Exhibit 10.14

Execution Copy

 

 

 

SOLAR CAPITAL LTD.

$50,000,000 4.40% Series 2016A Senior Notes, due May 8, 2022

 

 

NOTE PURCHASE AGREEMENT

 

 

Dated as of November 8, 2016

 

 

 

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TABLE OF CONTENTS

(Not a part of the Agreement)

 

SECTION   HEADING                                         PAGE  

SECTION 1.

 

AUTHORIZATION OF NOTES

     1  

SECTION 2.

 

SALE AND PURCHASE OF NOTES; SECURITY

     1  

Section 2.1.

 

Purchase and Sale of Notes

     1  

Section 2.2.

 

[Reserved]

     1  

Section 2.3.

 

Guarantee

     2  

Section 2.4.

 

Additional Series of Notes

     2  

SECTION 3.

 

CLOSING

     3  

SECTION 4.

 

CONDITIONS TO CLOSING

     3  

Section 4.1.

 

Representations and Warranties

     3  

Section 4.2.

 

Performance; No Default

     3  

Section 4.3.

 

Compliance Certificates

     3  

Section 4.4.

 

Opinions of Counsel

     4  

Section 4.5.

 

Purchase Permitted by Applicable Law, Etc

     4  

Section 4.6.

 

Sale of Other Notes

     4  

Section 4.7.

 

[Reserved]

     4  

Section 4.8.

 

[Reserved]

     4  

Section 4.9.

 

[Reserved]

     4  

Section 4.10.

 

[Reserved]

     4  

Section 4.11.

 

Payment of Special Counsel Fees

     4  

Section 4.12.

 

Private Placement Number

     5  

Section 4.13.

 

Changes in Corporate Structure

     5  

Section 4.14.

 

Funding Instructions

     5  

Section 4.15.

 

Rating

     5  

Section 4.16.

 

Consent of Holders of Other Indebtedness

     5  

Section 4.17.

 

Proceedings and Documents

     5  

Section 4.18.

 

Conditions to Issuance of Additional Notes

     5  

SECTION 5.

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     6  

Section 5.1.

 

Organization; Power and Authority

     6  

Section 5.2.

 

Authorization, Etc

     6  

Section 5.3.

 

Disclosure

     6  

Section 5.4.

 

Organization and Ownership of Shares of Subsidiaries

     7  

Section 5.5.

 

Financial Statements; Material Liabilities

     7  

Section 5.6.

 

Compliance with Laws

     8  

Section 5.7.

 

Governmental Authorizations, Compliance with Laws, Other Instruments Etc

     8  

 

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Section 5.8.

 

Litigation; Observance of Agreements, Statutes and Orders

     8  

Section 5.9.

 

Taxes

     8  

Section 5.10.

 

Title to Property; Leases

     9  

Section 5.11.

 

Licenses, Permits, Etc.

     9  

Section 5.12.

 

ERISA

     9  

Section 5.13.

 

Private Offering by the Company

     9  

Section 5.14.

 

Use of Proceeds; Margin Regulations

     9  

Section 5.15.

 

Existing Indebtedness; Future Liens

     10  

Section 5.16.

 

Foreign Assets Control Regulations, Etc

     10  

Section 5.17.

 

Status under Certain Statutes

     12  

Section 5.18.

 

Notes Rank Pari Passu

     12  

Section 5.19.

 

Investments

     12  

Section 5.20.

 

Affiliate Agreements

     13  

SECTION 6.

 

REPRESENTATION AND COVENANT OF THE PURCHASERS

     13  

Section 6.1.

 

Purchase for Investment

     13  

Section 6.2.

 

Source of Funds

     13  

SECTION 7.

 

INFORMATION AS TO THE COMPANY

     15  

Section 7.1.

 

Financial and Business Information

     15  

Section 7.2.

 

Officer’s Certificate

     17  

Section 7.3.

 

Visitation, Etc.

     18  

SECTION 8.

 

PREPAYMENT OF THE NOTES

     18  

Section 8.1.

 

Maturity

     18  

Section 8.2.

 

Optional Prepayments with Make-Whole Amount

     18  

Section 8.3.

 

Change in Control

     18  

Section 8.4.

 

[Reserved]

     19  

Section 8.5.

 

Allocation of Partial Prepayments

     19  

Section 8.6.

 

Maturity; Surrender, Etc

     19  

Section 8.7.

 

Purchase of Notes

     20  

Section 8.8.

 

Make-Whole Amount and Modified Make-Whole Amount

     20  

Section 8.9.

 

Prepayment for Tax Reasons

     22  

SECTION 9.

 

AFFIRMATIVE COVENANTS

     23  

Section 9.1.

 

Compliance with Law

     23  

Section 9.2.

 

Insurance

     23  

Section 9.3.

 

Maintenance of Properties

     23  

Section 9.4.

 

Payment of Taxes and Claims

     23  

Section 9.5.

 

Legal Existence, Etc

     23  

Section 9.6.

 

Notes to Rank Pari Passu

     23  

Section 9.7.

 

Subsidiary Guarantors

     24  

 

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Section 9.8.

 

Books and Records

     24  

Section 9.9.

 

Status of RIC and BDC

     25  

Section 9.10.

 

Investment Policies

     25  

Section 9.11.

 

Rating Confirmation

     25  

Section 9.12.

 

Rating

     25  

SECTION 10.

 

NEGATIVE COVENANTS

     25  

Section 10.1.

 

Indebtedness

     25  

Section 10.2.

 

Liens

     26  

Section 10.3.

 

Fundamental Changes

     27  

Section 10.4.

 

Investments

     29  

Section 10.5.

 

Restricted Payments

     29  

Section 10.6.

 

Certain Restrictions on Subsidiaries

     30  

Section 10.7.

 

Certain Financial Covenants

     31  

Section 10.8.

 

Transactions with Affiliates

     32  

Section 10.9.

 

Lines of Business

     32  

Section 10.10.

 

[Reserved]

     32  

Section 10.11.

 

Modifications of Longer-Term Documents

     33  

Section 10.12.

 

Payments of Longer-Term Indebtedness

     33  

Section 10.13.

 

Terrorism Sanctions Regulations

     33  

SECTION 11.

 

EVENTS OF DEFAULT

     34  

SECTION 12.

 

REMEDIES ON DEFAULT, ETC

     36  

Section 12.1.

 

Acceleration

     36  

Section 12.2.

 

Other Remedies

     37  

Section 12.3.

 

Rescission

     37  

Section 12.4.

 

No Waivers or Election of Remedies, Expenses, Etc

     37  

SECTION 13.

 

REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES

     37  

Section 13.1.

 

Registration of Notes

     37  

Section 13.2.

 

Transfer and Exchange of Notes

     38  

Section 13.3.

 

Replacement of Notes

     38  

SECTION 14.

 

PAYMENTS ON NOTES

     39  

Section 14.1.

 

Place of Payment

     39  

Section 14.2.

 

Home Office Payment

     39  

Section 14.3.

 

Taxation

     39  

SECTION 15.

 

EXPENSES, ETC

     42  

Section 15.1.

 

Transaction Expenses

     42  

Section 15.2.

 

Survival

     42  

 

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SECTION 16.

 

SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT

     43  

SECTION 17.

 

AMENDMENT AND WAIVER

     43  

Section 17.1.

 

Requirements

     43  

Section 17.2.

 

Solicitation of Holders of Notes

     44  

Section 17.3.

 

Binding Effect, Etc

     45  

Section 17.4.

 

Notes Held by Company, Etc

     45  

SECTION 18.

 

NOTICES

     46  

SECTION 19.

 

REPRODUCTION OF DOCUMENTS

     47  

SECTION 20.

 

CONFIDENTIAL INFORMATION

     47  

SECTION 21.

 

SUBSTITUTION OF PURCHASER

     48  

SECTION 22.

 

MISCELLANEOUS

     49  

Section 22.1.

 

Successors and Assigns

     49  

Section 22.2.

 

Payments Due on Non-Business Days

     49  

Section 22.3.

 

Accounting Terms

     49  

Section 22.4.

 

Severability

     50  

Section 22.5.

 

Construction, Etc

     50  

Section 22.6.

 

Counterparts

     50  

Section 22.7.

 

Governing Law

     50  

Section 22.8.

 

Jurisdiction and Process; Waiver of Jury Trial

     50  

 

-iv-

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SCHEDULE A

   —      INFORMATION RELATING TO PURCHASERS

SCHEDULE B

   —      DEFINED TERMS

SCHEDULE 5.4

   —      Subsidiaries, Affiliates and Directors and Senior Officers

SCHEDULE 5.7

   —      Description of Necessary Consents, Approvals, Etc.

SCHEDULE 5.15

   —      Liens and Indebtedness

SCHEDULE 5.19

   —      Investments

SCHEDULE 6.1

   —      Permitted Transferees

SCHEDULE 10.8(e)

   —      Affiliate Transactions

EXHIBIT 1

   —      Form of 4.40% Series 2016A Senior Note, due May 8, 2022

EXHIBIT S

   —      Form of Supplement to Note Purchase Agreement

 

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SOLAR CAPITAL LTD.

500 Park Ave.

New York, New York 10022

$50,000,000 4.40% SERIES 2016A SENIOR NOTES, DUE MAY 8, 2022

Dated as of November 8, 2016

TO EACH OF THE PURCHASERS LISTED IN

 SCHEDULE A HERETO:

Ladies and Gentlemen:

SOLAR CAPITAL LTD., a Maryland corporation (the “Company”), agrees with each of
the purchasers whose names appear at the end hereof (each, a “Purchaser” and,
collectively, the “Purchasers”) as follows:

 

SECTION 1.

AUTHORIZATION OF NOTES.

The Company will authorize the issue and sale of $50,000,000 aggregate principal
amount of its 4.40% Series 2016A Senior Notes, due May 8, 2022 (the “2016A
Notes”; such term to include any such notes issued in substitution therefor
pursuant to Section 13). The Notes shall be substantially in the form set out in
Exhibit 1. Certain capitalized and other terms used in this Agreement are
defined in Schedule B; and references to a “Schedule” or an “Exhibit” are,
unless otherwise specified, to a Schedule or an Exhibit attached to this
Agreement.

The Series 2016A Notes, together with each Series of Additional Notes which may
from time to time be issued pursuant to the provisions of Section 2.4, are
collectively referred to as the “Notes” (such term shall also include any such
notes as amended, restated or otherwise modified from time to time pursuant to
Section 17 and including any such notes issued in substitution therefor pursuant
to Section 13).

 

SECTION 2.

SALE AND PURCHASE OF NOTES; SECURITY.

Section 2.1.    Purchase and Sale of Notes. Subject to the terms and conditions
of this Agreement, the Company will issue and sell to each Purchaser and each
Purchaser will purchase from the Company, at the Closing provided for in
Section 3, Series 2016A Notes in the principal amount specified opposite such
Purchaser’s name in Schedule A at the purchase price of 100% of the principal
amount thereof. The Purchasers’ obligations hereunder are several and not joint
obligations and no Purchaser shall have any liability to any Person for the
performance or non-performance of any obligation by any other Purchaser
hereunder.

Section 2.2.    [Reserved].

 

SCHEDULE A

(to Note Purchase Agreement)

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Section 2.3    Guarantee. The payment by the Company of all amounts due with
respect to the Notes and the performance by the Company of its obligations under
this Agreement will be absolutely and unconditionally guaranteed by any
Subsidiary that delivers a guaranty pursuant to Section 9.7, pursuant to the
Subsidiary Guarantee.

Section 2.4.    Additional Series of Notes. The Company may, from time to time,
in its sole discretion but subject to the terms hereof, issue and sell one or
more additional Series of its promissory notes under the provisions of this
Agreement pursuant to a supplement (a “Supplement”) substantially in the form of
Exhibit S. Each additional Series of Notes (the “Additional Notes”) issued
pursuant to a Supplement shall be subject to the following terms and conditions:

(i)    each Series of Additional Notes, when so issued, shall be differentiated
from all previous Series by sequential designation inscribed thereon;

(ii)    Additional Notes of the same Series may consist of more than one
different and separate tranches and may differ with respect to outstanding
principal amounts, maturity dates, interest rates and premiums, if any, and
price and terms of redemption or payment prior to maturity, but all such
different and separate tranches of the same Series shall vote as a single class
and constitute one Series;

(iii)    each Series of Additional Notes shall be dated the date of issue, bear
interest at such rate or rates, mature on such date or dates, be subject to such
mandatory and optional prepayment on the dates and at the premiums, if any, have
such additional or different conditions precedent to closing, such
representations and warranties and such additional covenants as shall be
specified in the Supplement under which such Additional Notes are issued and
upon execution of any such Supplement, this Agreement shall be amended (a) to
reflect such additional covenants without further action on the part of the
holders of the Notes outstanding under this Agreement, provided, that any such
additional covenants shall inure to the benefit of all holders of Notes so long
as any Additional Notes issued pursuant to such Supplement remain outstanding,
and (b) to reflect such representations and warranties as are contained in such
Supplement for the benefit of the holders of such Additional Notes in accordance
with the provisions of Section 16;

(iv)    each Series of Additional Notes issued under this Agreement shall be in
substantially the form of Exhibit 1 to Exhibit S hereto with such variations,
omissions and insertions as are necessary or permitted hereunder;

(v)    the minimum principal amount of any Note issued under a Supplement shall
be $100,000, except as may be necessary to evidence the outstanding amount of
any Note originally issued in a denomination of $100,000 or more;

(vi)    all Additional Notes shall rank pari passu with all other outstanding
Notes; and

 

A-2

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(vii)    no Additional Notes shall be issued hereunder if at the time of
issuance thereof and after giving effect to the application of the proceeds
thereof, any Default or Event of Default shall have occurred and be continuing.

 

SECTION 3.

CLOSING.

The sale and purchase of the Series 2016A Notes to be purchased by each
Purchaser shall occur at the offices of Chapman and Cutler LLP, 111 West Monroe
Street, Chicago, Illinois 60603, at 10:00 A.M. Chicago time, at a closing (the
“Closing”) on November 3, 2016. At the Closing, the Company will deliver to each
Purchaser the Series 2016A Notes to be purchased by such Purchaser in the form
of a single Note so to be purchased or such greater number of Notes in
denominations of at least $100,000 as such Purchaser may request dated the date
of the Closing and registered in such Purchaser’s name (or in the name of its
nominee), against delivery by such Purchaser to the Company or its order of
immediately available funds in the amount of the purchase price therefor by wire
transfer of immediately available funds for the account of the Company to
[Redacted] If at the Closing the Company shall fail to tender such Notes to any
Purchaser as provided above in this Section 3, or any of the conditions
specified in Section 4 shall not have been fulfilled to such Purchaser’s
satisfaction, such Purchaser shall, at its election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights such
Purchaser may have by reason of such failure or such nonfulfillment.

 

SECTION 4.

CONDITIONS TO CLOSING.

Each Purchaser’s obligation to execute and deliver this Agreement and to
purchase and pay for the 2016A Notes to be sold to such Purchaser at the Closing
is subject to the fulfillment to such Purchaser’s satisfaction, prior or at the
Closing of the following conditions:

Section 4.1.    Representations and Warranties. The representations and
warranties of the Company in this Agreement shall be correct when made and
(except as expressly limited to an earlier time) at the time of the Closing.

Section 4.2.    Performance; No Default. The Company shall have performed and
complied in all material respects with all agreements and conditions contained
in this Agreement required to be performed or complied with by it prior to or at
the Closing, and after giving effect to the issue and sale of the Series 2016A
Notes (and the application of the proceeds thereof as contemplated by
Section 5.14), no Default or Event of Default shall have occurred and be
continuing. Neither the Company nor any Subsidiary shall have entered into any
transaction since December 31, 2015 that would have been prohibited by
Section 10 had such Section applied since such date.

Section 4.3.    Compliance Certificates.

(a)    Officer’s Certificate. The Company shall have delivered to such Purchaser
an Officer’s Certificate, dated the date of the Closing, certifying that the
conditions specified in Sections 4.1, 4.2 and 4.13 have been fulfilled in all
material respects.

 

A-3

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(b)    Secretary’s Certificate. The Company shall have delivered to such
Purchaser a certificate of its Secretary or Assistant Secretary, dated the date
of Closing, certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Notes, this Agreement and the Subsidiary Guarantee.

Section 4.4.    Opinions of Counsel. Such Purchaser shall have received opinions
in form and substance satisfactory to such Purchaser, dated the date of the
Closing (a) from (i) Latham & Watkins LLP, special U.S. counsel for the Company
and (ii) Venable LLP, Maryland counsel for the Company, covering the matters
incident to the transactions contemplated hereby as such Purchaser or its
counsel may reasonably request (and the Company hereby instructs its counsel to
deliver such opinion to the Purchasers) and (b) from Chapman and Cutler LLP, the
Purchasers’ special counsel, in connection with such transactions, covering such
matters incident to such transactions as such Purchaser may reasonably request.

Section 4.5.    Purchase Permitted by Applicable Law, Etc. On the date of the
Closing such Purchaser’s purchase of Notes shall (a) be permitted by the laws
and regulations of each jurisdiction to which such Purchaser is subject, without
recourse to provisions (such as section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without restriction
as to the character of the particular investment, (b) not violate any applicable
law or regulation (including, without limitation, Regulation T, U or X of the
Board of Governors of the Federal Reserve System) and (c) not subject such
Purchaser to any tax, penalty or liability under or pursuant to any applicable
law or regulation, which law or regulation was not in effect on the date of the
Closing. If requested by such Purchaser, such Purchaser shall have received an
Officer’s Certificate certifying as to such matters of fact as such Purchaser
may reasonably specify to enable such Purchaser to determine whether such
purchase is so permitted.

Section 4.6.    Sale of Other Notes. Contemporaneously with the Closing, the
Company shall sell to each other Purchaser, and each other Purchaser shall
purchase, the Series 2016A Notes to be purchased by it at the Closing as
specified in Schedule A.

Section 4.7.    [Reserved].

Section 4.8.    [Reserved].

Section 4.9.    [Reserved].

Section 4.10.    [Reserved].

Section 4.11.    Payment of Special Counsel Fees. Without limiting the
provisions of Section 15.1, the Company shall have paid on or before the Closing
the reasonable fees, charges and disbursements of the Purchasers’ special
counsel referred to in Section 4.4 to the extent reflected in a statement of
such counsel rendered to the Company at least one Business Day prior to the
Closing.

 

A-4

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Section 4.12.    Private Placement Number. A Private Placement Number issued by
Standard & Poor’s CUSIP Service Bureau (in cooperation with the SVO) shall have
been obtained for the Notes.

Section 4.13.    Changes in Corporate Structure. The Company shall not have
changed its jurisdiction of incorporation or organization, as applicable, or
been a party to any merger or consolidation or succeeded to all or any
substantial part of the liabilities of any other entity, at any time following
the date of the most recent financial statements referred to in Section 5.5.

Section 4.14.    Funding Instructions. At least three Business Days (or such
shorter period as agreed to by the Purchasers) prior to the date of the Closing,
each Purchaser shall have received written instructions signed by a Responsible
Officer on letterhead of the Company confirming the information specified in
Section 3 including (a) the name and address of the transferee bank, (b) such
transferee bank’s ABA number and (c) the account name and number into which the
purchase price for the Notes is to be deposited.

Section 4.15.    [Reserved].

Section 4.16.    Consent of Holders of Other Indebtedness. On or prior to the
date of the Closing, any consents or approvals required to be obtained from any
holder or holders of any outstanding Indebtedness of the Company or its
Subsidiaries and any amendments of agreements pursuant to which any Indebtedness
may have been issued which shall be necessary to permit the consummation of the
transactions contemplated hereby shall have been obtained (and shall be in full
force and effect on the date of the Closing) and shall be satisfactory to each
Purchaser and its special counsel.

Section 4.17.    Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory to such Purchaser and its special counsel, and such Purchaser and
its special counsel shall have received all such counterpart originals or
certified or other copies of such documents as such Purchaser or such special
counsel may reasonably request.

