Applicable Law.

(c)         Whenever the Owner Trustee is unable to decide between alternative courses of action permitted or required by the terms of this Trust Agreement or under any Transaction Document, the Owner Trustee shall promptly give notice (in such form as shall be appropriate under the circumstances) to the Certificateholders requesting instruction as to the course of action to be adopted and stating that if the Owner Trustee shall not have received appropriate instruction within ten Business Days of such notice (or within such shorter period of time as reasonably may be specified in such notice or may be necessary under the circumstances) it may, but shall be under no duty to, take or refrain from taking such action not inconsistent with this Agreement and the other Transaction Documents as it shall deem to be in the best interests of the Certificateholders and shall have no personal liability to any Person for such action or inaction. To the extent the Owner Trustee acts in good faith in accordance with any written instruction received from the Certificateholders evidencing not less than a majority of the aggregate Percentage Interest, the Owner Trustee shall not be personally liable on account of such action or inaction to any Person. If the Owner Trustee shall not have received appropriate instruction within ten Business Days of such notice (or within such shorter period of time as

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reasonably may be specified in such notice or may be necessary under the circumstances) it may, but shall be under no duty to, take or refrain from taking such action as it shall deem to be in the best interests of the Certificateholders and shall have no personal liability to any Person for such action or inaction.

(d)        In the event that the Owner Trustee is unsure as to the application of any provision of this Trust Agreement or any Transaction Document or any such provision is ambiguous as to its application, or is, or appears to be, in conflict with any other applicable provision, or in the event that this Trust Agreement permits any determination by the Owner Trustee or is silent or is incomplete as to the course of action that the Owner Trustee is required or permitted to take with respect to a particular set of facts, the Owner Trustee may give notice (in such form as shall be appropriate under the circumstances) to the Certificateholders requesting instruction and stating that if the Owner Trustee shall not have received appropriate instruction within ten Business Days of such notice (or within such shorter period of time as reasonably may be specified in such notice or may be necessary under the circumstances) it may, but shall be under no duty to, take or refrain from taking such action not inconsistent with this Agreement or the other Transaction Documents as it shall deem to be in the best interests of the Certificateholders, and shall have no personal liability to any Person for such action or inaction. To the extent that the Owner Trustee acts or refrains from acting in good faith in accordance with any such instruction received from Holders of Certificates evidencing not less than a majority of the aggregate Percentage Interest, the Owner Trustee shall not be personally liable, on account of such action or inaction, to any Person. If the Owner Trustee shall not have received appropriate instruction within ten Business Days of such notice (or within such shorter period of time as reasonably may be specified in such notice or may be necessary under the circumstances) it may, but shall be under no duty to, take or refrain from taking such action as it shall deem to be in the best interests of the Certificateholders, and shall have no liability to any Person for such action or inaction.

Section 6.04           No Duties Except as Specified in this Agreement or in Instructions.

The Owner Trustee shall not have any duty or obligation to manage, make any payment with respect to, register, record, sell, dispose of, or otherwise deal with the Trust Estate, or to otherwise take or refrain from taking any action under, or in connection with, the Transaction Documents or any document contemplated hereby or thereby (including as provided in Section 6.02), except as expressly provided by the terms of this Trust Agreement or in any document or written instruction received by the Owner Trustee pursuant to Section 6.03; and no implied duties or obligations shall be read into this Trust Agreement or any other Transaction Document against the Owner Trustee. Except as may be expressly provided in this Trust Agreement, the Owner Trustee shall have no responsibility for filing any financing or continuation statement in any public office at any time or to otherwise perfect or maintain the perfection of any security interest or lien granted to it hereunder or to prepare or file any Commission filing for the Trust or to record this Trust Agreement or any Transaction Document. The Owner Trustee nevertheless agrees that it will, at its own cost and expense (and not at the expense of the Trust), promptly take all action as may be necessary to discharge any liens on any part of the Trust Estate that result from actions by, or are attributable to claims against, the Owner Trustee in its individual capacity that are not related to the ownership or the administration of the Trust Estate.

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The Owner Trustee is authorized to execute on behalf of the Trust all documents, reports, filings, instruments, certificates and opinions as it shall be the duty of the Trust to prepare, file, or deliver pursuant to the Transaction Documents. Notwithstanding the foregoing, the Owner Trustee shall procure, prepare or cause to be prepared or obtain for delivery with respect to the following matters: (i)  the maintenance of the books of the Trust pursuant to Section 5.05(a); (ii) the furnishing of any notices to Certificateholders as required under the Transaction Documents, including notices regarding amendments pursuant to Section 11.01, to the extent the Owner Trustee has come into possession of such notices; and (iii) the filing of tax returns (once delivered to it in final form) and elections of the Trust pursuant to Section 5.05.

Section 6.05           Restrictions.

The Owner Trustee shall not take any action that, (i) is inconsistent with the purposes of the Trust set forth in Section 2.03 or (ii) to the actual knowledge of a Responsible Officer of the Owner Trustee, would result in the Trust’s becoming taxable as a corporation for federal income tax purposes. The Certificateholders shall not direct the Owner Trustee to take action that would violate the provisions of this Section 6.05.

Section 6.06           No Action Except Under Specified Documents or Instructions.

The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise deal with any part of, the Trust Estate except (i) in accordance with the powers granted to and the authority conferred upon the Owner Trustee pursuant to this Agreement, (ii) in accordance with the Transaction Documents and (iii) in accordance with any document or instruction delivered to the Owner Trustee pursuant to Section 6.03.

ARTICLE VII

CONCERNING THE OWNER TRUSTEE

Section 7.01           Acceptance of Trusts and Duties.

The Owner Trustee accepts the trusts hereby created and agrees to perform only such duties as are expressly required to be performed by the Owner Trustee hereunder, but only upon the terms of this Trust Agreement and the Transaction Documents. The Owner Trustee also agrees to disburse or cause to be disbursed all moneys actually received by it constituting part of the Trust Estate upon the terms of this Trust Agreement. The Owner Trustee shall not be personally answerable or accountable hereunder or under any other Transaction Document to any Person under any circumstances, except to the Trust and the Certificateholders (i) for its own willful misconduct, bad faith or gross negligence or (ii) in the case of the inaccuracy of any representation or warranty contained in Section 7.03 expressly made by the Owner Trustee. In particular, but not by way of limitation (and subject to the exceptions set forth in the preceding sentence):

(a)         the Owner Trustee shall not be personally liable for any error of judgment made in good faith by a Responsible Officer of the Owner Trustee which did not result from gross negligence on the part of such Responsible Officer;

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(b)           the Owner Trustee shall not be personally liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the instructions of the Trust Depositor, the Servicer or of Certificateholders holding such Percentage Interest as is required with respect thereto under this Agreement or the applicable Transaction Documents;

(c)           no provision of this Trust Agreement or any other Transaction Document shall require the Owner Trustee to expend or risk its own funds or otherwise incur any personal financial liability in the performance of any of its rights, duties or powers hereunder or under any Transaction Document if the Owner Trustee shall have reasonable grounds for believing repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured or provided to it;

(d)           under no circumstances shall the Owner Trustee be personally liable for indebtedness evidenced by or arising under any of the Transaction Documents, including the principal of and interest on the Notes;

(e)           the Owner Trustee shall not be personally responsible (i) for or in respect of the validity or sufficiency of this Trust Agreement or for the due execution hereof by the Trust Depositor, (ii) for the form, character, genuineness, sufficiency, value or validity of any of the Trust Estate, or (iii) for or in respect of the validity or sufficiency of the Transaction Documents, other than the Owner Trustee’s due execution of the Certificates on behalf of the Trust and, if applicable, of the certificate of authentication on the Trust Certificates, and the Owner Trustee shall in no event assume or incur any personal liability, duty, or obligation to any Noteholder or any Certificateholder other than as expressly provided for herein and in the Transaction Documents;

(f)            the Owner Trustee shall not be personally liable for the default or misconduct of the Trust Depositor, the Trustee or the Servicer or any other Person under any of the Transaction Documents or otherwise and the Owner Trustee shall have no obligation or personal liability to perform the obligations of the Trust under this Trust Agreement or the other Transaction Documents that are required to be performed by the Trustee under the Indenture or the Servicer or the Trust Depositor under the Sale and Servicing Agreement; and

(g)           the Owner Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Trust Agreement, or to institute, conduct or defend any litigation under this Trust Agreement or otherwise or in relation to this Trust Agreement or any other Transaction Document, at the request, order or direction of any of the Certificateholders, unless such Certificateholders have offered to the Owner Trustee (as such and in its individual capacity) security or indemnity satisfactory to it against the costs, expenses and liabilities that may be incurred by the Owner Trustee therein or thereby. The right of the Owner Trustee to perform any discretionary act enumerated in this Trust Agreement or in any other Transaction Document shall not be construed as a duty, and the Owner Trustee shall not be personally answerable therefor other than to the Trust, the Trust Depositor and the Certificateholders for its willful misconduct, bad faith or negligence in the performance of any such act.

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Section 7.02           Furnishing of Documents.

The Owner Trustee shall furnish to the Certificateholders duplicates or copies of all reports, notices, requests, demands, certificates, financial statements and any other instruments furnished to the Owner Trustee under the Transaction Documents.

Section 7.03           Representations and Warranties.

The Owner Trustee hereby represents and warrants to the Trust Depositor, for the benefit of the Trust Depositor and Certificateholders, that:

(a)         It is a trust company duly organized and validly existing in good standing under the laws of Delaware. It has all requisite corporate power and authority, and all franchises, grants, authorizations, consents, orders and approvals from all Governmental Authorities necessary to execute, deliver and perform its obligations under this Trust Agreement.

(b)        It has taken all corporate action necessary to authorize the execution and delivery by it of this Trust Agreement, and each Transaction Document to which the Trust is a party and this Trust Agreement and each Transaction Document will be executed and delivered by one of its officers who is duly authorized to execute and deliver this Trust Agreement on its behalf.

(c)         Neither the execution nor the delivery by it of this Trust Agreement, nor the consummation by it of the transactions contemplated hereby nor compliance by it with any of the terms or provisions hereof, will (i) contravene any federal or Delaware law, governmental rule or regulation governing the banking or trust powers of the Trust Company or any judgment or order binding on it, (ii) constitute any default under its charter documents or bylaws or any indenture, mortgage, contract, agreement or instrument to which it is a party or by which any of its properties may be bound or (iii) result in the creation or imposition of an lien, charge or encumbrance on the Trust Estate resulting from actions by or claims against the Owner Trustee individually which are unrelated to this Agreement or the other Transaction Documents.

(d)        This Agreement constitutes a legal, valid and binding obligation of the Owner Trustee enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization and similar laws relating to creditors’ rights generally and creditors of national banking associations and subject to general principles of equity.

(e)         To the Owner Trustee’s best knowledge, there are no proceedings or investigations pending, or to the Owner Trustee’s knowledge threatened, before any court, regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Owner Trustee or its properties:  (A) asserting the invalidity of this Trust Agreement, (B) seeking to prevent the consummation of any of the transactions contemplated by this Trust Agreement or (C) seeking any determination or ruling that might materially and adversely affect the performance by the Owner Trustee of its obligations under, or the validity or enforceability of, this Trust Agreement.

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Section 7.04           Reliance; Advice of Counsel.

(a)         The Owner Trustee shall incur no personal liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by an appropriate Person or Persons. The Owner Trustee may accept a certified copy of a resolution of the board of directors or other governing body of any Person as conclusive evidence that such resolution has been duly adopted by such body and that the same is in full force and effect. As to any fact or matter the method of determination of which is not specifically prescribed herein, the Owner Trustee may for all purposes hereof require and rely on a certificate, signed by the president or any vice president or by the treasurer or other authorized officer or agent of an appropriate Person or Persons or of any manager thereof, as to such fact or matter and such certificate shall constitute full protection to the Owner Trustee for any action taken or omitted to be taken by it in good faith in reliance thereon.

(b)        In the exercise or administration of the trusts hereunder and in the performance of its duties and obligations under this Trust Agreement or the other Transaction Documents, the Owner Trustee may act directly or through its agents or attorneys pursuant to agreements entered into with any of them, and the Owner Trustee shall not be personally liable for the conduct or misconduct of such agents or attorneys if such agents or attorneys shall have been selected by the Owner Trustee with reasonable care, and may consult with counsel, accountants and other skilled Persons to be selected with reasonable care and employed by it. The Owner Trustee shall not be personally liable for anything done, suffered or omitted in good faith by it in accordance with the written opinion or advice of any such counsel, accountants or other such Persons. The Owner Trustee shall have no duty to monitor or supervise any other trustee, the Certificate Registrar, the Paying Agent, the Trust Depositor, the Holders, the Servicer, any Subservicer, the Trustee, any agent, independent contractor, officer, employee or manager of the Trust, any delegate of any trustee, or any other Person.

Section 7.05           Not Acting in Individual Capacity.

Except as provided in this Article VII, in performing its duties hereunder, the Trust Company acts solely as Owner Trustee hereunder and not in its individual capacity, and all Persons having any claim against the Owner Trustee by reason of the transactions contemplated by this Trust Agreement or any Transaction Document shall look only to the Trust Estate for payment or satisfaction thereof.

Section 7.06           Owner Trustee Not Liable for Certificates or Loans.

The recitals contained herein and in the Certificates shall be taken as the statements of the Trust Depositor and the Owner Trustee assumes no personal responsibility for the correctness thereof. The Owner Trustee makes no representations as to the validity or sufficiency of this Trust Agreement, of any other Transaction Document or of the Certificates (other than as to the due execution by the Owner Trustee of the Certificates on behalf of the Trust and, if applicable, the certificate of authentication of the Owner Trustee on the Certificates) or the Notes, or of any Loan or related documents. The Owner Trustee shall at no time have any personal responsibility or liability for or with respect to the legality, validity and enforceability of any Loan, or for or

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with respect to the sufficiency of the Trust Estate or its ability to generate the payments to be distributed to Certificateholders under this Trust Agreement or the Noteholders under the Indenture, including, without limitation:  (a) the existence, condition and ownership of any collateral securing a Loan; (b) the existence and enforceability of any insurance thereon; (c) the validity of the assignment of any Loan to the Trust or of any intervening assignment; (d) the performance or enforcement of any Loan; and (e) the compliance by the Trust Depositor, the Trustee or the Servicer with any warranty or representation made under any Transaction Document or in any related document or the accuracy of any such warranty or representation, or any action of the Trust Depositor, the Trustee or the Servicer or any subservicer taken in the name of the Owner Trustee.

Section 7.07           Owner Trustee May Own Certificates and Notes.

The Owner Trustee in its individual or any other capacity may become the owner or pledgee of Certificates or Notes and may deal with the Trust Depositor, the Trustee, the Paying Agent and the Servicer in banking transactions with the same rights as it would have if it were not Owner Trustee.

ARTICLE VIII

COMPENSATION OF OWNER TRUSTEE

Section 8.01           Trust Company’s Fees and Expenses.

The Trust Company shall receive as compensation for its services hereunder such fees as have been separately agreed upon before the date hereof between the Trust Depositor and the Trust Company as set forth in the fee letter dated July 7, 2006, and the Owner Trustee shall be entitled to be reimbursed by the Trust Depositor for its other reasonable expenses hereunder, including, but not limited to, the reasonable compensation, expenses and disbursements of such agents, representatives, experts and counsel as the Owner Trustee may employ in connection with the exercise and performance of its rights and its duties hereunder. The Trust Depositor shall be responsible for such fees and expenses only to the extent the same are not paid pursuant to Sections 7.05(a) or 7.05(b) of the Sale and Servicing Agreement.

Section 8.02           Indemnification.

The Trust Depositor shall be liable as primary obligor for, and shall indemnify, defend and hold harmless the Owner Trustee and their successors, assigns, agents, employees, officers and servants (each, an “Indemnified Party” and collectively, the “Indemnified Parties”) from and against, any and all liabilities, obligations, losses, damages, taxes, claims, actions and suits, and any and all reasonable costs, expenses and disbursements (including reasonable legal fees and expenses) of any kind and nature whatsoever (collectively, “Expenses”) which may at any time be imposed on, incurred by or asserted against an Indemnified Party in any way relating to or arising out of this Trust Agreement, the Transaction Documents, the Trust Estate, the administration of the Trust Estate or the action or inaction of the Owner Trustee hereunder, except only that the Trust Depositor shall not be liable for or required to indemnify an Indemnified Party from and against Expenses arising or resulting from the gross negligence,

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willful misconduct or fraud on the part of the Indemnified Party. The indemnities contained in this Section 8.02 shall survive the resignation or removal of the Owner Trustee and the termination of this Trust Agreement. If an Indemnified Party seeks indemnification hereunder it shall promptly notify the Trust Depositor if a Responsible Officer of the Indemnified Party receives a complaint, claim, compulsory process or other notice of any loss, claim, damage or liability giving rise to a claim of indemnification hereunder but failure to provide such notice shall not relieve the Trust Depositor of its indemnification obligations hereunder. The Trust Depositor shall assume (with the consent of the Indemnified Party, such consent not to be unreasonably withheld) the defense and any settlement of any such claim and promptly pay, discharge and satisfy any judgment or decree which may be entered against the Indemnified Party in respect of such claim.

Section 8.03           Payments to the Owner Trustee.

Any amounts paid to the Owner Trustee pursuant to this Article VIII shall be deemed not to be a part of the Trust Estate immediately after such payment.

ARTICLE IX

TERMINATION OF TRUST AGREEMENT

Section 9.01           Termination of Trust Agreement.

(a)         The Trust shall dissolve, be wound up and terminate in accordance with Section 3808 of the Delaware Statutory Trust Act upon (i) the final distribution by the Paying Agent of all moneys or other property or proceeds of the Trust Estate in accordance with the terms of the Indenture, the Sale and Servicing Agreement and Article V, upon which time the Paying Agent shall notify the Owner Trustee and the Trust Depositor in writing and (ii) the written consent of the Certificateholders. The bankruptcy, liquidation, dissolution, death or incapacity of any Certificateholder shall not (x) operate to dissolve or terminate this Trust Agreement or the Trust or (y) entitle such Certificateholder’s legal representatives or heirs to claim an accounting or to take any action or proceeding in any court for a partition or winding up of all or any part of the Trust or Trust Estate or (z) otherwise affect the rights, obligations and liabilities of the parties hereto.

(b)        Except as provided in subsection 9.01(a), neither the Trust Depositor nor any Certificateholder shall be entitled to revoke or terminate the Trust.

(c)         Notice of any termination of the Trust, specifying the Distribution Date upon which the Certificateholders shall surrender their Certificates to the Paying Agent for payment of the final distribution and cancellation, shall be given by the Paying Agent by letter to Certificateholders mailed within five Business Days of receipt by the Paying Agent and the Owner Trustee of written notice of such termination from the Servicer stating, as set forth in such notice from the Servicer, (i) the Distribution Date upon or with respect to which final payment of the Certificates shall be made upon presentation and surrender of the Certificates at the office of the Paying Agent therein designated, (ii) the amount of any such final payment and (iii) that the Record Date otherwise applicable to such Distribution Date is not applicable,

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payments being made only upon presentation and surrender of the Certificates at the office of the Paying Agent therein specified. The Paying Agent shall give such notice to the Certificate Registrar (if other than the Paying Agent) and the Owner Trustee at the time such notice is given to Certificateholders. Upon presentation and surrender of the Certificates, the Paying Agent shall cause to be distributed to Certificateholders amounts distributable on such Distribution Date pursuant to Section 5.02.

In the event that all of the Certificateholders shall not surrender their Certificates for cancellation within six months after the date specified in the above mentioned written notice, the Paying Agent shall give a second written notice to the remaining Certificateholders to surrender their Certificates for cancellation and receive the final distribution with respect thereto. If within one year after the second notice all the Certificates shall not have been surrendered for cancellation, the Paying Agent may take appropriate steps, or may appoint an agent to take appropriate steps, to contact the remaining Certificateholders concerning surrender of their Certificates, and the cost thereof shall be paid out of the funds and other assets that shall remain subject to this Trust Agreement. Any funds remaining in the Trust after exhaustion of such remedies shall be distributed by the Paying Agent to the Trust Depositor. Certificateholders shall thereafter look solely to the Trust Depositor as general unsecured creditors.

(d)        Upon receipt of written notice from the Trust Depositor that the winding up of the Trust has been completed and payment of all liabilities in accordance with Section 3808 of the Delaware Statutory Trust Act, the Owner Trustee shall cause the Certificate of Trust to be cancelled by filing a certificate of cancellation with the Secretary of State in accordance with the provisions of Section 3810 of the Delaware Statutory Trust Act. Thereupon, the Trust and this Trust Agreement (other than the rights, benefits, protections, privileges and immunities of the Owner Trustee and the Trust Company) shall terminate.

ARTICLE X

SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES

Section 10.01         Eligibility Requirements for Owner Trustee.

The Owner Trustee or any Successor Trustee shall at all times be a Person (a) satisfying the provisions of Section 3807(a) of the Delaware Statutory Trust Act; (b) authorized to exercise corporate trust powers; (c) having a combined capital and surplus of at least $200,000,000 and subject to supervision or examination by federal or state banking authorities; and (d) having (or having a parent that has) a rating of at least BBB from S&P and Baa2 from Moody’s. If such Person shall publish reports of condition at least annually pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purpose of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Owner Trustee shall cease to be eligible in accordance with the provisions of this Section, the Owner Trustee shall resign immediately in the manner and with the effect specified in Section 10.02.

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Section 10.02           Resignation or Removal of Owner Trustee.

(a)           The Owner Trustee may at any time resign and be discharged from the trusts hereby created by giving 30 days’ prior written notice thereof to the Trust Depositor. Upon receiving such notice of resignation, the Trust Depositor shall promptly appoint a successor Owner Trustee meeting the qualifications set forth in Section 10.01 by written instrument, in duplicate, one copy of which instrument shall be delivered to the resigning Owner Trustee and one copy to the successor Owner Trustee. If no successor Owner Trustee shall have been so appointed and have accepted appointment within 60 days after the giving of such notice of resignation, the resigning Owner Trustee, at the expense of the Trust Depositor, may petition any court of competent jurisdiction for the appointment of a successor Owner Trustee.

(b)           If at any time the Owner Trustee shall cease to be eligible in accordance with the provisions of Section 10.01 and shall fail to resign after written request therefor by the Trust Depositor, or if at any time the Owner Trustee shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a receiver of the Owner Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Owner Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation or at any time with or without cause, then the Trust Depositor may remove the Owner Trustee. If the Trust Depositor shall remove the Owner Trustee under the authority of the immediately preceding sentence, the Trust Depositor shall promptly appoint a successor Owner Trustee by written instrument, in duplicate, one copy of which instrument shall be delivered to the outgoing Owner Trustee so removed, and one copy to the successor Owner Trustee, and shall pay all fees owed to the outgoing Owner Trustee (as such and in its individual capacity).

(c)           Any resignation or removal of the Owner Trustee and appointment of a successor Owner Trustee pursuant to any of the provisions of this Section shall not become effective until the appointment by the successor Owner Trustee pursuant to Section 10.03 has become effective and, in the case of removal, payment of all accrued and unpaid fees and expenses owed to the outgoing Owner Trustee as such and in its individual capacity. The Trust Depositor shall provide notice of such resignation or removal of the Owner Trustee to all Holders, the Trustee, the Servicer, the Paying Agent and each Rating Agency.

Section 10.03           Successor Owner Trustee.

(a)           Any successor Owner Trustee appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to the Trust Depositor and to its predecessor Owner Trustee an instrument accepting such appointment under this Trust Agreement, and thereupon the resignation or removal of the predecessor Owner Trustee shall become effective, and such successor Owner Trustee, without any further act, deed or conveyance, shall become fully vested with all the rights, powers, duties and obligations of its predecessor under this Trust Agreement, with like effect as if originally named as Owner Trustee. The predecessor Owner Trustee shall upon payment of fees and expenses owing to it in its individual capacity deliver to the successor Owner Trustee all documents and statements and monies held by it under this Trust Agreement; and the Trust Depositor and the predecessor Owner Trustee shall execute and deliver such instruments and do such other things as may reasonably be required for fully and

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certainly vesting and confirming in the successor Owner Trustee all such rights, powers, duties and obligations.

(b)        No successor Owner Trustee shall accept appointment as provided in this Section unless at the time of such acceptance such successor Owner Trustee shall be eligible pursuant to Section 10.01.

(c)         Upon acceptance of appointment by a successor Owner Trustee pursuant to this Section, the Trust Depositor shall mail notice thereof to all Holders, the Trustee, the Servicer, each Rating Agency and the Paying Agent. If the Trust Depositor shall fail to mail such notice within ten days after acceptance of such appointment by the successor Owner Trustee, the successor Owner Trustee shall cause such notice to be mailed at the expense of the Trust Depositor.

Section 10.04         Merger or Consolidation of Owner Trustee.

