Exhibit 10.1

 

THIRD AMENDMENT TO CREDIT AGREEMENT

 

THIS THIRD AMENDMENT TO CREDIT AGREEMENT (the “Agreement”) dated as of September
12, 2014, is by and among SANTANDER BANK, N.A. (formerly known as Sovereign
Bank, N.A.) as agent for the Lenders hereunder (in such capacity, together with
its successors in such capacity, the “Agent”), each of the lenders that is a
party or signatory hereto and identified under the caption “LENDERS” on the
signature pages hereto or that shall become a “Lender” thereunder (individually,
a “Lender” and, collectively, the “Lenders”), and FULL CIRCLE CAPITAL
CORPORATION, a Maryland corporation having an office at 102 Greenwich Avenue,
2nd Floor, Greenwich, CT 06830 (the “Borrower”).

 

WITNESSETH:

 

WHEREAS, the Agent, the Lenders and the Borrower entered into a certain Credit
Agreement dated June 3, 2013, as previously amended (collectively, the “Credit
Agreement”), pursuant to which the Lenders agreed to extend certain credit and
make certain loans to the Borrower; and

 

WHEREAS, the Borrower has requested the Agent and the Lenders, and the Agent and
the Lenders have agreed, to make certain amendments to the Credit Agreement, all
as more fully described herein.

 

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

 

1.                  Defined Terms. Except as otherwise indicated herein, all
words and terms defined in the Credit Agreement shall have the same meanings
when used herein.

 

2.                  Amendments to Credit Agreement and other Loan Documents.

 

(a)                The definitions “Eligible Loan Receivable” and “Security
Value of Eligible Loans Receivable” appearing in Section 1.1 of the Credit
Agreement are hereby renamed, respectively, “Eligible Asset Based Loan
Receivable” and “Security Value of Eligible Asset Based Loans Receivable,” and
such definitions are amended and restated pursuant to Section 2(b) of this
Agreement. All references in the Credit Agreement to Eligible Loan Receivable
and Security Value of Eligible Loans Receivable shall hereafter be deemed to be
references, respectively, to Eligible Asset Based Loan Receivable and Security
Value of Eligible Asset Based Loans Receivable.

 

(b)               The following definitions appearing in Section 1.1 of the
Credit Agreement are hereby amended to read in their entirety as follows:

 

“Average Excess Availability” means, as of the final day of each calendar month
or other measurement period specified in this Agreement, the arithmetic average
of the Excess Availability as reflected on all Borrowing Base Certificates
submitted by the Borrower during such calendar month or other measurement
period.

 

 

 

 

 

“Borrowing Base” means at any time an amount equal to:

 

(i)               the FCC Loan Availability; minus

 

(ii)              the FCC Borrower Overage; minus

 

(iii)             the Minimum Excess Availability; minus

 

(iv)             such reserves as the Agent may deem proper and necessary from
time to time in its sole discretion.

 

“Borrowing Base Certificate” means a certificate, in substantially the form of
Exhibit E hereto or such other form acceptable to the Agent, by which the
Borrower calculates the Borrowing Base, together with all back-up or supporting
information or documentation required by the Agent. For the avoidance of doubt,
the amounts contained in Exhibit E are for illustrative purposes only and have
no bearing on the actual Borrowing Base as reflected in the Borrowing Base
Certificates submitted by the Borrower from time to time.

 

“Eligible Asset Based Loan Receivable” means an Asset Based Loan Receivable
(with the corresponding Asset Based Loan valued at the lesser of (i) the
outstanding principal balance thereof, (ii) its Fair Value as reflected in the
Borrower’s most recent SEC filing that addresses the Fair Value of FCC Loans or,
if a particular Asset Based Loan is not referenced in such filing, as reflected
in the most recent External Valuation Report or the Borrower’s records and (iii)
the amount determined by the Agent based upon its reasonable assessment of the
quality and nature of the Asset Based Loan) that meets all of the following
requirements on its date of origination and continuing thereafter until
collected:

 

(a) such Loan Receivable arises from an FCC Loan which was underwritten and
closed in compliance with the Credit Policy;

 

(b) such Loan Receivable is evidenced by loan documentation substantially
similar to the loan documentation heretofore used by the Borrower and disclosed
to the Agent and, in all events, in form and substance acceptable to the Agent;

 

(c) the amount of such Loan Receivable is based upon and limited by (i) a
borrowing base, evidenced by a borrowing base certificate which the FCC Borrower
is required to submit not less frequently than monthly, setting forth advance
rates for eligible accounts receivable and/or eligible inventory, or (ii) an
appraisal or other valuation acceptable to the Agent for assets securing the
underlying FCC Loan;

 

2

 

 

 