Section 4.18.    Conditions to Issuance of Additional Notes. The obligations of
the Additional Purchasers to purchase any Additional Notes shall be subject to
the following conditions precedent, in addition to any conditions specified in
the Supplement pursuant to which such Additional Notes may be issued:

(a)    Compliance Certificate. A duly authorized Financial Officer shall execute
and deliver to each Additional Purchaser and each holder of Notes an Officer’s
Certificate dated the date of issue of such Series of Additional Notes stating
that such officer has reviewed the provisions of this Agreement (including any
Supplements hereto) and setting forth the information and computations (in
sufficient detail) required in order to establish whether the Company is in
compliance with the requirements of Section 10.7 on such date (based upon the
financial statements for the most recent fiscal quarter ended prior to the date
of such certificate but after giving effect to the issuance of the Additional
Series of Notes and the application of the proceeds thereof).

 

A-5

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(b)    Execution and Delivery of Supplement. The Company and each such
Additional Purchaser shall execute and deliver a Supplement substantially in the
form of Exhibit S hereto.

(c)    Representations of Additional Purchasers. Each Additional Purchaser shall
have confirmed in the Supplement that the representations set forth in Section 6
are true with respect to such Additional Purchaser on and as of the date of
issue of the Additional Notes.

(d)    Execution and Delivery of Guaranty Ratification. Each Subsidiary
Guarantor, if any, shall execute and deliver a ratification of its Subsidiary
Guarantee.

 

SECTION 5.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents and warrants to each Purchaser on the date of the
Closing, that:

Section 5.1.    Organization; Power and Authority. Each of the Company and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required of the Company or such Subsidiary, as applicable.

Section 5.2.    Authorization, Etc. The Transactions are within the Company’s
corporate powers and have been duly authorized by all necessary corporate action
and, if required, by all necessary shareholder action. This Agreement has been
duly executed and delivered by the Company and constitutes, and each of the
other Note Documents to which it is a party when executed and delivered will
constitute, a legal, valid and binding obligation of the Company, enforceable in
accordance with its terms, except as such enforceability may be limited by
(a) bankruptcy, insolvency, reorganization, moratorium or similar laws of
general applicability affecting the enforcement of creditors’ rights and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

Section 5.3.    Disclosure. The Company has disclosed to the Purchasers all
agreements, instruments and corporate or other restrictions to which it or any
of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. None of the reports, financial statements, certificates
or other information furnished by or on behalf of the Company to the Purchasers
in connection with the negotiation of this Agreement and the other Note
Documents or delivered hereunder or thereunder (as modified or supplemented by
other information so furnished) when taken together with the Company’s public
filings contains any material misstatement of fact therein (or omits to state
any material fact necessary to make the statements therein not misleading), in
the light of the

 

A-6

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circumstances under which they were made; provided that, with respect to
projected financial information, the Company represents only that such
information was prepared in good faith based upon assumptions believed to be
reasonable at the time.

Since the date of the most recent Applicable Financial Statements, there has not
been any event, development or circumstance that has had or could reasonably be
expected to have a material adverse effect on (i) the business, Portfolio
Investments and other assets, liabilities and financial condition of the Company
and its Subsidiaries taken as a whole (excluding in any case a decline in the
net asset value of the Company or a change in general market conditions or
values of the Company’s or any of its Subsidiaries’ Portfolio Investments), or
(ii) the validity or enforceability of any of the Note Documents or the rights
or remedies of the Purchasers and the holders of the Notes thereunder.

Section 5.4.    Organization and Ownership of Shares of Subsidiaries.
(a) Schedule 5.4 contains (except as noted therein) complete and correct lists
(i) of the Company’s Subsidiaries, showing, as to each Subsidiary, the correct
name thereof, the jurisdiction of its organization, and the percentage of shares
of each class of its capital stock or similar equity interests outstanding owned
by the Company and each other Subsidiary (other than any tax blocker or
investment held by such tax blocker), and (ii) of the Company’s directors and
senior officers.

(b)    All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company
and its Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by the Company or another Subsidiary free and clear of any Lien
(except Permitted Liens, Liens created pursuant to the Security Documents or as
otherwise disclosed in Schedule 5.4).

(c)    Each Subsidiary identified in Schedule 5.4 is a corporation or other
legal entity duly organized, validly existing and, where legally applicable, in
good standing under the laws of its jurisdiction of organization, and is duly
qualified as a foreign corporation or other legal entity and, where legally
applicable, is in good standing in each jurisdiction in which such qualification
is required by law, other than those jurisdictions as to which the failure to be
so qualified or in good standing could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Each such Subsidiary
has the corporate or other power and authority to own or hold under lease the
properties it purports to own or hold under lease and to transact the business
it transacts and proposes to transact.

(d)    No Subsidiary is a party to, or otherwise subject to any legal,
regulatory, contractual or other restriction (other than this Agreement, the
Senior Secured Credit Agreement, the agreements listed on Schedule 5.4 and
customary limitations imposed by corporate law or similar statutes) restricting
the ability of such Subsidiary to pay dividends out of profits or make any other
similar distributions of profits to the Company or any of its Subsidiaries that
owns outstanding shares of capital stock or similar equity interests of such
Subsidiary.

Section 5.5.    Financial Statements; Material Liabilities. The Company has
heretofore delivered to each Purchaser the audited consolidated statement of
assets and liabilities (or balance sheet) and statements of operations, changes
in net assets and cash flows of the Company and its

 

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Subsidiaries as of and for the fiscal year ending on December 31, 2015; such
financial statements present fairly, in all material respects, the consolidated
financial position and results of operations and cash flows of the Company and
its Subsidiaries as of such date in accordance with GAAP. The Company and its
Subsidiaries do not have any Material liabilities that are not disclosed on such
financial statements.

Section 5.6.    Compliance with Laws. Each of the Company and its Subsidiaries
is in compliance with all laws, regulations and orders of any Governmental
Authority applicable to it or its property and all indentures, agreements and
other instruments binding upon it or its property, except where the failure to
do so, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is subject to any contract or other arrangement, the performance of
which by the Company could reasonably be expected to result in a Material
Adverse Effect.

Section 5.7.    Governmental Authorizations, Compliance with Laws, Other
Instruments, Etc. The Transactions (a) do not require any consent or approval
of, registration or filing with, or any other action by, any Governmental
Authority, except for such as have been or will be obtained or made and are in
full force and effect and are described in Schedule 5.7, (b) will not violate
any applicable law or regulation or the limited liability company operating
agreement, charter, by-laws or other organizational documents of the Company or
any of its Subsidiaries or any order of any Governmental Authority, (c) will not
violate or result in a default in any material respect under any indenture,
agreement or other instrument binding upon the Company or any of its
Subsidiaries or assets, or give rise to a right thereunder to require any
payment to be made by any such Person, and (d) will not result in the creation
or imposition of any Lien on any asset of the Company or any of its
Subsidiaries.

Section 5.8.    Litigation; Observance of Agreements, Statutes and Orders.
(a) There are no actions, suits, investigations or proceedings by or before any
arbitrator or Governmental Authority now pending against or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination and that if adversely determined could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect or
(ii) that involve this Agreement or the Transactions.

(b)    Neither the Company nor any Subsidiary is in default under any term of
any agreement or instrument to which it is a party or by which it is bound, or
any order, judgment, decree or ruling of any court, arbitrator or Governmental
Authority or is in violation of any applicable law, ordinance, rule or
regulation of any Governmental Authority, which default or violation,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

Section 5.9.    Taxes. Each of the Company and its Subsidiaries has timely filed
or caused to be filed all material Tax returns and reports required to have been
filed and has paid or caused to be paid all material Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which such Person has set aside on its books
adequate reserves or (b) to the extent that the failure to do so could not
reasonably be

 

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expected to result in a Material Adverse Effect. The charges, accruals and
reserves on the books of the Company and its Subsidiaries in respect of Federal,
state or other taxes for all fiscal periods are adequate in all material
respects.

Section 5.10.    Title to Property; Leases. Each of the Company and the other
Obligors has good title to, or valid leasehold interests in, all its real and
personal property material to its business, except for minor defects in title
that do not interfere with its ability to conduct its business as currently
conducted or to utilize such properties for their intended purposes.

Section 5.11.    Licenses, Permits, Etc. Each of the Company and its
Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, patents and other intellectual property material to its business,
and the use thereof by the Company and its Subsidiaries does not infringe upon
the rights of any other Person, except for any such infringements that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.

Section 5.12.    ERISA. (a) The execution and delivery of this Agreement and the
issuance and sale of the Notes hereunder will not involve any transaction that
is subject to the prohibitions of section 406 of ERISA or in connection with
which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code.
The representation by the Company in the first sentence of this Section 5.12(a)
is made in reliance upon and subject to the accuracy of such Purchaser’s
representation in Section 6.2 as to the sources of the funds used to pay the
purchase price of the Notes to be purchased by such Purchaser.

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

Section 5.13.    Private Offering by the Company. Neither the Company nor anyone
acting on its behalf has offered the Series 2016A Notes or any similar
Securities for sale to, or solicited any offer to buy any of the same from, or
otherwise approached or negotiated in respect thereof with, any Person other
than the Purchasers and not more than one other Institutional Investor, each of
which has been offered the Series 2016A Notes at a private sale for investment.
Neither the Company nor anyone acting on its behalf has taken, or will take, any
action that would subject the issuance or sale of the Series 2016A Notes to the
registration requirements of Section 5 of the Securities Act or to the
registration requirements of any Securities or blue sky laws of any applicable
jurisdiction.

Section 5.14.    Use of Proceeds; Margin Regulations. The Company will apply the
proceeds of the sale of the Series 2016A Notes to refinance existing
indebtedness and for general corporate purposes and in compliance with all laws
referenced in Section 5.16. Neither the Company nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose, whether immediate, incidental or ultimate, of
buying or carrying Margin Stock, and no part of the proceeds of the sale of the
Series 2016A Notes hereunder will be used to buy or carry any Margin Stock, or
to extend credit to others for the purpose of buying or carrying Margin Stock.
After application of the proceeds of the sale of the Series 2016A Notes, not
more than 25% of the value (as determined by any reasonable method) of the
assets of the Company subject to any provision of this Agreement under which the
sale, pledge or disposition of assets is restricted will consist of Margin
Stock.

 

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Section 5.15.    Existing Indebtedness; Future Liens. (a) Part A of
Schedule 5.15 is a complete and correct list of each note, bond, certificate,
credit agreement, loan agreement, indenture, note purchase agreement, guarantee,
letter of credit or other arrangement providing for or otherwise relating to any
Indebtedness or any extension of credit (or commitment for any extension of
credit) to, or guarantee by, the Company or any of its Subsidiaries outstanding
on the date of the Closing, and the aggregate principal or face amount
outstanding or that is, or may become, outstanding, the interest rate,
collateral and related guaranties under each such arrangement is correctly
described in Part A of Schedule 5.15.

(b)    Part B of Schedule 5.15 is a complete and correct list of each Lien
securing Indebtedness of any Person outstanding or consented to on the date of
the Closing covering any property of the Company or any Subsidiary Guarantor,
and the aggregate Indebtedness secured (or that may be secured) by each such
Lien and the property covered by each such Lien is correctly described in Part B
of Schedule 5.15.

(c)    Neither the Company nor any Subsidiary is a party to, or otherwise
subject to any provision contained in, any instrument evidencing Indebtedness of
the Company or such Subsidiary, any agreement relating thereto or any other
agreement (including, but not limited to, its charter or other organizational
document) which limits the amount of, or otherwise imposes restrictions on the
incurring of, Indebtedness of the Company, except for the Senior Secured Credit
Agreement (and the other documents related thereto) and except as specifically
indicated in Schedule 5.15.

Section 5.16.    Foreign Assets Control Regulations, Etc. (a) Neither the
Company nor any Affiliated Entity is (i) a Person whose name appears on the list
of Specially Designated Nationals and Blocked Persons published by the Office of
Foreign Assets Control, United States Department of the Treasury (“OFAC”) (an
“OFAC Listed Person”) (ii) an agent, department, or instrumentality of, or is
otherwise beneficially owned by, controlled by or acting on behalf of, directly
or indirectly, (x) any OFAC Listed Person or (y) any Person, entity,
organization, foreign country or regime that is subject to any OFAC Sanctions
Program, or (iii) otherwise blocked, subject to sanctions under or engaged in
any activity in violation of other United States economic sanctions, including
but not limited to, the Trading with the Enemy Act, the International Emergency
Economic Powers Act, the Comprehensive Iran Sanctions, Accountability and
Divestment Act (“CISADA”) or any similar law or regulation with respect to Iran
or any other country, the Sudan Accountability and Divestment Act, any OFAC
Sanctions Program, or any economic sanctions regulations administered and
enforced by the United States or any enabling legislation or executive order
relating to any of the foregoing (collectively, “U.S. Economic Sanctions”) (each
OFAC Listed Person and each other Person, entity, organization and government of
a country described in clause (i), clause (ii) or clause (iii), a “Blocked
Person”). Neither the Company nor any Affiliated Entity has been notified that
its name appears or may in the future appear on a state list of Persons that
engage in investment or other commercial activities in Iran or any other country
that is subject to U.S. Economic Sanctions.

 

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(b)    No part of the proceeds from the sale of the Notes hereunder constitutes
or will constitute funds obtained on behalf of any Blocked Person or Canada
Blocked Person or will otherwise be used by the Company or any Controlled
Entity, directly or indirectly, (i) in connection with any investment in, or any
transactions or dealings with, any Blocked Person or Canada Blocked Person, or
(ii) otherwise in violation of U.S. Economic Sanctions or Canadian Economic
Sanctions.

(c)    Neither the Company nor any Affiliated Entity (i) has been found in
violation of, charged with, or convicted of, money laundering, drug trafficking,
terrorist-related activities or other money laundering predicate crimes under
the Currency and Foreign Transactions Reporting Act of 1970 (otherwise known as
the Bank Secrecy Act), the USA PATRIOT Act, any similar provisions of the
Criminal Code (Canada), any U.S. Economic Sanctions, any Canadian Economic
Sanctions or any other United States or Canadian law or regulation governing
such activities (collectively, “Anti-Money Laundering Laws”) or any
U.S. Economic Sanctions violations or violations of Canadian Economic Sanctions
Laws, (ii) to the Company’s actual knowledge after making due inquiry, is under
investigation by any governmental authority for possible violation of Anti-Money
Laundering Laws or any U.S. Economic Sanctions violations or violations of
Canadian Economic Sanctions Laws, (iii) has been assessed civil penalties under
any Anti-Money Laundering Laws or any U.S. Economic Sanctions or Canadian
Economic Sanctions Laws, or (iv) has had any of its funds seized or forfeited in
an action under any Anti-Money Laundering Laws. The Company has established
procedures and controls which it reasonably believes are adequate (and otherwise
comply with applicable law) to ensure that the Company and each Controlled
Entity is and will continue to be in compliance with all applicable current and
future Anti-Money Laundering Laws and U.S. Economic Sanctions and Canadian
Economic Sanctions Laws.

(d)    (1) Neither the Company nor any Affiliated Entity (i) has been charged
with, or convicted of bribery or any other anti-corruption related activity
under any applicable law or regulation in a U.S. or any non-U.S. country or
jurisdiction, including but not limited to, the U.S. Foreign Corrupt Practices
Act, the U.K. Bribery Act 2010 and any similar provisions of the Criminal Code
(Canada) (collectively, “Anti-Corruption Laws”) in the past five years, (ii) to
the Company’s actual knowledge after making due inquiry, is under investigation
by any U.S. or non-U.S. Governmental Authority for possible violation of
Anti-Corruption Laws, (iii) has been assessed civil or criminal penalties under
any Anti-Corruption Laws in the past five years or (iv) has been or is the
target of sanctions imposed by the United Nations, Canada or the European Union;

(2)    To the Company’s actual knowledge after making due inquiry, neither the
Company nor any Affiliated Entity has, within the last five years, directly or
indirectly offered, promised, given, paid or authorized the offer, promise,
giving or payment of anything of value to a Governmental Official or a
commercial counterparty for the purposes of: (i) influencing any act, decision
or failure to act by such Governmental Official in his or her official capacity
or such commercial counterparty, (ii) inducing a Governmental Official to do or
omit to do any act in violation of the Governmental Official’s lawful duty, or
(iii) inducing a Governmental Official or a commercial counterparty to use his
or her influence with a government or instrumentality to affect any act or
decision of such government or entity; in each case in order to improperly
obtain,

 

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retain or direct business or to otherwise secure an improper advantage in
violation of any applicable law or regulation or which would cause any holder to
be in violation of any Anti-Corruption Laws; and

(3)    No part of the proceeds from the sale of the Notes hereunder will be
used, directly or indirectly, for any improper payments, including bribes, to
any Governmental Official or commercial counterparty in order to improperly
obtain, retain or direct business or obtain any improper advantage. The Company
has established procedures and controls which it reasonably believes are
adequate (and otherwise comply with applicable law) to ensure that the Company
and each Affiliated Entity is and will continue to be in compliance with the
Anti-Corruption Laws.

(e)    Neither the Company nor any Affiliated Entity is (i) a Canada Blocked
Person, (ii) an agent, department, or instrumentality of, or is otherwise
controlled by or knowingly acting on behalf of, directly or indirectly, any such
Person, or (iii) otherwise blocked, subject to sanctions under or engaged in any
activity in violation of any Canadian Economic Sanctions Laws. Neither the
Company nor any Affiliated Entity has been notified by a governmental authority
in Canada that its name appears or has been proposed for inclusion on a list of
Persons maintained by a governmental authority in Canada that engage in
investment or other commercial activities in any country that is subject to
Canadian Economic Sanctions Laws. Neither the Company nor any Affiliated Entity
knowingly engages in any dealings or transactions with any Canada Blocked
Person.

Section 5.17.    Status under Certain Statutes. (a) The Company is a company
that has elected to be regulated as a “business development company” within the
meaning of the Investment Company Act and qualifies as a RIC.

(b)    The business and other activities of the Company and its Subsidiaries,
including the issuance of the Notes hereunder, the application of the proceeds
and repayment thereof by the Company and the consummation of the Transactions
contemplated by the Note Documents do not result in a violation or breach in any
material respect of the applicable provisions of the Investment Company Act or
any rules, regulations or orders issued by the SEC thereunder.

(c)    The Company is in compliance with its Investment Policies, except to the
extent that the failure to so comply could not reasonably be expected to result
in a Material Adverse Effect.

Section 5.18.    Notes Rank Pari Passu. The obligations of the Company under
this Agreement and the Notes rank at least pari passu in right of payment with
all other Senior Unsecured Indebtedness (actual or contingent) of the Company,
including, without limitation, all Senior Unsecured Indebtedness of the Company
described in Schedule 5.15 hereto.

Section 5.19.    Investments. Set forth in Schedule 5.19 is a complete and
correct list of all Investments (other than Investments of the types referred to
in clauses (b), (c) and (d) of Section 10.4) held by the Company or any
Subsidiary Guarantor in any Person on the date of the Closing and, for each such
Investment, (x) the identity of the Person or Persons holding such Investment
and (y) the nature of such Investment. Except as disclosed in Schedule 5.19, as
of the date of the Closing each of the Company and the Subsidiary Guarantors
owns, free and clear of all Liens (other than Permitted Liens or Liens created
pursuant to the Security Documents), all such Investments.

 

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Section 5.20.    Affiliate Agreements. As of the date of the Closing, the
Company has heretofore delivered (to the extent not otherwise publicly filed
with the SEC) to each of the Purchasers true and complete copies of each of the
Affiliate Agreements (including schedules and exhibits thereto, and any
amendments, supplements or waivers executed and delivered thereunder). As of the
date of the Closing, each of the Affiliate Agreements is in full force and
effect.

 

SECTION 6.

REPRESENTATION AND COVENANT OF THE PURCHASERS.