Any Person into which the Owner Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Owner Trustee shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of the Owner Trustee, shall be the successor of the Owner Trustee hereunder, without the execution or filing of any instrument or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding; provided that such Person shall be eligible pursuant to Section 10.01; and, provided further that the Owner Trustee shall mail notice of such merger or consolidation to all Holders, each Rating Agency, the Paying Agent, the Certificate Registrar, the Trustee, the Servicer and the Trust Depositor.

Section 10.05         Appointment of Co-Trustee or Separate Trustee.

(a)         Notwithstanding any other provisions of this Trust Agreement, at any time, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the Trust Estate may at the time be located, the Trust Depositor and the Owner Trustee acting jointly shall have the power and authority to execute and deliver all instruments to appoint one or more Persons approved by the Trust Depositor and Owner Trustee to act as co–trustee, jointly with the Owner Trustee, or as separate trustee or separate trustees, of all or any part of the Trust Estate, and to vest in such Person, in such capacity, such title to the Trust Estate or any part thereof and, subject to the other provisions of this Section 10.05, such powers, duties, obligations, rights and trusts as the Trust Depositor and the Owner Trustee may consider necessary or desirable. If the Trust Depositor shall not have joined in such appointment within 15 days after the receipt by it of a request so to do, the Owner Trustee alone shall have the power, authority and authorization to make such appointment. No co–trustee or separate trustee under this Trust Agreement shall be required to meet the terms of eligibility as a successor Owner Trustee pursuant to Section 10.01 and no notice of the appointment of any co–trustee or separate trustee shall be required pursuant to Section 10.03.

(b)        Each separate trustee and co–trustee shall, to the extent permitted by any Applicable Law, be appointed and act subject to the following provisions and conditions:

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(i)               all rights, powers, duties and obligations conferred or imposed upon the Owner Trustee shall be conferred upon and exercised or performed by the Owner Trustee and such separate trustee or co–trustee jointly (it being understood that such separate trustee or co–trustee is not authorized to act separately without the Owner Trustee joining in such act), except to the extent that under any Applicable Law of any jurisdiction in which any particular act or acts are to be performed, the Owner Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Estate or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co–trustee, but solely at the direction of the Owner Trustee;

(ii)              no separate trustee or co–trustee under this Trust Agreement or the Owner Trustee shall be personally liable by reason of any act or omission of any other trustee under this Trust Agreement; and

(iii)             the Trust Depositor and the Owner Trustee acting jointly may at any time accept the resignation of or remove any separate trustee or co–trustee.

(c)           Any notice, request or other writing given to the Owner Trustee shall be deemed to have been given to each of the then separate trustees and co–trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co–trustee shall refer to this Trust Agreement and the conditions of this Article X. Each separate trustee and co–trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Owner Trustee or separately, as may be provided therein, subject to all the provisions of this Trust Agreement, specifically including every provision of this Agreement relating to the conduct of, affecting the liability of, or affording protection to, the Owner Trustee. Each such instrument shall be filed with the Owner Trustee and a copy thereof given to each of the Trust Depositor, the Trustee, the Paying Agent and the Servicer.

(d)           Any separate trustee or co–trustee may at any time appoint the Owner Trustee as its agent or attorney–in–fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Trust Agreement on its behalf and in its name, and the Owner Trustee shall have the full power and authority to delegate its responsibilities to the Servicer as provided for herein and in the other Transaction Documents. If any separate trustee or co–trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Owner Trustee, to the extent permitted by law, without the appointment of a new or successor co–trustee or separate trustee.

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ARTICLE XI

MISCELLANEOUS

Section 11.01         Supplements and Amendments.

(a)           This Trust Agreement may be amended by the Trust Depositor and the Owner Trustee without the consent of the Noteholders or the Certificateholders, to cure any ambiguity, to correct or supplement any provisions in this Trust Agreement or for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions in this Trust Agreement or of modifying in any manner the rights of the Noteholders or the Certificateholders; provided that such action shall not, as evidenced by an Opinion of Counsel, materially adversely affect the interests of any Noteholder or Certificateholder.

(b)           Except as provided in Section 11.01(a), this Trust Agreement may be amended from time to time by the Trust Depositor and the Owner Trustee, with the consent of the Majority Noteholders, and, to the extent materially adversely affected thereby, the consent of the Majority Certificateholders (which consents shall be conclusive and binding on such Certificateholder or Noteholder and all future Certificateholders or Noteholders and of any Certificate or Note issued upon the transfer thereof or in exchange thereof a in lieu thereof whether or not notation of such consent is made upon the Certificate or Note), for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Trust Agreement or of modifying in any manner the rights of the Noteholders or the Certificateholders hereunder; provided that no such amendment shall (a) increase or reduce in any manner the amount of, or accelerate or delay the timing of any amounts received on the Loans which are required to be distributed on any Note or Certificate without the consent of the Holder of that Note or Certificate or (b) reduce the aforesaid percentage of Noteholders and the aggregate Percentage Interest of Certificateholders required to consent to any such amendment, without the consent of the holders of all the outstanding Notes and Certificates.

(c)           Promptly after the execution of any such amendment or consent, the Owner Trustee shall furnish written notification of the substance of such amendment or consent to each Certificateholder and a copy of each such amendment or consent to the Paying Agent, the Trustee, the Servicer and each Rating Agency.

(d)           It shall not be necessary for the consent of Certificateholders or Noteholders pursuant to this Section 11.01 to approve the particular form of any proposed amendment or consent, but it shall be sufficient if such consent shall approve the substance thereof. The manner of obtaining such consents (and any other consents of Certificateholders or Noteholders provided for in this Trust Agreement or in any other Transaction Document) and of evidencing the authorization of the execution thereof by Certificateholders or Noteholders shall be subject to such reasonable requirements as the Owner Trustee may prescribe.

(e)           Promptly after the execution of any amendment to the Certificate of Trust, the Owner Trustee shall cause the filing of such amendment with the Secretary of State of Delaware.

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(f)         Prior to the execution of any amendment to this Trust Agreement or the Certificate of Trust, the Owner Trustee at the expense of the Trust, shall be entitled to receive and rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Trust Agreement and that all conditions precedent to the execution and delivery of such amendment has been satisfied. The Owner Trustee and the Trust Company may, but shall not be obligated to, enter into any such amendment that affects the Owner Trustee’s or the Trust Company’s own rights, duties or immunities under this Trust Agreement or otherwise. Notwithstanding any other provision herein or elsewhere, no provision, amendment, supplement, waiver, or consent of or with respect to any of the Transaction Documents that affects any right, power, authority, duty, benefit, protection, privilege, immunity or indemnity of the Owner Trustee or the Trust Company shall be binding on the Owner Trustee or the Trust Company unless the Owner Trustee and the Trust Company shall have expressly consented thereto in writing.

Section 11.02         No Legal Title to Trust Estate in Certificateholders.

The Certificateholders shall not have legal title to any part of the Trust Estate. The Certificateholders shall be entitled to receive distributions with respect to their undivided beneficial ownership interest therein only in accordance with Articles V and IX. No transfer, by operation of law or otherwise, of any right, title or interest of the Certificateholders to and in their beneficial ownership interest in the Trust Estate shall operate to dissolve the Trust or terminate this Agreement or the trusts hereunder or entitle any transferee to an accounting or to the transfer to it of legal title to any part of the Trust Estate.

Section 11.03         Limitations on Rights of Others.

The provisions of this Trust Agreement are solely for the benefit of the Owner Trustee, the Trust Company, the Indemnified Parties, the Trust Depositor, the Certificateholders and, to the extent expressly provided herein, the Trustee and the Noteholders, and nothing in this Trust Agreement, whether express or implied, shall be construed to give to any other Person any legal or equitable right, remedy or claim in the Trust Estate or under or in respect of this Trust Agreement or any covenants, conditions or provisions contained herein.

Section 11.04         Notices.

(a)         Any request, demand, authorization, direction, notice, consent, waiver or Act of Certificateholders or other documents provided or permitted by this Trust Agreement shall be in writing to and mailed, return receipt requested, hand delivered, sent by overnight courier service guaranteeing next day delivery or by facsimile or telecopy in legible form, if to the Owner Trustee, addressed to its Corporate Trust Office; if to either of the Certificate Registrar or Paying Agent, addressed to their Corporate Trust Office; or if to the Trust Depositor, addressed to ARCC CLO 2006 LLC, 280 Park Avenue, 22nd Floor, Building East, New York, New York 10017, Attention: Michael J. Arougheti, Facsimile No.: (212) 750-1777; or if to a Certificateholder shall be given by first–class mail, postage prepaid, at the address of such Certificateholder as shown in the Certificate Register.

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(b)        Delivery of any request, demand, authorization, direction, notice, consent, waiver or act of Noteholders or other documents made as provided above will be deemed effective (except that notice to the Owner Trustee shall be deemed given only upon actual receipt by the Owner Trustee):  (i) if in writing and delivered in Person or by overnight courier service, on the date it is delivered; (ii) if sent by facsimile transmission, on the date that transmission is received by the recipient in legible form (it being agreed that the burden of proving receipt will be on the sender and will not be met by a transmission report generated by the sender’s facsimile machine); and (iii) if sent by mail, on the date that mail is delivered or its delivery is attempted; in each case, unless the date of that delivery (or attempted delivery) or that receipt, as applicable, is not a Business Day or that communication is delivered (or attempted) or received, as applicable, after the close of business on a Business Day, in which case that communication shall be deemed given and effective on the first following day that is a Business Day.

Section 11.05         Severability.

Any provision of this Trust Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

Section 11.06         Separate Counterparts.

This Trust Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

Section 11.07         Successors and Assigns.

All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, each of the Trust Depositor, the Owner Trustee, the Trust Company, each Certificateholder and their respective successors and permitted assigns, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by a Certificateholder shall bind the successors and assigns of such Certificateholder.

Section 11.08         No Petition.

(a)The Trust Depositor shall not be liable for the default or misconduct of the Owner Trustee, the Trustee or the Paying Agent under any of the Transaction Documents or this Trust Agreement or otherwise and, except as expressly provided herein or in the Transaction Documents, the Trust Depositor shall have no obligation or liability to perform the obligations of the Trust under this Trust Agreement or the Transaction Documents that are required to be performed by the Owner Trustee or the Trustee.

(b)The Trust Depositor will not, prior to the date which is one year and one day (or, if longer, the applicable preference period then in effect) after payment in full of each Class of Offered Notes rated by any Rating Agency (or such longer preference period as shall then be in

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effect), institute against the Trust any bankruptcy proceedings under any United States federal or state bankruptcy or similar law in connection with any obligations relating to the Certificates, the Notes, this Trust Agreement or any of the other Transaction Documents.

(c)         The Owner Trustee, by entering into this Trust Agreement, each Certificateholder, by accepting a Certificate, and the Trustee and each Noteholder, by accepting the benefits of this Trust Agreement, hereby covenant and agree that they will not, prior to the date which is one year and one day (or if longer, the applicable preference period as shall then be in effect) after payment in full of each Class of Notes rated by any Rating Agency (or such longer preference period as shall then be in effect), institute against the Trust, or join in any institution against the Trust of, any bankruptcy proceedings under any United States federal or state bankruptcy or similar law in connection with any obligations relating to the Certificates, the Notes, this Trust Agreement or any of the other Transaction Documents.

(d)        The provisions of this Section 11.08 shall survive the termination of this Trust Agreement for any reason whatsoever.

Section 11.09         No Recourse.

Each Certificateholder by accepting a Certificate acknowledges that such Certificateholder’s Certificates represent beneficial interests in the Trust only and do not represent interests in or obligations of the Trust Depositor, the Servicer, the Originator, the Owner Trustee, the Trustee, the Paying Agent, the Certificate Registrar or any Affiliate thereof and no recourse may be had against such parties or their assets, except as may be expressly set forth or contemplated in this Trust Agreement, the Certificates or the Transaction Documents. The right to distributions of the assets of the Trust or the proceeds thereof arising under this Agreement or the Certificates shall be payable solely in accordance with the priority set forth in Section 7.05 of the Sale and Servicing Agreement until the final discharge of the Indenture, and no Certificateholder shall have any recourse against the Trust except in accordance therewith. The provisions of this Section 11.09 shall survive any termination of this Agreement.

Section 11.10         Headings.

The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof.

Section 11.11         GOVERNING LAW.

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

[Remainder of Page Intentionally Left Blank.]

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

ARCC CLO 2006 LLC, as Trust Depositor
By:	Ares Capital Corporation, its sole member
By:		/s/ Michael Arougheti
Name:		Michael Arougheti
Title:		President

ARCC Commercial Loan Trust 2006

Amended and Restated Trust Agreement

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

WILMINGTON TRUST COMPANY, as Owner
Trustee and as the Trust Company
By:	/s/ Michele C. Harra
Name:	Michele C. Harra
Title:	Financial Services Officer

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

U.S. BANK NATIONAL ASSOCIATION, as
Trustee, hereby accepts the appointment as
Certificate Registrar and Paying Agent pursuant to
Sections 3.04 and 3.09 hereof.
By:	/s/ Joel D. Cough
Name:	Joel D. Cough
Title:	Assistant Vice President

EXHIBIT A

FORM OF TRUST CERTIFICATE

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES LAWS.  THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS AND TO A PERSON WHO HAS FURNISHED TO THE OWNER TRUSTEE (A) AN INVESTMENT LETTER TO THE EFFECT THAT SUCH PURCHASER IS THE TRUST DEPOSITOR OR AN AFFILIATE THEREOF, OR A QUALIFIED INSTITUTIONAL BUYER FOR PURPOSES OF RULE 144A UNDER THE ACT AND (B) IF REQUIRED, AN OPINION OF COUNSEL SATISFACTORY TO THE OWNER TRUSTEE.

THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, ON BEHALF OF OR WITH ANY ASSETS OF ANY EMPLOYEE BENEFIT PLAN AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”) THAT IS SUBJECT TO TITLE I OF ERISA OR A “PLAN” AS DEFINED IN AND SUBJECT TO SECTION 4975 OF THE CODE (A “BENEFIT PLAN”).  FURTHER, THIS CERTIFICATE MAY BE TRANSFERRED ONLY TO A UNITED STATES PERSON WITHIN THE MEANING OF SECTION 7701(a)(30) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.

THIS CERTIFICATE IS NOT GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY.

NO CERTIFICATE MAY BE ACQUIRED OR OWNED BY ANY PERSON THAT IS CLASSIFIED FOR U.S. FEDERAL INCOME TAX PURPOSES AS A PARTNERSHIP, SUBCHAPTER S CORPORATION OR GRANTOR TRUST UNLESS SUCH PERSON REPRESENTS IN WRITING THAT (I) THE VALUE OF THE CERTIFICATES AND CLASS E NOTES PROPOSED TO BE TRANSFERRED TO SUCH PERSON, TOGETHER WITH THE VALUE OF ANY CERTIFICATES AND TRUST CERTIFICATES ALREADY HELD BY SUCH PERSON, WILL NOT CONSTITUTE SUBSTANTIALLY ALL OF THE VALUE OF THE ASSETS OF SUCH PERSON AND (II) SUCH PERSON IS NOT PART OF ANY ARRANGEMENT THE PRINCIPAL PURPOSE OF WHICH IS TO CAUSE THE CERTIFICATES AND CLASS E NOTES TO BE TREATED AS OWNED BY 100 PERSONS OR LESS WITHIN THE MEANING OF TREAS. REG. § 1.7704 1(H)(1)(II).

NO CERTIFICATE (OR INTEREST THEREIN) MAY BE ACQUIRED BY ANY PERSON UNLESS SUCH PERSON REPRESENTS THAT IT HAS NOT ACQUIRED THE CERTIFICATES PURSUANT TO A TRADE ON AN “ESTABLISHED SECURITIES MARKET” AND AGREES THAT IT WILL NOT TRADE ANY CERTIFICATES ON AN “ESTABLISHED SECURITIES MARKET.” FOR THIS

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PURPOSE, THE TERM “ESTABLISHED SECURITIES MARKET” INCLUDES ANY NATIONAL SECURITIES EXCHANGE REGISTERED UNDER SECTION 6 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, OR EXEMPTED FROM REGISTRATION BECAUSE OF THE LIMITED VOLUME; ANY FOREIGN SECURITIES EXCHANGE THAT, UNDER THE LAWS OF THE JURISDICTION WHERE IT IS ORGANIZED, SATISFIES REGULATORY REQUIREMENTS THAT ARE ANALOGOUS TO THE REGULATORY REQUIREMENTS IMPOSED UNDER THE SECURITIES EXCHANGE ACT OF 1934; ANY REGIONAL OR LOCAL EXCHANGE; AND ANY INTERDEALER QUOTATION SYSTEM THAT REGULARLY DISSEMINATES FIRM BUY AND SELL QUOTATIONS BY IDENTIFIED BROKERS OR DEALERS, BY ELECTRONIC MEANS OR OTHERWISE.

NO TRANSFER, SALE, PLEDGE OR OTHER DISPOSITION OF ONE OR MORE CERTIFICATES (A “TRANSFER”) SHALL BE MADE UNLESS SIMULTANEOUSLY WITH THE TRANSFER (1) A PROPORTIONATE AMOUNT OF CLASS E NOTES ARE TRANSFERRED SO THAT THE PERCENTAGE INTEREST OF THE CERTIFICATES SO TRANSFERRED EQUALS THE PERCENTAGE INTEREST OF THE CLASS E NOTES SO TRANSFERRED, (2) THE TRANSFERS OF THE CERTIFICATES AND CLASS E NOTES REFERRED TO HEREIN ARE MADE TO THE SAME PERSON AND (3) THE PERCENTAGE INTEREST OF THE CERTIFICATES AND CLASS E NOTES, RESPECTIVELY, SO TRANSFERRED IS NO LESS THAN TEN (10%) PERCENT.

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NUMBER            CUSIP NO.          PERCENTAGE INTEREST:           

ARCC COMMERCIAL LOAN TRUST 2006

CERTIFICATE

Evidencing a beneficial ownership interest in the Trust, as defined below, the property of which includes primarily the Loans transferred to the Trust by ARCC CLO 2006 LLC.

(This Certificate does not represent an interest in or obligation of ARCC CLO 2006 LLC, Ares Capital Corporation (the “Servicer”) or the Owner Trustee (as defined below) (as such or in its individual capacity) or any of their respective affiliates, except to the extent described below.)

THIS CERTIFIES THAT ARCC CLO 2006 LLC is the registered owner of the nonassessable, fully paid, beneficial ownership interest in ARCC COMMERCIAL LOAN TRUST 2006 (the “Trust”) formed by ARCC CLO 2006 LLC, in the Percentage Interest evidenced hereby.

The Trust was created pursuant to a Trust Agreement, dated as of June 21, 2006 (as amended and restated as of July 7, 2006 and as further amended, modified, restated, waived, substituted or supplemented from time to time, the “Trust Agreement”), between ARCC CLO 2006 LLC, as trust depositor (the “Trust Depositor”), and Wilmington Trust Company, as owner trustee (the “Owner Trustee”), a summary of certain of the pertinent provisions of which is set forth below.  To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Trust Agreement.

This Certificate is one of a duly authorized issue of ARCC Commercial Loan Trust 2006 Certificates (herein called the “Certificates”).  This Certificate is issued under and is subject to the terms, provisions and conditions of the Trust Agreement, to which Trust Agreement the holder of this Certificate by virtue of its acceptance hereof assents and by which such holder is bound.

Under the Trust Agreement, there will be distributed on the 20th day of each December, March, June and September or, if such 20th day is not a Business Day, the next Business Day (each, a “Distribution Date”), commencing on December 20, 2006, to the Person in whose name this Trust Certificate is registered at the close of business on the last Business Day of the month immediately preceding the Distribution Date (the “Record Date”), such Certificateholder’s Percentage Interest in the amount to be distributed to Certificateholders on such Distribution Date pursuant to the terms of the Sale and Servicing Agreement and the Indenture.

The Holder of this Certificate acknowledges and agrees that its rights to receive distributions in respect of this Certificate are subordinated to the rights of the Noteholders as described in the Sale and Servicing Agreement and the Indenture.

It is the intent of the Trust Depositor, the Servicer, the Class E Noteholders and the Certificateholders that, (i) in the event that the Certificates and the Class E Notes are owned by a single Holder, for federal income tax purposes, the Trust will be treated as a division of such

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Holder, and such Holder, by acceptance of the Certificates and the Class E Notes, agrees to take no action inconsistent with such treatment and (ii) in the event that the Certificates and/or the Class E Notes are owned by more than one Holder, for federal income tax purposes, the Trust will be treated as a partnership, the partners of which are the Certificateholders and the Class E Noteholders, and the Certificateholders and the Class E Noteholders, by acceptance of a Certificate and a Class E Note, respectively, agree to treat the Certificates and the Class E Notes as equity and to take no action inconsistent with such treatment.

Each Certificateholder, by its acceptance of a Certificate, covenants and agrees that such Certificateholder, will not prior to the date which is one year and one day (or, if longer, the applicable preference period then in effect) after the payment in full of each Class of Notes rated by any Rating Agency, institute against the Trust, or join in any institution against the Trust of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any United States federal or state bankruptcy or similar law in connection with any obligations relating to the Certificates, the Notes, the Trust Agreement or any of the other Transaction Documents.

Distributions on this Certificate will be made as provided in the Trust Agreement by the Paying Agent by wire transfer or check mailed to the Certificateholder of record in the Certificate Register without the presentation or surrender of this Certificate or the making of any notation hereon.  Except as otherwise provided in the Trust Agreement and notwithstanding the above, the final distribution on this Certificate will be made after due notice by the Paying Agent of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency maintained for that purpose by the Paying Agent.

Reference is hereby made to the further provisions of this Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon shall have been executed by an authorized officer of the Owner Trustee or the Certificate Registrar, by manual signature, this Certificate shall not entitle the Holder hereof to any benefit under the Trust Agreement or the Sale and Servicing Agreement or be valid for any purpose.

THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH  THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

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IN WITNESS WHEREOF, the Owner Trustee or the Certificate Registrar, on behalf of the Trust and not in its individual capacity, has caused this Certificate to be duly executed.

Date:
	ARCC COMMERCIAL LOAN TRUST 2006
	By:	WILMINGTON TRUST COMPANY, solely as Owner Trustee and not in its individual capacity
	By:
		Authorized Signatory

OWNER TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Certificates of ARCC Commercial Loan Trust 2006 referred to in the within-mentioned Trust Agreement.

Date:
	WILMINGTON TRUST COMPANY, solely as Owner Trustee and not in its individual capacity
	By:
		Authorized Signatory
		or
	U.S. BANK NATIONAL ASSOCIATION, as Certificate Registrar
	By:
		Authorized Signatory

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[REVERSE OF CERTIFICATE]

The Certificates do not represent an obligation of, or an interest in, the Trust Depositor, the Servicer, the Owner Trustee or any affiliates of any of them and no recourse may be had against such parties or their assets, except as expressly set forth or contemplated herein or in the Trust Agreement, the Indenture or the Transaction Documents.  In addition, this Certificate is not guaranteed by any governmental agency or instrumentality and is limited in right of payment to certain collections and recoveries with respect to the Loans (and certain other amounts), all as more specifically set forth herein and in the Transaction Documents.  A copy of each of the Transaction Documents may be examined by any Certificateholder upon written request during normal business hours at the principal office of the Trust Depositor and at such other places, if any, designated by the Trust Depositor.

The Trust Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Trust Depositor and the rights of the Certificateholders under the Trust Agreement at any time, by the Trust Depositor and the Owner Trustee with the consent of the holders of the Certificates evidencing not less than a majority of the outstanding Percentage Interest and of the holders of the Majority Noteholders, each voting as a class.  Any such consent by the holder of this Certificate shall be conclusive and binding on such holder and on all future holders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent is made upon this Certificate.  The Trust Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the holders of any of the Certificates.

As provided in the Trust Agreement and subject to certain limitations therein set forth, the transfer of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the offices or agencies of the Certificate Registrar, accompanied by a written instrument of transfer in form satisfactory to the Owner Trustee and the Certificate Registrar duly executed by the holder hereof or such holder’s attorney duly authorized in writing, and thereupon one or more new Certificates of authorized denominations evidencing the same aggregate interest in the Trust will be issued to the designated transferee.  The initial Certificate Registrar appointed under the Trust Agreement is U.S. Bank National Association.

The Certificates are issuable only as registered Certificates without coupons in minimum Percentage Interests of 10% and integral multiples of 1% in excess thereof; provided that one Certificate may be issued in a different denomination.  As provided in the Trust Agreement and subject to certain limitations therein set forth, Certificates are exchangeable for new Certificates of authorized denominations evidencing the same aggregate denomination, as requested by the holder surrendering the same.  No service charge will be made for any such registration of transfer or exchange, but the Owner Trustee or the Certificate Registrar may require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith.