(d) no payment default exists under the FCC Loan giving rise to such Loan
Receivable, the FCC Borrower is in material compliance with all other covenants
contained in the documentation evidencing and securing the FCC Loan, and the
Borrower or Guarantor (in its capacity as lender), as applicable, has not
declared a default or event of default under such FCC Loan, in each case without
giving effect to any waiver, extension, forbearance or modification granted by
the Borrower or Guarantor, unless such waiver, extension, forbearance or
modification has been approved in writing by the Agent;

 

(e) such Loan Receivable has an Internal Rating of 1, 2 or 3 and, to the extent
applicable, the ratio of the Fair Value over the cost basis of such FCC Loan is
not less than 93%; provided, however, if the External Rating Firm responsible
for the Fair Value Rating uses a range, the Fair Value Rating shall, for
purposes of this subsection (e), be deemed the mid-point of such range and
provided further, if the Internal Rating of a Loan Receivable has been upgraded
to 1, 2 or 3 from a prior Internal Rating of 4 or 5, the Borrower shall have
provided notification of such upgrade and, upon request, an explanation
therefor, which is acceptable to the Agent in its sole but reasonable
discretion;

 

(f) such Loan Receivable is not evidenced by chattel paper, a note or an
instrument of any kind, unless the original of the same has been delivered to
the Agent or the Custodian with any necessary endorsement (including an allonge)
sufficient to grant the Agent a first position, perfected Lien on the chattel
paper, note or instrument;

 

(g) the FCC Loan giving rise to such Loan Receivable is secured by a first
position, perfected Lien on substantially all of the assets of the FCC Borrower
and any other assets which, in accordance with the applicable underwriting
approvals or loan documentation, were intended to serve as collateral for the
FCC Loan;

 

(h) all tangible assets of the FCC Borrower securing the Loan Receivable are
covered by full replacement cost, extended coverage casualty insurance, and the
FCC Borrower is covered under a policy of liability insurance (broad form), the
premiums for which are fully paid, the limits and deductibles for which are
customary for the industry or business of the FCC Borrower, and the Borrower or
the Guarantor that made the FCC Loan is in possession of a current certificate
evidencing the same and naming the Borrower or such Guarantor as loss payee and
as an additional insured;

 

(i) the FCC Borrower with respect to such Loan Receivable (i) is not insolvent
or the subject of any bankruptcy or insolvency proceedings of any kind or of any
other proceeding or action, which might have a materially adverse effect on the
business of such FCC Borrower, (ii) is the subject of any such bankruptcy or
insolvency proceeding, but the FCC Loan was extended pursuant to a
debtor-in-possession or other financing order of a bankruptcy court, which order
is satisfactory to the Agent in its sole but reasonable discretion, or (iii) is
not, in the judgment of the Agent, deemed ineligible for credit for any other
reason;

 

3

 

 

 

(j) if the FCC Borrower with respect to such Loan Receivable is a corporation,
limited liability company, general or limited partnership or other business
entity, such FCC Borrower is organized under the laws of the United States of
America, any state thereof or Puerto Rico and has its corporate headquarters or
another principal place of business located in the United States of America, any
state thereof or Puerto Rico;

 

(k) such Loan Receivable is a valid, legally enforceable obligation of the FCC
Borrower with respect thereto and is not subject to any present or contingent,
and no facts exist which are the basis for any future, offset, counterclaim or
other defense on the part of such FCC Borrower, including without limitation,
any claim or alleged claim of lender liability;

 

(l) the Agent has a first position, perfected Lien on such Loan Receivable,
which is subject to no other Lien, other than Permitted Liens;

 

(m) the FCC Borrower with respect to such FCC Loan is not an Affiliate of the
Borrower or any Guarantor;

 

(n) such Loan Receivable is not subject to any provision prohibiting its
assignment or requiring notice of or consent to such assignment;

 

(o) such Loan Receivable (or portion thereof) does not represent amounts owing
as a late fee, interest (including, without limitation, “payment in kind”
interest), prepayment premium or other fees or charges;

 

(p) the FCC Borrower with respect to such Loan Receivable is not the United
States government or any instrumentality or agency thereof;

 

(q) the FCC Borrower is not a business development company or a regulated
investment company, as such terms are defined under the 1940 Act;

 

(r) such Loan Receivable is not owned or held by an SBIC Subsidiary;

 

(s) unless otherwise approved by the Agent in writing in its sole but reasonable
discretion, such FCC Loan at no time constituted a Cash Flow Loan; and

 

(t) such Loan Receivable (or any portion thereof) is not deemed ineligible by
the Agent for any other reason in the exercise of its sole but reasonable
judgment.