Section 6.1.    Purchase for Investment. (a) Each Purchaser severally represents
that it is purchasing the Notes for its own account or for one or more separate
accounts maintained by such Purchaser or for the account of one or more pension
or trust funds and not with a view to the distribution thereof; provided that
the disposition of such Purchaser’s or their property shall at all times be
within such Purchaser’s or their control. Each Purchaser understands that the
Notes have not been registered under the Securities Act and may be resold only
if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law, and that the
Company is not required to register the initial sale or resale of the Notes.

(b)    Each Purchaser acknowledges that the Notes will bear a restrictive legend
in the form set forth on the form of Notes set out in Exhibit 1.

(c)    Each Purchaser severally represents and warrants that such Purchaser
(i) will not sell, transfer or otherwise dispose of the Notes or any interest
therein except in a transaction exempt from or not subject to the registration
requirements of the Securities Act and (ii) was given the opportunity to ask
questions and receive answers concerning the terms and conditions of the
offering and to obtain any additional information which the Company possesses or
can acquire without unreasonable effort or expense.

(d)    Each Purchaser for itself represents that it is an Institutional
Accredited Investor acting for its own account or as a fiduciary or agent for
others (which others are also Institutional Accredited Investors).

(e)    Each Purchaser severally represents that the purchase of the Notes by
such Purchaser has not been solicited by or through anyone other than the
Company or the Placement Agent.

(f)    Each holder of a Note covenants and agrees that it shall not directly or
indirectly transfer all or any portion of any of its Notes to any Person that is
a Competitor.

Section 6.2.    Source of Funds. Each Purchaser severally represents that at
least one of the following statements is an accurate representation as to each
source of funds (a “Source”) to be

 

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used by such Purchaser to pay the purchase price of the Notes to be purchased by
such Purchaser hereunder:

(a)    the Source is an “insurance company general account” (as the term is
defined in the United States Department of Labor’s Prohibited Transaction
Exemption (“PTE”) 95-60) in respect of which the reserves and liabilities (as
defined by the annual statement for life insurance companies approved by the
National Association of Insurance Commissioners (the “NAIC Annual Statement”))
for the general account contract(s) held by or on behalf of any employee benefit
plan together with the amount of the reserves and liabilities for the general
account contract(s) held by or on behalf of any other employee benefit plans
maintained by the same employer (or affiliate thereof as defined in PTE 95-60)
or by the same employee organization in the general account do not exceed ten
percent (10%) of the total reserves and liabilities of the general account
(exclusive of separate account liabilities) plus surplus as set forth in the
NAIC Annual Statement filed with such Purchaser’s state of domicile; or

(b)    the Source is a separate account that is maintained solely in connection
with such Purchaser’s fixed contractual obligations under which the amounts
payable, or credited, to any employee benefit plan (or its related trust) that
has any interest in such separate account (or to any participant or beneficiary
of such plan (including any annuitant)) are not affected in any manner by the
investment performance of the separate account; or

(c)    the Source is either (i) an insurance company pooled separate account,
within the meaning of PTE 90-1, or (ii) a bank collective investment fund,
within the meaning of the PTE 91-38 and, except as have been disclosed by such
Purchaser to the Company in writing pursuant to this clause (c), no employee
benefit plan or group of plans maintained by the same employer or employee
organization beneficially owns more than 10% of all assets allocated to such
pooled separate account or collective investment fund; or

(d)    the Source constitutes assets of an “investment fund” (within the meaning
of Part VI of PTE 84-14, as amended (the “QPAM Exemption”)) managed by a
“qualified professional asset manager” or “QPAM” (within the meaning of Part
VI of the QPAM Exemption), no employee benefit plan’s assets that are included
in such investment fund, when combined with the assets of all other employee
benefit plans established or maintained by the same employer or by an affiliate
(within the meaning of Section VI(c)(1) of the QPAM Exemption) of such employer
or by the same employee organization and managed by such QPAM, exceed 20% of the
total client assets managed by such QPAM, the conditions of Part I(c) and (g) of
the QPAM Exemption are satisfied, as of the last day of its most recent calendar
quarter, the QPAM does not own a 10% or more interest in the Company and no
Person controlling or controlled by the QPAM (applying the definition
of “control” in Section VI(e) of the QPAM Exemption) owns a 20% or more interest
in the Company (or less than 20% but greater than 10%, if such Person exercises
control over the management or policies of the Company by reason of its
ownership interest), and (i) the identity of such QPAM and (ii) the names of all
employee benefit plans

 

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whose assets in the investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same employer or by an
affiliate (within the meaning of Part VI(c)(1) of the QPAM Exemption) of such
employer or by the same employee organization, represent 10% or more of the
assets of such investment fund, have been disclosed to the Company in writing
pursuant to this clause (d); or

(e)    the Source constitutes assets of a “plan(s)” (within the meaning of
Section IV of PTE 96-23, as amended (the “INHAM Exemption”)) managed by
an “in-house asset manager” or “INHAM” (within the meaning of Part IV of the
INHAM Exemption), the conditions of Part I(a), (g) and (h) of the INHAM
Exemption are satisfied, as of the last day of its most recent calendar
quarter, neither the INHAM nor a Person controlling or controlled by the INHAM
(applying the definition of “control” in Section IV(d) of the INHAM Exemption)
owns a 10% or more interest in the Company and (i) the identity of such INHAM
and (ii) the name(s) of the employee benefit plan(s) whose assets constitute the
Source have been disclosed to the Company in writing pursuant to this clause
(e); or

(f)    the Source is a governmental plan; or

(g)    the Source is one or more employee benefit plans, or a separate account
or trust fund comprised of one or more employee benefit plans, each of which has
been identified to the Company in writing pursuant to this clause (g); or

(h)    the Source does not include assets of any employee benefit plan, other
than a plan exempt from the coverage of ERISA.

As used in this Section 6.2, the terms “employee benefit plan”, “governmental
plan”, “party in interest” and “separate account” shall have the respective
meanings assigned to such terms in sections 3(3), 3(32), 3(14) and 3(17),
respectively, of ERISA.

 

SECTION 7.

INFORMATION AS TO THE COMPANY.

Section 7.1.    Financial and Business Information. The Company shall deliver to
each holder of Notes that is an Institutional Investor:

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

 

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

(c)    [Reserved];

(d)    [Reserved];

(e)    [Reserved];

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

(g)    Employee Benefit Matters —promptly following any request therefor, copies
of (i) any documents described in section 101(k) of ERISA that the Company or
any of its ERISA Affiliates may request with respect to any Multiemployer Plan
and (ii) any notices described in section 101(l) of ERISA that the Company or
any of its ERISA Affiliates may request with respect to any Plan or
Multiemployer Plan;

(h)    SEC and Other Reports — promptly after the same become publicly
available, copies of all periodic and other reports, proxy statements and other
materials filed by the Company or any Subsidiary Guarantor with the SEC, or any
Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, as the case may be;

(i)    Management Agreement —within (i) five Business Days of any material
amendment, supplementation or modification of the Management Agreement, notice
of such material amendment, supplementation or modification and (ii) (y) within
ninety (90) days after the end of each fiscal year of the Company and (z) within
forty-five (45) days after the end of each of the first three (3) fiscal
quarters of each fiscal year of the Company, notice of any other amendment,
supplementation or modification of the Management Agreement;

 

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(j)    Requested Information — promptly following any request therefor, such
other information regarding the operations, business affairs and financial
condition of the Company or any of its Subsidiaries, or compliance with the
terms of this Agreement and the other Note Documents, as any holders of the
Notes that is an Institutional Investor may reasonably request;

(k)    Notices of Material Events — notice of the following:

(i)    the occurrence of any Default;

(ii)    the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the Company
or any of its Affiliates that, if adversely determined, could reasonably be
expected to result in liability of the Company and its Subsidiaries in an
aggregate amount exceeding $10,000,000;

(iii)    the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
a Material Adverse Effect; and

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

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

(j)    Supplements — promptly, and in any event within 10 Business Days after
the execution and delivery of any Supplement, a copy thereof.

Section 7.2.    Officer’s Certificate. Each set of financial statements
delivered to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b)
shall be accompanied by a certificate of a Financial Officer of the Company
(i) certifying as to whether the Company has knowledge that a Default has
occurred and, if a Default has occurred, specifying the details thereof and any
action taken or proposed to be taken with respect thereto, (ii) setting forth
reasonably detailed calculations demonstrating compliance with Sections 10.1,
10.2, 10.4, 10.5 and 10.7, including, without limitation, any Additional
Financial Covenant, and (iii) stating whether any material change in GAAP as
applied by (or in the application of GAAP by) the Company has occurred since the
date of the most recent audited financial statements delivered pursuant to
Section 7.1(a) and, if any such change has occurred, specifying the effect of
such change on the financial statements accompanying such certificate.

 

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Section 7.3.    Visitation, Etc. The Company will, and will cause each of its
Subsidiaries (other than Financing Subsidiaries and Immaterial Subsidiaries) to,
permit any representatives designated by the holder of a Note upon reasonable
prior notice (which, prior to the occurrence of a Default or Event of Default,
shall not be less than thirty (30) Business Days prior to the date of such
inspection), to visit and inspect its properties during normal business hours,
to examine and make extracts from its books and records, and to discuss its
affairs, finances and condition with its officers and independent accountants,
all at such reasonable times as reasonably requested, provided that the Company
or such Subsidiary shall be entitled to have its representatives and advisors
present during any inspection of its books and records, provided further that,
so long as no Default has occurred and is continuing and if the Company has
provided to each holder of the Notes written notice of the intent of a holder to
exercise inspection rights set forth in this Section 7.3 not less than
fifteen (15) Business Days prior to such inspection and permitting such holder
to join in such scheduled inspection upon five (5) (rather than thirty (30))
Business Days’ prior notice, the inspection rights set forth in this Section 7.3
may, in the aggregate for all holders of the Notes, only be exercised once per
calendar quarter, provided, further, if a Default or Event of Default then
exists, the reasonable and documented out-of-pocket costs for such visit or
inspection shall be at the expense of the Company.

 

SECTION 8.

PREPAYMENT OF THE NOTES.

Section 8.1.    Maturity. As provided therein, the entire unpaid principal
balance of the Series 2016A Notes shall be due and payable on the stated
maturity date thereof.

Section 8.2.    Optional Prepayments with Make-Whole Amount. The Company may, at
its option, upon notice as provided below, prepay at any time all, or from time
to time any part of, the Notes, in an amount not less than 10% of the aggregate
principal amount of the Notes then outstanding at 100% of the principal amount
so prepaid, together with interest accrued thereon to, but excluding, the date
of such prepayment, and the Make-Whole Amount determined for the prepayment date
with respect to such principal amount. The Company will give each holder of
Notes written notice of each optional prepayment under this Section 8.2 not less
than 30 days and not more than 60 days prior to the date fixed for such
prepayment. Each such notice shall specify such date (which shall be a Business
Day), the aggregate principal amount of the Notes to be prepaid on such date,
the principal amount of each Note held by such holder to be prepaid (determined
in accordance with Section 8.5), and the interest to be paid on the prepayment
date with respect to such principal amount being prepaid, and shall be
accompanied by a certificate of a Financial Officer as to the estimated
Make-Whole Amount due in connection with such prepayment (calculated as if the
date of such notice were the date of the prepayment), setting forth the details
of such computation. Two Business Days prior to such prepayment, the Company
shall deliver to each holder of Notes a certificate of a Financial Officer
specifying the calculation of such Make-Whole Amount as of the specified
prepayment date.

Section 8.3.    Change in Control.

(a)    Notice of Change in Control. The Company will, within five Business Days
after any Responsible Officer has knowledge of the occurrence of any Change in
Control, give written notice of such Change in Control to each holder of Notes.
Such notice shall contain and constitute an offer to prepay Notes as described
in subparagraph (b) of this Section 8.3 and shall be accompanied by the
certificate described in subparagraph (e) of this Section 8.3.

 

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(b)    Offer to Prepay Notes. The offer to prepay Notes contemplated by
subparagraph (a) of this Section 8.3 shall be an offer to prepay, in accordance
with and subject to this Section 8.3, all, but not less than all, the Notes held
by each holder (in this case only, “holder” in respect of any Note registered in
the name of a nominee for a disclosed beneficial owner shall mean such
beneficial owner) on a date specified in such offer (the “Section 8.3 Proposed
Prepayment Date”). Such date shall be not less than 15 days and not more than
60 days after the date of such offer (if the Section 8.3 Proposed Prepayment
Date shall not be specified in such offer, the Section 8.3 Proposed Prepayment
Date shall be the first Business Day after the 45th day after the date of such
offer).

(c)    Acceptance/Rejection. A holder of Notes may accept the offer to prepay
made pursuant to this Section 8.3 by causing a notice of such acceptance to be
delivered to the Company not later than 15 days after receipt by such holder of
the most recent offer of prepayment. A failure by a holder of Notes to respond
to an offer to prepay made pursuant to this Section 8.3 shall be deemed to
constitute rejection of such offer by such holder.

(d)    Prepayment. Prepayment of the Notes to be prepaid pursuant to this
Section 8.3 shall be at 100% of the principal amount of such Notes, together
with interest on such Notes accrued to, but excluding, the date of prepayment,
but without Make-Whole Amount or other premium.

(e)    Officer’s Certificate. Each offer to prepay the Notes pursuant to this
Section 8.3 shall be accompanied by a certificate, executed by a Financial
Officer of the Company and dated the date of such offer, specifying: (i) the
Section 8.3 Proposed Prepayment Date; (ii) that such offer is made pursuant to
this Section 8.3; (iii) the principal amount of each Note offered to be prepaid;
(iv) the interest that would be due on each Note offered to be prepaid, accrued
to, but excluding, the Section 8.3 Proposed Prepayment Date; (v) that the
conditions of this Section 8.3 have been fulfilled; and (vi) in reasonable
detail, the nature and date or proposed date of the Change in Control.

Section 8.4.    [Reserved].

Section 8.5.    Allocation of Partial Prepayments. In the case of each partial
prepayment of the Notes pursuant to Section 8.2, the principal amount of the
Notes to be prepaid shall be allocated among all of the Notes at the time
outstanding in proportion, as nearly as practicable, to the respective unpaid
principal amounts thereof not theretofore called for prepayment. All partial
prepayments made pursuant to Section 8.3 or 8.9 shall be applied only to the
Notes of the holders who have elected to participate in such prepayment.

Section 8.6.    Maturity; Surrender, Etc. In the case of each prepayment of
Notes pursuant to this Section 8, the principal amount of each Note to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment (which shall be a Business Day), together with interest on such
principal amount accrued to, but excluding, such date and the applicable
Make-Whole Amount (to the fullest extent permitted by applicable law), if any.
From and after

 

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such date, unless the Company shall fail to pay such principal amount when so
due and payable, together with the interest and Make-Whole Amount, if any, as
aforesaid, interest on such principal amount shall cease to accrue. Any Note
paid or prepaid in full shall be surrendered to the Company and cancelled and
shall not be reissued, and no Note shall be issued in lieu of any prepaid
principal amount of any Note.

Section 8.7.    Purchase of Notes. The Company will not and will not permit any
Affiliate to purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes or any part or portion except (a) upon
the payment or prepayment of the Notes in accordance with the terms of this
Agreement and the Notes or (b) pursuant to an offer to purchase all or any
portion of the outstanding Notes made by the Company or an Affiliate pro rata to
the holders of all Notes at the time outstanding upon the same terms and
conditions. Any such offer shall provide each holder with sufficient information
to enable it to make an informed decision with respect to such offer, and shall
remain open for at least 10 Business Days. If the holders of more than 25% of
the principal amount of the Notes then outstanding accept such offer, the
Company shall promptly notify the remaining holders of such fact and the
expiration date for the acceptance by holders of Notes of such offer shall be
extended by the number of days necessary to give each such remaining holder at
least 5 Business Days from its receipt of such notice to accept such offer. The
Company will promptly cancel all Notes acquired by it or any Affiliate pursuant
to any payment, prepayment or purchase of Notes pursuant to any provision of
this Agreement and no Notes may be issued in substitution or exchange for any
such Notes.

Section 8.8.    Make-Whole Amount and Modified Make-Whole Amount. The terms
“Make-Whole Amount” and “Modified Make-Whole Amount” mean, with respect to any
Note, an amount equal to the excess, if any, of the Discounted Value of the
Remaining Scheduled Payments with respect to the Called Principal of such Note
over the amount of such Called Principal; provided that the Make-Whole Amount
may in no event be less than zero. For the purposes of determining the
Make-Whole Amount and the Modified Make-Whole Amount, the following terms have
the following meanings:

“Applicable Percentage” in the case of the computation of the Modified
Make-Whole Amount for purposes of Section 8.9 means 1.00% (100 basis points) and
in the case of a computation of the Make-Whole Amount for any other purpose
means 0.50% (50 basis points).

“Called Principal” means, with respect to any Note, the principal of such Note
that is to be prepaid pursuant to Section 8.2 or 8.9 or has become or is
declared to be immediately due and payable pursuant to Section 12.1, as the
context requires.

“Discounted Value” means, with respect to the Called Principal of any Note, the
amount obtained by discounting all Remaining Scheduled Payments with respect to
such Called Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.

 

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“Reinvestment Yield” means, with respect to the Called Principal of any Note,
the sum of (x) the Applicable Percentage plus (y) the yield to maturity implied
by (i) the yields reported as of 10:00 a.m. (New York City time) on the second
Business Day preceding the Settlement Date with respect to such Called
Principal, on the display designated as “Page PX1” (or such other display as may
replace Page PX1) on Bloomberg Financial Markets for the most recently issued
actively traded on the run U.S. Treasury securities having a maturity equal to
the Remaining Average Life of such Called Principal as of such Settlement Date,
or (ii) if such yields are not reported as of such time or the yields reported
as of such time are not ascertainable (including by way of interpolation), the
Treasury Constant Maturity Series Yields reported, for the latest day for which
such yields have been so reported as of the second Business Day preceding the
Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (or any comparable successor publication) for U.S.
Treasury securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date. In the case of each
determination under clause (i) or clause (ii), as the case may be, of the
preceding paragraph, such implied yield will be determined, if necessary, by
(a) converting U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (b) interpolating linearly
between (1) the applicable U.S. Treasury security with the maturity closest to
and greater than such Remaining Average Life and (2) the applicable U.S.
Treasury security with the maturity closest to and less than such Remaining
Average Life. The Reinvestment Yield shall be rounded to the number of decimal
places as appears in the interest rate of the applicable Note.

“Remaining Average Life” means, with respect to any Called Principal, the number
of years (calculated to the nearest one-twelfth year) obtained by dividing
(a) such Called Principal into (b) the sum of the products obtained by
multiplying (i) the principal component of each Remaining Scheduled Payment with
respect to such Called Principal by (ii) the number of years (calculated to the
nearest one-twelfth year) that will elapse between the Settlement Date with
respect to such Called Principal and the scheduled due date of such Remaining
Scheduled Payment.

“Remaining Scheduled Payments” means, with respect to the Called Principal of
any Note, all payments of such Called Principal and interest thereon that would
be due after the Settlement Date with respect to such Called Principal if no
payment of such Called Principal were made prior to its scheduled due date;
provided that if such Settlement Date is not a date on which interest payments
are due to be made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of interest
accrued to such Settlement Date and required to be paid on such Settlement Date
pursuant to Section 8.2, 8.9 or 12.1.

“Settlement Date” means, with respect to the Called Principal of any Note, the
date on which such Called Principal is to be prepaid pursuant to Section 8.2 or
8.9 or has become or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.