The Owner Trustee, the Certificate Registrar and any agent of the Owner Trustee or the Certificate Registrar may treat the Person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the Owner Trustee, the Certificate Registrar or any such agent shall be affected by any notice to the contrary.

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This Certificate may not be acquired directly or indirectly by, on behalf of or with any assets of any employee benefit plan as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) that is subject to Title I of ERISA or a “plan” as defined in and subject to Section 4975 of the Code (a “Benefit Plan”).  By accepting and holding this Certificate, the Holder hereof shall be deemed to have represented and warranted that it is not any of the foregoing entities.

This Certificate may not be transferred to any person who is not a U.S. Person, as such term is defined in Section 7701(a)(30) of the Internal Revenue Code, as amended.

Each purchaser of the Certificates shall be required, prior to purchasing a Certificate, to execute the Purchaser’s Representation and Warranty Letter in the form attached to the Trust Agreement as Exhibit C.

The obligations and responsibilities created by the Trust Agreement and the Trust created thereby shall terminate upon (i) the payment to Certificateholders of all amounts required to be paid to them pursuant to the Trust Agreement and the Sale and Servicing Agreement and the disposition of all property held as part of the Trust and (ii) the written consent of the Certificateholders.  The Servicer on behalf of the Trustee has the option to cause the sale of the corpus of the Trust at a price and pursuant to auction procedures specified in the Indenture and the Sale and Servicing Agreement, and such sale of the receivables and other property of the Trust will effect early retirement of the Certificates.

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ASSIGNMENT

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE

(Please print or type name and address, including postal zip code, of assignee)

the within Certificate, and all rights thereunder, hereby irrevocably constituting and appointing

to transfer said Certificate on the books of the Certificate Registrar, with full power of substitution in the premises.

Dated:

	*
Signature Guaranteed:
	*

* NOTICE:  The signature to this assignment must correspond with the name as it appears upon the face of the within Certificate in every particular, without alteration, enlargement or any change whatever.  Such signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company.

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EXHIBIT B

CERTIFICATE OF TRUST
OF
ARCC COMMERCIAL LOAN TRUST 2006

This Certificate of Trust of ARCC Commercial Loan Trust 2006 (the “Trust”), is being duly executed and filed by the undersigned, as owner trustee, to form a statutory trust under the Delaware Statutory Trust Act (12 Del. Code, § 3801 et seq.) (the “Act”).

1.             Name.  The name of the statutory trust formed hereby is ARCC Commercial Loan Trust 2006 .

2.             Delaware Trustee.  The name and business address of the owner trustee of the Trust having its principal place of business in the State of Delaware is Wilmington Trust Company, 1100 North Market Street, Wilmington, Delaware 19801, Attention: Corporate Trust Administration.

3.             Effective Date.  This Certificate of Trust shall be effective upon its filing with the Secretary of State of the State of Delaware.

IN WITNESS WHEREOF, the undersigned being the only owner trustee of the Trust, has duly executed this Certificate of Trust in accordance with Section 3811(a)(1) of the Act.

WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as owner trustee of
the Trust

By:

Name:

Title:

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EXHIBIT C

[Form of Purchaser’s Representation and Warranty Letter]

ARCC Commercial Loan Trust 2006
c/o Wilmington Trust Company, as Owner Trustee
1100 North Market Street
Wilmington, Delaware  19801
Attention:  Corporate Trust Administration

Re:          ARCC Commercial Loan Trust 2006

Ladies and Gentlemen:

In connection with our proposed acquisition of Certificates (the “Certificates”) issued under the Trust Agreement, dated as of June 21, 2006 (as amended and restated as of July 7, 2006 and as further amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time, the “Agreement”; capitalized terms used but not defined herein shall have the meanings given to such terms in the Agreement), between ARCC CLO 2006 LLC, as Trust Depositor (the “Trust Depositor”), and Wilmington Trust Company, as Owner Trustee, the undersigned (the “Purchaser”) represents, warrants and agrees that:

4.             It is the Trust Depositor or an Affiliate thereof, or a Qualified Institutional Buyer (a “QIB”) for purposes of Rule 144A under the Securities Act and is acquiring the Certificates for its own institutional account or for the account of a QIB.

5.             It is not an employee benefit plan as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) that is subject to Title I of ERISA or a “plan” as defined in and subject to Section 4975 of the Code (a “Benefit Plan”), and is not acquiring Certificates directly or indirectly by, on behalf of or with any assets of any such Benefit Plan.

6.             It is a U.S. Person as defined in Section 7701(a)(30) of the Code.

7.             It has such knowledge and experience in evaluating business and financial matters so that it is capable of evaluating the merits and risks of an investment in the Certificates.  It understands the full nature and risks of an investment in the Certificates and based upon its present and projected net income and net worth, it believes that it can bear the economic risk of an immediate or future loss of its entire investment in the Certificates.

8.             It understands that the Certificates will be offered in a transaction not involving any public offering within the meaning of the Securities Act, and that, if in the future it decides to resell, pledge or otherwise transfer any Certificates, such Certificates may be resold, pledged or transferred only (a) to a person who the seller reasonably believes is a QIB that purchases for its own account or for the account of another QIB or (b) pursuant to an effective registration statement under the Securities Act.

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9.             It understands that each Certificate will bear a legend substantially to the following effect:

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES LAWS.  THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS AND TO A PERSON WHO HAS FURNISHED TO THE OWNER TRUSTEE (A) AN INVESTMENT LETTER TO THE EFFECT THAT SUCH PURCHASER IS THE TRUST DEPOSITOR OR AN AFFILIATE THEREOF, OR A QUALIFIED INSTITUTIONAL BUYER FOR PURPOSES OF RULE 144A UNDER THE ACT AND (B) IF REQUIRED, AN OPINION OF COUNSEL SATISFACTORY TO THE OWNER TRUSTEE.

THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, ON BEHALF OF OR WITH ANY ASSETS OF ANY EMPLOYEE BENEFIT PLAN AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”) THAT IS SUBJECT TO TITLE I OF ERISA OR A “PLAN” AS DEFINED IN AND SUBJECT TO SECTION 4975 OF THE CODE (A “BENEFIT PLAN”).  FURTHER, THIS TRUST CERTIFICATE MAY BE TRANSFERRED ONLY TO A UNITED STATES PERSON WITHIN THE MEANING OF SECTION 7701(a)(30) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.

THIS CERTIFICATE IS NOT GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY.

NO TRANSFER, SALE, PLEDGE OR OTHER DISPOSITION OF ONE OR MORE CERTIFICATES (A “TRANSFER”) SHALL BE MADE UNLESS SIMULTANEOUSLY WITH THE TRANSFER (1) A PROPORTIONATE AMOUNT OF CLASS E NOTES ARE TRANSFERRED SO THAT THE PERCENTAGE INTEREST OF THE CERTIFICATES SO TRANSFERRED EQUALS THE PERCENTAGE INTEREST OF THE CLASS E NOTES SO TRANSFERRED, (2) THE TRANSFERS OF THE CERTIFICATES AND CLASS E NOTES REFERRED TO HEREIN ARE MADE TO THE SAME PERSON, AND (3) THE PERCENTAGE INTEREST OF THE CERTIFICATE AND THE CLASS E NOTES, RESPECTIVELY, SO TRANSFERRED IS NO LESS THAN TEN (10%) PERCENT.

10.           It is acquiring the Certificates for its own account and not with a view to the public offering thereof in violation of the Securities Act (subject, nevertheless, to the understanding that disposition of its property shall at all times be and remain within its control).

11.           It has been furnished with all information regarding the Trust and Certificates which it has requested from the Trust and the Trust Depositor.

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12.           Neither it nor anyone acting on its behalf has offered, transferred, pledged, sold or otherwise disposed of any Certificate, any interest in any Certificate or any other similar security to, or solicited any offer to buy or accept a transfer, pledge or other disposition of any Trust Certificate, any interest in any Certificate or any other similar security from, or otherwise approached or negotiated with respect to any Certificate, any interest in any Certificate or any other similar security with, any person in any manner or made any general solicitation by means of general advertising or in any other manner, which would constitute a distribution of the Certificates under the Securities Act or which would require registration pursuant to the Securities Act nor will it act, nor has it authorized or will authorize any person to act, in such manner with respect to any Certificate.

13.           It is an institutional accredited investor within the meaning of Rule 501(a)(1)-(3) or (7) under the Securities Act.

14.           It also is acquiring Class E Notes such that the Percentage Interest of the Class E Notes being acquired and the Percentage Interest of the Certificates being acquired to all Certificates are equal.

Dated:
	Very truly yours,
	NAME OF PURCHASER
	By:
	Name:
	Title:
	NOTE: To be executed by an executive officer

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EX-10.6

Exhibit 10.6

COLLATERAL ADMINISTRATION AGREEMENT

This COLLATERAL ADMINISTRATION AGREEMENT, dated as of July 7, 2006 (the “Agreement”) is entered into by and among ARCC COMMERCIAL LOAN TRUST 2006, a statutory trust created and existing under the laws of the State of Delaware, as the issuer (together with its successors and assigns, the “Issuer”), ARES CAPITAL CORPORATION, a Maryland corporation, as the servicer (together with its successors and assigns, the “Servicer”), and U.S. BANK NATIONAL ASSOCIATION (“U.S. Bank”), acting as collateral administrator under and for purposes of this Agreement (in such capacity, and together with any successor Collateral Administrator hereunder, the “Collateral Administrator”).

WITNESSETH:

WHEREAS, the Issuer will issue U.S.$75,000,000 Class A-1A Floating Rate Notes (the “Class A-1A Notes”), U.S.$50,000,000 Class A-1A VFN Revolving Floating Rate Notes (the “Class A-1A VFN Notes”), U.S.$14,000,000 Class A-1B Floating Rate Notes (the “Class A-1B Notes” and, together with the Class A-1A Notes and the Class A-1A VFN Notes, the “Class A-1 Notes”), U.S.$75,000,000 Class A-2A Floating Rate Notes (the “Class A-2A Notes”), U.S. $33,000,000 Class A-2B Floating Rates Notes (the “Class A-2B Notes” and, together with the Class A-2A Notes, the “Class A-2 Notes” and, the Class A-2 Notes together with the Class A-1 Notes, the “Class A Notes”), U.S.$23,000,000 Class B Floating Rate Deferrable Interest Notes (the “Class B Notes”), U.S.$44,000,000 Class C Floating Rate Deferrable Interest Notes (the “Class C Notes” and, together with the Class A Notes and the Class B Notes, the “Offered Notes”), U.S.$32,000,000 Class D Floating Rate Deferrable Interest Notes (the “Class D Notes”) and the U.S.$54,000,000 Class E Principal Only Notes (the “Class E Notes” and, together with the Offered Notes and the Class D Notes, the “Notes”);

WHEREAS, the Servicer, the Issuer, ARCC CLO 2006 LLC, as the trust depositor, U.S. Bank, as the trustee and as the collateral administrator, Lyon Financial Services, Inc. (d/b/a U.S. Bank Portfolio Services), as the backup servicer, and Wilmington Trust Company, as the owner trustee, have entered into a Sale and Servicing Agreement dated as of July 7, 2006 (the “Sale and Servicing Agreement”);

WHEREAS, pursuant to the terms of the Indenture dated as of July 7, 2006, (the “Indenture”) by and between the Issuer, and U.S. Bank, as trustee (in such capacity, the “Trustee”), the Issuer has pledged certain Loans, Permitted Investments and certain other Indenture Collateral (the “Collateral”) as security for the Notes;

WHEREAS, the Issuer wishes to engage U.S. Bank to act as Collateral Administrator, and thereby to engage it to perform certain administrative duties with respect to the Collateral pursuant to the terms of this Agreement; and

WHEREAS, U.S. Bank is prepared to perform as Collateral Administrator certain specified obligations of the Issuer, or the Servicer on its behalf, under the Sale and Servicing Agreement (and certain other services) as specified herein, upon and subject to the terms of this Agreement (but without assuming the obligations and liabilities of the Issuer or the Servicer under the Sale and Servicing Agreement).

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and other good and valuable consideration the receipt of which is hereby acknowledged, the parties hereto agree as follows:

1.Definitions. Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in the Sale and Servicing Agreement or the Indenture.

2.Powers and Duties of Collateral Administrator.

(a)U.S. Bank shall act as Collateral Administrator pursuant to the terms of this Agreement, until U.S. Bank’s resignation or removal as Collateral Administrator pursuant to Section 7. In such capacity, the Collateral Administrator shall assist the Issuer and the Servicer in connection with monitoring the Collateral solely by maintaining a database of certain characteristics of the Loans and Permitted Investments on an ongoing basis, and in providing to the Issuer and the Servicer certain reports, schedules and calculations, all as more particularly described in Section 2(b) (in each case in such form and content, and in such greater detail, as may be mutually agreed upon by the parties hereto from time to time and as may be required by the Sale and Servicing Agreement), based upon information and data received from the Issuer and/or the Servicer, which reports, schedules and calculations the Issuer or the Servicer, on its behalf, is required to prepare and deliver (or which are necessary to be performed in order that certain reports, schedules and calculations can be performed as required) under Article IX of the Sale and Servicing Agreement. U.S. Bank’s duties and authority to act as Collateral Administrator hereunder are limited to the duties and authority specifically set forth in this Agreement. By entering into, or performing its duties under, this Agreement, the Collateral Administrator shall not be deemed to assume any obligations or liabilities of the Issuer or of the Servicer under the Sale and Servicing Agreement, and nothing herein contained shall be deemed to release, terminate, discharge, limit, reduce, diminish, modify, amend or otherwise alter in any respect the duties, obligations or liabilities of the Issuer, or the Trustee under or pursuant to the Indenture or of the Issuer or the Servicer under or pursuant to the Sale and Servicing Agreement.

(b)The Collateral Administrator shall perform the following general functions from time to time:

(i)Within 30 days after the Closing Date, create a collateral database with respect to the Collateral that is part of the trust estate granted to the Trustee from time to time, as provided in this Agreement (the “Collateral Database”);

(ii)Update the Collateral Database on a periodic basis for changes, including for ratings changes; and to reflect the sale or other disposition of the Loans included in the Collateral and the addition to the trust estate of additional Collateral from time to time, in each case based upon, and to the extent of, information furnished to the Collateral Administrator by the Issuer or the Servicer as may be reasonably required by the Collateral Administrator from time to time;

(iii)Track the receipt and daily allocation to the Transaction Accounts of Interest Collections and Principal Collections and any withdrawals therefrom and, on each

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Business Day, provide to the Servicer daily reports reflecting such actions to the Transaction Accounts as of the close of business on the preceding Business Day;

(iv)Prepare, on behalf of the Issuer, and arrange for delivery in accordance with the Sale and Servicing Agreement within the time frames stated therein, the Quarterly Report pursuant to the terms of Section 9.01 of the Sale and Servicing Agreement, on the basis of the information contained in the Collateral Database as of the applicable Determination Date and such other information as may be provided by the Servicer;

(v)Reasonably cooperate with the Independent Accountants appointed by the Issuer in the preparation by such accountants of the reports required under Sections 9.04 of the Sale and Servicing Agreement;

(vi)Reasonably cooperate with the Issuer and the Servicer in providing the Rating Agencies with such information as is contained in the Collateral Database, or routinely maintained by it in performing its Trustee function, and required to be delivered under Section 9.03 of the Sale and Servicing Agreement and such additional information as may be reasonably requested by the Rating Agencies and that can be provided without unreasonable burden or expense; and

(vii)Provide other such information with respect to the Collateral granted to the Trustee and not released from the trust estate as may be routinely maintained by the Collateral Administrator in performing its ordinary Trustee function pursuant to the Indenture (so long as the Collateral Administrator shall also serve as Trustee under the Indenture or the Sale and Servicing Agreement), or as may be required by the Indenture or the Sale and Servicing Agreement, as the Issuer or the Servicer may reasonably request from time to time.

(c)After the Effective Date, upon the written request of the Servicer on any Business Day and within three hours after the Collateral Administrator’s receipt of such request (provided such request is received by 1:00 pm (New York time) on such date (otherwise such request will be deemed made on the next succeeding Business Day), the Collateral Administrator shall perform the following functions: (A) as of the date the Servicer commits on behalf of the Issuer to purchase Additional Loans or Substitute Loans to be included in the Collateral and (B) as of the date of such request, for the purpose of evaluating the inclusion of proposed Substitute Loans or Additional Loans, perform a pro forma calculation of the tests and other requirements constituting the Portfolio Criteria set forth in Section 2.06(c)(ii) of the Sale and Servicing Agreement, in the case of Additional Loans, Section 11.01(g)(iii) of the Sale and Servicing Agreement, in the case of Substitute Loans, in each case, based upon information contained in the Collateral Database and information furnished by the Issuer or the Servicer as to the proposed Substitute Loans or Additional Loans, compare the results thereof against the applicable requirements set forth in said Sections 2.06(c)(ii) and 11.01(g)(iii) and report the results thereof to the Servicer in a mutually agreed format.

(d)The Servicer shall cooperate with the Collateral Administrator in connection with the preparation by the Collateral Administrator of the Quarterly Reports. Without limiting the generality of the foregoing, the Servicer shall supply in a timely fashion any information maintained by it that the Collateral Administrator may from time to time request

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with respect to the Collateral and reasonably need to complete the reports and certificates required to be prepared by the Collateral Administrator hereunder or required to permit the Collateral Administrator to perform its obligations hereunder, including without limitation, the Fair Market Value or Market Value of a Loan to the extent required by the Sale and Servicing Agreement and any other information that may be reasonably required under the Sale and Servicing Agreement with respect to the Collateral, including, without limitation, a Charged-Off Loan (including notifying the Collateral Administrator promptly upon a Loan becoming a Charged-Off Loan), Delinquent Loan, Swapped Floating Rate Loan and related Asset Specific Swap, Permitted PIK Loan, Credit Impaired Loan and Current Pay Loan. The Servicer shall review and verify the contents of the aforesaid reports, instructions, statements and certificates and shall send such reports, instructions, statements and certificates to the Issuer for execution.

(e)If, in performing its duties under this Agreement, the Collateral Administrator is required to decide between alternative courses of action, the Collateral Administrator may request written instructions from the Servicer, acting on behalf of the Issuer, as to the course of action desired by it. If the Collateral Administrator does not receive such instructions within two Business Days after it has requested them, the Collateral Administrator may, but shall be under no duty to, take or refrain from taking any such courses of action. The Collateral Administrator shall act in accordance with instructions received after such two-day period except to the extent it has already taken, or committed itself to take action inconsistent with such instructions. The Collateral Administrator shall be entitled to rely on the advice of legal counsel and independent accountants in performing its duties hereunder and shall be deemed to have acted in good faith if it acts in accordance with such advice.

(f)Nothing herein shall prevent the Collateral Administrator or any of its Affiliates from engaging in other businesses or from rendering services of any kind to any Person.

3.Compensation. The Issuer agrees to pay, and the Collateral Administrator shall be entitled to receive compensation for, and reimbursement for expenses in connection with, the Collateral Administrator’s performance of the duties called for herein; provided that such amounts will be payable solely from and pursuant to Section 7.05 of the Sale and Servicing Agreement.

4.Limitation of Responsibility of the Collateral Administrator; Indemnification.

(a)The Collateral Administrator will have no responsibility under this Agreement other than to render the services expressly called for hereunder in good faith and without willful misfeasance, gross negligence or reckless disregard of its duties hereunder. The Collateral Administrator shall incur no liability to anyone in acting upon any signature, instrument, statement, notice, resolution, request, direction, consent, order, certificate, report, opinion, bond or other document or paper reasonably believed by it to be genuine and reasonably believed by it to be signed by the proper party or parties. The Collateral Administrator may exercise any of its rights or powers hereunder or perform any of its duties hereunder either directly or, upon notice to the Servicer, by or through agents or attorneys, and the Collateral Administrator shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed hereunder with due care by it. Neither the Collateral Administrator nor any

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of its affiliates, directors, officers, shareholders, agents or employees will be liable to the Servicer, the Issuer or any other Person, except by reason of acts or omissions by the Collateral Administrator constituting bad faith, willful misfeasance, gross negligence or reckless disregard of the Collateral Administrator’s duties hereunder. The Collateral Administrator shall in no event have any liability for the actions or omissions of the Issuer, the Servicer or any other Person, and shall have no liability for any inaccuracy or error in any duty performed or information or report provided by it that results from or is caused by inaccurate, untimely or incomplete information or data received by it from the Issuer, the Servicer or another Person (other than the Trustee, if the same entity shall be serving as Trustee and Collateral Administrator hereunder) except to the extent that such inaccuracies or errors are caused by the Collateral Administrator’s own bad faith, willful misfeasance, gross negligence or reckless disregard of its duties hereunder. The Collateral Administrator shall not be liable for failing to perform or delay in performing its specified duties hereunder which results from or is caused by a failure or delay on the part of the Issuer, the Servicer or another Person (other than the Trustee, if the same entity shall be serving as Trustee and Collateral Administrator hereunder) in furnishing necessary, timely and accurate information to the Collateral Administrator. The duties and obligations of the Collateral Administrator and its employees or agents shall be determined solely by the express provisions of this Agreement and they shall not be under any obligation or duty except for the performance of such duties and obligations as are specifically set forth herein, and no implied covenants shall be read into this Agreement against them. The Collateral Administrator may consult with counsel and shall be protected in any action reasonably taken in good faith in accordance with the advice of such counsel.

(b)The Collateral Administrator may rely conclusively on any notice, certificate or other document (including, without limitation, telecopier or other electronically transmitted instructions, documents or information) furnished to it hereunder and reasonably believed by it in good faith to be genuine. The Collateral Administrator shall not be liable for any action taken by it in good faith and reasonably believed by it to be within the discretion or powers conferred upon it, or taken by it pursuant to any direction or instruction by which it is governed hereunder, or omitted to be taken by it by reason of the lack of direction or instruction required hereby for such action. The Collateral Administrator shall not be bound to make any investigation into the facts or matters stated in any certificate, report or other document; provided, however, that, if the form thereof is prescribed by this Agreement, the Collateral Administrator shall examine the same to determine whether it conforms on its face to the requirements hereof. The Collateral Administrator shall not be deemed to have knowledge or notice of any matter unless actually known to a Responsible Officer working in its Corporate Trust Services Division/CDO Department (or successor group). Under no circumstances shall the Collateral Administrator be liable for indirect, punitive, special or consequential damages under or pursuant to this Agreement, its duties or obligations hereunder or arising out of or relating to the subject matter hereof. It is expressly acknowledged by the Issuer and the Servicer that application and performance by the Collateral Administrator of its various duties hereunder (including recalculations to be performed in respect of the matters contemplated hereby) shall be based upon, and in reliance upon, data and information provided to it by the Servicer (and/or the Issuer) with respect to the Collateral, and the Collateral Administrator shall have no responsibility for the accuracy of any such information or data provided to it by such persons. Nothing herein shall impose or imply any duty or obligation on the part of the Collateral Administrator to verify, investigate or audit any such information or data (except to the extent

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any such information provided is patently incorrect or inconsistent with any proximally received information or instruction, in which case the Collateral Administrator shall investigate any such information), or to determine or monitor on an independent basis whether any issuer of or Obligor under the Collateral is in default or in compliance with the underlying documents governing or securing such securities, from time to time, the role of the Collateral Administrator hereunder being solely to perform certain mathematical computations and data comparisons as provided herein. For purposes of monitoring changes in ratings, the Collateral Administrator shall be entitled to use and rely (in good faith) exclusively upon a single reputable electronic financial information reporting services (which for ratings by S&P shall be www.standardandpoors.com or www.ratingsdirect.com) and shall have no liability for any inaccuracies in the information reported by, of other errors or omissions of, any such service.

(c)The Issuer shall, and hereby agrees to, reimburse, indemnify and hold harmless the Collateral Administrator and its affiliates, directors, officers, shareholders, agents and employees for and from any and all losses, damages, liabilities, demands, charges, costs, expenses (including the reasonable fees and expenses of counsel and other experts) and claims of any nature in respect of, or arising from any acts or omissions performed or omitted by the Collateral Administrator, its affiliates, directors, officers, shareholders, agents or employees pursuant to or in connection with the terms of this Agreement, or in the performance or observance of its duties or obligations under this Agreement; provided the same are in good faith and without willful misfeasance and/or gross negligence on the part of the Collateral Administrator or without reckless disregard of its duties hereunder provided that such amounts will be payable solely from and pursuant to Section 7.05 of the Sale and Servicing Agreement.

(d)The Servicer shall, and hereby agrees to, reimburse, indemnify and hold harmless the Collateral Administrator and its affiliates, directors, officers, shareholders, agents and employees with respect to all expenses, losses, damages, liabilities, demands, charges, costs, expenses (including the reasonable fees and expenses of counsel) and claims of any nature in respect of, or arising out of any acts or omissions performed or omitted by the Servicer, its affiliates, directors, officers, shareholders, agents or employees hereunder in bad faith or with willful misfeasance, gross negligence or reckless disregard of its duties hereunder.