4

 

 

 

“Eligible Cash Flow Loan Receivable” means the principal portion of an FCC Loan
(valued at the lesser of (i) the outstanding principal balance thereof, (ii) its
Fair Value as reflected in the Borrower’s most recent SEC filing that addresses
the Fair Value of FCC Loans or, if a particular Cash Flow Loan is not referenced
in such filing, as reflected in the most recent External Valuation Report or the
Borrower’s records and (iii) the amount determined by the Agent based upon its
reasonable assessment of the quality and nature of the Cash Flow Loan) that
satisfies all of the criteria for an Eligible Asset Based Loan Receivable,
except that the amount of the FCC Loan (A) is not determined in accordance with
a borrowing base, appraisal or other valuation and, accordingly, does not
satisfy the criteria set forth in subsection (c) of the definition Eligible
Asset Based Loan Receivable and (B) does not exceed sixty-five percent (65%) of
the enterprise value of the FCC Borrower as established to the reasonable
satisfaction of the Borrower; provided, however, the amount of the FCC Loan that
would constitute an Eligible Cash Flow Loan Receivable but for the provisions of
this clause (B) shall constitute an Eligible Cash Flow Loan Receivable to the
extent of sixty-five percent (65%) of the enterprise value of the FCC Borrower.

 

“FCC Borrower Overage” means, with respect to all FCC Loans under which a single
FCC Borrower or any of its Affiliates is the borrower, the amount by which the
Security Value of Eligible Asset Based Loans Receivable plus the Security Value
of Eligible Cash Flow Loans Receivable plus the Security Value of Eligible
Second Lien Loans Receivable exceed $6,000,000 or such greater amount as may be
approved by the Required Lenders.

 

“FCC Loan” means a loan or extension of credit made by the Borrower or a
Guarantor to an FCC Borrower, including without limitation, an Asset Based Loan,
a Cash Flow Loan and a Second Lien Loan.

 

“FCC Loan Availability” means the lesser of:

 

(A)        (i) the Security Value of Eligible Asset Based Loans Receivable; plus

 

(ii) the Security Value of Eligible Cash Flow Loans Receivable; plus

 

(iii) the Security Value of Eligible Second Lien Loans Receivable; provided,
however, the Security Value of Eligible Second Lien Loans Receivable shall not
exceed 20% of the lesser of the Revolving Commitment or the Borrowing Base;

 

provided, further, that the Security Value of Eligible Cash Flow Loans
Receivable plus the Security Value of Eligible Second Lien Loans Receivable, in
each case for which the FCC Borrower’s Leverage Ratio is greater than 5.5:1.0,
shall not exceed 10% of the lesser of the Revolving Commitment or the Borrowing
Base or

5

 

 

 

 

(B) sixty percent (60%) of the sum of (i) Eligible Asset Based Loans Receivable,
plus (ii) Eligible Cash Flow Loans Receivable, plus (iii) Eligible Second Lien
Loans Receivable.

 

“Loan Receivable” means, as to each FCC Loan, all principal owing to the
Borrower or a Guarantor (in its capacity as lender) under such FCC Loan,
including without limitation, principal owing under (i) an Asset Based Loan (an
“Asset Based Loan Receivable”), (ii) a Cash Flow Loan (a “Cash Flow Loan
Receivable”) and (iii) a Second Lien Loan (a “Second Lien Loan Receivable”).

 

“Minimum Excess Availability” means $3,500,000.

 

“Revolving Commitment” means $45,000,000, as such amount may be increased from
time to time pursuant to Section 2.1 of this Agreement.

 

“Security Value of Eligible Asset Based Loans Receivable” means the Applicable
Percentage, or such lesser percentage as the Agent may determine to be
appropriate from time to time based upon the Agent’s assessment of the quality
and nature of the Eligible Asset Based Loans Receivable taken as a whole, of
each Asset Based Loan included in determining the Security Value of Eligible
Asset Based Loans Receivable; provided, however, the Security Value of Eligible
Asset Based Loans Receivable with respect to which The Finance Company, LLC is
the FCC Borrower is $1,200,000.

 

“Security Value of Eligible Cash Flow Loans Receivable” means the Applicable
Percentage, or such lesser percentage as the Agent may determine to be
appropriate from time to time based upon the Agent’s reasonable assessment of
the quality and nature of the Eligible Cash Flow Loans Receivable taken as a
whole, of each Cash Flow Loan included in determining the Security Value of
Eligible Cash Flow Loans Receivable.

 

(c)                The following definitions are hereby added to, and inserted
alphabetically in, Section 1.1 of the Credit Agreement:

 

“Applicable Fiscal Quarter” means each quarter during a Fiscal Year in which the
Excess Availability remains less than $15,000,000 for 15 consecutive days.