 

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Section 8.9.    Prepayment for Tax Reasons. (a) The Company shall have an option
to prepay the affected Notes in whole, but not in part, at any time, on giving
not less than 30 nor more than 60 days’ notice to the Foreign Holders (which
notice shall be irrevocable) by payment of the principal amount, together with
interest accrued to the date fixed for prepayment and with a premium in an
amount equal to the Modified Make-Whole Amount, determined as of two Business
Days prior to the date of such prepayment pursuant to this Section 8.9, if
(i) the Company (a) has or will become obliged to pay additional amounts as
provided or referred to in Section 14.3 as a result of any change in, or
amendment to, the laws, regulations or rulings of the United States or any
political subdivision or any authority thereof or therein having power to tax,
or any change in the application or official interpretation of such laws,
regulations or rulings (including a holding by a court of competent
jurisdiction), which change or amendment becomes effective on or after the date
of the Closing and (b) in its business judgment, determines that such obligation
cannot be avoided by the use of reasonable measures available to it; or
(ii) (a) any action has been taken by a taxing authority of, or any decision has
been rendered by a court of competent jurisdiction in, the United States or any
political subdivision or taxing authority thereof or therein, including any
actions specified in (i) above, whether or not such action was taken or decision
was rendered with respect to the Company, or any change, amendment, application
or interpretation shall be officially proposed, which, in any such case, in the
written opinion of independent legal counsel of recognized legal standing, will
result in a material probability that the Company will become obligated to pay
additional amounts and (b) in its business judgment the Company determines that
such obligation cannot be avoided by the use of reasonable measures available to
it; provided that no such notice of prepayment shall be given earlier than 60
days prior to the earliest date on which the Company would be obliged to pay
such additional amounts if a payment in respect of such Notes held by the
Foreign Holders were then due.

(b)    Prior to the giving of any notice of prepayment pursuant to this
Section 8.9, the Company shall deliver to the Foreign Holder of any Note to be
prepaid (1) a certificate signed by two officers of the Company stating that the
Company is entitled to effect such prepayment and setting forth a statement of
facts showing that the conditions precedent to the right of the Company so to
prepay have occurred and (2) in the case of a determination under (ii) above, an
opinion of independent legal advisers of recognized standing to the effect that
there is a material probability that the Company will become obliged to pay such
additional amounts as a result of such change or amendment. Upon the expiry of
any such notice as is referred to in this Section 8.9, the Company shall be
bound to prepay such Note in accordance with this Section 8.9.

(c)    Notwithstanding the foregoing, if the Company shall give a Foreign Holder
notice of prepayment of any Note pursuant to Section 8.9(a), such Foreign
Holder, if it then holds one or more such Notes in an aggregate amount equal to
or greater than $5,000,000, shall have a one time option to reject such
prepayment with respect to the prepayment arising as a result of the
circumstances described in such notice; provided, however, if such Foreign
Holder rejects such prepayment, Section 14.3(a) shall no longer be operative
with respect to any Notes held by such Foreign Holder arising out of the
circumstances described in such notice, but not of such Foreign Holder’s right
to receive payments pursuant to Section 14.3(a) that may arise out of
circumstances not described in such notice. To exercise such option, such
Foreign Holder shall provide a rejection notice to the Company within ten
Business Days after its receipt of the Company’s notice of prepayment. Such
notice by a Foreign Holder shall be irrevocable and shall be binding on all
subsequent Foreign Holders of such Foreign Holder’s Notes.

 

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(d)    The provisions of Sections 8.2 and 8.5 shall not apply to any prepayment
pursuant to this Section 8.9.

 

SECTION 9.

AFFIRMATIVE COVENANTS.

So long as any of the Notes are outstanding, the Company covenants that:

Section 9.1.    Compliance with Law. The Company will, and will cause each of
its Subsidiaries to, comply with all laws, rules, regulations and orders of any
Governmental Authority applicable to it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. Without limiting the generality
of the foregoing, the Company will, and will cause its Subsidiaries to, conduct
its business and other activities in compliance in all Material respects with
the applicable provisions of the Investment Company Act (including, without
limiting the foregoing, Section 18(a)(1)(A) and any applicable “asset coverage”
maintenance requirement) and any applicable rules, regulations or orders issued
by the SEC thereunder.

Section 9.2.    Insurance. The Company will, and will cause each of its
Subsidiaries to, maintain, with financially sound and reputable insurance
companies, insurance in such amounts and against such risks as are customarily
maintained by companies engaged in the same or similar businesses operating in
the same or similar locations.

Section 9.3.    Maintenance of Properties. The Company will, and will cause each
of its Subsidiaries to, keep and maintain all property material to the conduct
of its business in good working order and condition, ordinary wear and tear
excepted.

Section 9.4.    Payment of Taxes and Claims. The Company will, and will cause
each of its Subsidiaries to, pay its obligations, including tax liabilities and
material contractual obligations, that, if not paid, could reasonably be
expected to result in a Material Adverse Effect before the same shall become
delinquent or in default, except where (a) the validity or amount thereof is
being contested in good faith by appropriate proceedings, (b) the Company or
such Subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP and (c) the failure to make payment pending such
contest could not reasonably be expected to result in a Material Adverse Effect.

Section 9.5.    Legal Existence, Etc. The Company will, and will cause each of
its Subsidiaries to, do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its legal existence and the rights,
licenses, permits, privileges and franchises material to the conduct of its
business; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 10.3.

Section 9.6.    Notes to Rank Pari Passu. The Notes and all other obligations
under this Agreement of the Company are and at all times shall rank at least
pari passu in right of payment

 

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with all other present and future Senior Unsecured Indebtedness (actual or
contingent) of the Company which is not expressed to be subordinate or junior in
rank to any other Senior Unsecured Indebtedness of the Company.

Section 9.7.    Subsidiary Guarantors. The Company will cause each of its
Subsidiaries that (i) guarantees any Indebtedness pursuant to the Guarantee and
Security Agreement or (ii) otherwise becomes liable at any time, whether as a
borrower or an additional or co-borrower or otherwise, for or in respect of any
Indebtedness under the Senior Secured Credit Agreement to concurrently
therewith:

(a)    enter into an agreement in form and substance reasonably satisfactory to
the Required Holders providing for the guaranty by such Subsidiary, on a joint
and several basis with all other such Subsidiaries, of (i) the prompt payment in
full when due of all amounts payable by the Company pursuant to the Notes
(whether for principal, interest, Make-Whole Amount or otherwise) and this
Agreement, including, without limitation, all indemnities, fees and expenses
payable by the Company thereunder and (ii) the prompt, full and faithful
performance, observance and discharge by the Company of each and every covenant,
agreement, undertaking and provision required pursuant to the Notes or this
Agreement to be performed, observed or discharged by it (a “Subsidiary
Guarantee”); and

(b)    deliver the following to each of holder of a Note:

(i)    an executed counterpart of such Subsidiary Guarantee;

(ii)    a certificate signed by an authorized responsible officer of such
Subsidiary containing representations and warranties on behalf of such
Subsidiary to the same effect, mutatis mutandis, as those contained in Sections
5.1, 5.2, 5.6, and 5.7 of this Agreement (but with respect to such Subsidiary
and such Subsidiary Guarantee rather than the Company);

(iii)    all documents as may be reasonably requested by the Required Holders to
evidence the due organization, continuing existence and good standing of such
Subsidiary and the due authorization by all requisite action on the part of such
Subsidiary of the execution and delivery of such Subsidiary Guaranty and the
performance by such Subsidiary of its obligations thereunder; and

(iv)    unless waived by the Required Holders, an opinion of counsel reasonably
satisfactory to the Required Holders covering such matters relating to such
Subsidiary and such Subsidiary Guarantee as the Required Holders may reasonably
request.

Section 9.8.    Books and Records. The Company will, and will cause each of its
Subsidiaries to, keep or cause to be kept proper books of record and account in
accordance with GAAP.

 

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Section 9.9.    Status of RIC and BDC. The Company shall (i) maintain its status
as a RIC under the Code, and (ii) maintain its status as a “business development
company” under the Investment Company Act.

Section 9.10.    Investment Policies. The Company shall at all times be in
compliance with its Investment Policies, except to the extent that the failure
to so comply could not reasonably be expected to result in a Material Adverse
Effect.

Section 9.11.    Rating Confirmation. The Company covenants and agrees that, at
its sole cost and expense, it shall cause to be maintained at all times a Rating
from at least one NRSRO that indicates that it will monitor the rating on an
ongoing basis. No later than November 8 of each year, commencing in 2017, the
Company shall provide a notice to each of the holders of the Notes sent in the
manner provided in Section 18 with respect to any then current Ratings, which
shall include a Rating from at least one NRSRO, and which notice shall include a
copy of such Rating.

Section 9.12.    Rating. Within 30 days after the date of the Closing, the
Company shall deliver to the Purchasers in the manner provided in Section 18
evidence in form and substance satisfactory to the Purchasers that the Notes
have been rated Investment Grade or better by either Fitch, S&P or another NRSRO

 

SECTION 10.

NEGATIVE COVENANTS.

So long as any of the Notes are outstanding, the Company covenants that:

Section 10.1.    Indebtedness. The Company will not, nor will it permit any of
its Subsidiaries (other than Financing Subsidiaries) to, create, incur, assume
or permit to exist any Indebtedness, except:

(a)    Indebtedness evidenced by the Notes and the Existing Notes or outstanding
under or incurred pursuant to the Senior Secured Credit Agreement;

(b)    Secured Longer-Term Indebtedness and Unsecured Longer-Term Indebtedness
in an aggregate amount that taken together with other then-outstanding
Indebtedness, does not exceed the amount required to comply with the provisions
of Section 10.7(b);

(c)     Indebtedness existing on the date hereof and set forth on Schedule 5.15;

(d)    Other Permitted Indebtedness;

(e)    Indebtedness of the Company to or from any other Obligor or Indebtedness
of an Obligor to or from another Obligor;

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

 

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

(h)    Secured Shorter-Term Indebtedness and Unsecured Shorter-Term Indebtedness
in an aggregate amount (determined at the time of the incurrence of such
Indebtedness) not exceeding 5% of Shareholders’ Equity and that taken together
with other then-outstanding Indebtedness, does not exceed the amount required to
comply with the provisions of Section 10.7(b);

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

(j)    Permitted SBIC Guarantees.

For the avoidance of doubt, notwithstanding anything to the contrary in this
Agreement or in any other Note Document (a) any settlement in respect of
Convertible Debt to the extent made through the delivery of Equity Interests
and/or payment of Cash does not constitute a Restricted Payment and (b) the
conversion of Convertible Debt, or the right of any or all of the holders
thereof to trigger and/or settle such conversion, or any triggering and/or
settlement thereof, or the triggering, exercise or settlement of any rights by
any or all holders thereof to cause the Company to repurchase such Convertible
Debt, shall not constitute an event or condition described in Section 11(g),
shall not constitute “amortization” for purposes of clause (a) of the definition
of “Unsecured Longer-Term Indebtedness,” and any cash payment made by the
Company in respect thereof shall constitute a “regularly scheduled payment,
prepayment or redemption of principal and interest in respect thereof required
pursuant to the instruments evidencing such Indebtedness” within the meaning of
clause (a) of Section 10.12. Notwithstanding anything to the contrary herein or
in any other Note Document, the immediately preceding sentence shall be deemed
incorporated by reference mutatis mutandis in each other Note Document, and each
such Note Document shall be deemed amended to the extent necessary to effectuate
the foregoing. Notwithstanding the prior sentence to the contrary, the Company
shall only be permitted to make a cash payment on account of principal of
Convertible Debt if no Default exists at the time of, or immediately after, such
payment, on the date of such payment, the Company is in pro forma compliance
with each of the covenants set forth in Section 6.07 of the Senior Secured
Credit Agreement after giving effect to such payment.

Section 10.2.    Liens. The Company will not, nor will it permit any of its
Subsidiaries (other than Financing Subsidiaries) to, create, incur, assume or
permit to exist any Lien on any property or asset now owned or hereafter
acquired by it, or assign or sell any income or revenues (including accounts
receivable) or rights in respect of any thereof, except:

(a)    any Lien on any property or asset of the Company existing on the date of
the Closing and set forth on Schedule 5.15, provided that (i) no such Lien shall
extend to any other property or asset of the Company or any of its Subsidiaries
and (ii) any such Lien shall secure only those obligations which it secures on
the date of the Closing and extensions, renewals and replacements thereof that
do not increase the outstanding principal amount thereof;

 

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(b)    Liens created pursuant to the Security Documents;

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

(d)    Liens securing Indebtedness or other obligations in an aggregate
principal amount not exceeding the greater of (x) $50,000,000 and (y) an amount
equal to 5% of Shareholder’s Equity at any one time outstanding (which may cover
Portfolio Investments, but only to the extent released from the Lien in favor of
the Collateral Agent in accordance with the requirements of Section 10.03 of the
Guarantee and Security Agreement), so long as at the time thereof the aggregate
amount of Indebtedness permitted under clauses (a), (b) and (h) of Section 10.1,
does not exceed the amount required to comply with the provisions of
Section 10.7(b);

(e)    Permitted Liens; and

(f)    Liens on the Company’s or a Subsidiary’s Equity Interests in any SBIC
Subsidiary created in favor of the SBA.

Section 10.3.    Fundamental Changes. The Company will not, nor will it permit
any of its Subsidiaries (other than Financing Subsidiaries and Immaterial
Subsidiaries) to enter into any transaction of merger, consolidation or
amalgamation or to liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution). The Company will not, nor will it permit any of its
Subsidiaries (other than Financing Subsidiaries and Immaterial Subsidiaries) to
acquire any business or property from, or capital stock of, or be a party to any
acquisition of, any Person, except for purchases or acquisitions of Portfolio
Investments and other assets in the normal course of the day-to-day business
activities of the Company and its Subsidiaries and not in violation of the terms
and conditions of this Agreement. The Company will not, nor will it permit any
of its Subsidiaries (other than Financing Subsidiaries and Immaterial
Subsidiaries) to, convey, sell, lease, transfer or otherwise dispose of, in one
transaction or a series of transactions, any part of its assets, whether now
owned or hereafter acquired, but excluding (x) assets sold or disposed of in the
ordinary course of business (including to make expenditures of cash and
dispositions of investments in connection with exits and work-outs (including
assets abandoned for no consideration if the Company determines such assets have
no value) in the normal course of the day-to-day business activities of the
Company and its Subsidiaries) and (y) subject to the provisions of clause (d)
below, Portfolio Investments (to the extent not otherwise included in clause (x)
of this Section 10.3).

Notwithstanding the foregoing provisions of this Section 10.3:

(a)    any Subsidiary Guarantor of the Company may be merged or consolidated
with or into the Company or any other Subsidiary Guarantor; provided that (i) at
the time thereof and after giving effect thereto, no Default shall have occurred
or be continuing, (ii) if any such transaction shall be between a Subsidiary
Guarantor and a wholly-owned Subsidiary Guarantor, the wholly-owned Subsidiary
Guarantor shall be the continuing or surviving corporation and (iii) if any such
transaction shall be between the Company and a Subsidiary Guarantor, the Company
shall be the continuing or surviving corporation;

 

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

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

(d)    the Obligors may sell, transfer or otherwise dispose of Portfolio
Investments to a Financing Subsidiary so long as (i) after giving effect to such
sale, transfer or other disposition (and any concurrent acquisitions of
Portfolio Investments or payment of the outstanding principal amount of the
Notes, Indebtedness outstanding under and pursuant to the Senior Secured Credit
Agreement, and/or Other Covered Indebtedness), such sale, transfer or other
disposition shall be permitted under 6.03(d) of the Senior Secured Credit
Agreement, as evidenced by a copy delivered to the holders of the Notes of any
certificate (including related calculations) of a Financial Officer delivered in
accordance with such section under the Senior Secured Credit Agreement;

(e)    the Company or any Subsidiary may merge or consolidate with any other
Person so long as at the time thereof and after giving effect thereto, no
Default shall have occurred or be continuing and provided that (i) if any such
transaction shall be between the Company and another Person, the Company shall
be the continuing or surviving corporation, (ii) if any such transaction shall
be between a wholly-owned Subsidiary Guarantor and another Person (other than
the Company), a wholly-owned Subsidiary Guarantor shall be the continuing or
surviving corporation, and (iii) if any such transaction shall be between a
Subsidiary Guarantor and another Person (other than the Company or a
wholly-owned Subsidiary Guarantor), a Subsidiary Guarantor shall be the
continuing or surviving corporation;

(f)    the Company and its Subsidiaries may sell, lease, transfer or otherwise
dispose of equipment or other property or assets that do not consist of
Portfolio Investments so long as the aggregate amount of all such sales, leases,
transfer and dispositions does not exceed $25,000,000 in any fiscal year; and

(g)    the Company or the other Obligors may dissolve or liquidate (i) any
Subsidiary that does not own, legally or beneficially, assets which in aggregate
have a value of $500,000 or more at such time of dissolution or liquidation or
(ii) any SBIC Subsidiary, provided that no portion of any Indebtedness or any
other obligations (contingent or otherwise) of such SBIC Subsidiary (A) is, or
would as a result of dissolution or liquidation hereunder become, recourse to or
obligate the Company or any other Obligor (other than any SBIC Subsidiary) in
any way, or (B) subjects, or would as a result of dissolution or liquidation
hereunder subject, any property of the Company or any other Obligor (other than
any SBIC Subsidiary) to the satisfaction of such Indebtedness.

 

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Section 10.4.    Investments. The Company will not, nor will it permit any of
its Subsidiaries (other than Financing Subsidiaries) to, acquire, make or enter
into, or hold, any Investments except:

(a)    operating deposit accounts with banks;

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

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

(d)    Portfolio Investments by the Company and its Subsidiaries, provided that,
(i) such Portfolio Investments are permitted under the Company’s Investment
Policies and (ii) such Portfolio Investments are permitted under the provisions
of the Investment Company Act;

(e)    Investments in Financing Subsidiaries to the extent permitted by the
Senior Secured Credit Agreement; and

(f)    additional Investments up to but not exceeding an amount in the aggregate
at any time outstanding equal to $50,000,000 minus the aggregate value of assets
owned by all Immaterial Subsidiaries, legally or beneficially, or directly or
indirectly.

For purposes of clause (f) of this Section 10.4, the aggregate amount of an
Investment at any time shall be deemed to be equal to (A) the aggregate amount
of cash, together with the aggregate fair market value of property, loaned,
advanced, contributed, transferred or otherwise invested that gives rise to such
Investment (calculated at the time such Investment is made) minus (B) the
aggregate amount of dividends, distributions or other payments received in cash
in respect of such Investment, provided that in no event shall the aggregate
amount of such Investment be deemed to be less than zero; the amount of an
Investment shall not in any event be reduced by reason of any write-off of such
Investment nor increased by any increase in the amount of earnings retained in
the Person in which such Investment is made that have not been dividended,
distributed or otherwise paid out.

Section 10.5.    Restricted Payments. The Company will not, nor will it permit
any of its Subsidiaries (other than Financing Subsidiaries) to, declare or make,
or agree to pay or make, directly or indirectly, any Restricted Payment, except
that the Company may declare and pay:

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

(b)    dividends and distributions in either case in cash or other property
(excluding for this purpose the Company’s common stock) in any taxable year of
the Company in amounts not to exceed the amount that is estimated in good faith
by the Company to be required to (i) reduce to zero for such taxable year or for
the previous

 

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taxable year, its investment company taxable income (within the meaning of
section 852(b)(2) of the Code), and reduce to zero the tax imposed by
section 852(b)(3) of the Code, and (ii) avoid federal excise taxes for such
taxable year or for the previous taxable year imposed by section 4982 of the
Code;

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

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

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

(d)    other Restricted Payments so long as (i) on the date of such Restricted
Payment and after giving effect thereto no Default shall have occurred and be
continuing and (ii) such payment shall be permitted under Section 6.05 of the
Senior Secured Credit Agreement, as evidenced by a copy delivered to the holders
of the Notes of any certificate (including related calculations) of a Financial
Officer delivered in accordance with such section under the Senior Secured
Credit Agreement.