(e)Without limiting the generality of any terms of this Section 4, the Collateral Administrator shall have no liability for any failure, inability or unwillingness on the part of the Servicer or Issuer (or Trustee, if not the same Person as the Collateral Administrator) to provide accurate and complete information on a timely basis to the Collateral Administrator, or otherwise on the part of any such party to comply with the terms of this Agreement, the Indenture, or the Sale and Servicing Agreement, and shall have no liability for any inaccuracy or error in the performance or observance on the Collateral Administrator’s part of any of its duties hereunder that is caused by or results from any such inaccurate, incomplete or untimely information received by it, or other failure on the part of any such other party to comply with the terms hereof.

Nothing herein shall obligate the Collateral Administrator to determine independently the characteristics of any Collateral, including whether any item of Collateral is a Margin Stock, a Current Pay Loan, a Charged-Off Loan, a Delinquent Loan, a Permitted PIK Loan, or a Credit Impaired Loan, it being understood that any such determination shall be based

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exclusively upon notification the Collateral Administrator may receive from the Servicer or from (or in its capacity as) the Trustee (based upon notices received by the Trustee from the Obligor, or trustee or agent bank under an Underlying Loan Agreement, or similar source).

5.No Joint Venture. Nothing contained in this Agreement (i) shall constitute the Issuer, the Collateral Administrator and the Servicer members of any partnership, joint venture, association, syndicate, unincorporated business or other separate entity, (ii) shall be construed to impose any liability as such on any of them or (iii) shall be deemed to confer on any of them any express, implied or apparent authority to incur any obligation or liability on behalf of the others.

6.Term. This Agreement shall continue in effect so long as the Indenture remains in effect with respect to the Notes, unless this Agreement has been previously terminated in accordance with Section 7.

7.Termination.

(a)This Agreement may be terminated without cause by any party hereto upon not less than 90 days’ written notice to the other parties.

(b)If at any time prior to the payment in full of the obligations under the Notes the Collateral Administrator shall resign or be removed as Trustee under the Indenture, such resignation or removal shall be deemed a resignation or removal of the Collateral Administrator hereunder.

(c)At the option of the Issuer, this Agreement may be terminated upon ten days’ written notice of termination from the Issuer to the Collateral Administrator if any of the following events shall occur:

(i)The Collateral Administrator shall (i) willfully or with reckless regard default in the performance of any of its duties under this Agreement or (ii) breach any material provision of this Agreement and shall not cure such default or breach within 30 days (or, if such default or breach cannot be cured in such time, the Collateral Administrator shall not have given within 30 days such assurance of cure as shall be reasonably satisfactory to the Issuer);

(ii)A court having jurisdiction in the premises shall enter a decree or order for relief in respect of the Collateral Administrator in any involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appoint a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Collateral Administrator or for any substantial part of its property, or order the winding up or liquidation of its affairs; or

(iii) The Collateral Administrator shall (A) commence a voluntary case under applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or similar official) of the Collateral Administrator or for any substantial part of its property, or make any general assignment for the benefit of creditors; (B) fail

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generally to pay its debts as they become due; or (C) permit or suffer all or substantially all of its properties or assets to be sequestered or attached by a court order, which order remains undismissed for 60 days.

If any of the events specified in clauses (ii) or (iii) of this Section 7 shall occur, the Collateral Administrator shall give written notice thereof to the Servicer and the Issuer within one Business Day after the happening of such event.

(d)Except when the Collateral Administrator shall be removed pursuant to subsection (b) of this Section 7 or shall resign pursuant to Section 7, no removal or resignation of the Collateral Administrator shall be effective until the date as of which a successor Collateral Administrator reasonably acceptable to the Issuer shall have agreed in writing to assume all of the Collateral Administrator’s duties and obligations pursuant to this Agreement and shall have executed and delivered an agreement in form and content reasonably satisfactory to the Issuer, the Servicer and the Trustee.

(e)Notwithstanding the foregoing, the Collateral Administrator may resign its duties hereunder without any requirement that a successor Collateral Administrator be obligated hereunder and without any liability for further performance of any duties hereunder (i) immediately upon the termination (whether by resignation or removal) of U.S. Bank as Trustee under the Indenture, (ii) with at least 30 days, prior written notice to the Servicer and the Issuer, upon any reasonable determination by U.S. Bank that the taking of any action, or performance of any duty, on its part as Collateral Administrator pursuant to the terms of this Agreement would be in conflict with or in violation of its duties or obligations as Trustee under the Indenture, or (C) upon at least 60 days’ prior written notice of termination to the Servicer and the Issuer upon the occurrence of any of the following events and the failure to cure such event within such 60 day notice period: (i) failure of the Issuer to pay any of the amounts specified in Section 3 within 60 days after such amount is due pursuant to Section 3 (to the extent not already paid to U.S. Bank pursuant to Section 6.07 of the Indenture) or (B) failure of the Issuer to provide any indemnity payment to U.S. Bank pursuant to the terms of this Agreement, as the case may be, within 60 days of the receipt by the Issuer of a written request for such payment or reimbursement (to the extent not already paid to U.S. Bank pursuant to Section 6.07 of the Indenture).

(f)The Collateral Administrator shall provide notice of any such termination to the Rating Agencies.

8.Representations and Warranties.

(a)The Servicer hereby represents and warrants to U.S. Bank and the Issuer as follows:

(i)The Servicer is a Maryland corporation and has the full corporate power and authority to execute, deliver and perform this Agreement and all obligations required hereunder and has taken all necessary corporate action to authorize this Agreement on the terms and conditions hereof, the execution, delivery and performance of this Agreement and the performance of all obligations imposed upon it hereunder. No consent of any other person

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including, without limitation, stockholder and creditors of the Servicer, and no license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any Governmental Authority is required by the Servicer in connection with this Agreement or the execution, delivery, performance, validity or enforceability of this Agreement and the obligations imposed upon it hereunder. This Agreement constitutes the legal, valid and binding obligation of the Servicer enforceable against the Servicer in accordance with its terms subject, as to enforcement, (A) to the effect of bankruptcy, insolvency or similar laws affecting generally the enforcement of creditors’ rights as such laws would apply in the event of any bankruptcy, receivership, insolvency or similar event applicable to the Servicer and (B) to general equitable principles (whether enforceability of such principles is considered in a proceeding at law or in equity).

(ii)The execution, delivery and performance of this Agreement and the documents and instruments required hereunder will not violate any provision of any existing law or regulation binding on the Servicer, or any order, judgment, award or decree of any court, arbitrator or Governmental Authority binding on the Servicer, or the governing instruments of, or any securities or equity interests issued by, the Servicer or of any mortgage, indenture, lease, contract or other agreement, instrument or undertaking to which the Servicer is a party or by which the Servicer or any of its assets may be bound, the violation of which would have a material adverse effect on the business, operations, assets or financial condition of the Servicer and will not result in, or require, the creation or imposition of any lien on any of its property, assets or revenues pursuant to the provisions of any such mortgage, indenture, lease, contract or other agreement, instrument or undertaking.

(b)The Issuer hereby represents and warrants to the Collateral Administrator and the Servicer as follows:

(i)The Issuer is a statutory trust duly created and validly existing and in good standing under the laws of the State of Delaware and has the full power and authority to execute, deliver and perform this Agreement and all obligations required hereunder and has taken all necessary action to authorize this Agreement on the terms and conditions hereof, the execution, delivery and performance of this Agreement and the performance of all obligations imposed upon it hereunder. No consent of any other person including, without limitation, creditors of the Issuer, and no license, permit, approval or authorization of, exemption by, notice or report to, or registration, tiling or declaration with, any Governmental Authority is required by the Issuer in connection with this Agreement or the execution, delivery, performance, validity or enforceability of this Agreement and the obligations imposed upon it hereunder. This Agreement constitutes the legal, valid and binding obligation of the Issuer enforceable against the Issuer in accordance with its terms subject, as to enforcement, (A) to the effect of bankruptcy, insolvency or similar laws affecting generally the enforcement of creditors’ rights as such laws would apply in the event of any bankruptcy, receivership, insolvency or similar event applicable to the Issuer and (B) to general equitable principles (whether unenforceability of such principles is considered in a proceeding at law or in equity).

(ii)The execution, delivery and performance of this Agreement and the documents and instruments required hereunder will not violate any provision of any existing law or regulation binding on the Issuer, or any order, judgment, award or decree of any court,

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arbitrator or Governmental Authority binding on the Issuer, or the governing instruments of, or any securities issued by, the Issuer or of any mortgage, indenture, lease, contract or other agreement, instrument or undertaking to which the Issuer is a party or by which the Issuer or any of its assets may be bound, the violation of which would have a material adverse effect on the business, operations, assets or financial condition of the Issuer and will not result in, or require, the creation or imposition of any lien on any of its property, assets or revenues pursuant to the provisions of any such mortgage, indenture, lease, contract or other agreement, instrument or undertaking.

(c)The Collateral Administrator hereby represents and warrants to the Servicer and the Issuer as follows:

(i)The Collateral Administrator is a national banking association duly organized, validly existing and in good standing under the laws of The United States of America and has full corporate power and authority to execute, deliver and perform this Agreement and all obligations required hereunder and has taken all necessary corporate action to authorize this Agreement on the terms and conditions hereof, the execution, delivery and performance of this Agreement and all obligations required hereunder. No consent of any other person including, without limitation, stockholders and creditors of the Collateral Administrator, and no license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any Governmental Authority is required by the Collateral Administrator in connection with this Agreement or the execution, delivery, performance, validity or enforceability of this Agreement and the obligations imposed upon it hereunder. This Agreement constitutes the legal, valid and binding obligations of the Collateral Administrator enforceable against the Collateral Administrator in accordance with their terms subject, as to enforcement, (A) to the effect of bankruptcy, insolvency or similar laws affecting generally the enforcement of creditors’ rights as such laws would apply in the event of any bankruptcy, receivership, insolvency or similar event applicable to the Collateral Administrator and (B) to general equitable principles (whether enforceability of such principles is considered in a proceeding at law or in equity).

(ii)The execution, delivery and performance of this Agreement and the documents and instruments required hereunder will not violate any provision of any existing law or regulation binding on the Collateral Administrator, or any order, judgment, award or decree of any court, arbitrator or Governmental Authority binding on the Collateral Administrator, or the Amended and Restated Articles of Association or Amended and Restated Bylaws of the Collateral Administrator or of any mortgage, indenture, lease, contract or other agreement, instrument or undertaking to which the Collateral Administrator is a party or by which the Collateral Administrator or any of its assets may be bound, the violation of which would have a material adverse effect on the business, operations, assets or financial condition of the Collateral Administrator and will not result in, or require, the creation or imposition of any lien on any of its property, assets or revenues pursuant to the provisions of any such mortgage, indenture, lease, contact or other agreement, instrument or undertaking.

9.Amendments; Instrument Under Seal. This Agreement may not be amended, changed, modified or terminated (except as otherwise expressly provided herein) except (i) by the Servicer, the Issuer and the Collateral Administrator in writing and (ii) with prior written

10

notice to the Rating Agencies. This Agreement is intended to take effect as an instrument under seal.

10.Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN CONFORMITY WITH THE LAWS OF THE STATE OF NEW YORK WITH RESPECT TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN (WITHOUT REGARD TO ITS CHOICE OF LAW RULES).

11.Notices. All notices, requests, directions and other communications permitted or required hereunder shall be in writing and shall be deemed to have been duly given when received.

If to the Collateral Administrator, to:

U.S. Bank National Association
Corporate Trust Services/CDO Department
One Federal Street, Third Floor
Boston, Massachusetts 02110
Ref:  ARCC Commercial Loan Trust 2006
Facsimile No.:  (508) 258-6020

If to the Servicer, to:

Ares Capital Corporation
280 Park Avenue, 22nd Floor, Building East
New York, New York 10017
Attention: Michael J. Arougheti
Facsimile No.: (212) 750-1777

with a copy to:

Ares Capital Management LLC
1999 Avenue of the Stars, Suite 1900
Los Angeles, California 90067
Attention: Daniel F. Nguyen
Facsimile No.: (312) 201-4189

If to the Issuer, to:

ARCC Commercial Loan Trust 2006
c/o Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19801
Attention: Ian P. Monigle
Facsimile No.: (302) 636-4140

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with a copy to:

the Servicer

12.Successors and Assigns. This Agreement shall inure to the benefit of, and be binding upon, the successors and assigns of each of the Servicer, the Issuer and the Collateral Administrator, provided however, that the Collateral Administrator may not assign (by operation of law or otherwise) its rights and obligations hereunder without the prior written consent of the Servicer and the Issuer, and prior notice to the Rating Agencies, except that U.S. Bank as Collateral Administrator may delegate to, employ as agent, or otherwise cause any duty or obligation hereunder to be performed by, any direct or indirect wholly owned subsidiary of U.S. Bank National Association or its successors without the prior written consent of the Servicer and the Issuer (provided that in such event U.S. Bank as Collateral Administrator shall remain responsible for the performance of its duties as Collateral Administrator hereunder).

13.Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same instrument.

14.Conflict with the Sale and Servicing Agreement. If this Agreement shall require that any action be taken with respect to any matter and the Sale and Servicing Agreement shall require that a different action be taken with respect to such matter, and such actions shall be mutually exclusive, or if this Agreement should otherwise conflict with the Sale and Servicing Agreement, the provisions of the Sale and Servicing Agreement in respect thereof shall control.

15.Subordination. The Collateral Administrator agrees that the payment of all amounts to which it is entitled pursuant to under this Agreement shall be subordinated to the extent set forth in, and the Collateral Administrator agrees to be bound by the provisions of, the Indenture (as if it were a party to the Indenture, in the case of any successor Collateral Administrator that is not also serving as Trustee under the Indenture). The obligations of the Issuer hereunder are limited recourse obligations of the Issuer payable solely from the Collateral (except as otherwise provided in the fee letter between the Collateral Administrator and the Issuer) and following realization of the Collateral, application of the proceeds thereof in accordance with the Sale and Servicing Agreement and their reduction of the Outstanding Loan Balance to zero, any obligations of, or claims against the Issuer for any shortfall after such realization shall be extinguished and shall not thereafter revive. The Collateral Administrator further agrees that it will not have any recourse against the Issuer or its employees and agents for any such amounts. The Collateral Administrator consents to the assignment of this Agreement as provided in the granting clause of the Indenture.

16.Survival. Notwithstanding any term herein to the contrary, all indemnifications set forth or provided for in this Agreement, together with Sections 15 and 17 shall survive the terminations of this Agreement.

17.No Petition in Bankruptcy. The Collateral Administrator agrees not to file or join in the filing of an involuntary petition in bankruptcy in any jurisdiction against the Issuer for the nonpayment of the Collateral Administrator’s fees or other amounts payable by the Issuer under

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this Agreement until the payment in full of all Notes issued under the Indenture and the expiration of a period equal to the applicable preference period under the Bankruptcy Code plus one day following said payment. In no circumstances will the Collateral Administrator seek to bring any action against any employee, agent or affiliate of the Issuer for any amounts owing hereunder.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

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IN WITNESS WHEREOF, the parties hereto have caused this Collateral Administration Agreement to be executed effective as of the day first above written.

ARCC COMMERCIAL LOAN TRUST 2006, as Issuer
By:	Wilmington Trust Company, not in its individual capacity, but solely as Owner Trustee on behalf of the Issuer
By:		/s/ Robert J. Perkins
	Name:	Robert J. Perkins
	Title:	Financial Services Officer
ARES CAPITAL CORPORATION, as Servicer
By:
	Name:
	Title:
U.S. BANK NATIONAL ASSOCIATION, as Collateral Administrator
By:
	Name:
	Title:

IN WITNESS WHEREOF, the parties hereto have caused this Collateral Administration Agreement to be executed effective as of the day first above written.

ARCC COMMERCIAL LOAN TRUST 2006, as Issuer
By:	Wilmington Trust Company, not in its individual capacity, but solely as Owner Trustee on behalf of the Issuer
By:
	Name:
	Title:
ARES CAPITAL CORPORATION, as Servicer
By:	/s/ Michael Arougheti
	Name:	Michael Arougheti
	Title:	President
U.S. BANK NATIONAL ASSOCIATION, as Collateral Administrator
By:
	Name:
	Title:

IN WITNESS WHEREOF, the parties hereto have caused this Collateral Administration Agreement to be executed effective as of the day first above written.

ARCC COMMERCIAL LOAN TRUST 2006, as Issuer
By:	Wilmington Trust Company, not in its individual capacity, but solely as Owner Trustee on behalf of the Issuer
By:
	Name:
	Title:
ARES CAPITAL CORPORATION, as Servicer
By:
	Name:
	Title:
U.S. BANK NATIONAL ASSOCIATION, as Collateral Administrator
By:		/s/ Joel D. Cough
	Name:	Joel D. Cough
	Title:	Assistant Vice President

EX-10.7

Exhibit 10.7

MASTER PARTICIPATION AGREEMENT

This Master Participation Agreement (this “Agreement”) is entered into as of July 7, 2006, between Ares Capital CP Funding LLC (“Seller”) and Ares Capital Corporation (“Purchaser”).

RECITALS:

Whereas, Seller owns interests in (a) the loans and other securities and investments identified in Exhibit A (each a “Loan” and collectively, the “Loans”) consisting of loans, advances and notes and interests in, to and under the related Credit Documents, as hereinafter defined (each a “Loan Interest” and collectively, the “Loan Interests”), pursuant to various credit agreements, indentures, note purchase agreements and other similar documents, each between a borrower (each, a “Borrower” and collectively, the “Borrowers”), an agent for the relevant lenders or noteholders (if applicable), and one or more financial institutions acting as lenders or noteholders (such credit agreements, as amended, supplemented, novated or otherwise modified from time to time, together with all guarantees, security agreements, mortgages, deeds of trust, letters of credit, reimbursement agreements, waivers and any other documents executed in connection therewith, hereinafter are referred to as the “Credit Documents”); and

Whereas, Seller desires to sell and grant to Purchaser, without recourse, a participation interest in all of Seller’s Loan Interests, and Purchaser desires to purchase and take from Seller, without recourse, a participation interest in all of Seller’s Loan Interests.

AGREEMENT

Now therefore, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser hereby agree as follows:

1.             Participation. Seller hereby sells and grants to Purchaser, and Purchaser hereby purchases and takes from Seller, as of the Effective Date (as hereinafter defined), an undivided 100% participation interest in and to (i) each of the Loan Interests, (ii) all Collections and payments paid in respect thereof and all monies due, to become due or paid in respect thereof accruing on and after the Effective Date, (iii) all security interests, liens and collateral subject thereto from time to time purporting to secure payment by the applicable Obligor(s), (iv) all guaranties, indemnities and warranties, and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Loan Interests, (v) all collections and records with respect to the foregoing, and (vi) all income, payments, proceeds and other benefits of any and all of the foregoing, including but not limited to, all accounts, cash and currency, chattel paper, electronic chattel paper, tangible chattel paper, copyrights, copyright licenses, equipment, fixtures, general intangibles, instruments, commercial tort claims, deposit accounts, inventory, investment property, letter of credit rights, software, supporting obligations, accessions, and other property consisting of, arising out of, or related to the foregoing ((i)-(vi) collectively, the “Participated Assets”) (each such participation interest, a “Participation Interest” and, collectively, the “Participation Interests”).

The term “Obligors” as used herein shall mean, collectively, the Borrowers and each guarantor, pledgor, subordinator or other person or entity directly or indirectly obligated in respect of the Loans.

The term “Collections” as used herein shall mean and include all payments or distributions received by or on behalf of Seller from any Obligor in respect of the Loan Interests and the proceeds of any collateral applied by Seller to such Loan Interests. Seller shall promptly remit to Purchaser, as received, all such Collections without set-off, counterclaim or deduction of any kind within three business days after receipt thereof from an Obligor or following application of any collateral therefor, as applicable, to the account specified below Purchaser’s signature hereto.

It is the intention of the parties hereto that each sale of interests in Loans hereunder shall be absolute and irrevocable and will provide Purchaser with the full risks and benefits of ownership of such interests so purchased (such that the Loan Interests would not constitute property of Seller’s estate in the event of Seller’s bankruptcy) and shall constitute a “sale of accounts,” as such term is used in Article 9 of the Uniform Commercial Code of the State of New York, to the extent applicable, and not a loan secured by such Loan Interests. In the event that, contrary to the mutual intent of Seller and Purchaser, any purchase of Loan Interests hereunder is not characterized as a sale but rather as a collateral transfer for security (or the transactions contemplated hereby are characterized as a financing transaction), it is the intent of the parties hereto that this Agreement shall constitute a security agreement under applicable law and that such purchase of the Loan Interests shall be deemed to be a secured financing, secured by a security interest in all of Seller’s right, title and interest now or hereafter existing and hereafter arising in, to and under (i) all Loan Interests, (ii) all Collections and (iii) all proceeds of the foregoing (collectively, the “Seller Collateral”). In furtherance of the foregoing, Seller hereby grants to Purchaser a security interest in all of Seller’s right, title and interest now or hereafter existing in, to and under the Seller Collateral to secure the repayment of all amounts due and owing by Seller to Purchaser hereunder with accrued interest thereon, if applicable, whether now or hereafter existing, due or to become due, direct or indirect, or absolute or contingent.

2.             Effective Date. From and after the date of Seller’s receipt of the purchase price mutually agreed between Seller and Purchaser (the “Effective Date”), the Participation Interests purchased hereunder shall be for the account and risk of Purchaser, without any recourse to Seller, except as expressly provided herein. The transfer of the Participation Interests shall be deemed effective as of the Effective Date. The Purchaser hereby assumes full risk and responsibility with respect to repayment of the Participation Interests without recourse to Seller and, in the event of any failure by any Borrower to fulfill any of its obligations under the terms of the related Credit Documents, Seller shall not be under any liability to Purchaser for payment of principal, interest or fees other than as provided in Paragraph 3.

3.             Sharing of Liabilities and Expenses. Purchaser shall pay to Seller, from time to time and upon Seller’s demand therefor, an amount equal to all liabilities, losses, out-of-pocket costs and expenses (including reasonable attorneys’ fees) (collectively, the “Liabilities”) suffered or incurred by Seller from and after the Effective Date in administering and collecting on the Loan Interests or which otherwise arise in connection therewith or in connection with preserving any collateral security therefor, except for such Liabilities as may be caused by the negligence or willful misconduct of Seller and except to the extent that Seller has theretofore been reimbursed for such Liabilities by or on behalf of any Borrower. Purchaser shall be entitled to any such amounts recovered by Seller from, or on behalf of, any Borrower after Purchaser has paid Seller with respect to such Liabilities. Seller shall promptly remit to Purchaser an amount equal to any payment received by Seller on account of increased costs, break funding payments or expenses incurred by Purchaser in connection with the Participation Interest.

4.             Information; No Recourse or Warranty; Responsibilities. Seller holds in its possession for the benefit of itself and Purchaser true and complete copies of all of the documents in connection with the Loan Interests which constitute all documents that Purchaser considers necessary in deciding to enter into this Agreement and participate in the Loan Interests as provided herein. It is understood and agreed that Seller does not make any express or implied representations or warranties of any kind or character with

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respect to the genuineness, validity, effectiveness, enforceability, value, priority, perfection or collectability of the Loan Interests, any collateral security therefor or the Credit Documents, nor with respect to the solvency, financial condition or financial statements of any of the Borrowers, and by its acceptance hereof, Purchaser agrees that Seller shall be free of liability on account of Purchaser’s Participation Interests described herein with respect to anything Seller may do or refrain from doing in good faith and in the exercise of its judgment, provided, however, that Seller agrees to use the same care in protecting the interests of Purchaser in the Loan Interests as it uses for similar interests held by it solely for its own account and Seller agrees to account to Purchaser as herein set forth for the share from time to time applicable to Purchaser’s Participation Interests hereunder in Collections. Whenever Seller receives a payment of principal of, or interest, fees and make-whole amounts, if any, on, the Loan Interests, Seller will accept such payment for the account and sole benefit of, and as agent for, Purchaser and promptly pay over to Purchaser the amount so received. In administering the Loan Interests and the Credit Documents, Seller shall not be bound to ascertain or inquire as to the performance of any of the terms, provisions or conditions of any thereof on the part of any Borrower or any other person, shall be entitled to rely upon any statement or notice, however sent, believed by it to be genuine and correct and believed by it to be sent by the proper person, may consult with counsel and shall be fully protected in any action taken or omitted to be taken by it in accordance with the advice or opinion of such counsel, may employ agents or attorneys-in-fact and shall not be liable for the default or misconduct of any such person selected by it with due care, and shall not be responsible for the performance of the payment or other obligations of the Borrowers or the value of any collateral securing the same.