 

“Applicable Percentage” means:

 

(i) with respect to each Asset Based Loan included in determining the Security
Value of Eligible Asset Based Loans Receivable, (A) 80%, for amounts of the
Asset Based Loan extended on the basis of advance rates that do not exceed 85%
of eligible accounts receivable, 50% of eligible inventory, 50% of the appraised
value of equipment securing the Asset Based Loan or, in the case of real
property collateral, 50% of the appraised, fair market value of such real
property or (B) 20%, for the amount of the Asset Based Loan in excess of the
amount calculated in accordance with the advance rates set forth in the
preceding clause (A);

6

 

 

 

(ii) with respect to each Cash Flow Loan included in determining the Security
Value of Eligible Cash Flow Loans Receivable, (A) 50%, if the FCC Borrower with
respect to such FCC Loan has generated EBITDA of not less than $3,500,000 and
the FCC Borrower’s Leverage Ratio is less than or equal to 4.0:1.0, (B) 40%, if
the FCC Borrower with respect to such FCC Loan has generated EBITDA of not less
than $3,500,000 and the FCC Borrower’s Leverage Ratio is greater than 4.0:1.0
but less than or equal to 5.5:1.0 or (C) 40%, if the FCC Borrower with respect
to such FCC Loan has generated EBITDA of not less than $10,000,000 and the FCC
Borrower’s Leverage Ratio is greater than 5.5:1.0, provided, however, the 40%
advance rate will apply only to the amount of the FCC Loan that does not result
in the FCC Borrower’s Leverage Ratio exceeding 5.5:1.0; and

 

(iii) with respect to each Second Lien Loan included in determining the Security
Value of Eligible Second Lien Loans Receivable, (A) 50%, if the Second Lien
Collateral Coverage is equal to or greater than 100% and the FCC Borrower with
respect to such FCC Loan has generated EBITDA of not less than $7,500,000 and
the FCC Borrower’s Leverage Ratio is less than or equal to 4.0:1.0, (B) 40%, if
the Second Lien Collateral Coverage is less than 100% and the FCC Borrower with
respect to such FCC Loan has generated EBITDA of not less than $7,500,000 and
the FCC Borrower’s Leverage Ratio is less than or equal to 5.5:1.0 or (C) 40%,
if the FCC Borrower with respect to such FCC Loan has generated EBITDA of not
less than $10,000,000 and the FCC Borrower’s Leverage Ratio is greater than
5.5:1.0, provided, however, the 40% advance rate will apply only to the amount
of the FCC Loan that does not result in the FCC Borrower’s Leverage Ratio
exceeding 5.5:1.0.

 

“Asset Based Loan” means a loan to an FCC Borrower (a) secured by a first
position perfected Lien on substantially all of the assets of the FCC Borrower
and all other assets which, in accordance with the applicable underwriting
approvals or loan documentation, were intended to serve as collateral for such
FCC Loan and (b) the amount of which is based upon and limited by (i) a
borrowing base, evidenced by a borrowing base certificate which the FCC Borrower
is required to submit not less frequently than monthly, setting forth advance
rates for eligible accounts receivable and/or eligible inventory or (ii) an
appraisal or other valuation acceptable to the Agent for equipment and/or real
property securing the underlying FCC Loan.

 

“Asset Coverage Ratio” means, with respect any Person, as of any date of
determination, the ratio of (a) total assets determined in accordance with GAAP
to (b) Funded Debt.

 

“Cash Flow Loan” means a loan to an FCC Borrower (i) secured by a first position
perfected Lien on substantially all of the assets of the FCC Borrower and all
other assets which, in accordance with the applicable underwriting approvals or
loan documentation, were intended to serve as collateral for such FCC Loan and
(ii) the amount of which is not based upon or limited by a borrowing base,
appraisal or other valuation of collateral.

7

 

 

 

“EBITDA” means, for any measurement period, net income of any Person for such
period plus, without duplication and to the extent deducted in calculating net
income (i) the sum of (a) interest expense for such period, (b) the sum of
federal, state, local and foreign income taxes paid in cash during such period,
(c) depreciation and amortization expense for such period, and (d) any
extraordinary or non-recurring items reducing net income for such period to the
extent approved by the Agent in its sole discretion, minus (ii) any
extraordinary or non-recurring items increasing net income for such period to
the extent approved by the Agent in its sole discretion. Except as otherwise
approved in writing by the Agent in its sole discretion, EBITDA, to the extent
it has to be measured for purposes of this Agreement (for the Borrower, the
Guarantors, each FCC Borrower and all other Persons), shall for all purposes be
measured on a trailing 12-month basis.

 

“Eligible Second Lien Loan Receivable” means the principal portion of a FCC Loan
(valued at the lesser of (i) the outstanding principal balance thereof, (ii) its
Fair Value as reflected in the Borrower’s most recent SEC filing that addresses
the Fair Value of FCC Loans or, if a particular Second Lien Loan in not
referenced in such filing, as reflected in the most recent External Valuation
Report or the Borrower’s records and (iii) the amount determined by the Agent
based upon its reasonable assessment of the quality and nature of the Second
Lien Loan) that satisfies all criteria for an Eligible Cash Flow Loan
Receivable, except that (a) it is secured by a second (rather than a first)
position perfected Lien on substantially all of the assets of the FCC Borrower
and all other assets which, in accordance with the applicable underwriting
approvals or loan documentation, were intended to serve as collateral for such
FCC Loan and (b) EBITDA for the FCC Borrower must be tested no less frequently
than quarterly.