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

Section 10.6.    Certain Restrictions on Subsidiaries. Other than the Senior
Secured Credit Agreement, the Security Documents and the other agreements in
connection therewith, the Company will not permit any of its Subsidiaries (other
than Financing Subsidiaries) to enter into or suffer to exist any indenture,
agreement, instrument or other arrangement that prohibits or restrains, in each
case in any material respect, or imposes materially adverse conditions upon, the
incurrence or payment of Indebtedness, the granting of Liens, the declaration or
payment of dividends, the making of loans, advances, guarantees or Investments
or the sale, assignment, transfer or other disposition of property by any
Obligor; provided that, the foregoing shall not apply to (i) indentures,
agreements, instruments or other agreements pertaining to other Indebtedness
permitted hereunder so long as it is not, in the Company’s good faith judgment,
more restrictive or burdensome in respect of the foregoing activities than the
Note Documents (provided that, in any event, such restrictions would not
adversely affect the exercise of rights or remedies of the holder of the Notes
under the Note Documents or impair the rights or ability of the Company

 

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or any Subsidiary Guarantor in any manner from performing its obligations under
the Note Documents) and (ii) indentures, agreements, instruments or other
agreements pertaining to any lease, sale or other disposition of any asset
permitted by this Agreement or any Lien permitted by this Agreement on such
asset so long as the applicable restrictions only apply to the assets subject to
such lease, sale, other disposition or Lien.

Section 10.7.    Certain Financial Covenants.

(a)    [Reserved].

(b)    Asset Coverage Ratio. The Company will not permit the Asset Coverage
Ratio to be less than the Investment Company Act Asset Coverage at any time.

(c)    [Reserved].

(d)    Financial Covenant Most Favored Lender. (i) If at any time, including,
for the avoidance of doubt, as of the date of the Closing, (A) the Senior
Secured Credit Agreement includes financial covenants (individually an
“Additional Financial Covenant” and, collectively, “Additional Financial
Covenants”) not set forth in this Agreement or (B) thereafter enters into any
amendment, supplement, waiver, change, clarification, interpretation, consent or
other modification (which, for the avoidance of doubt for purposes of this
Section 10.7(d), shall include any such change effectuated pursuant to a
replacement of the Senior Secured Credit Agreement) (individually a “Financial
Covenant Modification” and, collectively, “Financial Covenant Modifications”) to
Section 6.07 of the Senior Secured Credit Agreement or to an Additional
Financial Covenant (or to any defined term contained or used in Section 6.07 or
such Additional Financial Covenant), then and in any such event (other than with
respect to any Additional Financial Covenant on the date of the Closing) the
Company shall give written notice thereof to each holder of the Notes not later
than 10 Business Days following the date of any such Additional Financial
Covenant(s) or Financial Covenant Modification(s), as the case may be. Effective
on the date of such Additional Financial Covenant(s) or Financial Covenant
Modification(s) under and pursuant to the Senior Secured Credit Agreement, such
Additional Financial Covenant(s) or Financial Covenant Modification(s), whether
or not more or less restrictive upon the Company, shall then and thereupon be
deemed to have been incorporated herein with respect to Section 10.7 and/or any
defined term contained or used therein, as the case may be; provided that if a
Default or Event of Default shall have occurred and be continuing at the time
Section 10.7, such Additional Financial Covenant(s) or Financial Covenant
Modification(s) (and/or any defined term contained or used therein, as the case
may be) is or are to be so excluded, terminated, loosened, tightened, amended or
modified under this Section 10.7(d), the prior written consent thereto of the
Required Holders shall be required as a condition to the exclusion, termination,
loosening, tightening or other amendment or modification of such Section 10.7,
such Additional Financial Covenant(s) or Financial Covenant Modification(s)
(and/or any defined term contained or used therein, as the case may be);
provided further that, notwithstanding the foregoing and for the avoidance of
doubt, in no event shall the minimum asset coverage required to be held by the
Company pursuant to this Section 10.7 be less than the Investment Company Act
Asset Coverage; provided further that, for the avoidance of doubt, the covenants
set forth in Sections 6.07(a) and (b) of the Senior Secured Credit Agreement on
the date of Closing are Additional Financial Covenants hereunder.

 

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(ii)    The Company further covenants to promptly execute and deliver at its
expense (including, without limitation, the reasonable fees and expenses of one
counsel for the holders of the Notes) each and every amendment to this Agreement
reasonably considered to be necessary or appropriate by the Required Holders for
purposes of maintaining clarity and consistency between the applicable sections
of the Senior Secured Credit Agreement and related defined terms contained or
used therein and Section 10.7 and related defined terms contained or used
therein; provided that the execution and delivery of any such amendment shall
not be a precondition to the effectiveness of such alteration or alterations,
but shall merely be for the convenience of the parties hereto.

(iii)    The Company agrees that it will not, nor will it permit any Subsidiary
or Affiliate to, directly or indirectly, pay or cause to be paid any
consideration or remuneration, whether by way of supplemental or additional
interest, fee or otherwise, to any creditor of the Company as consideration for
or as an inducement to the entering into by any such creditor of any
modification(s) primarily with respect to the principal terms of an Additional
Financial Covenant(s) or Section 6.07 of the Senior Secured Credit Agreement the
effect of which modification is to exclude, terminate, loosen, tighten or
otherwise amend or modify an Additional Financial Covenant(s) or Section 6.07 of
the Senior Secured Credit Agreement, which exclusion, termination, loosening,
tightening or other amendment or modification would require a similar change in
this Agreement, unless such consideration or remuneration is concurrently paid,
on the same terms, and in an amount bearing the same proportion to the aggregate
outstanding principal amount of the Notes as the amount paid to such other
creditor bears to the aggregate principal amount of indebtedness owing by the
Company to such other creditor, ratably to all of the holders of the Notes then
outstanding.

Section 10.8.    Transactions with Affiliates. The Company will not, and will
not permit any of its Subsidiaries (other than Financing Subsidiaries and
Immaterial Subsidiaries) to, enter into any material transactions with any of
its Affiliates, even if otherwise permitted under this Agreement, except
(a) transactions in the ordinary course of business at prices and on terms and
conditions not less favorable to the Company or such Subsidiary than could be
obtained on an arm’s-length basis from unrelated third parties; provided that,
affiliate transactions that are expressly permitted to be undertaken by a
business development company under the Investment Company Act and the rules and
regulations promulgated thereunder will be deemed to be in the ordinary course
of business for purposes of this Section 10.8, (b) transactions between or among
the Company and its Subsidiaries, (c) Restricted Payments permitted by
Section 10.5, (d) the transactions provided in the Affiliate Agreements,
(e) transactions described on Schedule 10.8(e), (f) any Investment that results
in the creation of an Affiliate, (g) Permitted Directing Body-Approved Affiliate
Transactions, and (h) transactions between or among the Obligors and any SBIC
Subsidiary at prices and on terms and conditions not less favorable to the
Obligors than could be obtained at the time on an arm’s-length basis from
unrelated third parties.

Section 10.9.    Lines of Business. The Company will not, nor will it permit any
of its Subsidiaries to, engage to any material extent in any business other than
in accordance with its Investment Policies.

Section 10.10.    [Reserved].

 

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Section 10.11.    Modifications of Longer-Term Documents. Without the prior
consent of the Required Holders, the Company will not consent to any
modification, supplement or waiver of:

(a)    any of the provisions of any agreement, instrument or other document
evidencing or relating to any Secured Longer-Term Indebtedness or Unsecured
Longer-Term Indebtedness that would result in such Indebtedness not meeting the
requirements of the definition of “Secured Longer-Term Indebtedness” and
“Unsecured Longer-Term Indebtedness,” as applicable, unless (i) in the case of
Secured Longer-Term Indebtedness, such Indebtedness would have been permitted to
be incurred as Secured Shorter-Term Indebtedness at the time of such
modification, supplement or waiver and the Company so designates such
Indebtedness as “Secured Shorter-Term Indebtedness” (whereupon such Indebtedness
shall be deemed to constitute “Secured Shorter-Term Indebtedness” for all
purposes of this Agreement) and (ii) in the case of Unsecured Longer-Term
Indebtedness, such Indebtedness would have been permitted to be incurred as
Unsecured Shorter-Term Indebtedness at the time of such modification, supplement
or waiver and the Company so designates such Indebtedness as “Unsecured
Shorter-Term Indebtedness” (whereupon such Indebtedness shall be deemed to
constitute “Unsecured Shorter-Term Indebtedness” for all purposes of this
Agreement), or

(b)    any of the Affiliate Agreements (other than in connection with any
Permitted Directing Body-Approved Affiliate Transaction), unless such
modification, supplement or waiver is not less favorable to the Company than
could be obtained on an arm’s-length basis from unrelated third parties.

Section 10.12.    Payments of Longer-Term Indebtedness. The Company will not,
nor will it permit any of its Subsidiaries to, purchase, redeem, retire or
otherwise acquire for value, or set apart any money for a sinking, defeasance or
other analogous fund for the purchase, redemption, retirement or other
acquisition of, or make any voluntary payment or prepayment of the principal of
or interest on, or any other amount owing in respect of, any Secured Longer-Term
Indebtedness or Unsecured Longer-Term Indebtedness (other than the refinancing
of Secured Longer-Term Indebtedness or Unsecured Longer-Term Indebtedness with
Indebtedness permitted under Section 10.1), except for (a) regularly scheduled
payments, prepayments or redemptions of principal and interest in respect
thereof required pursuant to the instruments evidencing such Indebtedness,
(b) payments and prepayments of Secured Longer-Term Indebtedness required to
comply with requirements of Section 2.10(c) of the Senior Secured Credit
Agreement, (c) payments and prepayments of Secured Longer-Term Indebtedness or
Unsecured Longer-Term Indebtedness with the proceeds of any offer and sale of
equity interests of the Company, or (d) other payments and prepayments so long
as at the time of and immediately after giving effect to such payment, (i) no
Default shall have occurred and be continuing and (ii) if such payment were
treated as a “Restricted Payment” for the purposes of determining compliance
with Section 10.5(d), such payment would be permitted to be made under
Section 10.5(d).

Section 10.13.    Terrorism Sanctions Regulations. The Company will not and will
not permit any Affiliated Entity (a) to become (including by virtue of being
owned or controlled by a Blocked Person or Canada Blocked Person), own or
control a Blocked Person or Canada Blocked Person or any Person that is the
target of sanctions imposed by the United Nations or by the European

 

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Union, or (b) directly or indirectly to have any investment in or engage in any
dealing or transaction (including, without limitation, any investment, dealing
or transaction involving the proceeds of the Notes) with any Person if such
investment, dealing or transaction (i) would cause any holder to be in violation
of any law or regulation applicable to such holder, or (ii) is prohibited by or
subject to sanctions under any U.S. Economic Sanctions or Canadian Economic
Sanctions Laws, or (c) to engage, nor shall any Affiliate of either engage, in
any activity that could subject such Person or any holder to sanctions under
CISADA or any similar law or regulation with respect to Iran or any other
country that is subject to U.S. Economic Sanctions or Canadian Economic
Sanctions Laws.

 

SECTION 11.

EVENTS OF DEFAULT.

An “Event of Default” shall exist if any of the following conditions or events
shall occur and be continuing:

(a)    the Company defaults in the payment of any principal or Make-Whole
Amount, if any, on any Note when the same becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise; or

(b)    the Company defaults in the payment of any interest on any Note for a
period of five or more Business Days after the same becomes due and payable; or

(c)    the Company defaults in the performance of or compliance with any term
contained in (i) Section 9.7 or Sections 10.1 through 10.7 or Section 10.12
hereof or (ii) Section 7.1(k) hereof and such failure shall continue unremedied
for a period of five or more days after notice thereof by any holder of a Note
to the Company or (iii) in each case of clause (i) or (ii) above, as applicable,
any covenant in a Supplement which specifically provides that it shall have the
benefit of this paragraph (c); or

(d)    [Reserved];

(e)    the Company defaults in the performance of or compliance with any term
contained herein or in any Supplement (other than those referred to in
Sections 11(a), (b) and (c)) and such default is not remedied within 30 days
after the earlier of (i) a Responsible Officer obtaining actual knowledge of
such default and (ii) the Company receiving written notice of such default from
any holder of a Note (any such written notice to be identified as a “notice of
default” and to refer specifically to this Section 11(e)); or

(f)    any representation or warranty made in writing by or on behalf of the
Company or a Subsidiary Guarantor or by any officer of the Company or a
Subsidiary Guarantor in this Agreement, any Supplement or the Subsidiary
Guarantee or in any writing furnished in connection with the transactions
contemplated hereby proves to have been false or incorrect in any material
respect on the date as of which made; or

(g)    (i) the Company or any of its Subsidiaries shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material

 

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Indebtedness, when and as the same shall become due and payable, or (ii) any
event or condition (other than any condition which is a Change of Control (in
which event the terms and conditions of Section 8.3 shall govern)) occurs that
results in any Material Indebtedness becoming due prior to its scheduled
maturity or that enables or permits (with or without the giving of notice, the
lapse of time or both) the holder or holders of any Material Indebtedness or any
trustee or agent on its or their behalf to cause any Material Indebtedness to
become due, or to require the prepayment, repurchase, redemption or defeasance
thereof, prior to its scheduled maturity; provided that this clause (g) shall
not apply to secured Indebtedness that becomes due as a result of the voluntary
sale or transfer of the property or assets securing such Indebtedness; or

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

(i)    the Company or any of its Subsidiaries shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (h) of this Section 11, (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for the Company or any of its Subsidiaries or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors, (vi) take any action for the
purpose of effecting any of the foregoing or (vii) become unable, admit in
writing its inability or fail generally, to pay its debts as they become due; or

(j)    one or more judgments for the payment of money in an aggregate amount in
excess of $50,000,000 shall be rendered against the Company or any of its
Subsidiaries or any combination thereof and the same shall remain undischarged
for a period of 30 consecutive days following the entry of such judgment during
which execution shall not be effectively stayed, discharged or bonded pending
appeal, or liability for such judgment amount shall not have been admitted by an
insurer of reputable standing reasonably acceptable to the Required Holders, or
any action shall be legally taken by a judgment creditor to attach or levy upon
any assets of the Company or any of its Subsidiaries to enforce any such
judgment; or

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

 

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(l)    Solar Capital Partners, LLC shall cease to be the investment advisor for
the Company; or

(m)    [Reserved]; or

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

(o)    the Company or any of its Subsidiaries shall cause or permit the
occurrence of any condition or event that would result in any recourse to any
Obligor under any Permitted SBIC Guarantee.

 

SECTION 12.

REMEDIES ON DEFAULT, ETC.

Section 12.1.    Acceleration. (a) If an Event of Default with respect to the
Company described in Section 11(h) or (i) (other than an Event of Default
described in clause (vii) of Section 11(i)) has occurred, all the Notes then
outstanding shall automatically become immediately due and payable.

(b)    If any other Event of Default has occurred and is continuing, the
Required Holders may at any time at its or their option, by notice or notices to
the Company, declare all the Notes then outstanding to be immediately due and
payable.

(c)    If any Event of Default described in Section 11(a) or (b) has occurred
and is continuing, either (i) any original Purchaser or Affiliate thereof
(provided, that notwithstanding the definition thereof, “Affiliate” shall
include any Person that acts as investment adviser in the ordinary course of
business on behalf of the account of any original Purchaser) which is a holder
or holders of Notes at the time outstanding affected by such Event of Default or
(ii) the Required Holders may at any time, at its or their option, by notice or
notices to the Company, declare all the Notes held by it or them to be
immediately due and payable.

Upon any Notes becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Notes will forthwith mature and the entire
unpaid principal amount of such Notes, plus (i) all accrued and unpaid interest
thereon (including, but not limited to, interest accrued thereon at the Default
Rate) and (ii) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for), and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.

 

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Section 12.2.    Other Remedies. If any Default or Event of Default has occurred
and is continuing, and irrespective of whether any Notes have become or have
been declared immediately due and payable under Section 12.1, the holder of any
Note at the time outstanding may proceed to protect and enforce the rights of
such holder by an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein or in any
Note, or for an injunction against a violation of any of the terms hereof or
thereof, or in aid of the exercise of any power granted hereby or thereby or by
law or otherwise.

Section 12.3.    Rescission. At any time after any Notes have been declared due
and payable pursuant to Section 12.1(b) or (c), the holders of more than 50% in
principal amount of the Notes then outstanding, by written notice to the
Company, may rescind and annul any such declaration and its consequences if
(a) the Company has paid all overdue interest on the Notes, all principal of and
Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid
other than by reason of such declaration, and all interest on such overdue
principal and Make-Whole Amount, if any, and (to the extent permitted by
applicable law) any overdue interest in respect of the Notes, at the Default
Rate, (b) neither the Company nor any other Person shall have paid any amounts
which have become due solely by reason of such declaration, (c) all Events of
Default and Defaults, other than non-payment of amounts that have become due
solely by reason of such declaration, have been cured or have been waived
pursuant to Section 17, and (d) no judgment or decree has been entered for the
payment of any monies due pursuant hereto or to the Notes. No rescission and
annulment under this Section 12.3 will extend to or affect any subsequent Event
of Default or Default or impair any right consequent thereon.

Section 12.4.    No Waivers or Election of Remedies, Expenses, Etc. No course of
dealing and no delay on the part of any holder of any Note in exercising any
right, power or remedy shall operate as a waiver thereof or otherwise prejudice
such holder’s rights, powers or remedies. No right, power or remedy conferred by
this Agreement or by any Note upon any holder thereof shall be exclusive of any
other right, power or remedy referred to herein or therein or now or hereafter
available at law, in equity, by statute or otherwise. Without limiting the
obligations of the Company under Section 15, the Company will pay to the holder
of each Note on demand such further amount as shall be sufficient to cover all
costs and expenses of such holder incurred in any enforcement or collection
under this Section 12, including, without limitation, reasonable attorneys’
fees, expenses and disbursements.

 

SECTION 13.

REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

Section 13.1.    Registration of Notes. The Company shall keep at its principal
executive office a register for the registration and registration of transfers
of Notes. The name and address of each holder of one or more Notes, each
transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that is an
Institutional Investor promptly upon request therefor, a complete and correct
copy of the names and addresses of all registered holders of Notes.

 

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Section 13.2.    Transfer and Exchange of Notes. (a) Upon surrender of any Note
to the Company at the address and to the attention of the designated officer
(all as specified in Section 18(a)(C)) for registration of transfer or exchange
(and in the case of a surrender for registration of transfer accompanied by a
written instrument of transfer duly executed by the registered holder of such
Note or such holder’s attorney duly authorized in writing and accompanied by the
relevant name, address and other information for notices of each transferee of
such Note or part thereof), within ten Business Days thereafter, the Company
shall execute and deliver, at the Company’s expense (except as provided below),
one or more new Notes of the same Series (and of the same tranche if such Series
has separate tranches) (as requested by the holder thereof) in exchange
therefor, in an aggregate principal amount equal to the unpaid principal amount
of the surrendered Note. Each such new Note shall be payable to such Person as
such holder may request and shall be substantially in the form of Exhibit 1 or
attached to the applicable Supplement with respect to any Additional Notes. Each
such new Note shall be dated and bear interest from the date to which interest
shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $100,000; provided that if necessary
to enable the registration of transfer by a holder of its entire holding of
Notes, one Note may be in a denomination of less than $100,000. Any transferee,
by its acceptance of a Note registered in its name (or the name of its nominee),
shall be deemed to have made the representations and agreements set forth in
Section 6.1(b), (d) and (f) and Section 6.2.

(b)    Any transfer of a Note made in violation of Section 6.1(f) or this
Section 13.2 shall be null and void and of no force and effect.

Section 13.3.    Replacement of Notes. Upon receipt by the Company at the
address and to the attention of the designated officer (all as specified in
Section 18(C)) of evidence reasonably satisfactory to it of the ownership of and
the loss, theft, destruction or mutilation of any Note (which evidence shall be,
in the case of an Institutional Investor, notice from such Institutional
Investor of such ownership and such loss, theft, destruction or mutilation), and

(a)    in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a nominee
for, an original Purchaser or Additional Purchaser or another holder of a Note
with a minimum net worth of at least $50,000,000 or a Qualified Institutional
Buyer, such Person’s own unsecured agreement of indemnity shall be deemed to be
satisfactory), or

(b)    in the case of mutilation, upon surrender and cancellation thereof,

within ten Business Days thereafter, the Company at its own expense shall
execute and deliver, in lieu thereof, a new Note of the same Series (and of the
same tranche if such Series has separate tranches), dated and bearing interest
from the date to which interest shall have been paid on such lost, stolen,
destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or
mutilated Note if no interest shall have been paid thereon.