5.             Borrower Information. Upon the request of Purchaser, Seller shall provide Purchaser with copies of any information in Seller’s possession which was received pursuant to the provisions of any Credit Document and, to the extent not otherwise available to Purchaser, Seller shall use its best efforts to provide Purchaser, following Purchaser’s written request therefor, such current factual information that Purchaser specifically requests which is then in Seller’s possession and relating to the status of the Loan Interests or any Borrower’s financial condition; provided that Seller shall not be required to provide Purchaser with any information in violation of any law or any contractual restriction set forth in the Credit Documents on the disclosure thereof.

6.             Representations and Warranties. (a) Purchaser represents and warrants to Seller that (i) without characterizing the Loan Interests, the Participation Interests, or any portion thereof as securities, Purchaser is purchasing the Participation Interests hereunder for its own account in the ordinary course of business not with a view to, or in connection, with any subdivision, resale, or distribution thereof in violation of any applicable securities laws, (ii) Purchaser is engaged in the business of entering into transactions of the nature contemplated herein, and (iii) Purchaser has full power and authority to execute, deliver and perform its obligations under this Agreement.

(b) Seller represents and warrants to Purchaser that, as of the date hereof and as of the Effective Date, (i) Seller is the sole legal and beneficial owner and holder of the rights comprising each Loan Interest with good title thereto, free and clear of all liens, charges, encumbrances or other security interests as of the date hereof, and is not a party to any agreement (other than this Agreement) which would result in any lien, charge or other encumbrance, (ii) the aggregate amounts owed by the respective Borrowers under or in respect of the respective Loan Interests are not less than the amounts set forth in Exhibit A hereto, and (iii) Seller has full power and authority to execute, deliver and perform its obligations under this Agreement.

7.             Further Assurances. From and after the date hereof, each of Purchaser and Seller covenants and agrees to execute and deliver all such agreements, instruments and documents and to take all such further actions as the other party hereto may reasonably deem necessary from time to time to carry out the intent and purposes of this Agreement and to consummate the transactions contemplated hereby.

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8.             Other Financings. Purchaser shall have no interest, by virtue of this Agreement and Purchaser’s rights hereunder or otherwise, in any future extension of credit or financing transactions by Seller to, on behalf of, or with, any Borrower or any guarantees or collateral therefor, or any property now or hereafter in the possession or control of Seller which may be or become security for the obligations of any Borrower arising under any Credit Document by reason of the general description of indebtedness, secured or otherwise; provided that, if payments in respect of any guarantees or the proceeds of any such collateral shall be applied to any of the obligations of any Borrower described in clauses (a) and (b) of Section 1 hereof, then Purchaser shall be entitled to share in such application as set forth in Section 1 hereof.

9.             Amendments, Waivers, etc. Subject to the terms of the Credit Documents, Seller may not enter into any amendment or modification of, or waive compliance with the terms of, any Credit Document without the consent of Purchaser. If Seller shall at any time request in writing Purchaser’s consent to any such matter for which Purchaser’s consent is required and shall not receive a response to such request within five business days after Purchaser has received such request (or within such earlier period as Seller may notify to Purchaser in connection with a specific request), Purchaser shall be conclusively deemed to have refused to give such consent and Seller shall be entitled to thereafter act on the basis that Purchaser has denied such consent.

10.           Savings Clause. Notwithstanding any other provision of this Agreement, with respect to each Participation Interest: (i) nothing contained herein shall grant to Purchaser any rights which the relevant Credit Documents require Seller to retain; (ii) this Agreement shall be deemed to incorporate any provisions required by any Credit Document to be incorporated in order to transfer the related Participation Interest hereunder; and (iii) this Agreement shall be deemed to omit any provision which any Credit Document requires to be omitted in order to transfer the related Participation Interest hereunder.

11.           Further Sale and Assignment. To the extent permitted under the related Credit Documents, Purchaser shall be entitled to freely pledge, sell, transfer, or convey (each, a “Transfer”) any Participation Interest hereunder to any person (a “Transferee”), provided that each of the following conditions are met: (i) Purchaser shall obtain the prior written consent of Seller to such Transfer (which consent shall not be unreasonably withheld); and (ii) as a result of the Transfer, at the discretion of Seller, either (A) Transferee shall hold a participation directly from Seller governed by such agreements as Seller and the Transferee shall reasonably agree and not governed by this Agreement, or (B) the Participation Interest shall be terminated with respect to such interest and Seller shall assign all of its right, title and interest in and to the relevant Loan Interest to the Transferee pursuant to such documentation as may be required by the relevant Credit Documents. Notwithstanding the foregoing, Purchaser may grant a subparticipation interest in any or all of the Participation Interests without the consent of, or notice to, Seller, but only if such subparticipation does not violate any applicable law or regulation or cause Seller to violate or be in breach of any provision of the Credit Documents. Purchaser agrees that any sale or disposition of Purchaser’s Participation Interest will be made in accordance with applicable securities laws.

Seller shall not sell, assign, transfer, mortgage, pledge, grant a lien on or otherwise deal with or encumber any of its rights or obligations in or to the Loan Interests to the extent such interests relate to the Participation Interests or any other distributions or payments with respect thereto or any of its rights or obligations under this Agreement without the prior written consent of Purchaser.

12.           Waivers. No delay or omission by any party to exercise any right under this Agreement shall impair any such right, nor shall it be construed to be a waiver thereof. No waiver of any single breach or default under this Agreement shall be deemed a waiver of any other breach or default.

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13.           Withholding Tax. Purchaser represents and warrants that payments to it under this Agreement are not subject to U.S. withholding tax. Upon request from time to time, Purchaser shall promptly provide to Seller an appropriately executed Internal Revenue Service form or such other evidence as shall be necessary to establish that payments made to Purchaser hereunder are exempt from U.S. withholding tax.

14.           Notices. Whenever this Agreement requires or permits any consent, approval, notice, request, or demand from one party to another, the consent, approval, notice, request, or demand must be in writing and shall be deemed effective when delivered, if sent by courier or by registered or certified mail, or when receipt is confirmed, if sent by telecopy, each case at the address or telecopy number set forth below the relevant party’s signature hereto or at such other address or telecopy number as may be provided by either party to the other party.

15.           Illegality. Construction; Governing Law. The illegality or unenforceability of any provision of this Agreement shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement. Paragraph headings used in this Agreement are for convenience of reference only and shall not affect the construction of this Agreement. The laws of the State of New York shall govern the rights and duties of the parties hereto and the interpretation hereof (without regard to any conflicts of law provision that would require the application of the law of any other jurisdiction).

16.           Termination. From and after the date hereof, Seller and Purchaser agree to use diligent efforts to promptly effect an outright assignment to Purchaser or Purchaser’s designee of each Loan relating to each Participation Interest. With respect to each Participation Interest, effective upon (i) obtaining such consents, acknowledgements and authorizations as may be required under the relevant Credit Documents to effect each such assignment, (ii) execution and delivery of such assignment agreements as are required under the terms of the relevant Credit Documents to effect such assignment, and (iii) the satisfaction of all other conditions to the effectiveness of such assignment under the terms of the relevant Credit Documents, such Participation Interest shall automatically convert to and become, and Seller hereby grants and conveys, an outright assignment of the relevant Participated Assets to Purchaser and Purchaser hereby assumes all of the obligations of Seller arising under and relating to such Participated Assets and this Agreement shall be deemed to be an agreement for the outright assignment of such Participated Assets upon the effective date of the relevant assignment agreement (each such date, an “Elevation Date”), and the terms hereof shall be construed accordingly, mutatis mutandis.

17.           Survival of Representations and Warranties. All representations and warranties made herein by the parties hereto shall survive the execution, delivery and performance of this Agreement.

18.           Relationship Between Seller and Purchaser. The relationship between Seller and Purchaser shall be that of seller and buyer and not that of debtor and creditor. Nothing contained in this Agreement shall establish any fiduciary, partnership, joint venture or similar relationship between or among the parties hereto. This Agreement is intended to, and upon execution hereof and satisfaction or waiver of the conditions precedent set forth herein shall, effect a true sale of the Participation Interests.

19.           Entire Agreement. This Agreement (a) embodies the entire Agreement between the parities, supersedes all prior agreements and understandings between the parties, if any, relating to the subject matter hereof, and may be amended, and any provision hereof may be waived, only by an instrument in writing executed by each party hereto, and (b) may be executed in any number of identical counterparts, each of which shall be deemed an original for all purposes and all of which shall constitute, collectively, one Agreement. Transmission by telecopier of an executed counterpart of this Agreement shall be deemed to constitute due and sufficient delivery of such counterpart.

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[The remainder of the page is intentionally blank.]

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

SELLER:
ARES CAPITAL CP FUNDING LLC
By:	/s/ Daniel F. Nguyen
	Name: Daniel F. Nguyen
	Title:   Chief Financial Officer
PURCHASER:
ARES CAPITAL CORPORATION
By:	/s/ Merritt S. Hooper
	Name: Merritt S. Hooper
	Title:   Vice President

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EXHIBIT A

Loans

Borrower	Credit Agreement	Tranche	Aggregate Amount
Qualitor Acquisition Corp. (First Lien)	Credit Agreement dated as of December 21, 2004 (as amended, amended and restated, supplemented or otherwise modified from time to time), among Transportation Aftermarket Enterpriser Inc., Qualitor Acquisition Corp., BLD Products, Ltd., Hebco Products, Inc., International Brake Industries, Inc., Longman Enterprises, Inc., McGuane Industries, Inc., Novo Products Inc., Pylon Manufacturing Corp., Anstro Manufacturing, Inc., Antares Capital Corporation, as agent for the benefit of all lenders, and the lenders who are parties thereto	Term Loan B	$1,975,000.00
Qualitor Acquisition Corp. (Second Lien)	Second Lien Credit Agreement dated as of December 21, 2004 (as amended, amended and restated, supplemented or otherwise modified from time to time), among Transportation Aftermarket Enterpriser Inc., Qualitor Acquisition Corp., BLD Products, Ltd., Hebco Products, Inc., International Brake Industries, Inc., Longman Enterprises, Inc., McGuane Industries, Inc., Novo Products Inc., Pylon Manufacturing Corp., Anstro Manufacturing, Inc., Antares Capital Corporation, as agent for the benefit of all lenders, and the lenders who are parties thereto	Term Loan	$5,000,000.00
SMS Holdings, LLC	Credit Agreement dated as of July 2, 2004 (as amended, amended and restated, supplemented or otherwise modified from time to time), among Shoes For Crews, LLC, Mighty Mat, LLC, SMS Holdings, LLC, the various financial institutions and other persons from time to time party thereto, Royal Bank of Canada, as administrative agent, The Bank Of New York, as syndication agent, Antares Capital Corporation, as documentation agent, and RBC Capital Partners, as arranger	Term Loans	$1,478,167.43
Miller Heiman Acquisition Corp.	Second Amended and Restated Credit Agreement dated as of June 1, 2005 (as amended, amended and restated, supplemented or otherwise modified from time to time), among Miller Heiman Inc., Miller Heiman Acquisition Corp., the lenders party thereto, and CIT Lending Services Corporation, as administrative agent and collateral agent, CIT Capital Securities LLC, as arranger, and any documentation agent designated in accordance with the terms thereof	Term Loan A Term Loan B	$3,900,285.34 $4,048,182.20
Canon Communications Merger Sub LLC	Second Lien Credit Agreement dated as of May 31, 2005 (as amended, amended and restated, supplemented or otherwise modified from time to time), among Canon Communications Merger Sub LLC, Canon Communications Holdings, LLC, the Subsidiary Guarantors (as defined therein), the Lenders (as defined therein), and Credit Suisse, Cayman Islands Branch, as collateral agent for the Secured Parties (as defined therein) and as administrative agent for the Lenders (as defined therein)	Term Loans	$12,000,000.00

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Borrower	Credit Agreement	Tranche	Aggregate Amount
DCS Business Services, Inc.	Amended and Restated Credit Agreement dated as of February 4, 2005 (as amended, amended and restated, supplemented or otherwise modified from time to time), among DCS Business Services, Inc., the financial institutions party thereto from time to time, Madison Capital Funding LLC, as agent and lead arranger, Key Bank National Association, as syndication agent and arranger, and Bank of America, N.A., as documentation agent	Term A Loan Term B Loan	$5,242,026.40 $6,757,973.60
Thermal Solutions LLC	Amended and Restated Credit Agreement dated as of March 21, 2006 (as amended, amended and restated, supplemented or otherwise modified from time to time), among Thermal Solutions LLC, the financial institutions party thereto from time to time, Newstar Financial, Inc., as syndication agent, and Madison Capital Funding LLC, as agent	Term A Loan Term B Loan	$1,750,000.00 $3,250,000.00
Making Memories Wholesale, Inc.	Credit Agreement dated as of May 6, 2005 (as amended, amended and restated, supplemented or otherwise modified from time to time), among Making Memories Wholesale, Inc., MMW Holdings Corp., the various financial institutions and other persons from time to time party thereto, The Royal Bank Scotland plc, as administrative agent, Ares Capital Corporation and The Royal Bank of Scotland plc, as joint lead arrangers, and Ares Capital Corporation, as documentation agent	Term Loans	$8,075,000.00
Tiger III, Inc.	Agreement dated October 4, 2004 (as amended, amended and restated, supplemented or otherwise modified from time to time), among Tiger III, Inc., the financial institutions listed therein as lenders, The Royal Bank of Scotland plc, as mandated lead arranger, agent, and security trustee	Facility B Facility C	$2,500,000.00 $5,000,000.00
Varel International Acquisition, L.P.	Credit and Guaranty Agreement dated as of June 1, 2005 (as amended, amended and restated, supplemented or otherwise modified from time to time), among Varel International Acquisition, L.P., Varel GP Newco, LLC, Varel Holding, Inc., the lenders party thereto from time to time, The Royal Bank of Scotland plc, as sole lead arranger, administrative agent, and collateral agent, Freeport Loan Fund, LLC, as syndication agent, and Ares Capital Corporation, as documentations agent	Tranche B Term Loans   Tranche C Term Loans	$8,600,422.93 $3,333,333.33

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EX-10.8

Exhibit 10.8

ARCC COMMERCIAL LOAN TRUST 2006,
as the Issuer,

U.S. BANK NATIONAL ASSOCIATION,
as the Class A-1A VFN Agent and as the Trustee

and

THE OTHER CLASS A-1A VFN NOTEHOLDERS PARTY HERETO

CLASS A-1A VFN PURCHASE AGREEMENT

Dated as of July 7, 2006

TABLE OF CONTENTS

				Page
ARTICLE I -		DEFINITIONS		1
	Section 1.01.		Defined Terms	1
	Section 1.02.		Terms Generally	4
ARTICLE II -		THE COMMITMENTS		4
	Section 2.01.		Commitments	4
	Section 2.02.		Advances and Draws	5
	Section 2.03.		Requests for Draws	5
	Section 2.04.		Funding of Draws	6
	Section 2.05.		Termination and Reduction of Class A-1A VFN Commitments	6
	Section 2.06.		Advances; Prepayments	6
	Section 2.07.		[Reserved]	7
	Section 2.08.		Class A-1A VFN Commitment Fee; Class A-1A VFN
			Increased Costs	7
	Section 2.09.		Class A-1A VFN Breakage Costs	8
ARTICLE III -		REPRESENTATIONS AND WARRANTIES; COLLATERAL		9
	Section 3.01.		Representations and Warranties	9
	Section 3.02.		Several Representations and Covenants of Each Holder	10
ARTICLE IV -		CONDITIONS		12
	Section 4.01.		Closing Date Conditions	12
	Section 4.02.		Conditions to Advances	13
	Section 4.03.		Obligations Unconditional	14
	Section 4.04.		Draws Upon Termination of the Replenishment Period	14
ARTICLE V -		THE CLASS A-1A VFN AGENT		14
	Section 5.01.		Appointment	14
	Section 5.02.		Certain Duties and Responsibilities	14
	Section 5.03.		Compensation	16
	Section 5.04.		Resignation and Removal; Appointment of a Successor	16
	Section 5.05.		Acceptance of Appointment by Successor	18
ARTICLE VI -		MISCELLANEOUS		18
	Section 6.01.		Notices	18

TABLE OF CONTENTS

(continued)

					Page
	Section 6.02.			Waivers; Amendments	18
	Section 6.03.			Successors and Assigns	19
	Section 6.04.			Survival	22
	Section 6.05.			Counterparts; Integration; Effectiveness	22
	Section 6.06.			Severability	22
	Section 6.07.			Governing Law; Jurisdiction; Consent to Service of Process;
				Waiver of Jury Trial Right	22
	Section 6.08.			Benefits of Indenture and this Agreement	23
	Section 6.09.			Headings	24
	Section 6.10.			No Proceedings	24
	Section 6.11.			Recourse Against Certain Parties	24
	Section 6.12.			Non-Petition; Non-Recourse Obligations	24
	Section 6.13.			[Reserved]	25
	Section 6.14.			Disclosure	25
SCHEDULE 2.01			Initial Holders
SCHEDULE 3.02			Holder Representations
EXHIBIT A		Form of Assignment and Acceptance
EXHIBIT B		Form of Draw Request

CLASS A-1A VFN PURCHASE AGREEMENT (as amended, restated, supplemented or modified from time to time, this “Agreement”) dated as of July 7, 2006 among:

ARCC COMMERCIAL LOAN TRUST 2006, a statutory trust created and existing under the laws of the State of Delaware (together with its successors and assigns, the “Issuer”);

The HOLDERS (as such term is defined below) party hereto; and

U.S. BANK NATIONAL ASSOCIATION, as agent for the Holders from time to time of the Class A-1A VFN Notes (together with its successors in such capacity, the “Class A-1A VFN Agent”), and as the Trustee (together with its successors in such capacity, the “Trustee”).

WHEREAS, the Issuer and the Trustee are party to an Indenture dated as of July 7, 2006 (as modified and supplemented and in effect from time to time, the “Indenture”) pursuant to which the Issuer has authorized and issued U.S.$202,000,000 Class A-1 Floating Rate Notes due 2019, U.S.$50,000,000 Class A-1A VFN Revolving Floating Rate `Notes due 2019, U.S.$18,000,000 Class B Floating Rate Deferrable Interest Notes due 2019, U.S.$44,000,000 Class C Floating Rate Deferrable Interest Notes due 2019, the U.S.$32,000,000 Class D Floating Rate Deferable Interest Notes due 2019 and U.S.$54,000,000 Class E Principal Only Notes;

WHEREAS, the Issuer, the Class A-1A VFN Agent and the Holders from time to time of the Class A-1A VFN Notes issued under the Indenture wish to evidence certain agreements relating to, among other things, the right of the Issuer (at the direction of the Servicer) to borrow, repay and re-borrow amounts under the Class A-1A VFN Notes during the Replenishment Period, and the appointment of the Class A-1A VFN Agent as agent for the Holders, all as provided in this Agreement and in the Indenture; and

WHEREAS, the Issuer has, under and in accordance with the terms of the Indenture, Granted to the Trustee, for the benefit and security of the Secured Parties, all of the Issuer’s right, title and interest in, to and under this Agreement.

NOW THEREFORE, in consideration of the foregoing premises and the mutual agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I - DEFINITIONS

Section 1.01.                Defined Terms

Terms used but not defined herein have the respective meanings given to such terms in (or incorporated by reference in) the Indenture and the Sale and Servicing Agreement. In addition, as used in this Agreement, the following terms have the meanings specified below:

“Advances” means the advances made to the Issuer by the Holders or by one or more Liquidity Providers pursuant to Section 2.01 or Section 6.03(e), as the case may be, in respect of the Class A-1A VFN Notes.

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“Assignment and Acceptance” means an assignment and acceptance entered into by a Holder and an assignee of such Holder substantially in the form of Exhibit A or any other form reasonably approved by the Servicer and the Class A-1A VFN Agent.

“Break Funding Event” has the meaning specified in Section 2.09.

“Change in Law” means with respect to any Person:

(a)           any change after the date of this Agreement in (or the adoption or commencement of effectiveness of) any:

(i)            United States federal or state law or foreign law applicable to such Person;

(ii)           regulation, interpretation, directive, requirement or request (whether or not having the force of law) applicable to such person made by (A) any court or government authority charged with the interpretations or administration of any law referred to in clause (a)(i) or (B) any fiscal, monetary or other authority having jurisdiction over such Person; or

(iii)          the issuance of any change in accounting standards or the issuance of any other pronouncement, release or interpretation of such accounting standards after the date hereof, whether or not having the force of law (it being understood that the issuance of Interpretation No. 46 by the Financial Accounting Standards Board is excluded from such term); or

(b)           any change after the date of this Agreement in the application to such Person of any existing law, regulation, interpretation, directive, requirement, request or accounting principles referred to in clauses (a)(1), (a)(ii) or (a)(iii) above, which change has been instigated or communicated by the court, governmental authority or other Person charged with the interpretation and/application of such existing law, regulation, interpretation, directive, requirement, request or accounting principles.

“Class A-1A VFN Agent Fee” shall have the meaning provided for in the fee letter, dated as of the date hereof, between the Issuer and U.S. Bank National Association.

“Class A-1A VFN Breakage Costs” has the meaning set forth in Section 2.09.

“Class A-1A VFN Commitment” means, in the case of any Holder, the obligation of such Holder at any time during the Revolving Period to make Advances in an aggregate principal amount not to exceed the initial Class A-1A VFN Commitment of each Holder as set forth on Schedule 2.01 (in the case of an Initial Holder) or in the Assignment and Acceptance pursuant to which such Holder shall have assumed its Class A-1A VFN Commitment, as applicable, as such obligation may be reduced from time to time pursuant to Section 2.05 or pursuant to assignments by or to such Holder pursuant to Section 6.03.

“Class A-1A VFN Increased Costs” has the meaning set forth in Section 2.08(b).

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“Class A-1A VFN Note Register” has the meaning specified in Section 2.06.

“Class A-1A VFN Permitted Investments” has the meaning set forth in Section 3.02(e).

“Collateral Account Termination Date” means, with respect to any Holder that has had payments deposited into the Class A-1A VFN Holder Collateral Account pursuant to Section 3.02(d), the earliest to occur of (a) the assignment by such Holder of all of its rights and obligations under its Class A-1A VFN Notes and this Agreement, (b) the Stated Maturity Date of the Class A-1A VFN Notes and (c) the end of the Revolving Period.

“Committed Liquidity Provider” has the meaning specified in Section 6.03(f).

“CP Conduit” means a limited-purpose entity established to issue commercial paper notes, and any Holder which is a CP Conduit shall be identified as such in this Agreement.

“Defaulting Holder” has the meaning specified in Section 3.02(d).

“Draw” has the meaning specified in Section 2.01.

“Draw Request” has the meaning specified in Section 2.03.

“Funding Entity” means has the meaning set forth in Section 2.08(b).

“Indemnified Person” has the meaning specified in Section 5.03(a)(iii).

“Initial Holder” means an initial Holder of Class A-1A VFN Notes listed on Schedule 2.01 under the caption “INITIAL HOLDERS”.

“Losses” has the meaning specified in Section 5.03(a)(iii).

“Maximum Class A-1A VFN Commitment” means $50,000,000.

“Qualified Securitization Pledge” means, with respect to any Holder of a Class A-1A VFN Note that is a CP Conduit and indicates that it will make a Qualified Securitization Pledge on Schedule 2.01 (in the case of any Initial Holder) or in the Assignment and Acceptance delivered by it with respect to the interests of a Holder of a Class A-1A VFN Note, a bona fide pledge by such Holder of its right, title and interest in and to any Class A-1A VFN Note pursuant to its program collateral or security agreement with a collateral agent to secure obligations owing by such Holder to such Holder’s Liquidity Providers, debt holders or other creditors, but only:

(c)           if such pledge would not (in the reasonable judgment of the Holder (to which the Issuer does not reasonably object)) (A) have the effect of requiring the Issuer or the pool of Loan Assets to register as an investment company under the 1940 Act, (B) subject the Issuer or the Notes to the registration requirements of the Securities Act, (C) result in a nonexempt prohibited transaction under ERISA or the Code, or a violation of provisions of federal, state, local, non-U.S. or other laws or regulations that are substantively similar thereto, or (D) cause the Issuer to be a publicly traded partnership or otherwise be taxable as a corporation for U.S. Federal income tax purposes; and

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(d)           if such Holder from time to time delivers to the Issuer, the Servicer and the Trustee such information concerning such Holder, such collateral agent and such Liquidity Providers, debt holders or other creditors as the Issuer or the Servicer may reasonably request in order for the Issuer to determine whether it objects to the Holder’s conclusion referred to in clause (a) above;

provided that, upon any foreclosure action in respect of any such pledge and any related purported transfer of legal or beneficial ownership of such Class A-1A VFN Note or any right, title or interest therein, any such purported transfer will be considered to be a “transfer” of such Class A-1A VFN Note (or such right, title or interest) for all purposes of the Indenture (including for purposes of Section 4.02 of the Indenture).