 

“External Rating Firm” means a company engaged in the business of valuing and/or
rating loans, which is reputable and recognized in the commercial finance
industry for its provision of such services.

 

“External Valuation Report” is defined in Section 8.5(c) hereof.

 

“Fair Value” means, for each FCC Loan as of any date, the product of (i) the
Fair Value Rating of such FCC Loan multiplied by (ii) the then current
outstanding principal balance of such FCC Loan.

 

“Funded Debt” means, with respect to any Person at any date, without
duplication, (a) all Indebtedness of such Person for borrowed money (whether by
loan or the issuance and sale of debt securities) or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices), (b) any other Indebtedness of such Person which is evidenced by a
note, bond, debenture or similar instrument, including any promissory notes, (c)
all obligations of such Person under Capital Leases, (d) all Indebtedness of a
third party (other than a wholly-owned subsidiary) for borrowed money, which is
guaranteed by such Person, and (e) all obligations of such Person in respect of
letters of credit, acceptances or similar instruments issued or created for the
account of such Person.

8

 

 

 

“Incremental Revolving Commitment” is defined in Section 2.1(c) hereof.

 

“Incremental Revolving Loans” is defined in Section 2.1(c) hereof.

 

“Interest Coverage Ratio” means, as of any date of determination, the ratio of
(a) net investment income (inclusive of all operating expenses of the Borrower
as reported in its quarterly or annual financial statements) plus interest
expense (to the extent used in determining net investment income) for the
trailing 12-month period, all as reported by the Borrower in its quarterly or
annual financial statements for such period to (b) cash interest paid by the
Borrower on account of senior, secured Funded Debt for such period.

 

“Leverage Ratio” means the ratio of (a) Funded Debt as of any date of
determination to (b) EBITDA for the applicable measurement period ending as of
such date of determination.

 

“Portfolio Review” is defined in Section 8.5(b) hereof.

 

“Revolving Commitment Fee Percentage” means:

 

(i) prior to October 1, 2014, an amount equal to one-half of one percent (0.50%)
per annum; and

 

(ii) from and after October 1, 2014, an amount equal to (a) one percent (1.00%)
per annum, if the average daily outstanding principal balance of the Revolving
Loans during the immediately preceding month is less than 25% of the Revolving
Commitment, (b) three-quarters of one percent (0.75%) per annum, if the average
daily outstanding principal balance of the Revolving Loans during the
immediately preceding month is greater than or equal to 25% of the Revolving
Commitment but less than 50% of the Revolving Commitment, or (c) one-half of one
percent (0.50%) per annum, if the average daily outstanding principal balance of
the Revolving Loans during the immediately preceding month is greater than or
equal to 50% of the Revolving Commitment.

 

“Second Lien Collateral Coverage” means with respect to a FCC Borrower indebted
under a Second Lien Loan the ratio (expressed as a percentage) of (i) the value
of the collateral securing all Funded Debt of the FCC Borrower to (ii) the
aggregate financing commitments and (without duplication) Funded Debt of such
FCC Borrower, including without limitation, the commitment for the Second Lien
Loan, all as determined by the Agent in its sole but reasonable discretion. For
the purpose of clause (i) herein, the value of collateral securing all Funded
Debt shall be approximated using the following formula: 85% of the FCC
Borrower’s eligible accounts receivable plus 50% of the FCC Borrower’s eligible
inventory plus 50% of the appraised value of the FCC Borrower’s equipment plus
50% of the appraised, fair market value of the FCC Borrower’s real property;
provided, however this calculation will not be dispositive of the value of the
collateral securing all Funded Debt of the applicable FCC Borrower.

9

 

 

 

“Second Lien Collateral Coverage Report” means a report setting forth in detail
(including accounts receivable agings, inventory break downs and other
information requested by the Agent) the collateral securing the Funded Debt of
an FCC Borrower indebted under a Second Lien Loan, which collateral will be
assessed by the Agent in determining the Second Lien Collateral Coverage. For
the avoidance of doubt, the Second Lien Collateral Coverage Report will not be
dispositive of the extent of the Second Lien Collateral Coverage, which will be
determined by the Agent in its sole but reasonable discretion.

 

“Second Lien Loan” means a loan to an FCC Borrower secured by a second position
perfected Lien on substantially all of the assets of the FCC Borrower and all
other assets which, in accordance with the applicable underwriting approvals or
loan documentation, were intended to serve as collateral for such FCC Loan.