 

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SECTION 14.

PAYMENTS ON NOTES.

Section 14.1.    Place of Payment. Subject to Section 14.2, payments of
principal, Make-Whole Amount or Modified Make-Whole Amount, if any, and interest
becoming due and payable on the Notes shall be made in New York, New York at the
principal office of Goldman Sachs Bank USA in such jurisdiction. The Company may
at any time, by notice to each holder of a Note, change the place of payment of
the Notes so long as such place of payment shall be either the principal office
of the Company in such jurisdiction or the principal office of a bank or trust
company in such jurisdiction.

Section 14.2.    Home Office Payment. So long as any Purchaser or Additional
Purchaser or its nominee shall be the holder of any Note, and notwithstanding
anything contained in Section 14.1 or in such Note to the contrary, the Company
will pay all sums becoming due on such Note for principal, Make-Whole Amount or
Modified Make-Whole Amount, if any, and interest by the method and at the
address specified for such purpose below such Purchaser’s or Additional
Purchaser’s name in Schedule A or attached to any Supplement to which such
Additional Purchaser is a party, or by such other method or at such other
address as such Purchaser or Additional Purchaser shall have from time to time
specified to the Company in writing for such purpose, without the presentation
or surrender of such Note or the making of any notation thereon, except that
upon written request of the Company made concurrently with or reasonably
promptly after payment or prepayment in full of any Note, such Purchaser or
Additional Purchaser shall surrender such Note for cancellation, reasonably
promptly after any such request, to the Company at its principal executive
office or at the place of payment most recently designated by the Company
pursuant to Section 14.1. Prior to any sale or other disposition of any Note
held by a Purchaser or Additional Purchaser or such Person’s nominee, such
Person will, at its election, either endorse thereon the amount of principal
paid thereon and the last date to which interest has been paid thereon or
surrender such Note to the Company in exchange for a new Note or Notes pursuant
to Section 13.2. The Company will afford the benefits of this Section 14.2 to
any Institutional Investor that is the direct or indirect transferee of any Note
purchased by a Purchaser or Additional Purchaser under this Agreement, including
via any Supplement, and that has made the same agreement relating to such Note
as the Purchasers have made in this Section 14.2.

Section 14.3.    Taxation. (a) All payments of principal, interest, Make-Whole
Amount and Modified Make-Whole Amount in respect of the Notes shall be made free
and clear of, and without withholding or deduction for, any taxes, duties,
assessments or governmental charges of whatsoever nature imposed, levied,
collected, withheld or assessed by the United States, any other taxing
jurisdiction from which or through which the Company makes payments or any
political subdivision or any authority thereof or therein having power to tax,
unless such withholding or deduction is required by law. In that event, the
Company shall pay such additional amounts as will result in the receipt by any
holders that are not U.S. persons as defined in I.R.C. § 7701 (collectively, the
“Foreign Holders”) or any other holder of such amounts as would have been

 

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received by the holder if no such withholding or deduction had been required,
except that no such additional amounts shall be payable in respect of any tax,
assessment or other governmental charge that:

(1)    is imposed or withheld solely by reason of the existence of any present
or former connection (other than the mere fact of being a Foreign Holder or the
taxing of any enforcement action by a Foreign Holder under this Agreement)
between any holder and the United States, including, without limitation, such
holder being or having been a citizen or resident of the United States or
treated as being or having been a resident thereof;

(2)    in the case of a Foreign Holder, is imposed or withheld solely by reason
of any Foreign Holder (or any partnership, trust, estate, limited liability
company or other fiscally transparent entity of which such Foreign Holder is a
partner, beneficiary, settlor or member) (i) being or having been present in, or
engaged in a trade or business in, the United States, (ii) being treated as
having been present in, or engaged in a trade or business in, the United States,
or (iii) having or having had a permanent establishment in the United States;

(3)    is an estate, inheritance, gift, sales, transfer, personal property or
excise tax or any similar tax assessment or governmental charge;

(4)    is, in respect of any payment to any Foreign Holder that is not qualified
for the benefits of a U.S. tax treaty providing for zero withholding on interest
on the date of this Agreement, imposed on a beneficial owner that actually or
constructively owns 10% or more of the total combined voting power of all of the
classes of stock of the Company that are entitled to vote within the meaning of
Section 871(h)(3) of the Code (as in effect on the date of this Agreement or, in
the case of a transfer to another Foreign Holder, as in effect on the date of
such transfer) or that is a bank making a loan entered into in the ordinary
course of its trade or business within the meaning of Section 881(c)(3)(A) of
the Code (as in effect on the date of this Agreement, or in the case of a
transfer to another Foreign Holder, as in effect on the date of such transfer);

(5)    would not have been imposed but for the failure or inability (other than
as a result of Change in Law) of the beneficial owner or any holder to comply
with the requirements of Section 14.3(c) or any other certification,
information, documentation or other reporting requirements (“Forms”) concerning
the nationality, residence, identity or connection with the United States of
such beneficial owner or such holder, if such compliance is required by statute
or by regulation of the United States or of any political subdivision or taxing
authority thereof or therein as a precondition to relief or exemption from such
tax, duty, assessment or other governmental charge; provided that the filing of
such Forms would not impose any unreasonable burden on such holder or result in
any confidential or proprietary income tax return information being revealed,
either directly or indirectly, to any Person (other than any tax authority), it
being understood that the provision of United States Internal Revenue Service
Forms W-9, W-8BEN, W-8BEN-E, W-8ECI or W-8EXP does not impose an unreasonable
burden on any holder or result in the disclosure of any confidential or
proprietary income tax return information, and provided further that such holder
shall be deemed to have satisfied the requirements of this clause (5) upon the
good faith completion and submission of such Forms (including refilings or
renewals of filings) as may be specified in a written request of the Company no
later than 60 days after receipt by such holder of such written request
(accompanied by copies of such Forms and related instructions);

 

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(6)    is payable otherwise than by withholding by the Company from payments on
or in respect of any Note held by any Foreign Holder;

(7)    is (i) an income, branch or franchise taxes imposed on (or measured by)
the Foreign Holder’s net income by the United States of America, or by the
jurisdiction (or any political subdivision thereof) under the laws of which such
holder is organized or in which its principal office is located or in which its
applicable lending office is located, (ii) is a withholding tax that is imposed
on amounts payable to such holder at the time such holder becomes a party to
this Agreement (or becomes a transferee of another holder) or is attributable to
such holder’s failure or inability (other than as a result of a Change in Law)
to comply with Section 14.3(c) or (iii) is any US withholding tax imposed under
Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any
amended or successor version that is substantively comparable and not materially
more onerous to comply with) (“FATCA”).

(8)    any combination of items (1), (2), (3), (4), (5), (6) and (7).

(b)    In addition, the Company will not pay additional amounts to any Foreign
Holder if it is a partnership, trust, estate, limited liability company or other
fiscally transparent entity, or to any Foreign Holder if it is not the sole
beneficial owner of the Note held by it, as the case may be. This exception,
however, will apply only to the extent that a beneficiary or settlor with
respect to the trust or estate, or a beneficial owner or member of the
partnership, limited liability company or other fiscally transparent entity,
would not have been entitled to payment of an additional amount had the
beneficiary, settlor, beneficial owner or member received directly its
beneficial or distributive share of the payment.

(c)    Within five days after the date that any Foreign Holder becomes eligible
for the benefits of this Agreement, such Foreign Holder shall provide, the
Company with a properly executed original United States Internal Revenue Service
Form W-8BEN, W-8BEN-E, W-8ECI or W-8EXP, as appropriate, or any successor or
other form prescribed by the United States Internal Revenue Service, certifying
that it is not a United States person for United States federal income tax
purposes and that either (i) it is entitled to the benefits of a tax treaty with
the United States that provides for a zero rate of withholding on interest on
the date of this Agreement, (ii) it is receiving the interest payments under
this Agreement in connection with a U.S. trade or business or (iii) it is a
foreign governmental entity, international organization or other organization
entitled to exemption from U.S. income tax on investment income. Thereafter such
Foreign Holder shall provide additional Forms W-8BEN, W-8BEN-E, W-8ECI or W-8EXP
(or any successor or other form prescribed by the United States Internal Revenue
Service) (i) to the extent a form previously provided has become inaccurate or
invalid as a result of any action or change in regard to the Foreign Holder or
(ii) as reasonably requested in writing by the Company within 60 days of such
written request, unless such Foreign Holder is unable to provide such form
solely as a result of any change in, or amendment to, the laws, regulations, or
rulings of the United States or any political subdivision or any authority
thereof or therein having power to tax, or any change in the application or
official interpretation of such laws, regulations or rulings (including a
holding by any court of competent jurisdiction), which change or amendment
becomes effective on or after the date of the Closing. Any holder other than a
Foreign Holder shall provide a Form W-9.

 

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(d)    if a payment made to a Foreign Holder would be subject to U.S. federal
withholding tax imposed by FATCA if such Foreign Holder were to fail to comply
with the applicable reporting requirements of FATCA, such Foreign Holder shall
deliver to the Company at the time or times prescribed by law and at such time
or times reasonably requested by the Company such documentation prescribed by
applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code)
and such additional documentation reasonably requested by the Company as may be
necessary for the Company to comply with its obligations under FATCA and to
determine that the Company has complied with the Company’s obligations under
FATCA or to determine the amount to deduct and withhold from such payment.

(e)    Any reference in this Agreement to principal, Make-Whole Amount, Modified
Make-Whole Amount or interest shall be deemed to include any additional amounts
in respect of principal or interest (as the case may be) which may be payable
under this Section 14.3.

(f)    This Section 14.3 shall apply only with respect to the Foreign Holders.
It shall not apply to payments made to any Holder other than the Foreign
Holders.

 

SECTION 15.

EXPENSES, ETC.

Section 15.1.    Transaction Expenses. The Company shall pay (i) all reasonable
and documented out-of-pocket expenses incurred by the holders of the Notes, and
their Affiliates, including the reasonable fees, charges and disbursements of
counsel for the holders of the Notes, in connection with the preparation and
administration of this Agreement and the other Note Documents or any amendments,
modifications or waivers of the provisions hereof or thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all
documented out-of-pocket expenses incurred by the holders of the Notes,
including the fees, charges and disbursements of any counsel or financial
advisors for the holders of the Notes, in connection with the enforcement or
protection of its rights in connection with this Agreement and the other Note
Documents, including its rights under this Section, including all such
out-of-pocket expenses incurred during any insolvency or bankruptcy involving
the Company or any Subsidiary, workout, restructuring or negotiations in respect
thereof, (iv) and all documented costs, expenses, taxes, assessments and other
charges incurred in connection with any filing, registration, recording or
perfection of any security interest and (v) the costs and expenses incurred in
connection with the initial filing of this Agreement and all related documents
and financial information with the SVO, provided, that such costs and expenses
under this clause (v) shall not exceed $8,000 for any Series or tranche. The
Company will pay, and will save each Purchaser, Additional Purchaser and each
other holder of a Note harmless from, all claims in respect of any fees, costs
or expenses, if any, of brokers and finders (other than those, if any, retained
by a Purchaser or Additional Purchaser or other holder in connection with its
purchase of the Notes).

Section 15.2.    Survival. The obligations of the Company under this Section 15
will survive the payment or transfer of any Note, the enforcement, amendment or
waiver of any provision of this Agreement, any Supplement or the Notes, and the
termination of this Agreement.

 

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SECTION 16.

SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

All representations and warranties contained herein or in any of the Subsidiary
Guarantee or in any Supplement shall survive the execution and delivery of this
Agreement, such Supplement and the Notes, the purchase or transfer by any
Purchaser or Additional Purchaser of any Note or portion thereof or interest
therein and the payment of any Note and may be relied upon by any subsequent
holder of a Note, regardless of any investigation made at any time by or on
behalf of such Purchaser or any Additional Purchaser or any other holder of a
Note. All statements contained in any certificate or other instrument delivered
by or on behalf of the Company pursuant to this Agreement, any Supplement or the
Subsidiary Guarantee shall be deemed representations and warranties of the
Company under this Agreement. Subject to the preceding sentence, this Agreement,
the Notes and each Subsidiary Guarantee embody the entire agreement and
understanding between each Purchaser and Additional Purchaser and the Company
and supersede all prior agreements and understandings relating to the subject
matter hereof.

 

SECTION 17.

AMENDMENT AND WAIVER.

Section 17.1.    Requirements. (a) Subject in each case of this clause (a) to
Sections 10.7(d) and 17.1(b), this Agreement (including any Supplement) and the
Notes may be amended, and the observance of any term hereof or of the Notes may
be waived (either retroactively or prospectively), with (and only with) the
written consent of the Company and the Required Holders, except that

(i)    no amendment or waiver of any of the provisions of Section 1, 2, 3, 4, 5,
6 or 21 hereof or the corresponding provision of any Supplement, or any defined
term (as it is used therein or in such corresponding provision of any
Supplement), will be effective as to any Purchaser or Additional Purchaser
unless consented to by such Purchaser or Additional Purchaser in writing, and

(ii)    no such amendment or waiver may, without the written consent of the
holder of each Note at the time outstanding affected thereby, (A) subject to the
provisions of Section 12 relating to acceleration or rescission, change the
amount or time of any prepayment or payment of principal of, or reduce the rate
or change the time of payment or method of computation of interest or of the
Make-Whole Amount on, the Notes, (B) change the percentage of the principal
amount of the Notes the holders of which are required to consent to any such
amendment or waiver, or (C) amend any of Section 8, 11(a), 11(b), 12 or 17.

(b)    Notwithstanding the terms of Section 17.1(a), but subject to
Section 10.7(d), in the event the Company obtains any amendment, supplement,
waiver, change, clarification, interpretation, consent or other modification to
a covenant under the Senior Secured Credit Agreement that corresponds to
Section 10, the threshold amount included in an event of default set forth in
Section 11(g) (including any defined term used therein) or (j), or any defined
term contained or used in Section 10, whether or not more or less restrictive
upon the Company (a “Credit Amendment”) such amendment, supplement, waiver,
change, clarification, interpretation, consent or other modification shall be
automatically reflected mutatis mutandis through

 

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conforming amendments or modifications to this Agreement without any further
action of the holders of the Notes (a “Corresponding Modification”). For
purposes of the foregoing, an amendment, supplement, waiver, change,
clarification, interpretation, consent or other modification of a covenant under
the Senior Secured Credit Agreement that corresponds to Section 10, the
threshold amount included in an event of default set forth in Section 11(g)
(including any defined term used therein) or (j), and/or any defined term
contained or used in Section 10 shall include any such change effectuated
pursuant to a replacement of the Senior Secured Credit Agreement.

(c)    If any consideration or remuneration, by way of supplemental or
additional fee or otherwise (but excluding, in any event, principal repayments
or adjustment of interest rate spreads), is paid to any of the lenders under the
Senior Secured Credit Agreement in consideration for or as an inducement to the
entering into by any such lender of modification(s) primarily to effect a Credit
Amendment, such consideration or remuneration shall be concurrently paid, on the
same terms, ratably to all of the holders of the Notes; provided that, if any
such fees under the Senior Secured Credit Agreement are payable only to
consenting holders, to the extent the holders of the Notes hereunder have an
ability to grant or withhold consent to such amendment or other modification
pursuant to the terms hereof, such fees shall be payable to holders of Notes
under this Agreement only to the extent such holders have approved the amendment
or other modification.

(d)    The Subsidiary Guarantee may be amended or modified in accordance with
the terms thereof, and all amendments to the Subsidiary Guarantee obtained in
conformity with such requirements shall bind all holders of the Notes.

(e)    Notwithstanding anything to the contrary in this Agreement (i) no consent
shall be required from and no fees shall be payable to the holders of the Notes
in connection with any renewal, refinancing or other extension of the Senior
Secured Credit Agreement (or any amendments, modifications or supplements
effected in connection therewith) and (ii) any such renewal, refinancing or
other extension (and any amendment, modification or supplement to any of the
terms and provisions of the Senior Secured Credit Agreement, this Agreement or
any other Note Document in connection with such renewal, refinancing or other
extension) shall be, to the extent applicable, automatically reflected mutatis
mutandis through conforming amendments, modifications or supplements to this
Agreement without any further action of the holders of the Notes.

(f)    Supplements. Notwithstanding anything to the contrary contained herein,
the Company may enter into any Supplement providing for the issuance of one or
more Series of Additional Notes consistent with, and in compliance with,
Sections 2.4 and 4.17 hereof without obtaining the consent of any holder of any
other Series of Notes.

Section 17.2.    Solicitation of Holders of Notes.

(a)    Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it), with substantially the
same material information and substantially the same amount of time as it
provides any other holder of the Notes, to enable such holder to make an
informed and considered decision with respect to any proposed amendment,

 

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waiver or consent in respect of any of the provisions hereof or any Supplement
or of the Notes or any of the Subsidiary Guarantee. The Company will deliver
executed or true and correct copies of each amendment, waiver or consent
effected pursuant to the provisions of this Section 17 to each holder of
outstanding Notes promptly following the date on which it is executed and
delivered by, or receives the consent or approval of, the requisite holders of
Notes.

(b)    Payment. Except as described in Section 17.1(c), the Company will not
directly or indirectly pay or cause to be paid any remuneration, whether by way
of supplemental or additional interest, fee or otherwise, or grant any security
or provide other credit support, to any holder of Notes as consideration for or
as an inducement to the entering into by any holder of Notes of any waiver or
amendment of any of the terms and provisions hereof, any Supplement or of any of
the Subsidiary Guarantee unless such remuneration is concurrently paid, or
security is concurrently granted or other credit support concurrently provided,
on the same terms, ratably to the holder of Notes then outstanding even if such
holder did not consent to such waiver or amendment.

(c)    Consent in Contemplation of Transfer. Any consent made pursuant to this
Section 17.2 by the holder of any Note that has transferred or has agreed to
transfer such Note to the Company, any Subsidiary or any Affiliated Entity of
the Company and has provided or has agreed to provide such written consent as a
condition to such transfer shall be void and of no force or effect except solely
as to such holder, and any amendments effected or waivers granted or to be
effected or granted that would not have been or would not be so effected or
granted but for such consent (and the consents of all other holders of Notes
that were acquired under the same or similar conditions) shall be void and of no
force or effect except solely as to such transferring holder.

Section 17.3.    Binding Effect, Etc. Any amendment or waiver consented to as
provided in this Section 17 applies equally to all holders of Notes and is
binding upon them and upon each future holder of any Note and upon the Company
without regard to whether such Note has been marked to indicate such amendment
or waiver. No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or impair any right consequent thereon. No course of dealing between the Company
and the holder of any Note nor any delay in exercising any rights hereunder or
under any Note shall operate as a waiver of any rights of any holder of such
Note. As used herein, the term “this Agreement” and references thereto shall
mean this Agreement as it may from time to time be amended or supplemented.

Section 17.4.    Notes Held by Company, Etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement, the Notes or
Subsidiary Guarantee, or have directed the taking of any action provided herein
or in the Notes to be taken upon the direction of the holders of a specified
percentage of the aggregate principal amount of Notes then outstanding, Notes
directly or indirectly owned by the Company or any of its Affiliates shall be
deemed not to be outstanding.

 

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SECTION 18.

NOTICES.

(a)    All notices and communications provided for hereunder shall be in writing
and sent (i) by tele-facsimile if the sender on the same day sends a confirming
copy of such notice by a recognized overnight delivery service (charges
prepaid), or (ii) by registered or certified mail with return receipt requested
(postage prepaid), or (iii) by a recognized overnight delivery service (with
charges prepaid). Any such notice must be sent:

(A)    if to any Purchaser or its nominee, to such Purchaser or nominee at the
address specified for such communications in Schedule A, or at such other
address as such Purchaser or nominee shall have specified to the Company in
writing,

(B)    if to any other holder of any Note, to such holder at such address as
such other holder shall have specified to the Company in writing, or

(C)    if to the Company, to the Company at its address set forth at the
beginning hereof to the attention of the Chief Financial Officer, or at such
other address as the Company shall have specified to the holder of each Note in
writing.