“Revolving Period” means the period from and including the Closing Date to but excluding the Commitment Termination Date.

Section 1.02.                Terms Generally

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

ARTICLE II - THE COMMITMENTS

Section 2.01.                Commitments

(a)           Subject to the terms and conditions set forth herein, each Holder agrees to make Advances (the aggregate of all contemporaneous Advances by the Holders, a “Draw”) to the Issuer from time to time during the Revolving Period in an aggregate principal amount at any one time outstanding up to but not exceeding the amount of such Holder’s Class A-1A VFN Commitment; provided that (i) the aggregate principal amount of Advances of the Holders hereunder at any one time outstanding shall in no event exceed the Maximum Class A-1A VFN Commitment, as such amount may be reduced from time to time pursuant to Section 2.05, and (ii) the aggregate principal amount of Advances of any one Holder hereunder at any one time outstanding shall in no event exceed such Holder’s Class A-1A VFN Commitment.

(b)           Notwithstanding the foregoing but subject to the foregoing provisos and Section 6.03(f):

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(i)            no Holder that enters into a Liquidity Facility that is subject to Section 6.03(f) (other than a Holder that is maintaining a Holder Subaccount as provided in Section 3.02(e), who shall be so obligated to the extent of funds then on deposit therein) shall be obligated to make any Advance to the Issuer with respect to any Class A-1A VFN Note, except to the extent that such Holder has received funds from its financing arrangements in place with respect to the Class A-1A VFN Notes (including such Liquidity Facility) which may (consistent with such financing arrangements) be used to make such Advance;

(ii)           any such Holder referred to in clause (i) above, subject to the terms and conditions set forth herein, may, in its sole discretion make Advances to the Issuer from time to time during the Revolving Period in an aggregate principal amount at any time outstanding up to but not exceeding the amount of such Holder’s Class A-1A VFN Commitment (as provided in the definition of such term); and

(iii)          any such Holder referred to in clause (i) above shall enforce all of its material rights under such Liquidity Facility from time to time to assure that, to the fullest extent possible consistent with such Liquidity Facility, such Holder shall have funds available to make Advances hereunder in a timely manner.

Within the foregoing limits and subject to the terms and conditions set forth herein and in the Indenture, the Issuer (at the direction of the Servicer) may borrow, repay and re-borrow Advances.

Section 2.02.                Advances and Draws

(a)           Each Advance shall be made as part of a Draw consisting of Advances made by the Holders ratably in accordance with the unfunded amounts of their respective Class A-1A VFN Commitments. The failure of any Holder to make any Advance required to be made by it shall not relieve any other Holder of its obligations hereunder; provided that the Class A-1A VFN Commitments are several and no Holder shall be responsible for any other Holder’s failure to make Advances as so required. No Advance may be made if after giving effect thereto and any other Draw Request given and pending, the aggregate outstanding principal amount of all Advances, shall exceed the aggregate amount of the Class A-1A VFN Commitments.

(b)           The aggregate principal amount of Advances made in respect of any Draw shall be at least U.S.$250,000 (and integral multiples of U.S.$50,000) or, if the aggregate undrawn amount is less than such required threshold, such lesser amount, provided that if any amount is outstanding under a Class A-1A VFN Note, such outstanding amount shall be at least U.S.$500,000.

Section 2.03.                Requests for Draws

To request a Draw, the Issuer (or the Servicer on behalf of the Issuer) shall notify the Class A-1A VFN Agent (with a copy to the Trustee) (each such notice, a “Draw Request”) of such request by mail, facsimile or hand delivery of a written Draw Request in the form of Exhibit B hereto and signed by the Issuer (or the Servicer on behalf of the Issuer) not later than 1:00 p.m. (New York time) on the date which is two Business Days prior to the proposed Draw. Each such

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written Draw Request shall be irrevocable and receipt of the Class A-1A VFN Agent shall be confirmed promptly by the Isssuer (or the Servicer on behalf of the Issuer) by telephone. A Draw Request shall be deemed to have been received by the Class A-1A VFN Agent at the time of a successful telephone confirmation of such receipt by the Class A-1A VFN Agent. Each such Draw Request shall specify the following information in compliance with Section 2.02 of this Agreement and Section 10.06 of the Indenture:

(a)           the aggregate amount of the requested Draw; and

(b)           the date of such Draw, which shall be a Business Day.

Promptly following receipt of a Draw Request, on the date of receipt of a Draw Request for a Draw, the Class A-1A VFN Agent shall forward (by fax or electronic messaging system) to each Holder (with a copy to the Trustee and, upon request, each Noteholder) a copy of such Draw Request and of the amount of such Holder’s Advance to be made as part of the requested Draw. A Draw Request shall be deemed to have been received by a Holder at the time of a successful telephone confirmation by the Class A-1A VFN Agent of such receipt by such Holder. Any Draw Request received by the Class A-1A VFN Noteholders after 1:00 p.m. (New York time) on any day (whether or not a Business Day) shall be deemed to be a Draw Request received at 9:00 a.m. on the next Business Day and to be funded by the Holders of Class A-1A VFN Notes on the third Business Day following the receipt of such Draw Request.

Section 2.04.                Funding of Draws

Subject to Sections 2.01, 3.02(d), 4.02 and 4.03, each Holder shall make each Advance to be made by it hereunder by wire transfer in immediately available funds by 1:00 p.m. (New York time) on the Business Day specified in the Draw Request to the account designated by Servicer for such purpose by notice to the Holders, which shall initially be the Class A-1A VFN Funding Account.

Section 2.05.                Termination and Reduction of Class A-1A VFN Commitments

(a)           The Class A-1A VFN Commitments shall terminate at the close of business (New York time) on the last day of the Revolving Period.

(b)           The aggregate amount of the Class A-1A VFN Commitments shall be subject to reduction from time to time as provided in Section 5.02 and Section 10.01 of the Indenture.

(c)           Each reduction of the Class A-1A VFN Commitments shall be made ratably among the Holders in accordance with the amounts of their respective Class A-1A VFN Commitments. No termination or reduction of the Class A-1A VFN Commitments shall be effected except as provided in this Section 2.05 and Section 5.02 and Section 10.01of the Indenture.

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Section 2.06.                Advances; Prepayments

(a)           All Advances made by a Holder shall be evidenced by the Class A-1A VFN Note of such Holder and shall be governed by and subject to this Agreement and the Indenture. Advances may be prepaid from time to time to the extent payments are either required or permitted to be made under the Indenture; provided that any Class A-1A VFN Prepayment under Section 10.06(b) of the Indenture shall be made upon not less than two Business Days’ notice to the Class A-1A VFN Agent (with a copy to the Trustee) by Issuer Order (or by the Servicer on behalf of the Issuer) specifying the amount and date of such Class A-1A VFN Prepayment, and the Class A-1A VFN Agent shall promptly notify each Holder of the contents of such notice from the Issuer (or from the Servicer, as the case may be); provided further that, with respect to any Class A-1A VFN Prepayment made during any Interest Period in which one or more Draws on the Class A-1A VFN Notes were made, the Class A-1A VFN Prepayment shall be made among the Draws on such Class A-1A VFN Notes in the priority directed by the Servicer. Each such notice of a Class A-1A VFN Prepayment shall be irrevocable.

(b)           The Class A-1A VFN Agent hereby agrees that it shall keep a register (the “Class A-1A VFN Note Register”) at the office of the Class A-1A VFN Agent and in which the Issuer shall provide for the registration of the Class A-1A VFN Notes and the registration of transfers and exchanges of Class A-1A VFN Notes, subject to the terms of the Indenture, and in which the Class A-1A VFN Agent shall maintain records of the Class A-1A VFN Commitment of each Holder, the aggregate principal amount of Advances from time to time outstanding in respect of each Class A-1A VFN Note and a copy of each Assignment and Acceptance delivered to the Class A-1A VFN Agent pursuant to Section 6.03(b). On each Determination Date and at any time promptly following a request therefor by the Servicer or the Trustee, the Class A-1A VFN Agent shall provide the Servicer and the Trustee with a report specifying the aggregate principal amount of Advances outstanding in respect of each Class A-1A VFN Note and the Class A-1A VFN Commitment of the related Holder (as of such Determination Date).

Section 2.07.                [Reserved]

Section 2.08.                Class A-1A VFN Commitment Fee; Class A-1A VFN Increased Costs

(a)           Class A-1A VFN Commitment Fee shall accrue and be payable by the Issuer as provided in the Indenture and the Sale and Servicing Agreement.

(b)           Class A-1A VFN Increased Costs shall be payable by the Issuer from time to time as provided in the Indenture. No Class A-1A VFN Increased Cost shall be payable to any Holder or Liquidity Provider (each, a “Funding Entity”) on any Distribution Date unless such Funding Entity has delivered to the Class A-1A VFN Agent, the Issuer and the Trustee prior to the related Determination Date a certificate setting forth the amount necessary to compensate such Funding Entity, for (i) any increase in the cost to such Funding Entity of making or maintaining any loan or asset purchase under this Agreement or the related Liquidity Facility (or of maintaining its obligation to make any such loan or asset purchase) resulting from a Change in Law applicable to such Funding Entity, (ii) any reduction in any amount received or

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receivable by a Funding Entity under this Agreement or the related Liquidity Facility resulting from a Change in Law applicable to such Funding Entity or (iii) any reduction in the rate of return on the capital of a Funding Entity or its parent/holding company resulting from a Change in Law applicable to such Funding Entity or parent/holding company to a level below that which such Funding Entity or parent/holding company could have achieved but for such Change in Law (such amount, “Class A-1A VFN Increased Costs”). Failure or delay on the part of any Funding Entity to demand compensation pursuant to this Section shall not constitute a waiver of such person’s right to demand such compensation; provided that the Issuer shall not be required to compensate a Funding Entity pursuant to this Section 2.08 for any Class A-1A VFN Increased Costs incurred more than six months prior to the earlier of (x) the date on which the applicable Funding Entity has actual knowledge of the Change in Law giving rise to such Class A-1A VFN Increased Costs and (y) the date on which the applicable Funding Entity should, in the exercise of reasonable care, have knowledge of the Change in Law giving rise to such Class A-1A VFN Increased Costs; provided further that, if the Change in Law giving rise to such Class A-1A VFN Increased Costs is retroactive, then the six month period referred to above shall be extended to include the period of retroactive effect thereof. Each Holder and Funding Entity agree to use reasonable efforts (including, without limitation, a reasonable effort to change its applicable funding office or to transfer its affected interest to an Affiliate of such Funding Entity) to avoid, or minimize the amount of, any demand for payment from the Issuer under this Section 2.08 unless such efforts would, in such Person’s judgment, be disadvantageous to such Funding Entity (as reasonably determined by such Funding Entity in good faith).

(c)           If the Issuer is required to pay Class A-1A VFN Increased Costs to any Funding Entity under Section 2.08(b), the Servicer on behalf of the Issuer, in the Servicer’s sole discretion, may require such Funding Entity to transfer or assign, in whole or in part, at the expense of the Funding Entity, without recourse (in accordance with Section 6.03), all or part of its interests, rights and obligations under such Holder’s or Funding Entity’s Class A-1A VFN Notes to another Person (provided that the Issuer identifies a Person that would otherwise be eligible under the terms of this Agreement to purchase such Class A-1A VFN Notes and is ready, willing and able to be an assignee with respect thereto) which shall assume such assigned obligations and is reasonably satisfactory to the Class A-1A VFN Agent (which assignee may be another Funding Entity, if such assignee accepts such assignment); provided that (i) the assignee has paid to such Funding Entity in immediately available funds the principal of and interest accrued and unpaid to the date of such payment on the Advances made by it hereunder and all other amounts owed to it hereunder, including without limitation any amounts that would be owing under Section 2.09 if such Advances were prepaid on the date of such assignment and (ii) such assignment does not conflict with any law, rule or regulation or order of any Governmental Authority.

(d)           Each Funding Entity will be required to represent and warrant to the Issuer that it is not subject to Class A-1A VFN Increased Costs as of the date it becomes a Funding Entity.

Section 2.09.                Class A-1A VFN Breakage Costs

If the Issuer (a) pays any principal of any Advance other than on a Permitted Prepayment Date (whether in connection with a permitted Class A-1A VFN Prepayment of Advances, due to

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acceleration or otherwise) or (b) fails to effect a Draw on the scheduled date therefor after having submitted a Draw Request to the Class A-1A VFN Agent in accordance with Section 2.03 and such failure is not due to the failure of the Holder to fund such Advance (each such prepayment or failed Draw, a “Break Funding Event”), then the Issuer shall compensate each affected Holder for any loss (excluding loss of profits), cost and expense incurred by such Holder as a result of such Break Funding Event (such amounts, “Class A-1A VFN Breakage Costs”). The loss to any Holder attributable to any such Break Funding Event shall be deemed to be an amount determined by such Holder to be equal to the excess (if any) of (i) such Holder’s cost of funding the principal amount of such prepayment or reduction (or failed Draw), for the period from the date of such Break Funding Event to but excluding the next Distribution Date over (ii) the amount of interest obtainable by such Holder upon the redeployment of an amount of funds equal to the amount of such prepayment or reduction (or failed Draw) for the period from the date of such Break Funding Event to but excluding the next Distribution Date. A certificate of any Holder setting forth any amount or amounts that such Holder is entitled to receive pursuant to this Section 2.09, and the calculation of such amount or amounts, shall be delivered to the Issuer, the Servicer, the Trustee and the Class A-1A VFN Agent and shall be conclusive absent manifest error. The Issuer shall pay such Holder the amount shown as due on any such certificate on the Distribution Date following the Due Period in which such certificate is received by the Servicer and Trustee.

ARTICLE III - REPRESENTATIONS AND WARRANTIES; COLLATERAL

Section 3.01.                Representations and Warranties

The Issuer represents and warrants to the Holders, the Servicer, the Class A-1A VFN Agent and the Trustee that:

(a)           The Issuer is a statutory trust duly organized and validly existing and in good standing under the laws of the State of Delaware.

(b)           It has the power to execute and deliver this Agreement and the Indenture and to perform its obligations under this Agreement and the Indenture and has taken all necessary action to authorize such execution, delivery and performance.

(c)           Such execution, delivery and performance do not violate or conflict with any law applicable to it, any provision of its constitutional documents, any order or judgment of any court or other agency of government applicable to it or any of its assets or any contractual restriction binding on or affecting it or any of its assets.

(d)           All governmental and other consents that are required to have been obtained by it with respect to the execution, delivery and performance of this Agreement and the Indenture have been obtained and are in full force and effect and all conditions of any such consents have been complied with.

(e)           Its obligations under this Agreement and the Indenture constitute its legal, valid and binding obligations, enforceable against it in accordance with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of

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general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).

(f)            There is not pending or, to its knowledge, threatened against it, or against any of its Affiliates, any action, suit or proceeding at law or in equity or before any court, tribunal, government body, agency or official or any arbitrator that is likely to affect the legality, validity or enforceability against it of this Agreement or the Indenture or its ability (as a matter of law) to perform its obligations under this Agreement or the Indenture.

(g)           It is not registered or is not required to register, as an investment company under the 1940 Act.

(h)           It has timely filed or caused to be filed all tax returns and reports required to have been filed and has timely paid or caused to be paid all taxes required to have been paid by it where the failure to do so could reasonably be expected to result, singularly or in the aggregate, in a Material Adverse Effect.

(i)            No Event of Default has occurred and is continuing.

Section 3.02.                Several Representations and Covenants of Each Holder

Each Holder severally represents and warrants as of each date it shall acquire any interest in any Class A-1A VFN Note, or fund any Advance (including the date that such Holder shall become a party hereto pursuant to an Assignment and Acceptance) and covenants (as to itself only and as to no other Holder) to the Issuer and the Class A-1A VFN Agent that:

(a)           it is an entity duly organized and validly existing and (if applicable) in good standing under the laws of the jurisdiction of its organization; it has the organizational power to execute and deliver this Agreement and to perform its obligations under this Agreement and has taken all necessary organizational action to authorize such execution, delivery and performance; such execution, delivery and performance do not violate or conflict with any law applicable to it, any provision of its constitutional documents, any order or judgment of any court or other agency of government applicable to it or any of its assets and do not violate or conflict with in any material respect any material contractual restriction binding on or affecting it or any of its assets; all governmental and other consents that are required to have been obtained by it with respect to the execution, delivery and performance of this Agreement have been obtained and are in full force and effect and all conditions of any such consents have been complied with; there is not pending or, to its knowledge, threatened against it, or against any of its Affiliates, any action, suit or proceeding at law or in equity or before any court, tribunal, government body, agency or official or any arbitrator that is likely to affect the legality, validity or enforceability against it of this Agreement or the Indenture or its ability to perform its obligations under this Agreement or the Indenture; it has duly executed and delivered this Agreement and its obligations under this Agreement constitute its legal, valid and binding obligations, enforceable against it in accordance with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law));

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(b)           each of the representations and warranties set forth on Schedule 3.02 is true, correct and complete;

(c)           it satisfies the Rating Criteria, and acknowledges and agrees that, if it shall at any time fail to comply with the Rating Criteria, it shall promptly (but in no event later than 5:00 p.m. on the Business Day such Holder receives notice or otherwise becomes aware thereof, or, if such notice is received or such Holder becomes aware thereof after 5:00 p.m. (New York time) on a Business Day or on any day which is not a Business Day, 9:00 a.m. (New York time) on the Business Day following the date such Holder receives notice or otherwise becomes aware thereof) notify the Issuer, the Servicer, the Rating Agencies, the Class A-1A VFN Agent and the Trustee of such failure. Each Holder agrees that if it fails at any time to comply with or satisfy the Rating Criteria, such Holder shall use all reasonable efforts to assign (at the cost of such Holder), within 30 days of such failure, all of its rights and obligations in respect of its Class A-1A VFN Notes to another entity in accordance with the provisions specified in Section 6.03 (unless such Holder again satisfies the Rating Criteria within 30 days after such failure by delivering to the Issuer, the Class A-1A VFN Note Agent, the Trustee and each Rating Agency a certification in writing that such Holder satisfies the Rating Criteria, such certification to include a letter from each Rating Agency establishing such ratings upgrade or such other evidence as shall be reasonably satisfactory to the Trustee and the Issuer); provided that the transferee entity must satisfy, on the effective date of the proposed replacement, the Rating Criteria. The replaced Holder agrees to cooperate with all reasonable requests of the Issuer (or the Servicer on behalf of the Issuer) for the purpose of effecting such transfer. If such Holder is unable to make such transfer within 30 days after its failure to satisfy the Rating Criteria, the Issuer will make a Draw in the amount of the entire undrawn portion of such Holder’s Class A-1A VFN Commitment and will make a corresponding deposit of the proceeds of such Draw into the Class A-1A VFN Funding Account. The amount of such Draw shall not bear interest, but the Issuer shall pay the Class A-1A VFN Commitment Fee on the amount of such Draw until the date such Holder makes an assignment to a replacement Holder which satisfies the Rating Criteria.

(d)           it will fund Draws as required under Article II and acknowledges and agrees that if at any time it fails to fund any portion of a Draw (taking into account the terms of Section 6.03(f)) (any such Holder a “Defaulting Holder”), any payments of principal of or interest on any outstanding Advance and any Class A-1A VFN Commitment Fee, that would otherwise be payable to such Defaulting Holder under this Agreement and the Indenture, shall be deposited into a Holder Subaccount with respect to such Defaulting Holder until the Collateral Account Termination Date as provided in Section 3.02(e)(ii) and Section 10.08 of the Indenture and such Holder Subaccount shall be governed by the terms of the Indenture;

(e)           funds on deposit in a Holder Subaccount shall not constitute principal outstanding under a Class A-1A VFN Note and each Defaulting Holder that has had payments deposited into a Holder Subaccount pursuant to Section 3.02(d) agrees that from and after the date of such deposit and until the related Collateral Account Termination Date, (i) the obligation of such Defaulting Holder to make any Advance shall be satisfied by the Servicer withdrawing funds (and the Servicer will provide prior or contemporaneous notice of any such withdrawal to the Class A-1A VFN Agent and the Defaulting Holder) from such Holder Subaccount (provided that such Defaulting Holder shall remain obligated in respect of such Advance to the extent the amount thereof exceeds the amount on deposit in such Holder Subaccount), (ii) all payments of

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principal and interest with respect to any Advances and any Class A-1A VFN Commitment Fees otherwise payable to such Defaulting Holder shall be made by depositing the related funds into such Holder Subaccount and (iii) the Servicer shall have full authority to withdraw funds (and the Servicer will provide prior notice of any such withdrawal to the Class A-1A VFN Agent and the Defaulting Holder) from such Holder Subaccount at the time of, and in connection with, the making of any Draw and to deposit funds (with prior or contemporaneous notice of any such deposit to the Class A-1A VFN Agent and the Holders) to such Holder Subaccount, all in accordance with the terms of and for the purposes set forth in this Agreement and in the Indenture. After the Collateral Account Termination Date for any Defaulting Holder with respect thereto (subject to the terms of Section 10.08(d) of the Indenture), all funds then held in the related Holder Subaccount shall be withdrawn from such Holder Subaccount and remitted to such Defaulting Holder and thereafter all payments of principal, interest and Class A-1A VFN Commitment Fee with respect to the Class A-1A VFN Notes of such Defaulting Holder shall be paid directly to such Defaulting Holder or assignee thereof, as applicable. The Trustee shall promptly at the written direction of the related Defaulting Holder (which may be in the form of standing instructions) invest any amounts on deposit in any Holder Subaccount in Permitted Investments maturing on the day following the date of acquisition thereof (collectively, the “Class A-1A VFN Permitted Investments”). Investment earnings received during each Due Period in respect of Class A-1A VFN Permitted Investments in a Holder Subaccount shall be deposited into such Holder Subaccount within two Business Days of receipt thereof. In the absence of such instructions, such funds will remain uninvested; and

(f)            it agrees to treat the Issuer for U.S. federal, state and local income tax purposes, (i) as an entity disregarded from its single owner if the Issuer has a single owner and (ii) as a partnership if the Issuer has more than one owner, to report all income (or loss) in accordance with such treatment and not take any action inconsistent with such treatment.

ARTICLE IV - CONDITIONS

Section 4.01.                Closing Date Conditions

The obligations of the Holders to make Advances shall not become effective until the date on which the Indenture is executed and delivered and the Notes are duly authorized, issued, authenticated and delivered thereunder.

The purchase of the Class A-1A VFN Note on the Closing Date, the obligation of each Holder to make an Advance on the occasion of the initial Draw pursuant to Article II is subject to the satisfaction of the following conditions (in addition to the conditions specified in Section 4.02):

(a)           All of the conditions precedent in the Sale and Servicing Agreement and the Indenture shall have been satisfied or waived in accordance with the terms thereof.

(b)           Each of the statements referred to in Section 4.02(a), (b), (d), (e), (f) and (g) hereof shall be true (as if a Draw shall occur on the Closing Date), and the Class A-1A VFN Agent (with a copy to the Holders) shall have received a certificate, dated the Closing Date, of a

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Responsible Officer of the Servicer in which such officer shall (to the best of such officer’s knowledge) certify to such effect.

(c)           The Class A-1A VFN Notes shall have been duly executed by the Issuer and delivered to the Class A-1A VFN Agent for the benefit of the Initial Holders.

Section 4.02.                Conditions to Advances

The obligation of each Holder to make an Advance on the occasion of any Draw pursuant to Article II is subject to the satisfaction of the following conditions:

(a)           Notwithstanding any provision to the contrary in the Indenture, after the Effective Date at the time of and immediately after giving effect to any Draw, each of the Portfolio Criteria shall be satisfied.

(b)           Except as provided in Section 4.03, at the time of and immediately after giving effect to such Draw, no Event of Default or Servicer Default, or event the occurrence of which with notice or the lapse of time or both would become an Event of Default or Servicer Default, has occurred and is continuing or would result from such Draw; shall have occurred and be continuing or would result from such Draw.

(c)           If, notwithstanding clause (b) above, at the time of or immediately after giving effect to such Draw, an Event of Default or Servicer Default, or event the occurrence of which with notice or the lapse of time or both would become and Event of Default or Servicer Default, has occurred and is continuing, after giving effect to such Draw and any contemporaneous application of amounts standing to the credit of the Class A-1A VFN Funding Account, no amounts shall be standing to the credit of the Class A-1A VFN Funding Account.

(d)           After giving effect to any Draw, the aggregate Outstanding Principal Balance of the Class A-1A VFN Notes will not exceed the Maximum Class A-1A VFN Commitment.

(e)           In the case of any Draw, the Class A-1A VFN Agent shall have received a Draw Request given in accordance with Section 2.03.