 

“Security Value of Eligible Second Lien Loans Receivable” means the Applicable
Percentage, or such lesser percentage as the Agent may determine to be
appropriate from time to time based upon the Agent’s assessment of the of the
quality and nature of the Eligible Second Lien Loans Receivable taken as a
whole, of each Second Lien Loan included in determining the Eligible Second Lien
Loans Receivable.

 

(d)               The following provisions are hereby added to Section 2.1 of
the Credit Agreement immediately after subsection (b) thereof:

 

(c) The Borrower may, by written notice to the Agent, request increases in the
Revolving Commitment (each, an “Incremental Revolving Commitment” and the
Revolving Loans thereunder, “Incremental Revolving Loans”) in an aggregate
amount not to exceed $15,000,000; provided that no Commitment of any Lender
shall be increased without the prior written consent of such Lender. Such notice
from the Borrower shall set forth (i) the amount of the Incremental Revolving
Commitment being requested (each such request to be in a minimum amount of
$5,000,000) and (ii) the date on which such Incremental Revolving Commitment is
to become effective. If all of the existing Lenders with a Revolving Commitment
elect to provide the requested Incremental Revolving Commitment, each Lender
shall be entitled to provide only a pro rata share of the requested Incremental
Revolving Commitment. If one or more of the existing Lenders elect not to
participate in the requested Incremental Revolving Commitment, the Lenders who
have elected to provide the Incremental Revolving Commitment shall decide, as
among themselves, their respective commitment amounts.

 

(d) No Incremental Revolving Commitment shall become effective hereunder unless:

 

(i) after giving effect to such Incremental Revolving Commitment, the initial
Incremental Revolving Loans to be made thereunder, and the application of the
proceeds therefrom, no Default or Event of Default shall exist at the time of
funding;

10

 

 

 

(ii) after giving effect to such Incremental Revolving Commitment, the initial
Incremental Revolving Loans to be made thereunder and the application of the
proceeds therefrom, the Borrower shall be in pro forma compliance with the
covenants set forth in this Agreement; and

 

(iii) the Incremental Revolving Commitment is evidenced by such substitute
Revolving Notes and any modification to this Agreement (executed and delivered
by the Borrower, the Agent and each Lender providing an Incremental Revolving
Commitment, it being acknowledged that any such modification to this Agreement,
so long as it relates solely to the Incremental Revolving Commitment, need not
be executed by any other Lender) or any of the other Loan Documents as
reasonably required by the Agent.

 

(e) Any Incremental Revolving Loans shall be on the same terms (as amended from
time to time) (including all-in pricing and maturity date) as are applicable to
the Revolving Loans outstanding as of the date the Incremental Revolving
Commitment is requested and subject to such fees as the Agent and Lenders
issuing the Incremental Revolving Commitment may agree.

 

(f) On any date on which the Incremental Revolving Commitment becomes effective,
each Lender providing a portion thereof shall become a Lender hereunder with
respect its share of the Incremental Revolving Commitment and any Incremental
Revolving Loans shall constitute Revolving Loans for all purposes of this
Agreement and the other Loan Documents. The terms and conditions of the
Incremental Revolving Commitment and the Incremental Revolving Loans made
pursuant thereto shall be identical to the terms of the Revolving Commitments
and the Revolving Loans, respectively, existing as of the date the Borrower
requests the Incremental Revolving Commitment.

 

(g) With respect to the subject matter hereof, Sections 2.1(c) through 2.1(f)
shall supersede any provision in Section 12.4 to the contrary.

 

(e)                Section 4.1 of the Credit Agreement is hereby amended to read
in its entirety as follows:

 

4.1 Revolving Commitment Fee. The Borrower shall pay to the Agent, for the
ratable account of the Lenders, a fee equal to the Revolving Commitment Fee
Percentage multiplied by the difference between the Revolving Commitment and the
average daily outstanding principal balance of the Revolving Loans (the
“Revolving Commitment Fee”). The Revolving Commitment Fee shall be computed on
the basis of the actual number of days elapsed over a year of 360 days and shall
accrue from the date hereof, to and including, the Revolving Loan Termination
Date. The Revolving Commitment Fee shall be payable monthly in arrears on the
first day of each month.

11

 

 

 

(f)                Section 8.1 of the Credit Agreement is hereby amended to read
in its entirety as follows:

 

8.1 Financial Covenants. The Borrower shall not cause, suffer or permit:

 

(i) its Balance Sheet Leverage Ratio to exceed 0.50 at any time;

 

(ii) its Asset Coverage Ratio to be less than 2.0:1.0 at any time from and after
December 31, 2014; and

 

(iii) its Interest Coverage Ratio to be less than 2.5:1.0, tested as of the last
day of each Applicable Fiscal Quarter for the trailing 12-month period.