(D)    if to an Additional Purchaser or such Additional Purchaser’s nominee, to
such Additional Purchaser or such Additional Purchaser’s nominee at the address
specified for such communications in Schedule A to any Supplement, or at such
other address as such Additional Purchaser or such Additional Purchaser’s
nominee shall have specified to the Company in writing.

Notices under this Section 18 will be deemed given only when actually received.
Notices delivered through electronic communications to the extent provided in
paragraph (b) below, shall be effective as provided in said paragraph (b).

(b)    Notices and other communications to the Purchasers, Additional Purchasers
or other holders of any Note hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites);
provided that the foregoing shall not apply to notices to a Purchaser,
Additional Purchaser or other holder of any Note if such Purchaser, Additional
Purchaser or holder has notified the Company that it is incapable of receiving
notices under this Agreement by electronic communication. Notices and other
communications (i) sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgment from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgment), provided that if such notice or other communication is
not sent during normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next Business Day for the recipient, and (ii) posted to an Internet or
intranet website shall be deemed received upon the deemed receipt by the
intended recipient at its e-mail address as described in foregoing clause (i) of
notification that such notice or communication is available and identifying the
website address therefor. Unless a Purchaser, Additional Purchaser or other
holder of any Note has notified the Company that it is incapable of receiving
notices by electronic

 

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communication, each Purchaser, Additional Purchaser or other holder of any Note
agrees to notify the Company in writing (including by electronic communication)
from time to time of any change in such Purchaser’s, Additional Purchaser’s or
holder’s e-mail address to which the foregoing notice may be sent by electronic
transmission and that the foregoing notice may be sent to such e-mail address.

 

SECTION 19.

REPRODUCTION OF DOCUMENTS.

This Agreement and each Subsidiary Guarantee and all documents relating thereto,
including, without limitation, (a) consents, waivers and modifications that may
hereafter be executed, (b) documents received by any Purchaser or Additional
Purchaser at a Closing (except the Notes themselves), and (c) financial
statements, certificates and other information previously or hereafter furnished
to any Purchaser or Additional Purchaser may be reproduced by such Purchaser or
Additional Purchaser by any photographic, photostatic, electronic, digital or
other similar process and such Purchaser or Additional Purchaser may destroy any
original document so reproduced. The Company agrees and stipulates that, to the
extent permitted by applicable law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by such Purchaser or Additional Purchaser in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Company or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.

 

SECTION 20.

CONFIDENTIAL INFORMATION.

Each of the holders of the Notes agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its Affiliates and to its and its Affiliates’ respective managers,
administrators, trustees, partners, directors, officers, employees, agents,
advisors and other representatives (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority purporting to have jurisdiction
over it (including any self-regulatory authority and the NAIC or the SVO or, in
each case, any similar organization, or any nationally recognized rating agency
that requires access to information about such holder’s investment portfolio),
(c) to the extent required by applicable laws or regulations or by any subpoena
or similar legal process, (d) to any other party hereto, (e) in connection with
the exercise of any remedies hereunder or under any other Note Document or any
action or proceeding relating to this Agreement or any other Note Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to
(i) any assignee of or participant in, or any prospective assignee of or
participant in, any of its rights or obligations under this Agreement or
(ii) any actual or prospective party (or its managers, administrators, trustees,
partners, directors, officers, employees and other personnel, agents, advisors
and other representatives) to any swap, derivative or similar transaction under
which payments are to be made by reference to the Company and its obligations
under this Agreement or payments hereunder, (iii) any rating agency or (iv) the
CUSIP Service Bureau or any similar organization, (g) with the consent of the
Company, (h) to the extent such Information (i) becomes publicly available other
than as a result of a breach of this Section or (ii) becomes available to any
holder

 

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of a Note or any of their respective Affiliates on a nonconfidential basis from
a source other than the Company, (i) to Gold Sheets, private placement
newsletters and other similar financial services industry trade publications;
such information to consist of deal terms and other information regarding the
issuance of securities evidenced by this Agreement customarily found in such
publications, (j) to a Person that is an investor or prospective investor in a
Securitization (as defined below) that agrees that its access to information
regarding the Company and the Notes is solely for purposes of evaluating an
investment in such Securitization, (k) to a Person that is a trustee, collateral
manager, servicer, noteholder or secured party in a Securitization in connection
with the administration, servicing and reporting on the assets serving as
collateral for such Securitization, or (l) to a nationally recognized rating
agency that requires access to information regarding the Obligors, the Notes and
Note Documents in connection with ratings issued with respect to a
Securitization. For purposes of this Section, “Securitization” means a public or
private offering by a holder of a Note or any of its Affiliates or their
respective successors and assigns, of securities which represent an interest in,
or which are collateralized, in whole or in part, by the Notes or the Note
Documents.

For purposes of this Section, “Affiliate” shall, notwithstanding the definition
thereof, include any Person that acts as an investment adviser in the ordinary
course of business on behalf of the account of any Purchaser or any other
subsequent holder of Notes.

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

 

SECTION 21.

SUBSTITUTION OF PURCHASER.

Each Purchaser or Additional Purchaser shall have the right to substitute any
one of its Affiliates as the purchaser of the Notes that it has agreed to
purchase hereunder, by written notice to the Company, which notice shall be
signed by both such Purchaser or Additional Purchaser, as the case may be, and
such Affiliate, shall contain such Affiliate’s agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, any reference to such Purchaser in this Agreement (other than in
this Section 21) or Additional Purchaser in any Supplement shall be deemed to
refer to such Affiliate in lieu of such original Purchaser or Additional
Purchaser. In the event that such Affiliate is so substituted as a Purchaser
hereunder or Additional Purchaser in any Supplement and such Affiliate
thereafter transfers to such original Purchaser or Additional Purchaser all of
the Notes then held by such Affiliate, upon receipt by the Company of notice of
such transfer, any reference to such Affiliate as a “Purchaser” in this
Agreement (other than in this Section 21) shall no longer be deemed to refer to
such Affiliate, but

 

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shall refer to such original Purchaser or Additional Purchaser, as the case may
be, and such original Purchaser or Additional Purchaser shall again have all the
rights of an original holder of the Notes under this Agreement.

 

SECTION 22.

MISCELLANEOUS.

Section 22.1.    Successors and Assigns. All covenants and other agreements
contained in this Agreement (including all covenants and other agreements
contained in any Supplement) by or on behalf of any of the parties hereto bind
and inure to the benefit of their respective successors and assigns (including,
without limitation, any subsequent holder of a Note) whether so expressed or
not.

Section 22.2.    Payments Due on Non-Business Days. Anything in this Agreement,
the Notes or any Subsidiary Guarantee to the contrary notwithstanding (but
without limiting the requirement in Section 8.5 that the notice of any optional
prepayment specify a Business Day as the date fixed for such prepayment), any
payment of principal of or Make-Whole Amount or interest on any Note that is due
on a date other than a Business Day shall be made on the next succeeding
Business Day without including the additional days elapsed in the computation of
the interest payable on such next succeeding Business Day; provided that if the
maturity date of any Note is a date other than a Business Day, the payment
otherwise due on such maturity date shall be made on the next succeeding
Business Day and shall include the additional days elapsed in the computation of
interest payable on such next succeeding Business Day.

Section 22.3.    Accounting Terms. (a) All accounting terms used herein which
are not expressly defined in this Agreement have the meanings respectively given
to them in accordance with GAAP. Except as otherwise specifically provided
herein, (i) all computations made pursuant to this Agreement shall be made in
accordance with GAAP and (ii) all financial statements shall be prepared in
accordance with GAAP.

(b)    If the Company notifies the holders of the Notes that the Company
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date of the Closing in GAAP or in the application
thereof on the operation of such provision (or if the Required Holders notifies
the Company that the Required Holders request an amendment to any provision
hereof for such purpose), regardless of whether any such notice is given before
or after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.

(c)    Notwithstanding any other provision contained herein, all terms of an
accounting or financial nature used herein shall be construed, and all
computations of amounts and ratios referred to herein shall be made, without
giving effect to any election under Accounting Standard Codification Topic
No. 825-10-25 – Fair Value Option (or any other Financial Accounting Standard
having a similar result or effect) to value any Indebtedness or other
liabilities of the Company or any Subsidiary at “fair value,” as defined
therein.

 

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Section 22.4.    Severability. Any provision of this 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 (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.

Section 22.5.    Construction, Etc. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.

For the avoidance of doubt, all Schedules and Exhibits attached to this
Agreement shall be deemed to be a part hereof.

Section 22.6.    Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument. Each counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by all, of the parties
hereto.

Section 22.7.    Governing Law. This Agreement shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the law
of the State of New York, excluding choice-of-law principles of the law of such
State that would permit the application of the laws of a jurisdiction other than
such State.

Section 22.8.    Jurisdiction and Process; Waiver of Jury Trial. (a) The Company
irrevocably submits to the non-exclusive jurisdiction of any New York State or
federal court sitting in the Borough of Manhattan, The City of New York, over
any suit, action or proceeding arising out of or relating to this Agreement or
the Notes. To the fullest extent permitted by applicable law, the Company
irrevocably waives and agrees not to assert, by way of motion, as a defense or
otherwise, any claim that it is not subject to the jurisdiction of any such
court, any objection that it may now or hereafter have to the laying of the
venue of any such suit, action or proceeding brought in any such court. Each
party hereto irrevocably waives, to the full extent permitted by applicable law,
any claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.

(b)    Each party hereto consents to process being served by or on behalf of any
holder of Notes in any suit, action or proceeding of the nature referred to in
Section 22.8(a) by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, return receipt
requested, to it at its address specified in Section 18 or at such other address
of which such holder shall then have been notified pursuant to said Section.
Each party hereto agrees that such service upon receipt (i) shall be deemed in
every respect effective service of process upon it in any such suit, action or
proceeding and (ii) shall, to the fullest extent permitted by applicable law, be
taken and held to be valid personal service upon and personal delivery to it.
Notices hereunder shall be conclusively presumed received as evidenced by a
delivery receipt furnished by the United States Postal Service or any reputable
commercial delivery service.

 

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(c)    Nothing in this Section 22.8 shall affect the right of any party hereto
to serve process in any manner permitted by law, or limit any right that the
holders of any of the Notes may have to bring proceedings against the Company in
the courts of any appropriate jurisdiction or to enforce in any lawful manner a
judgment obtained in one jurisdiction in any other jurisdiction.

(d)    THE PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR
WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN
CONNECTION HEREWITH OR THEREWITH.

*    *    *    *    *

 

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If you are in agreement with the foregoing, please sign the form of agreement on
a counterpart of this Agreement and return it to the Company, whereupon this
Agreement shall become a binding agreement between you and the Company.

 

Very truly yours,

SOLAR CAPITAL LTD.

By

   

Name:

 

Title:

This Agreement is hereby accepted and agreed to as of the date thereof.

[REDACTED]

By:

   

Name:

 

Title:

By:

   

Name:

 

Title:

 

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Information Relating to Purchasers

[Redacted]

 

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DEFINED TERMS

As used herein, the following terms have the respective meanings set forth below
or set forth in the Section hereof following such term:

“Additional Financial Covenant” is defined in Section 10.7.

“Additional Notes” is defined in Section 2.4.

“Additional Purchasers” means purchasers of Additional Notes.

“Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified. Anything
herein to the contrary notwithstanding, the term “Affiliate” shall not include
(i) any Person that constitutes an Investment held by any Obligor in the
ordinary course of business or (ii) any Person that acts as investment advisor
in the ordinary course of business on behalf of the account of any Purchaser or
any other subsequent holder of Notes. Unless the context otherwise clearly
requires, any reference to an “Affiliate” is a reference to an Affiliate of the
Company.

“Affiliate Agreements” means, collectively, (a) the Management Agreement,
(b) the Amended and Restated Administration Agreement dated October 29, 2013,
between the Company and Solar Capital Management, LLC, and (c) the Trademark
License Agreement dated as of December 17, 2009, between the Company and Solar
Capital Partners, LLC.

“Affiliated Entity” means any of the Subsidiaries of the Company and any of
their or the Company’s respective Controlled Affiliates. As used in this
definition, “Control” means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.

“Agreed Foreign Currency” means, at any time, Euros, English Pounds Sterling,
Canadian Dollars and, with the agreement of each Multicurrency Lender (as
defined in the Senior Secured Credit Agreement), any other Foreign Currency, so
long as, in respect of any such specified Foreign Currency or other Foreign
Currency, at such time (a) such Foreign Currency is dealt with in the London
interbank deposit market or the relevant local market, if applicable, (b) such
Foreign Currency is freely transferable and convertible into Dollars in the
London foreign exchange market or the relevant local market, if applicable and
(c) no central bank or other governmental authorization in the country of issue
of such Foreign Currency (including, in the case of the Euro, any authorization
by the European Central Bank) is required to permit use of such Foreign Currency
by any Multicurrency Lender (as defined in the Senior Secured Credit Agreement)
for making any Loan under the Senior Secured Credit Agreement and/or to permit
the Company to borrow and repay the principal thereof and to pay the interest
thereon, unless such authorization has been obtained and is in full force and
effect.

“Anti-Money Laundering Laws” is defined in Section 5.16(c).

 

SCHEDULE B

(to Note Purchase Agreement)

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“Anti-Corruption Laws” is defined in Section 5.16(d)(1).

“Applicable Financial Statements” means December 31, 2015.

“Asset Coverage Ratio” means the ratio, determined on a consolidated basis,
without duplication, in accordance with GAAP, of (a) the Value of total assets
of the Company and its Subsidiaries, less all liabilities (other than
Indebtedness, including Indebtedness hereunder) of the Company and its
Subsidiaries, to (b) the aggregate amount of Indebtedness of the Company and its
Subsidiaries. For the purposes of calculating the Asset Coverage Ratio,
Indebtedness of an SBIC Subsidiary outstanding as of the date of such
calculation shall be excluded from the calculation of Asset Coverage Ratio to
the extent and in the manner that such Indebtedness may be excluded from the
asset coverage requirements of sections 18(a) and 61(d) of the Investment
Company Act pursuant to an effective exemptive order issued by the US Securities
and Exchange Commission.

“Bank Administrative Agent” means Citibank, N.A, in its capacity as
administrative agent, and its successors and assigns under the Senior Secured
Credit Agreement.

“Blocked Person” is defined in Section 5.16(a).

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

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed.

“Canada Blocked Person” means (i) a “terrorist group” as defined for the
purposes of Part II.1 of the Criminal Code (Canada), as amended or (ii) a Person
identified in or pursuant to (x) Part II.1 of the Criminal Code (Canada), as
amended or (y) regulations or orders promulgated pursuant to the Special
Economic Measures Act (Canada), as amended, the United Nations Act (Canada), as
amended, or the Freezing Assets of Corrupt Foreign Officials Act (Canada), as
amended, in any case pursuant to this clause (ii) as a Person in respect of
whose property or benefit a holder of Notes would be prohibited from entering
into or facilitating a related financial transaction.

“Canadian Economic Sanctions Laws” means those laws, including enabling
legislation, orders-in-council or other regulations administered and enforced by
Canada or a political subdivision of Canada pursuant to which economic sanctions
have been imposed on any Person, entity, organization, country or regime,
including Part II.1 of the Criminal Code (Canada), as amended, the Special
Economic Measures Act (Canada), as amended, the United Nations Act (Canada), as
amended, the Export and Import Permits Act (Canada), as amended, and the
Freezing Assets of Corrupt Foreign Officials Act (Canada), as amended, and
including all regulations promulgated under any of the foregoing, or any other
similar sanctions program or action.

“Capital Lease Obligations” of any Person means the obligations of such Person
to pay rent or other amounts under any lease of (or other arrangement conveying
the right to use) real or

 

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personal property, or a combination thereof, which obligations are required to
be classified and accounted for as capital leases on a balance sheet or
statement of assets and liabilities, as applicable, of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.

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

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

(a)    U.S. Government Securities, in each case maturing within three (3) months
from the date of acquisition thereof;

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

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

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

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

 

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“Change in Control” means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the SEC
thereunder as in effect on the date of the Closing) other than Solar Capital
Partners, LLC, the Managing Member or any of their respective Affiliates, of
shares representing more than 35% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of the Company; (b) the
occupation of a majority of the seats (other than vacant seats) on the Board of
Directors of the Company by Persons who were neither (y) nominated by the
requisite members of the Board of Directors of the Company nor (z) appointed by
a majority of the directors so nominated; or (c) the acquisition of direct or
indirect Control of the Company by any Person or group other than Solar Capital
Partners, LLC, the Managing Member or any of their respective Affiliates.

“CISADA” means the Comprehensive Iran Sanctions, Accountability, and Divestment
Act of 2010, United States Public Law 111195, as amended from time to time, and
the rules and regulations promulgated thereunder from time to time in effect.

“Closing” is defined in Section 3.

“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time.

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

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

“Company” means Solar Capital Ltd., a Maryland corporation or any successor that
becomes such in the manner prescribed in Section 10.3(e).

“Competing Business” means at any particular time any “business development
company” under the Investment Company Act.

“Competitor” means at any particular time any Person which at such time is
engaged in a Competing Business or intends to become engaged in a Competing
Business; provided that the initial Purchasers and any Permitted Transferee
shall be deemed not to be Competitors; provided, further, in any event that any
Private Placement Agent that would otherwise be deemed to be a Competitor
pursuant to the foregoing provisions of this definition shall not be deemed to
be a Competitor if such Private Placement Agent holds the Notes only in
connection with its role as an intermediary in the prompt and expeditious sale
in accordance with customary financial market conditions of the Note or Notes
owned by one Institutional Investor who is not a Competitor to another
purchasing Institutional Investor who is a Permitted Transferee that is not a
Competitor and such Private Placement Agent has established procedures which
will prevent confidential information supplied to either the selling or buying
Institutional Investor by the Company from being transmitted or otherwise made
available to such Private Placement Agent or any of its Affiliates in any
capacity other than as the agent and intermediary in connection with such sale
of any such Note or Notes.

 

B-4

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“Confidential Information” is defined in Section 20.

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

“Convertible Debt” means unsecured Indebtedness that is convertible into Equity
Interests of the Company and/or settled through the payment of Cash (which may
be guaranteed by any or all of the Subsidiary Guarantors).

“Covered Debt Amount” is defined in the Senior Secured Credit Agreement.

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

“Default Rate” means, with respect to any Note of any Series or tranche, that
rate of interest that is the greater of (i) 2.00% per annum above the rate of
interest then in effect for such Series or tranche or (ii) 2.00% over the rate
of interest publicly announced by Citibank, N.A. in New York, New York as its
“base” or “prime” rate.

“Directing Body” means the Company’s Board of Directors.

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

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

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time in effect.

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

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043(c) of
ERISA or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30 day notice period is waived); (b) any failure by any Plan
to satisfy the minimum funding standards (within the meaning of Sections 412 and
430 of the Code or Sections 302 and 303 of ERISA) applicable to such Plan,
whether or not waived; (c) the filing pursuant to Section 412(c) of the

 

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Code or Section 302(c) of ERISA of an application for a waiver of the minimum
funding standard with respect to any Plan; (d) the incurrence by the Company or
any of its ERISA Affiliates of any liability under Title IV of ERISA with
respect to the termination of any Plan (other than for premiums due but not
delinquent under Section 4007 of ERISA); (e) a determination that any Plan is,
or is expected to be, in “at-risk” status (within the meaning of Section 303(i)
of ERISA); (f) the receipt by the Company or any ERISA Affiliate from the PBGC
or a plan administrator of any notice relating to an intention to terminate any
Plan under Section 4041 of ERISA or to appoint a trustee to administer any Plan
under Section 4042 of ERISA; (g) the incurrence by the Company or any of its
ERISA Affiliates of any liability with respect to the withdrawal from a Plan
subject to Section 4063 of ERISA during a plan year in which it was a
“substantial employer” (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations that is treated as such a withdrawal under
Section 4062(e) of ERISA, or a “complete withdrawal” or “partial withdrawal” (as
such terms are defined in Sections 4203 and 4205 of ERISA) from any
Multiemployer Plan; or (h) the receipt by the Company or any ERISA Affiliate of
any notice from any Multiemployer Plan concerning the imposition of Withdrawal
Liability on the Company or any ERISA Affiliate or a determination that a
Multiemployer Plan is “insolvent” (within the meaning of Section 4245 of ERISA),
in “reorganization” (within the meaning of Section 4241 of ERISA) or in
“endangered or critical status” within the meaning of Section 305 of ERISA.