(f)            In the case of any Draw, the proceeds of such Draw shall be used solely to (i) fund Exposure Amounts relating to Revolving Loans and Delayed Draw Term Loans or (ii) acquire Additional Loans during the Ramp-Up Period and the Replenishment Period. None of the proceeds of such Draw shall be used by the Issuer, directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of buying or carrying any Margin Stock. No Advance will be secured, directly or indirectly, by Margin Stock and the Indenture Collateral will not include any Margin Stock.

(g)           All representations and warranties made by the Issuer in this Agreement and in Section 3.25 of the Indenture are true and correct in all material respects, as if repeated on the date of such Draw or issuance with respect to the facts and circumstances then existing (except to the extent that any such representation or warranty refers to a prior specific date).

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(h)           Each of this Agreement, the Indenture and the Class A-1A VFN Notes is in full force and effect.

(i)            All other conditions precedent to such Draw or issuance set forth in this Agreement and the Indenture have been satisfied (or waived pursuant to the terms hereof or thereof).

Except for a Draw made as contemplated under Section 4.03, each Draw shall be deemed to constitute a representation and warranty by the Issuer on the date thereof as to the applicable matters specified in clauses (a), (b), (c), (d), (f), (g), (h) and (i) above.

Section 4.03.                Obligations Unconditional

Notwithstanding the failure to satisfy any of the conditions in clauses (a), (b), (e) and (g) of Section 4.02, the Holders shall be obligated to make Advances to the Issuer in connection with Draws (x) to fund Exposure Amounts relating to Revolving Loans and Delayed Draw Term Loans or (y) funded by the applicable Holder in connection with such Holder’s failure to satisfy the Rating Criteria. However, the obligation of each Holder under this Section 4.03 shall terminate on the Commitment Termination Date.

Section 4.04.                Draws Upon Termination of the Replenishment Period

(a)           On the Commitment Termination Date, the Issuer (or the Servicer on behalf of the Issuer) shall make a Draw Request in accordance with Section 2.03 hereof in an amount equal to the undrawn amount of the Maximum Class A-1A VFN Commitment as of such date. The Trustee will (at the direction of the Servicer and on behalf of the Issuer) upon receipt of such Draw, deposit into the Class A-1A VFN Funding Account out of the proceeds of such Draw, an amount determined by the Servicer sufficient to cause the Class A-1A VFN Funding Test to be satisfied and shall deposit the remaining proceeds of such Draw into the Principal and Interest Account where such amounts shall be applied in accordance with the Priority of Payments as Principal Collections on the following Distribution Date (or, if such amount is received on a Distribution Date, on such Distribution Date). The Class A-1A VFN Commitments will terminate immediately after such Draw is made and such funds are deposited to the Class A-1A VFN Funding Account and, as applicable, the Principal and Interest Account.

(b)           The Servicer shall fund any Draw Request received after the end of the Replenishment Period solely from funds available in the Class A-1A VFN Funding Account.

ARTICLE V - - THE CLASS A-1A VFN AGENT

Section 5.01.                Appointment

Each of the Holders hereby irrevocably appoints the Class A-1A VFN Agent as its agent and authorizes the Class A-1A VFN Agent to take such actions on its behalf and to exercise such powers as are delegated to the Class A-1A VFN Agent by the terms hereof and of the Indenture, together with such actions and powers as are reasonably incidental thereto.

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Section 5.02.                Certain Duties and Responsibilities

(a)           The Class A-1A VFN Agent undertakes to perform such duties and only such duties as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement against the Class A-1A VFN Agent.

(b)           Upon certificates and other notices furnished to the Class A-1A VFN Agent and conforming to the requirements of this Agreement, the Class A-1A VFN Agent may, in the absence of gross negligence, willful misconduct or bad faith on its part, conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein. Neither the Class A-1A VFN Agent nor any of its affiliates, directors, officers, agents or employees shall be liable for any action taken or not taken by it in connection herewith (i) with the consent or at the request of the Holders representing a majority of the Class A-1A VFN Commitments (and to the extent required under the Transaction Documents, the Issuer or Servicer on behalf of the Issuer) or (ii) in the absence of its own gross negligence or willful misconduct. Neither the Class A-1A VFN Agent nor any of its affiliates, directors, officers, agents or employees shall be responsible or have any duty to ascertain, inquire or verify: (i) any statement, warranty or representation made in connection with this Agreement, any of the other Transaction Documents or any Draw hereunder, (ii) the performance or observation of any of the covenants or agreements of the Issuer or the Servicer or (iii) the validity, effectiveness or genuineness of this Agreement, the Indenture or any instrument or writing furnished in connection herewith. The Class A-1A VFN Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate, statement or other writing (which may be a bank wire, fax, electronic messaging or similar writing) reasonably believed by it to be genuine or signed by the proper party or parties.

(c)           No provision of this Agreement shall be construed to relieve the Class A-1A VFN Agent from liability for its own grossly negligent action, its own grossly negligent failure to act, or its own willful misconduct, except that:

(i)            this subsection shall not be construed to limit the effect of clauses (a) and (b) above;

(ii)           the Class A-1A VFN Agent shall not be liable for any error of judgment made in good faith by an officer, unless it shall be proven that the Class A-1A VFN Agent was grossly negligent in ascertaining the pertinent facts; and

(iii)          no provision of this Agreement shall require the Class A-1A VFN Agent 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 contemplated hereunder, 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 performance of its ordinary services under this Agreement.

(d)           For all purposes under this Agreement, the Class A-1A VFN Agent shall not be deemed to have notice or knowledge of any Event of Default unless an officer of the Class

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A-1A VFN Agent has actual knowledge thereof or unless written notice of any event which is in fact such an Event of Default is received by the Class A-1A VFN Agent.

(e)           Whether or not therein expressly so provided, every provision of this Agreement relating to the conduct or affecting the liability of or affording protection to the Class A-1A VFN Agent shall be subject to the provisions of this Section 5.02. Each Holder shall, ratably, in accordance with its Class A-1A VFN Commitment (or, if the Class A-1A VFN Commitments have been terminated or permanently reduced to zero, the unpaid principal amount of its Advances) indemnify each Indemnified Person for all Losses not reimbursed by the Issuer pursuant to Section 5.03(a)(iii); provided that no Holder shall have such indemnity or reimbursement obligation to the extent that such loss, liability or expense incurred by the applicable Indemnified Person arises out of, or in connection with any act or omission of any Indemnified Person constituting (x) negligence, willful misconduct or bad faith or (y) a breach of this Agreement.

Section 5.03.                Compensation

(a)           Subject to Section 6.12 the Issuer agrees:

(i)            to pay the Class A-1A VFN Agent on each Distribution Date the Class A-1A VFN Agent Fee for all services rendered by it hereunder;

(ii)           except as otherwise expressly provided herein, to reimburse the Class A-1A VFN Agent (subject to any written agreement between the Issuer and the Class A-1A VFN Agent) forthwith upon its request for all reasonable fees and expenses (including attorneys’ fees) incurred or made by the Class A-1A VFN Agent in accordance with any provision of this Agreement; and

(iii)          to indemnify the Class A-1A VFN Agent and its affiliates, officers, directors, employees and agents (collectively, “Indemnified Persons”), and to hold them harmless against, any loss, liability or expense incurred without gross negligence, willful misconduct or bad faith on their part, arising out of or in connection with the exercise or performance of any of the Class A-1A VFN Agent’s obligations or duties under this Agreement, including the reasonable costs and expenses of defending themselves against any claim or liability in connection therewith (collectively “Losses”);

provided that (x) such amounts described in clauses (i), (ii) and (iii) above shall be payable on each Distribution Date only to the extent that funds are available for such purpose in accordance with the Priority of Payments and (y) any such amounts that are not paid in full on any Distribution Date shall be deferred and shall be payable on a subsequent Distribution Date to the extent funds are available for such purpose in accordance with the Priority of Payments.

(b)           The Class A-1A VFN Agent shall, subject to Section 6.12 and the Priority of Payments, receive amounts pursuant to this Section 5.03 and Section 7.05 of the Sale and Servicing Agreement 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 Class A-1A VFN Agent shall not, by itself, constitute an Event of Default. The Class A-1A VFN Agent hereby agrees not to cause the filing of a petition in bankruptcy against the Issuer for the non-payment to the Class A-1A VFN Agent

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of any amounts provided by this Section 5.03 until at least one year and one day, or if longer, the applicable preference period then in effect, after the payment in full of all the Notes issued under the Indenture.

Section 5.04.                Resignation and Removal; Appointment of a Successor

(a)           No resignation or removal of the Class A-1A VFN Agent and no appointment of a successor Class A-1A VFN Agent pursuant to this Article V shall become effective until the delivery by the successor Class A-1A VFN Agent of the acceptance required under Section 5.05.

(b)           The Class A-1A VFN Agent may resign at any time by giving written notice thereof to the Issuer, the Servicer, the Holders, the Trustee and each Rating Agency.

(c)           The Class A-1A VFN Agent may be removed at any time by Holders representing a majority of the Class A-1A VFN Commitments delivered to the Class A-1A VFN Agent, the Trustee, the Servicer and to the Issuer.

(d)           If at any time the Class A-1A VFN Agent shall become incapable of acting or shall be adjudged as bankrupt or insolvent or a receiver or liquidator of the Class A-1A VFN Agent or of its property shall be appointed or any public officer shall take charge or control of the Class A-1A VFN Agent or of all or a substantial part of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case (subject to Section 5.04(e)), (i) the Issuer, by Issuer Order, shall remove the Class A-1A VFN Agent or (ii) any Holder may, on behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Class A-1A VFN Agent and the appointment of a successor Class A-1A VFN Agent.

(e)           If the Class A-1A VFN Agent shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of the Class A-1A VFN Agent for any reason, the Issuer, by Issuer Order, shall promptly appoint a successor Class A-1A VFN Agent. If the Issuer shall fail to appoint a successor Class A-1A VFN Agent within 60 days after such resignation, removal or incapability or the occurrence of such vacancy, a successor Class A-1A VFN Agent may be appointed at such time by written notice of the Servicer or Holders representing a majority of the Class A-1A VFN Commitments delivered to the Issuer and the retiring Class A-1A VFN Agent. The successor Class A-1A VFN Agent so appointed shall, forthwith upon its acceptance of such appointment, become the successor Class A-1A VFN Agent and supersede any successor Class A-1A VFN Agent proposed by the Issuer. If no successor Class A-1A VFN Agent shall have been so appointed by the Issuer or the Holders and shall have accepted appointment in the manner hereinafter provided, any Holder may, on behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Class A-1A VFN Agent.

(f)            The Issuer shall give prompt notice of each resignation and each removal of the Class A-1A VFN Agent and each appointment of a successor Class A-1A VFN Agent by mailing written notice of such event by first class mail, postage prepaid, to the Trustee, each Rating Agency, the Servicer and to the Holders as their names and addresses appear in the Class

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A-1A VFN Note Register. Each notice shall include the name and address of the successor Class A-1A VFN Agent. If the Issuer fails to mail such notice within ten days after acceptance of appointment by the successor Class A-1A VFN Agent, the successor Class A-1A VFN Agent shall cause such notice to be given at the expense of the Issuer.

Section 5.05.        Acceptance of Appointment by Successor

Every successor Class A-1A VFN Agent appointed hereunder shall execute, acknowledge and deliver to the Issuer and the retiring Class A-1A VFN Agent an instrument accepting such appointment with immediate effect. Upon delivery of the required instrument, the resignation or removal of the retiring Class A-1A VFN Agent shall become effective and such successor Class A-1A VFN Agent, without any other act, deed or conveyance, shall become vested with all the rights, powers, duties and obligations of the retiring Class A-1A VFN Agent; save that, upon request of the Issuer or Holders representing a majority of the Class A-1A VFN Commitments or the successor Class A-1A VFN Agent, such retiring Class A-1A VFN Agent shall, upon payment of its fees and expenses then unpaid, execute and deliver an instrument transferring to such successor Class A-1A VFN Agent all the rights, powers and trusts of the retiring Class A-1A VFN Agent.

ARTICLE VI - MISCELLANEOUS

Section 6.01.        Notices

Except in the case of notices and other communications expressly permitted to be given by telephone or electronic messaging system, all notices and other communications provided for herein (including each consent, notice, direction or request) shall be in writing and shall be delivered by hand or overnight courier service or sent by fax, as follows:

(a)           if to the Issuer, the Servicer or the Trustee, at its address or fax number set forth in the Indenture;

(b)           if to the Class A-1A VFN Agent, at its address or fax number set forth on Schedule 2.01 or at such other address as shall be designated by the Class A-1A VFN Agent in a notice to the Issuer, each Holder, the Trustee and the Servicer; and

(c)           if to any Holder, at its address or fax number set forth on Schedule 2.01 (in the case of any Initial Holder) or in the Assignment and Acceptance delivered by it; or at such other address as shall be designated by a Holder in a notice to the Issuer, the Class A-1A VFN Agent, the Trustee and the Servicer.

All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.

Section 6.02.        Waivers; Amendments

(a)           No waiver of any provision of this Agreement or consent to any departure by the Issuer herefrom shall in any event be effective unless the same shall be permitted by Section 6.02(b) and the S&P Rating Condition is satisfied with respect thereto, and then such

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waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of an Advance shall not be construed as a waiver of any Default or Event of Default, regardless of whether the Servicer, the Trustee, the Class A-1A VFN Agent, any Holder or any other Noteholder may have had notice or knowledge of such Default or Event of Default at the time.

(b)           Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Servicer on behalf of the Issuer and the Class A-1A VFN Agent with the consent of Holders representing a majority of the Class A-1A VFN Commitments except as otherwise expressly provided in Section 6.02(b); provided that no such agreement shall amend, modify or otherwise affect the rights or duties of the Trustee or of the Servicer, as applicable, hereunder or in respect hereof without the prior written consent of the Trustee or of the Servicer, as applicable. Prior to entering into any amendment, waiver or modification to this Agreement, the Rating Agency Condition shall be satisfied with respect thereto. Subject to the foregoing, the Servicer on behalf of the Issuer shall give written notice to each Rating Agency and the Trustee of any waiver, amendment or modification of any provision of this Agreement.

(c)           No waiver, amendment or modification of the Indenture or any other agreement referred to herein or therein to which the Issuer is a party (other than this Agreement) shall affect any of the rights or obligations under this Agreement of the parties hereto unless such waiver, amendment or modification is effected in accordance with the applicable provisions of this Agreement and the Indenture; provided that no such waiver, amendment or modification shall increase the Maximum Class A-1A VFN Commitment, or extend the term of any of the Class A-1A VFN Commitments, or extend the time or waive any requirement for the reduction or termination of any of the Class A-1A VFN Commitments, without the consent of each of the Holders.

(d)           A failure or delay in exercising any right, power or privilege in respect of this Agreement shall not be presumed to operate as a waiver, and a single or partial exercise of any right, power or privilege shall not be presumed to preclude any subsequent or further exercise, of that right, power or privilege or the exercise of any other right, power or privilege.

Section 6.03.        Successors and Assigns

(a)           The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and transferees.

(b)           The Issuer may not assign or delegate any of its rights or obligations under this Agreement without the prior consent of each Holder, the Class A-1A VFN Agent the Trustee and the Servicer, provided that the Issuer is Granting all of its rights under this Agreement to the Trustee pursuant to the Indenture. No Holder may assign or delegate any of its rights or obligations under this Agreement or under any Class A-1A VFN Notes, except that (i) any Holder may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Class A-1A VFN Commitment and the Advances at the time owing to it); provided that, in either such case, (A) any assignment by a Holder of less than all of a Class A-1A VFN Note or the related Class A-1A VFN Commitment

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shall be of the same ratable portion of such Class A-1A VFN Note and the related Class A-1A VFN Commitment, (B) no such assignment shall be effected unless all conditions precedent to the transfer of the relevant Class A-1A VFN Note specified in the Indenture (including such assignee’s satisfaction of the Rating Criteria) have been satisfied and such Holder shall have received the prior written consent of the Issuer and the Servicer to such assignment, and (C) no such assignment shall be effected unless the parties to such assignment shall have executed and delivered to the Class A-1A VFN Agent (with a copy to the Trustee, the Servicer and the Holders) a duly completed Assignment and Acceptance and (ii) any Holder that is entitled under a Liquidity Facility to borrow loans from, or sell all or a portion of Class A-1A VFN Notes or interests therein to, Liquidity Providers may assign its rights hereunder and under the Class A-1A VFN Notes and/or delegate to the related Liquidity Providers, and such Liquidity Providers may severally agree to each perform their ratable share (determined in accordance with their respective Class A-1A VFN Commitments under the relevant Liquidity Facility) of, all of the Holder’s obligations hereunder or under the Class A-1A VFN Notes; provided that each related Liquidity Provider which is a Committed Liquidity Provider either executes and delivers a signature page hereto or enters into an Assignment and Acceptance agreeing to be a Committed Liquidity Provider hereunder. Upon acceptance and recording pursuant to Section 6.03(c), from and after the effective date specified in each Assignment and Acceptance, the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Holder or of a Committed Liquidity Provider, as applicable, under this Agreement, and the assigning Holder thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Holder’s rights and obligations under this Agreement and in respect of Class A-1A VFN Notes, such Holder shall cease to be a party hereto).

(c)           Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Holder and an assignee and/or delegee, the Class A-1A VFN Agent shall accept such Assignment and Acceptance and record the information contained therein in the Class A-1A VFN Note Register. No such assignment or delevation shall be effective for purposes of this Agreement unless it has been recorded in the Class A-1A VFN Note Register as provided in this paragraph.

(d)           Any Holder may at any time Grant a security interest in all or any portion of its rights under this Agreement to secure obligations of such Holder, including any such Grant to a Federal Reserve Bank, and this Section 6.03 shall not apply to any such Grant of a security interest; provided that no such Grant of a security interest shall release a Holder from any of its obligations hereunder or substitute any such assignee for such Holder as a party hereto.

(e)           Notwithstanding anything in Section 6.03(b) to the contrary, any Holder may delegate its obligations hereunder in respect of any Class A-1A VFN Note held by such Holder to its Liquidity Providers; provided that (i) each such Liquidity Provider which is a Committed Liquidity Provider either executes and delivers a signature page hereto or enters into an Assignment and Acceptance Agreement pursuant to which it agrees to be a Committed Liquidity Provider hereunder, (ii) such delegation shall be effected ratably according to the respective Class A-1A VFN Commitments under the Liquidity Facility of the Liquidity Providers, (iii) notwithstanding such delegation, such Holder may, in its sole discretion, continue

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to perform the obligations so delegated (and the Liquidity Providers shall have no right to perform such obligations in the event such Holder performs such obligations) and (iv) subject to the immediately preceding clause (iii), the rights and obligations of the parties hereto in respect of any Advances made by such Holder hereunder shall not be affected by such delegation. Any such delegation shall also be subject to the several agreement of the Liquidity Providers (for the express benefit of such Holder, the Issuer, the Class A-1A VFN Agent the Servicer and the Trustee) to be included in their respective Assignment and Acceptance Agreements to perform all of the obligations of such Holder hereunder delegated to the Liquidity Providers as provided in the foregoing sentence, with each Liquidity Provider agreeing to perform only its ratable share of such obligations as so provided. With respect to Advances made by the Liquidity Providers in accordance with the delegation provided above, the Liquidity Providers shall be subrogated, severally and ratably in accordance with their respective Class A-1A VFN Commitments under the Liquidity Facility, to the rights of the relevant Holder against the Issuer in respect of the related Class A-1A VFN Note and under the Indenture.

(f)            Notwithstanding anything in Section 2.01 or Section 6.03(b) to the contrary, if any Holder party hereto elects to be subject to this Section 6.03(f), then such Holder (unless it is maintaining a Holder Subaccount as provided in Sections 3.02(d)) shall not be obligated to make Advances hereunder except as provided in Section 2.01(b)(i); provided that such Holder shall have in effect at all times (unless it is maintaining a Class A-1A VFN Holder Collateral Account as provided in Sections 3.02(d) for the full amount of its unfunded Class A-1A VFN Commitment) a Liquidity Facility with one or more Liquidity Providers pursuant to which such Liquidity Providers are obligated (ratably according to their respective Class A-1A VFN Commitments under the Liquidity Facility), to make loans to, or acquire interests in assets of, such Holder in an aggregate principal amount up to the maximum aggregate stated principal amount of the Class A-1A VFN Notes held by such Holder (such a Liquidity Provider a “Committed Liquidity Provider”) and each such Committed Liquidity Provider has agreed (for the express benefit of such Holder, the Issuer, the Class A-1A VFN Agent, the Servicer and the Trustee) to be a Committed Liquidity Provider hereunder by either executing and delivering a signature page hereto or by entering into an Assignment and Acceptance Agreement. Notwithstanding the foregoing, such Holder may, in its sole discretion, elect, from time to time, to fund any Advance requested by the Issuer in respect of any Class A-1A VFN Note held by such Holder. With respect to Advances made by the Liquidity Providers under the Liquidity Facility as contemplated by this Section 6.03(f) at the request of the Issuer on behalf of such Holder, the Liquidity Providers for such Holder shall be subrogated, severally and ratably in accordance with their respective Class A-1A VFN Commitments under the Liquidity Facility, to the rights of such Holder against the Issuer in respect of the related Class A-1A VFN Notes and under the Indenture. Any such Holder that elects to enter into a Liquidity Facility as contemplated by and to be subject to this Section 6.03(f) shall indicate such Holder’s election on Schedule 2.01 at the time it first becomes a Holder and shall provide to the Issuer and the Trustees an original executed signature page to this Agreement (in the case of a Committed Liquidity Provider that becomes a party hereto on the Closing Date) or an original executed copy of each Assignment and Acceptance Agreement, in each case, executed by its Committed Liquidity Providers, with a copy thereof to the Class A-1A VFN Agent and the Servicer.

(g)           Without limiting the effect of Section 6.03(f), for so long as a Holder is a CP Conduit, and notwithstanding any provisions contained herein or in the Indenture, such

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Holder shall not, and shall not be obligated to, make any payments hereunder or under the Indenture (except with respect to funding Draws as and to the extent required under this Agreement), unless such Holder has received funds which may be used to make such payment and which funds are not required to repay its commercial paper notes when due and, after giving effect to such payment, either (i) the Holder could issue commercial paper notes to refinance all of such Holder’s outstanding commercial paper notes (assuming such outstanding commercial paper notes matured at such time) in accordance with the governing documents governing such Holder’s commercial paper program or (ii) all of such Holder’s commercial paper notes are paid in full. Any amount which the Holder does not fund pursuant to the operation of this paragraph shall not constitute a claim (as defined in Section 101 of the Bankruptcy Code) against or obligation of such Holder for any such insufficiency.

Section 6.04.        Survival

All covenants, agreements, representations and warranties made by the Issuer herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Advances, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Trustee, the Servicer, the Class A-1A VFN Agent or any Holder may have had notice or knowledge of any Event of Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as any Class A-1A VFN Note or any amount payable under this Agreement or the Indenture in respect of any Class A-1A VFN Note is outstanding and unpaid and so long as the Class A-1A VFN Commitments have not expired or terminated.

Section 6.05.        Counterparts; Integration; Effectiveness

This Agreement may be executed in any number of counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, any Liquidity Facility and the Indenture constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Issuer, the Initial Holders party hereto and when the Issuer shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by fax or by electronic messaging shall be effective as delivery of a manually executed counterpart of this Agreement.

Section 6.06.        Severability

Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining

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provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

Section 6.07.        Governing Law; Jurisdiction; Consent to Service of Process; Waiver of Jury Trial Right.

(a)           THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND THIS AGREEMENT AND ALL MATTERS ARISING OUT OF OR RELATING IN ANY WAY WHATSOEVER TO THIS AGREEMENT (WHETHER IN CONTRACT, TORT OR OTHERWISE) SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK.

(b)           Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Subject to Section 6.12, nothing in this Agreement shall affect any right that the Class A-1A VFN Agent or any Holder may otherwise have to bring any action or proceeding relating to this Agreement against the Issuer or their properties in the courts of any jurisdiction.

(c)           Each of the parties hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in the first sentence of Section 6.07(b). Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d)           Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 6.01. Nothing in this Agreement shall affect the right of any party to this Agreement to serve process in any other manner permitted by law.

(e)           EACH PARTY TO THIS AGREEMENT HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 6.08.        Benefits of Indenture and this Agreement

The Issuer hereby acknowledges and confirms that each representation, warranty, covenant and agreement made pursuant to the Indenture by it is also made herein to the Trustee,

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all for the benefit and security of the Securityholders (including the Holders of the Class A-1A VFN Notes) as provided in the Indenture.