 

(g)               Section 8.2 of the Credit Agreement is hereby amended by
renumbering subsection (xiii) as subsection (xv) and inserting the following
provisions as new subsections (xiii) and (xiv) in Section 8.2:

 

(xiii) External Valuation Reports. Promptly following the preparation of each
quarterly External Valuation Report pursuant to Section 8.5(c), a copy of each
such report;

 

(xiv) Second Lien Collateral Coverage Reports. Within 30 days after the end of
each quarter in a Fiscal Year, a copy of the Second Lien Collateral Coverage
Report as of the final day of the such quarterly period;

 

(h)               Section 8.5 of the Credit Agreement is hereby amended to read
in its entirety as follows:

 

8.5 Field Exams; Portfolio Reviews; External Valuations.

 

(a)                Upon the request of the Agent or any Lender, the Borrower
will allow the Agent or any Lender, and any of their officers, employees or
agents, at any time during normal business hours, to (i) visit and inspect the
facilities and the properties of the Borrower and the Administrator, (ii)
inspect and make copies or extracts from the books and records of the Borrower,
and (iii) discuss with the Administrator and the Borrower’s principal managers,
officers, employees and independent public accountants any and all matters with
respect to the business, assets, liabilities, financial condition, results of
operations and business prospects of the Borrower. Without limiting the
generality of the foregoing, the Agent shall be permitted to conduct periodic
field examinations of the Borrower and the Guarantors and their businesses and
operations in accordance with the Agent’s normal and customary practices;
provided, however, so long as no Default or Event of Default exists, the Agent
and the Lenders shall not conduct more than three field examinations in the
aggregate in any 12-month period.

12

 

 

 

(b) At the request of the Agent, the Borrower will participate and will cause
its principal managers and officers to participate in meetings with the Agent
and the Lenders for the purpose of reviewing and discussing the corporate
minutes of the Borrower’s meetings with the FCC Borrowers and otherwise
discussing the performance of the FCC Loans with the Agent and the Lenders (each
a “Portfolio Review”). If no Default or Event of Default exists, from and after
the Closing Date, the Agent and the Lenders may collectively conduct one
Portfolio Review (i) each three-month period following the most recent Portfolio
Review, if the Average Excess Availability was less than $8,000,000 for the
prior three months or (ii) each four-month period following the most recent
Portfolio Review, if the Average Excess Availability was greater than or equal
to $8,000,000 but less than $15,000,000 for the prior four months or (iii) each
six-month period following the most recent Portfolio Review, if the Average
Excess Availability was greater than $15,000,000 for the prior six months.

 

(c) On or before the 30th day of each quarter of each Fiscal Year, the Borrower
shall cause to be prepared by an External Rating Firm acceptable to the Agent,
and shall deliver to the Agent and the Lenders, a report (an “External Valuation
Report”), evaluating the FCC Loans and assigning a Fair Value Rating to each FCC
Loan or validating the Fair Value Rating of each FCC Loan. Each External
Valuation Report will cover, at a minimum, approximately twenty-five percent
(25%) of the FCC Loans on a rotating basis, so that (A) each FCC Loan, greater
than 1.5% of the aggregate Fair Value of all FCC Loans, will be evaluated at
least once during each Fiscal Year and (B) notwithstanding the immediately
preceding clause (A), not less than ninety percent (90%) of all FCC Loans will
be evaluated during each Fiscal Year. However, the Borrower shall cause to be
prepared and delivered to the Agent and the Lenders an External Valuation Report
every other fiscal quarter (i.e., every six months) (i) for each Second Lien
Loan, unless the Average Excess Availability is greater than or equal to
$10,000,000 for the two full months preceding the month in which such External
Valuation Report would have to be delivered and (ii) for each FCC Loan that is
included in any Borrowing Base Certificate and has a Fair Value Rating below 96.

 

(i)                 Schedule 4 to the Credit Agreement is hereby replaced by
Schedule 4 to the this Agreement.

 

(j)                 Exhibit E to this Agreement is hereby added as Exhibit E to
the Credit Agreement.

 

(k)               The Borrower’s new address and telecopy number for purposes of
receiving Notices under the Credit Agreement are set forth below the Borrower’s
signature to this Agreement.

 

3.                  Reaffirmation of Guaranty. Concurrently herewith, the
Guarantors are executing and delivering to the Agent and the Lenders a
Reaffirmation of Guaranty Agreement.

13

 

 

 

4.                  Amendments to Other Loan Documents. Each of the other Loan
Documents is hereby amended to the extent necessary to reflect the amendments to
the terms of the Credit Agreement effected by this Agreement.