Nothing in this Agreement, express or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns and the Holders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

Section 6.09.        Headings

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

Section 6.10.        No Proceedings

Each of the parties hereto hereby agrees (which agreement shall, pursuant to the terms of this Agreement, be binding upon their respective successors and assigns) that they shall not institute against, or join any other Person in instituting against, any Holder which is a CP Conduit any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding, or other proceeding under any federal or state bankruptcy or similar law, for one year and a day (or, if longer, the applicable preference period then in effect) after the latest maturing commercial paper note or other debt obligation issued by such Holder is paid, provided that the foregoing shall not limit the rights of the Issuer to take any such action with respect to any Liquidity Provider to which the obligations of such Holder have been delegated in accordance with Section 6.03(e) and (f). The provisions of this Section 6.10 shall survive the termination of this Agreement.

Section 6.11.        Recourse Against Certain Parties

No recourse under or with respect to any obligation, covenant or agreement of any Holder shall be had against any incorporator, stockholder, affiliate, officer, member, manager, partner, employee or director of such Holder, as such, by the enforcement of any assessment, by any legal or equitable proceeding, by virtue of any statute or otherwise; it being expressly agreed and understood that the agreements of such Holder contained in this Agreement and all of the other agreements, instruments and documents entered into by it pursuant hereto or in connection herewith are, in each case, solely the corporate obligations of such Holder, and that no personal liability whatsoever shall attach to or be incurred by the any incorporator, stockholder, affiliate, officer, member, manager, partner, employee or director of such Holder, as such, or any of them, under or by reason of any of the obligations, covenants or agreements of such Holder contained in this Agreement or in any other such instrument, document or agreement, or which are implied therefrom, and that any and all personal liability of every such incorporator, stockholder, Affiliate, officer, employee, member, manager, partner or director of such Holder for breaches by such Holder of any such obligations, covenants or agreements, which liability may arise either at common law or at equity, by statute or constitution, or otherwise, is hereby expressly waived as a condition of and in consideration for the execution of this Agreement. The provisions of this Section 6.11 shall survive the termination of this Agreement.

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Section 6.12.        Non-Petition; Non-Recourse Obligations

Each Holder agrees that it shall not cause the filing of a petition in bankruptcy against the Issuer in any jurisdiction for any amounts due hereunder until at least one year and one day, or if longer, the applicable preference period then in effect, after the payment in full of all the Notes issued under the Indenture. The Class A-1A VFN Notes and all obligations of the Issuer under this Agreement are non-recourse obligations of the Issuer. The Class A-1A VFN Notes and all of the other obligations of the Issuer under this Agreement are payable solely from the Loan Assets and other Collateral pledged by the Issuer to secure the Notes subject to the availability of funds for such purpose in accordance with the Priority of Payments established under the Indenture and, following realization of the Collateral, any claims against the Issuer shall be extinguished and shall not thereafter revive. None of the security holders, stockholders, beneficial owners, members, managers, officers, directors, employees, partners or incorporators of the Issuer, the Servicer, the Placement Agent, the Trustee, any of their respective affiliates and any other person or entity shall be obligated to make payments on the Notes. Consequently, the Holders of the Notes must rely solely on amounts received in respect of the Loan Assets and other Collateral pledged to secure the Notes for the payment of principal thereof and interest, Class A-1A VFN Commitment Fee and all other amounts owing thereon. The provisions of this Section 6.12 shall survive the termination of this Agreement.

Section 6.13.        [Reserved]

Section 6.14.        Disclosure

Each Holder and the Class A-1A VFN Agent shall (subject to the terms of the Indenture including Section 11.01 thereof) be permitted to disclose information (a) to such of its officers, directors, employees, attorneys and accountants, Liquidity Providers and rating agencies as need to know such information in connection with its participation in any of the transactions or the administration of or litigation concerning this Agreement; (b) to the extent required by applicable laws and regulations or by any subpoena or similar legal process, or requested by any governmental authority; (c) to the extent such information (i) becomes publicly available other than as a result of a breach of this Agreement or the tortious act of a third party or (ii) becomes available to any such party on a non-confidential basis; or (d) to the extent that the Issuer shall have previously consented to such disclosure in writing. Notwithstanding anything to the contrary herein, all persons may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transactions described herein and all materials of any kind (including opinions or other tax analyses) that are provided to such person relating to such tax treatment and tax structure. This authorization to disclose the tax treatment and tax structure does not permit disclosure of information identifying the Issuer, the Servicer or any other party to the transactions contemplated hereby or the pricing (except to the extent pricing is relevant to tax structure or tax treatment) of this offering.

Each of the parties hereby covenants and agrees that:

(a)           Except with respect to the Class A-1A VFN Holder Collateral Account, it waives any right to set-off and to appropriate and apply any and all deposits and any other indebtedness at any time held or owing thereby to or for the credit or the account of Clipper

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Receivables Company, LLC against and on account of the obligations and liabilities of Clipper Receivables Company, LLC to such party under this Agreement; and

(b)           notwithstanding anything to the contrary herein no provision of this Agreement affecting the rights or duties of Clipper Receivables Company, LLC or a Liquidity Provider for Clipper Receivables Company, LLC may be amended or waived without the written consent of Clipper Receivables Company, LLC.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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

ARCC COMMERICIAL LOAN TRUST 2006, as
the Issuer
By:	WILMINGTON TRUST COMPANY, not
	in its individual capacity, but solely as
	Owner Trustee on behalf of the Trust
By:	/s/ Michele C. Maria
Name:	Michele C. Maria
Title:	Financial Services Officer

U.S. BANK NATIONAL ASSOCIATION, as
Class A-2 Agent
By:	/s/ Joel D. Cough
Name:	Joel D. Cough
Title:	Assistant Vice President

CLIPPER RECEIVABLES COMPANY LLC, as
Class A-1A VFN Note Holder
By:	/s/ R. Douglas Donaldson
Name:	R. Douglas Donaldson
Title:	Treasurer

STATE STREET GLOBAL MARKETS, LLC,
as Administrator for Clipper Receivables Company,
LLC
By:	/s/ Todd Meringoff
Name:	Todd Meringoff
Title:	Vice President

SCHEDULE 2.01

INITIAL HOLDERS

Name of Holder	Initial Class A-1A  Address for Notices
	VFN Commitment
Sailorlaunch & Company, as Beneficiary	$50,000,000
of Clipper Receivables Company, LLC

Clipper Receivables Company LLC shall not make a Qualified Securitization Pledge

Payment Instructions:

Account Bank: State Street Bank

ABA#: 011000028

Account#: 00076026

Account Name: Sailorlaunch & Co.

Attn: Income Dept

Fund BFLM

Tax ID#: 13-4251510

CLASS A-1A VFN AGENT

Address for Notices

U.S. Bank National Association

Corporate Trust Services

One Federal Street

Boston, Massachusetts 02110

Attention: CDO Unit - ARCC 2006/Class A-1A VFN NPA

Facsimile: 866-386-0156

SCHEDULE 3.02

Pursuant to Section 3.02 of the Class A-1A VFN Purchase Agreement to which this Schedule 3.02 is attached, each Holder (including each Assignee thereof) and each Committed Liquidity Provider, if any (as if it were deemed to be a Holder hereunder) hereby makes the acknowledgments, covenants, representations and agreements set forth below solely with respect to itself:

(1)           The Holder (a)(i) is a Qualified Institutional Buyer who is acquiring the Notes in reliance on the exemption from the Securities Act registration provided by Rule 144A thereunder or (ii) is a non-U.S. Person and is acquiring the Class A-1A VFN Notes in certificated form in an offshore transaction in reliance on the exemption from the Securities Act registration provided by Regulation S thereunder and (b) understands the Class A-1A VFN Notes will bear the legend set forth below.

(2)           The Holder understands that the Class A-1A VFN Notes are being offered only in a transaction not involving any public offering in the United States within the meaning of the Securities Act, the Class A-1A VFN Notes have not been and will not be registered under the Securities Act, and, if in the future the Holder decides to offer, resell, pledge or otherwise transfer the Class A-1A VFN Notes, such Class A-1A VFN Notes may be offered, resold, pledged or otherwise transferred only in accordance with the legend on such Class A-1A VFN Notes described herein. The Holder acknowledges that no representation is made by the Issuer or the Placement Agent as to the availability of any exemption under the Securities Act or any state securities laws for resale of the Class A-1A VFN Notes.

(3)           The Holder understands that an investment in the Class A-1A VFN Notes involves certain risks, including the risk of loss of a substantial part of its investment under certain circumstances. The Holder has had access to such financial and other information concerning the Issuer and the Class A-1A VFN Notes as it deemed necessary or appropriate in order to make an informed investment decision with respect to its acquisition of the Class A-1A VFN Notes, including an opportunity to ask questions of and request information from the Issuer.

(4)           In connection with the purchase of the Class A-1A VFN Notes: (i) none of the Issuer or the Placement Agent is acting as a fiduciary or financial or investment adviser for the Holder; (ii) the Holder is not relying (for purposes of making any investment decision or otherwise) upon any advice, counsel or representations (whether written or oral) of the Issuer or the Placement Agent other than any in a current offering memorandum for such Class A-1A VFN Notes and any representations expressly set forth in a written agreement with such party; (iii) none of the Issuer or the Placement Agent has given to the Holder (directly or indirectly through any other person) any assurance, guarantee, or representation whatsoever as to the expected or projected success, profitability, return, performance, result, effect, consequence, or benefit (including legal, regulatory, tax, financial, accounting, or otherwise) of its purchase or the documentation for the Class A-1A VFN Notes; (iv) the Holder has consulted with its own legal, regulatory, tax, business, investment, financial, and accounting advisers to the

1

extent it has deemed necessary, and it has made its own investment decisions (including decisions regarding the suitability of any transaction pursuant to the documentation for the Class A-1A VFN Notes) based upon its own judgment and upon any advice from such advisers as it has deemed necessary and not upon any view expressed by the Issuer or the Placement Agent; (v) the Holder has determined that the rates, prices or amounts and other terms of the purchase and sale of the Class A-1A VFN Notes reflect those in the relevant market for similar transactions; (vi) the Holder is purchasing the Class A-1A VFN Notes with a full understanding of all of the terms, conditions and risks thereof (economic and otherwise), and it is capable of assuming and willing to assume (financially and otherwise) those risks; (vii) the Holder is a sophisticated investor familiar with transactions similar to its investment in the Class A-1A VFN Notes; and (viii) the purchase of such Class A-1A VFN Notes by the Holder is within its powers and authority, is permissible under applicable laws governing such purchase, has been duly authorized by it and otherwise complies with applicable laws.

(5)           [Reserved].

(6)           Each Holder of Class A-1A VFN Notes understands that the Class A-1A VFN Notes will bear a legend to the following effect unless the Issuer determines otherwise in compliance with applicable law:

“THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES OR BLUE SKY LAW OF ANY STATE. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES THAT THIS NOTE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER REQUIREMENTS OF LAWS AND ONLY (1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A “QIB”) PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) IN CERTIFICATED FORM TO AN INSTITUTIONAL “ACCREDITED INVESTOR” (WITHIN THE MEANING OF RULE 501 (a)(1)—(3) OR (7) UNDER THE SECURITIES ACT) PURCHASING FOR INVESTMENT AND NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, IN EACH CASE, SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE INDENTURE AND (B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER REQUIREMENTS OF LAWS OR IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND SECURITIES AND BLUE SKY LAWS OF ANY

2

STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION, (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (4) PURSUANT TO ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (5) PURSUANT TO A VALID REGISTRATION STATEMENT. THE PURCHASE OF THIS NOTE WILL BE DEEMED A REPRESENTATION BY THE ACQUIRER THAT IT IS NOT, AND IS NOT ACQUIRING OR HOLDING THIS NOTE, DIRECTLY OR INDIRECTLY, ON BEHALF OF OR WITH ANY ASSETS OF, AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 (AS AMENDED, “ERISA”) THAT IS SUBJECT TO TITLE I OF ERISA, A “PLAN” DESCRIBED IN AND SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986 (AS AMENDED, THE “CODE”) (COLLECTIVELY, A “PLAN”), OR OTHER PLAN OR ARRANGEMENT SUBJECT TO ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAW SUBSTANTIVELY SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE (“SIMILAR LAW”).

THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

ADDITIONAL AMOUNTS MAY BE BORROWED IN RESPECT OF A CLASS A-1A VFN NOTE AFTER THE DATE OF ISSUE THEREOF IN ACCORDANCE WITH THE INDENTURE AND THE CLASS A-1A VFN PURCHASE AGREEMENT DATED AS OF THE CLOSING DATE AMONG THE ISSUER AND THE HOLDERS OF CLASS A-1A VFN NOTES PARTY THERETO.”

(7)           The Holder will not, at any time, offer to buy or offer to sell the Class A-1A VFN Notes by any form of general solicitation or advertising, including, but not limited to, any advertisement, article, notice or other communication published in any newspaper, magazine or similar medium or broadcast over television or radio or seminar or meeting whose attendees have been invited by general solicitations or advertising.

(8)           The Holder is not purchasing the Class A-1A VFN Notes with a view to the resale, distribution or other disposition thereof in violation of the Securities Act.

(9)           The Holder has carefully read and understands the Offering Memorandum, including, without limitation, the “Risk Factors” Section of the Offering Memorandum, and has based its decision to purchase the Class A-1A VFN Notes on the information contained therein and not upon any other information, if any, provided by the Issuer or the Placement Agent. The Holder has received copies of the Transaction Documents and all relevant information as it shall have deemed necessary or desirable in order to make

3

its investment decision. It understands that the terms of the transactions contemplated by the Transaction Documents (as set forth in the Transaction Documents) supercede and replace all terms described or summarized in any term sheet or the Offering Memorandum previously distributed to it. The Holder understands that an investment in the Class A-1A VFN Notes involves certain risks, including the risk of loss of all or a substantial part of its investment under certain circumstances. The Holder understands that the Class A-1A VFN Notes will be highly illiquid and are not suitable for short-term trading.

(10)         The Holder will provide notice to each Person to whom it proposes to transfer any interest in the Class A-1A VFN Notes of the transfer restrictions set forth in Section 4.02 of the Indenture, including the Exhibits referenced in Section 4.02 of the Indenture.

(11)         The Holder understands that the Indenture permits the Issuer to require any holder of a beneficial interest in the Notes who is determined not to be either (i) a Qualified Institutional Buyer or (ii) a non-U.S. Person at the time of acquisition of such Class A-1A VFN Notes to sell all its right, title and interest in such Class A-1A VFN Notes to a Person who is either (A) both a Qualified Institutional Buyer or (B) a non-U.S. Person in a transaction meeting the requirements of Rule 144A or Regulation S, as applicable.

(12)         The Holder acknowledges that no action was taken or is being contemplated by the Issuer that would permit a public offering of the Class A-1A VFN Notes or possession or distribution of the Offering Memorandum with respect thereto or any amendment thereof or supplement thereto or any other offering material relating to the Class A-1A VFN Notes in any jurisdiction where, or in any circumstances in which, action for those purposes is required. Nothing contained in the Offering Memorandum relating to the Class A-1A VFN Notes will constitute an offer to sell or a solicitation of an offer to purchase any Class A-1A VFN Notes in any jurisdiction where it is unlawful to do so absent the taking of such action or the availability of an exemption therefrom.

(13)         Each initial Holder and each subsequent transferee of a Class A-1A VFN Note (or any interest therein) hereby represents, warrants and covenants that, at the time of its acquisition and throughout the period of its holding (including, without limitation, the exercise of any rights thereunder) and disposition of such Class A-1A VFN Note (or any interest therein), either (a) it is not, and is not directly or indirectly acquiring or holding the Note or any interest therein for, on behalf of, or with any assets of, an employee benefit plan or other arrangement subject to Title I of ERISA, a plan subject to Section 4975 of the Code, or a plan or other arrangement subject to any federal, state, local, non-U.S. or other law that is substantively similar to the foregoing provisions of ERISA or the Code (“Similar Law”).

(14)         The Holder is not a conduit entity participating in a conduit financing arrangement, within the meaning of Section 7701(1) of the Code or Treasury Regulation financing arrangement. The Holder shall indemnify the Issuer against any Taxes

4

imposed on the Issuer due to the IRS finding that the Holder is a conduit entity participating in a conduit financing arrangement.

(15)         The Holder understands that the Issuer may require certification acceptable to the Issuer (a) to permit the Issuer to make payments to it without, or at a reduced rate of withholding or (b) to enable the Issuer to qualify for a reduced rate of withholding in any jurisdiction from or through which the Issuer received payments on its assets. It agrees to provide any such certification that is requested by the Issuer that is it legally capable of providing and is otherwise consistent with this Agreement.

(16)         The Holder understands that the Issuer has the right to request and receive from it additional representations and undertakings, that it is legally capable of providing, from time to time, as the Issuer may deem necessary and prudent in order to comply with legal requirements applicable to the Issuer.

(17)         The Holder acknowledges that the Issuer, the Placement Agent and others will rely upon the truth and accuracy of the foregoing acknowledgments, representations and agreements and agrees that if any of the acknowledgments, representations or agreements made or deemed to have been made by it by its purchase of the Class A-1A VFN Notes are no longer accurate, it shall promptly notify the Issuer and the Placement Agent.

(18)         The Holder is a United States Person (as defined in Section 7701(a)(30) of the Code).

5

EXHIBIT A

ASSIGNMENT AND ACCEPTANCE

Reference is made to the Class A-1A VFN Purchase Agreement dated as of July 7, 2006 (as modified and supplemented and in effect from time to time, the “Class A-1A VFN Purchase Agreement”) between ARCC Commercial Loan Trust 2006, a statutory trust created and existing under the laws of the State of Delaware (the “Issuer”), the Holders party thereto and U.S. Bank National Association, as Class A-1A VFN Agent (the “Class A-1A VFN Agent”), relating to the Class A-1A VFN Notes issued under the Indenture dated as of July 7, 2006 (as modified and supplemented and in effect from time to time, the “Indenture”) entered into by the Issuer and U.S. Bank National Association, as the Trustee.  Terms used but not defined herein have the respective meanings given to such terms in (or incorporated by reference in) the Class A-1A VFN Purchase Agreement and in the Indenture.

The Assignor named on the signature pages hereof (the “Assignor”) hereby sells and assigns to the Assignee named on the signature pages hereof (the “Assignee”), and the Assignee hereby purchases and assumes from the Assignor, effective as of the Assignment Date set forth below, the interests set forth below (the “Assigned Interest”) in the Assignor’s rights and obligations under the Class A-1A VFN Purchase Agreement, including, without limitation, the interests set forth below in the Class A-1A VFN Notes held by (and the related Class A-1A VFN Commitment of and outstanding principal amount of Advances held by) the Assignor on the Assignment Date.  The Assignee hereby acknowledges receipt of a copy of the Class A-1A VFN Purchase Agreement and the Indenture.  From and after the Assignment Date (A) the Assignee shall be a party to and be bound by the provisions of the Class A-1A VFN Purchase Agreement and, to the extent of the Assigned Interest, have the rights and obligations of a Holder thereunder and (B) the Assignor shall, to the extent of the Assigned Interest, relinquish its rights and be released from its obligations under the Class A-1A VFN Purchase Agreement.  The Assignor hereby represents and warrants to the Assignee that, as of the Assignment Date, the Assignor (1) owns the Assigned Interest free and clear of any lien or other encumbrance and (2) is not aware of any Default or Event of Default under the Indenture.  The Assignee hereby makes to the Assignor, the Issuer, the Servicer, the Trustee and the Class A-1A VFN Agent all of the representations and warranties set forth in Section 3.02 of the Class A-1A VFN Purchase Agreement (including those made by reference to Schedule 3.02 thereof).

The Assignee hereof hereby represents and warrants that it is not subject to Class A-1A VFN Increased Costs as of the date of this Assignment.

Each of the parties hereby covenants and agrees that so long as [                                    ] is the registered owner of the Class A-1A VFN Notes:

(a)           except with respect to the Class A-1A VFN Holder Collateral Account, it waives any right to set-off and to appropriate and apply any and all deposits and any other indebtedness at any time held or owing thereby to or for the credit or the account of [                                           ] against and on account of the obligations and liabilities of [                                           ] to such party under this Agreement; and

A-1

(b)           notwithstanding anything to the contrary herein no provision of this Agreement adversely affecting the rights or duties of [                                             ] or a Liquidity Provider for [                                             ] may be amended or waived without the written consent of [                                             ].

This Assignment and Acceptance shall be governed by and construed in accordance with the law of the State of New York.

Legal Name of Assignor:
Legal Name of Assignee:
Assignee’s Address for Notices:
Fax No.:
Details of electronic messaging system:
Payment Instructions:
Federal Taxpayer ID No. of Assignee:
Effective Date of Assignment (“Assignment Date”):

	Amount Assigned	Amount Retained
Class A-1A VFN Commitment:	U.S.$[                    ]	U.S.$[                    ]
Outstanding Principal
Amount of Advances:	U.S.$[                    ]	U.S.$[                    ]

The Assignee [shall/shall not] make a Qualified Securitization Pledge

[[Name of Holder] elects to be subject to Section 6.03(f) of the Class A-1A VFN Purchase Agreement]

The terms set forth above are hereby agreed to:

[Name of Assignor], as Assignor

By:
	Name:
	Title:

[Name of Assignee], as Assignee

By:
	Name:
	Title:

A-2

[                                                  ],

as Committed Liquidity Provider with regard to

[                                                  ],

as Class A-1A VFN Note Holder

By:
	Name:
	Title:

A-3

EXHIBIT B

FORM OF DRAW REQUEST
(Advances)

[Date]

U.S. Bank National Association
One Federal Street, 3rd Floor
Boston, Massachusetts 02110
Attention:  ARCC 2006-1

Re:Class A-1A VFN Purchase Agreement dated as of July 7, 2006

Ladies and Gentlemen:

This Draw Request is delivered to you pursuant to Sections 2.03 of that certain Class A-1A VFN Purchase Agreement dated as of July 7, 2006 (as modified and supplemented and in effect from time to time, the “Class A-1A VFN Purchase Agreement”) between ARCC Commercial Loan Trust 2006, a statutory trust created and existing under the laws of the State of Delaware (the “Issuer”), the Holders party thereto and U.S. Bank National Association, as Class A-1A VFN Agent (the “Class A-1A VFN Agent”).  Capitalized terms used but not defined herein shall have the respective meanings given to such terms in (or incorporated by reference in) the Class A-1A VFN Purchase Agreement, the Sale and Servicing Agreement and the Indenture.

1.The Issuer hereby requests a Draw in the principal amount of $                      on                             , 20    , which date shall be the Draw Date.

(i)The amount of [Holder’s] Advance pursuant to the requested Draw is $                     .

(ii)The amount of [Holder’s] Advance pursuant to the requested Draw is $                     .

(iii)The amount of [Holder’s] Advance pursuant to the requested Draw is $                     .

2.The Aggregate Outstanding Principal Balance for all Notes as of the date above is $                     .

3.The Aggregate Outstanding Loan Balance as of the date above is $                     .

4.The Outstanding Principal Balance of the Class A-1A VFN Notes prior to the requested Draw is $                     .

5.The Outstanding Principal Balance of the Class A-1A VFN Notes after the Advances listed in clause 1 have been made shall be $                     .

B-1

6.The Issuer hereby requests that the Advances be made on and as of the Draw Date.

7.The amount needed to cause the Class A-1A VFN Funding Test to be satisfied is $                     .

8.All of the conditions applicable to the Advance requested herein as set forth in the Class A-1A VFN Purchase Agreement have been satisfied as of the date hereof and will remain satisfied to the date of such Advance.

IN WITNESS WHEREOF, the undersigned have executed this Draw Request this        day of                   , 2006.

ARCC COMMERCIAL LOAN TRUST 2006,
as the Issuer
By:	Wilmington Trust Company, not in its individual capacity, but solely as Owner Trustee on behalf of the Trust
By:
Name:
Title:

B-2

EX-31.1

Exhibit 31.1

Certification of President

of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d-14(a)

I, Michael J. Arougheti, certify that:

1.     I have reviewed this Quarterly Report on Form 10-Q of Ares Capital Corporation;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2006

/s/ Michael J. Arougheti

Michael J. Arougheti

President

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d-14(a)

I, Daniel F. Nguyen, certify that:

1.     I have reviewed this Quarterly Report on Form 10-Q of Ares Capital Corporation;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2006

/s/ Daniel F. Nguyen

Daniel F. Nguyen

Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

Certification of President and Chief Financial Officer

Pursuant to

18 U.S.C. Section 1350

In connection with the Quarterly Report on Form 10-Q of Ares Capital Corporation (the “Company”) for the quarterly period ended June 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Michael J. Arougheti, as President of the Company, and Daniel F. Nguyen, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

1.     The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 9, 2006

/s/ Michael J. Arougheti

Michael J. Arougheti

President

(Principal Executive Officer)

/s/ Daniel F. Nguyen

Daniel F. Nguyen

Chief Financial Officer

(Principal Financial Officer)

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Ares Capital Corporation and will be retained by Ares Capital Corporation and furnished to the Securities and Exchange Commission or its staff upon request.