 

5.                  Representations and Warranties. In order to induce the Agent
and the Lenders to enter into this Agreement and amend the Credit Agreement as
provided herein, the Borrower hereby represents and warrants to the Agent and
the Lenders that:

 

(a)                All of the representations and warranties of the Borrower set
forth in the Credit Agreement are true, complete and correct in all material
respects on and as of the date hereof with the same force and effect as if made
on and as of the date hereof and as if set forth at length herein (except to the
extent that such representations and warranties relate solely to an earlier date
in which case such representations and warranties were true and correct in all
material respects on such earlier date).

 

(b)               No Default or Event of Default presently exists and is
continuing on and as of the date hereof.

 

(c)                Since the date of the Borrower’s most recent financial
statements delivered to the Agent, no material adverse change has occurred in
the business, assets, liabilities, financial condition or results of operations
of the Borrower, and no event has occurred or failed to occur which has had or
could reasonably be expected to have a material adverse effect on the business,
assets, liabilities, financial condition or results of operations of the
Borrower.

 

(d)               The Borrower has all corporate power and authority to execute,
deliver and perform any action or step which may be necessary to carry out the
terms of this Agreement and all other documents, if any, executed in connection
herewith (together with this Agreement, the “Amendment Documents”), and each
Amendment Document to which the Borrower is a party has been duly executed and
delivered by the Borrower and each such Amendment Document is the legal, valid
and binding obligation of the Borrower enforceable in accordance with its terms,
subject to any applicable bankruptcy, insolvency, general equity principles or
other similar laws affecting the enforcement of creditors’ rights generally.

 

(e)                The execution, delivery and performance of the Amendment
Documents to which the Borrower is a party will not (i) violate any provision of
any existing law, statute, rule, regulation or ordinance, (ii) conflict with,
result in a breach of, or constitute a default under (A) the certificate of
incorporation or the bylaws of the Borrower, (B) any order, judgment, award or
decree of any court, governmental authority, bureau or agency, or (C) any
mortgage, indenture, lease, contract or other material agreement or undertaking
to which the Borrower is a party or by which the Borrower or any of its
properties or assets may be bound, or (iii) result in the creation or imposition
of any lien or other encumbrance upon or with respect to any property or asset
now owned or hereafter acquired by the Borrower, other than liens in favor of
the Agent for the benefit of the Lenders.

14

 

 

 

(f)                Except for filings required under applicable securities laws,
no consent, license, permit, approval or authorization of, exemption by, notice
to, report to, or registration, filing or declaration with any person is
required in connection with the execution, delivery and performance by the
Borrower of the Amendment Documents to which the Borrower is a party or the
validity thereof or the transactions contemplated thereby.

 

6.                  Costs. The Borrower shall reimburse the Agent and the
Lenders on demand for all costs, including reasonable legal fees and expenses
and recording or filing fees, incurred by them in connection with this Agreement
and the transactions referenced herein.

 

7.                  Amendment Fee. Upon the execution and delivery of this
Agreement, the Borrower shall pay to the Agent for the ratable benefit of the
Lenders an amendment fee in the amount of $36,000, which shall be fully-earned
when paid and not subject to rebate or refund for any reason whatsoever.

 

8.                  Counterparts. This Agreement may be signed in several
counterparts, each of which shall be an original and all of which shall
constitute one and the same instrument.

 

9.                  No Change. Except as expressly set forth herein, all of the
terms and provisions of the Credit Agreement shall continue in full force and
effect.

 

10.              Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to its conflict of laws principles.

[Signatures on following pages]

 

15

 

 

 

 

[Signature pages to Third Amendment to Credit Agreement]

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized representatives as of
the date set forth on the first page hereof.

 

 

BORROWER:

 

FULL CIRCLE CAPITAL CORPORATION

 

 

By:________________________

Name:

Title:

 

Address:102 Greenwich Avenue, 2nd Floor

Greenwich, CT 06830

Attention: John E. Stuart

   Co-Chief Executive Officer

 

Telephone: (203) 900-2120

Telecopy: (203) 900-2103

 

AGENT:

 

SANTANDER BANK, N.A. (formerly known as Sovereign Bank, N.A.)

 

 

By: ________________________

Name:

Title:

 

LENDERS:

 

SANTANDER BANK, N.A. (formerly known as Sovereign Bank, N.A.)

 

 

By: ________________________

Name:

Title:

 

 

 Lending Offices: 45 East 53rd Street New York, NY 10573      Amount of
Revolving Commitment: $30,000,000.00      Percentage of Revolving Commitment:
66-2/3%

 

 

 

ALOSTAR BANK OF COMMERCE

 

 

By: ________________________

Name:

Title:

 

 Lending Offices:3630 Peachtree Road, Suite 1050 Atlanta, GA 30326      Amount
of Revolving Commitment: $15,000,000.00      Percentage of Revolving Commitment:
33-1/3%

  

16