“Event of Default” is defined in Section 11.

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, and the rules and regulations promulgated thereunder from time to time
in effect.

“Existing Notes” means the Company’s 5.875% Senior Secured Notes due May 10,
2017.

“FATCA” is defined in Section 14.3.

“Financial Covenant Modification” and “Financial Covenant Modifications” are
defined in Section 10.7(d).

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

“Financing Subsidiary” means

1.    an SBIC Subsidiary; or

2.    a direct or indirect Subsidiary of the Company to which any Obligor sells,
conveys or otherwise transfers (whether directly or indirectly) Portfolio
Investments, which engages in no material activities other than in connection
with the purchase, holding, disposition and financing of such assets and which
is designated by the Company (as provided below) as a Financing Subsidiary,

(a)    no portion of the Indebtedness or any other obligations (contingent or
otherwise) of which (i) is Guaranteed by any Obligor (other than Guarantees in
respect of

 

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Standard Securitization Undertakings), (ii) is recourse to or obligates any
Obligor in any way other than pursuant to Standard Securitization Undertakings
or (iii) subjects any property of any Obligor, directly or indirectly,
contingently or otherwise, to the satisfaction thereof, other than pursuant to
Standard Securitization Undertakings or any Guarantee of any Standard
Securitization Undertakings,

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

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

Any such designation by the Company shall be effected pursuant to a certificate
of a Financial Officer delivered to the holders of the Notes, which certificate
shall include a statement to the effect that, to the best of such officer’s
knowledge, such designation complied with the foregoing conditions. Each
Subsidiary of a Financing Subsidiary shall be deemed to be a Financing
Subsidiary and shall comply with the foregoing requirements of this definition.

“Fitch” means Fitch Ratings Service, or its successors or assigns.

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

“Foreign Holders” is defined in Section 14.3.

“Forms” is defined in Section 14.3.

“GAAP” means generally accepted accounting principles in the United States of
America, the American Institute of Certified Public Accountants Accounting Guide
for Investment Companies or Article 6 of Regulation S-X under the Securities
Act.

“Governmental Authority” means the government of the United States of America,
or of any other nation, or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government (including any supra-national bodies such as the European Union or
the European Central Bank).

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

 

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

“Guarantee and Security Agreement” means the Second Amended and Restated
Guarantee and Security Agreement dated as of July 3, 2012, among the Company,
any Subsidiary of the Company that is required to be a “Subsidiary Guarantor”
from time to time pursuant to Section 5.08 of the Senior Secured Credit
Agreement, the Administrative Agent, each holder (or a representative or trustee
therefor) from time to time of any Secured Longer-Term Indebtedness, and the
Collateral Agent, as amended by Amendment No. 1 to Senior Secured Credit
Agreement and Second Amended and Restated Guarantee and Security Agreement dated
as of July 24, 2013, and as the same shall be modified and supplemented and in
effect from time to time.

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

“holder” means, with respect to any Note, the Person in whose name such Note is
registered in the register maintained by the Company pursuant to Section 13.1.

“Immaterial Subsidiary” means any Subsidiary of the Company that (a) owns,
legally or beneficially, directly or indirectly, assets which in the aggregate
have a value not in excess of the lesser of (y) $10,000,000 and (z) 1.0% of the
total assets of the Company and its Subsidiaries determined on a consolidated
basis in accordance with GAAP, and (b) is not designated a Financing Subsidiary
or a Subsidiary Guarantor in accordance with the terms and provisions of this
Agreement.

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

 

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

“INHAM Exemption” is defined in Section 6.2(e).

“Institutional Accredited Investor” means an “accredited investor” as that term
is defined in Rule 501(a)(1), (a)(2), (a)(3) or (a)(7) of Regulation D
promulgated under the Securities Act.

“Institutional Investor” means (a) any original purchaser of a Note, (b) any
holder of a Note holding (together with one or more of its affiliates) more than
5% of the aggregate principal amount of the Notes then outstanding, (c) any
bank, trust company, savings and loan association or other financial
institution, any pension plan, any investment company, any insurance company,
any broker or dealer, or any other similar financial institution or entity,
regardless of legal form, and (d) any Related Fund of any holder of any Note.

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

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

“Investment Company Act Asset Coverage” means the minimum asset coverage
required to be maintained by the Company to comply with the Investment
Company Act.

“Investment Grade” means a rating of at least “BBB-” or higher by S&P or its
equivalent by any other NRSRO.

“Investment Policies” means the investment objectives, policies, restrictions
and limitations set forth in the Registration Statement on Form N-2 as filed
with the SEC in June, 2016 including any amendments, changes, supplements or
modifications to such investment objectives, policies, restrictions and
limitations; provided that any amendment, change, supplement or modification
thereto that (a) is, or could reasonably be expected to be, materially adverse
to the Lenders and (b) was effected without the prior written consent of the
Administrative Agent (with the approval of the Required Lenders (as defined in
the Senior Secured Credit Agreement)) shall be deemed excluded from the
definition of “Investment Policies” for purposes of this Agreement.

 

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“LC Exposure” has the meaning assigned to such term in the Senior Secured Credit
Agreement.

“Lenders” has the meaning assigned to such term in the Senior Secured Credit
Agreement.

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

“Make-Whole Amount” is defined in Section 8.8.

“Management Agreement” means the First Amended and Restated Investment Advisory
and Management Agreement dated as of August 2, 2016 between the Company and
Solar Capital Partners, LLC.

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

“Material” means material in relation to the business, Portfolio Investments and
other assets, liabilities and financial condition of the Company and its
Subsidiaries taken as a whole.

“Material Adverse Effect” means a material adverse effect on (a) the business,
operations, Portfolio Investments and other assets, liabilities and financial
condition of the Company and its Subsidiaries taken as a whole (excluding in any
case a decline in the net asset value of the Company or a change in general
market conditions or values of the Company’s or any of its Subsidiaries’
Portfolio Investments), or (b) the validity or enforceability of this Agreement,
the Notes or any Subsidiary Guarantee or the rights or remedies of the holders
of the Notes hereunder or of the rights or remedies of the Collateral Agent
under any of the Security Documents.

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

“Modified Make-Whole Amount” is defined in Section 8.8.

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

 

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“Multiemployer Plan” means a multiemployer plan as defined in section 4001(a)(3)
of ERISA in respect of which the Company or any ERISA Affiliate is or within the
six-year period immediately preceding the date hereof, was required to make
contributions.

“NAIC” means the National Association of Insurance Commissioners or any
successor thereto.

“NAIC Annual Statement” is defined in Section 6.2(a).

“Nationally Recognized Statistical Rating Organization” or “NRSRO” means a
rating organization designated from time to time by the SEC as being nationally
recognized whose status has been confirmed by the SVO.

“Note Documents” means, collectively, this Agreement, the Notes and the
Subsidiary Guarantee.

“Notes” is defined in Section 1.

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

“OFAC” is defined in Section 5.16(a).

“OFAC Listed Person” is defined in Section 5.16(a).

“OFAC Sanctions Program” means any economic or trade sanction, law, regulation
or executive order that OFAC is responsible for administering and enforcing,
including, but not limited to those regulations found in 31 CFR. Subtitle B,
Chapter V, as amended, and any enabling legislation or executive order relating
thereto, and those OFAC Sanctions Programs found at
http://www.ustreas.gov/offices/enforcement/ofac/programs/, as may be amended
from time to time.

“Officer’s Certificate” means a certificate of a Financial Officer or of any
other officer of the Company whose responsibilities extend to the subject matter
of such certificate.

“Other Covered Indebtedness” means, collectively, Secured Longer-Term
Indebtedness, Secured Shorter-Term Indebtedness and Unsecured Shorter-Term
Indebtedness.

“Other Permitted Indebtedness” means (a) accrued expenses and current trade
accounts payable incurred in the ordinary course of any Obligor’s business which
are not overdue for a period of more than 90 days or which are being contested
in good faith by appropriate proceedings, (b) Indebtedness (other than
Indebtedness for borrowed money) arising in connection with transactions in the
ordinary course of such Obligor’s business in connection with its purchasing of
securities, derivatives transactions, reverse repurchase agreements or dollar
rolls to the extent such transactions are permitted under the Investment Company
Act and the Company’s Investment Policies, provided that such Indebtedness does
not arise in connection with the purchase of Portfolio Investments other than
Cash Equivalents and U.S. Government Securities and (c)

 

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Indebtedness in respect of judgments or awards that have been in force for less
than the applicable period for taking an appeal so long as such judgments or
awards do not constitute an Event of Default under clause (j) of Section 11.

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA or any successor thereto.

“Permitted Advisor” means, at any time, any entity listed on Schedule 6.1 that
directly or indirectly through its Affiliates acts as an investment advisor to
any Person.

“Permitted Directing Body-Approved Affiliate Transaction” means any transaction
between the Company or any of its Subsidiaries, on the one hand, and any
Affiliate of the Company, on the other hand (including any amendment,
modification, supplement or waiver of an Affiliate Agreement), that (a) has been
approved by the Directing Body (which shall mean the approval of a majority of
the independent directors of the Board of Directors of the Company) and (b) has
been consented to by the Administrative Agent under the Senior Secured Credit
Agreement (such consent not to be unreasonably withheld or delayed).

“Permitted Liens” means (a) Liens imposed by any Governmental Authority for
taxes, assessments or charges not yet due or that are being contested in good
faith and by appropriate proceedings if adequate reserves with respect thereto
are maintained on the books of the Company in accordance with GAAP; (b) Liens of
clearing agencies, broker-dealers and similar Liens incurred in the ordinary
course of business, provided that such Liens (i) attach only to the securities
(or proceeds) being purchased or sold and (ii) secure only obligations incurred
in connection with such purchase or sale, and not any obligation in connection
with margin financing; (c) Liens imposed by law, such as materialmen’s,
mechanics’, carriers’, workmens’, storage and repairmen’s Liens and other
similar Liens arising in the ordinary course of business and securing
obligations (other than Indebtedness for borrowed money); (d) Liens incurred or
pledges or deposits made to secure obligations incurred in the ordinary course
of business under workers’ compensation laws, unemployment insurance or other
similar social security legislation (other than in respect of employee benefit
plans subject to ERISA) or to secure public or statutory obligations; (e) Liens
securing the performance of, or payment in respect of, bids, insurance premiums,
deductibles or co-insured amounts, tenders, government or utility contracts
(other than for the repayment of borrowed money), surety, stay, customs and
appeal bonds and other obligations of a similar nature incurred in the ordinary
course of business; (f) Liens arising out of judgments or awards that have been
in force for less than the applicable period for taking an appeal so long as
such judgments or awards do not constitute an Event of Default under clause (j)
of Section 11; (g) customary rights of setoff and liens upon (i) deposits of
cash in favor of banks or other depository institutions in which such cash is
maintained in the ordinary course of business, (ii) cash and financial assets
held in securities accounts in favor of banks and other financial institutions
with which such accounts are maintained in the ordinary course of business and
(iii) assets held by a custodian in favor of such custodian in the ordinary
course of business including, without limitation, securing payment of fees,
indemnities and other similar obligations; (h) Liens arising solely from
precautionary filings of financing statements under the Uniform Commercial Code
of the applicable jurisdictions in respect of operating leases entered into by
the Company or any of its Subsidiaries in the ordinary course of business;
(i) easements, rights of way, zoning restrictions

 

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and similar encumbrances on real property and minor irregularities in the title
thereto that do not (i) secure obligations for the payment of money or
(ii) materially impair the value of such property or its use by any Obligor or
any of its Subsidiaries in the normal conduct of such Person’s business;
(j) Liens in favor of any escrow agent solely on and in respect of any cash
earnest money deposits made by any Obligor in connection with any letter of
intent or purchase agreement (to the extent that the acquisition or disposition
with respect thereto is otherwise permitted hereunder); provided that all Liens
on any Collateral included in the Borrowing Base (as defined in the Senior
Secured Credit Agreement) that are permitted pursuant to this clause (j) shall
have a priority that is junior to the Liens under the Security Documents;
(k) precautionary Liens, and filings of financing statements under the Uniform
Commercial Code, covering assets sold or contributed to any Person not
prohibited hereunder; and (l) Liens incurred in connection with any Hedging
Agreement entered into with a Lender (or an Affiliate of a Lender) in the
ordinary course of business and not for speculative purposes.

“Permitted SBIC Guarantee” means a guarantee by the Company of Indebtedness of
an SBIC Subsidiary on the SBA’s then applicable form, provided that the recourse
to the Company thereunder is expressly limited only to periods after the
occurrence of an event or condition that is an impermissible change in the
control of such SBIC Subsidiary (it being understood that, as provided in
Section 11(o), it shall be an Event of Default hereunder if any such event or
condition giving rise to such recourse occurs).

“Permitted Transferee” means at any time any Person (i) which is identified on
Schedule 6.1 or (ii) for whom the investment management decisions are made by a
Permitted Advisor.

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

“Placement Agent” means Goldman, Sachs & Co.

“Plan” means any employee pension benefit plan within the meaning of
Section 3(2) of ERISA (other than a Multiemployer Plan) subject to the
provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of
ERISA, and in respect of which the Company or any ERISA Affiliate is or within
the six-year period immediately preceding the date hereof, was (or, if such plan
were terminated, would under Section 4069 of ERISA be deemed to be), an
“employer” as defined in Section 3(5) of ERISA.

“Portfolio Investment” means any Investment held by the Obligors in their asset
portfolio (and solely for purposes of determining the Borrowing Base (as defined
in the Senior Secured Credit Agreement), Cash).

“Private Placement Agent” means any company organized as a “broker” or “dealer”
(as each such term is defined in Section 3(a) (4) and (5), respectively, of the
Exchange Act) of recognized national standing regularly engaged as an
intermediary in the placement or sale to and among Institutional Investors of
Indebtedness Securities exempt from registration under the Securities Act.

 

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“property” or “properties” means, unless otherwise specifically limited, real or
personal property of any kind, tangible or intangible, choate or inchoate.

“PTE” is defined in Section 6.2(a).

“Purchaser” is defined in the first paragraph of this Agreement.

“QPAM Exemption” means Prohibited Transaction Class Exemption 84-14 issued by
the United States Department of Labor, as amended effective November 3, 2010.

“Qualified Institutional Buyer” means any Person who is a “qualified
institutional buyer” within the meaning of such term as set forth in
Rule 144A(a)(1) under the Securities Act.

“Rating” means a rating with respect to the Notes as identified by CUSIP or PPN
number

“Rating Agency” means any of S&P, Moody’s or Fitch.

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

“Related Fund” means, with respect to any holder of any Note, any fund or entity
that (a) invests in Securities or bank loans, and (b) is advised or managed by
such holder, the same investment advisor as such holder or by an affiliate of
such holder or such investment advisor.

“Required Holders” means, at any time, the holders of more than 50% in principal
amount of the Notes at the time outstanding (exclusive of Notes then owned by
the Company or any of its Affiliates).

“Responsible Officer” means any Financial Officer and any other officer of the
Company with responsibility for the administration of the relevant portion of
this Agreement.

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

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

“S&P” means S&P Global Ratings, or any successor thereto.

“SBA” means the United States Small Business Administration or any Governmental
Authority succeeding to any or all of the functions thereof.

 

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“SBIC Equity Commitment” means a commitment by the Company to make one or more
capital contributions to an SBIC Subsidiary.

“SBIC Subsidiary” means any direct or indirect Subsidiary (including such
Subsidiary’s general partner or managing entity to the extent that the only
material asset of such general partner or managing entity is its equity interest
in the SBIC Subsidiary) of the Company licensed as a small business investment
company under the Small Business Investment Act of 1958, as amended, (or that
has applied for such a license and is actively pursuing the granting thereof by
appropriate proceedings promptly instituted and diligently conducted) and which
is designated by the Company (as provided below) as an SBIC Subsidiary, so long
as (a) no portion of the Indebtedness or any other obligations (contingent or
otherwise) of such Subsidiary: (i) is Guaranteed by any Obligor (other than a
Permitted SBIC Guarantee or analogous commitment), (ii) is recourse to or
obligates any Obligor in any way (other than in respect of any SBIC Equity
Commitment, Permitted SBIC Guarantee or analogous commitment), or (iii) subjects
any property of any Obligor, directly or indirectly, contingently or otherwise,
to the satisfaction thereof, (b) no Obligor has any obligation to maintain or
preserve such Subsidiary’s financial condition or cause such entity to achieve
certain levels of operating results (other than in respect of any SBIC Equity
Commitment, Permitted SBIC Guarantee or analogous commitment), (c) other than
pursuant to a Permitted SBIC Guarantee, neither the Company nor any of its
Subsidiaries has any material contract, agreement, arrangement or understanding
with such Person other than on terms no less favorable to the Company or such
Subsidiary than those that might be obtained at the time from Persons that are
not Affiliates of the Company or such Subsidiary and (d) such Person has not
Guaranteed or become a co-borrower under, and has not granted a security
interest in any of its properties to secure, and the Equity Interests it has
issued are not pledged to secure, in each case, any indebtedness, liabilities or
obligations of any one or more of the Obligors. Any such designation by the
Company shall be effected pursuant to a certificate of a Financial Officer
delivered to the Administrative Agent, which certificate shall include a
statement to the effect that, to the best of such officer’s knowledge, such
designation complied with the foregoing conditions.

“SEC” means the Securities and Exchange Commission.

“Section 8.3 Proposed Prepayment Date” is defined in Section 8.3(c).

“Secured Longer-Term Indebtedness” means, as at any date, Indebtedness (other
than Indebtedness outstanding under and pursuant to the Senior Secured Credit
Agreement) of any Obligor (which may be Guaranteed by any other Obligor) that
(a) has no scheduled amortization prior to, and a final maturity date not
earlier than, six months after the September 30, 2021 (it being understood that
none of: (w) the conversion features under convertible notes; (x) the triggering
and/or settlement thereof; or (y) any cash payment made in respect thereof,
shall constitute “amortization” for purposes of this clause (a)), (b) is
incurred pursuant to documentation containing (i) financial covenants, covenants
governing the borrowing base, if any, portfolio valuations and events of default
(other than events of default customary in indentures or similar instruments
that have no analogous provisions in the Senior Secured Credit Agreement or
credit agreements generally) that are no more restrictive upon the Company and
its Subsidiaries than those set forth in the Senior Secured Credit Agreement and
(ii) other terms (other than interest) that are no more restrictive in any
material respect upon the Company and its Subsidiaries, prior to September 30,

 

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2021, than those set forth in the Senior Secured Credit Agreement (it being
understood that put rights or repurchase or redemption obligations (x) in the
case of convertible securities, in connection with the suspension or delisting
of the capital stock of the Company or the failure of the Company to satisfy a
continued listing rule with respect to its capital stock or (y) arising out of
circumstances that would constitute a “fundamental change” (as such term is
customarily defined in convertible note offerings) or an Event of Default under
the Senior Secured Credit Agreement shall not be deemed to be more restrictive
for purposes of this definition)); provided that, upon the Company’s written
request in connection with the incurrence of any Secured Longer-Term
Indebtedness that otherwise would not meet the requirements of this clause (b),
the Senior Secured Credit Agreement will be deemed automatically amended (and,
upon the request of the Administrative Agent or the Required Lenders (as defined
in the Senior Secured Credit Agreement), the Company shall promptly enter into a
written amendment evidencing such amendment), mutatis mutandis, solely to the
extent necessary such that the financial covenants, covenants governing the
borrowing base, if any, portfolio valuations, events of default (other than
events of default customary in indentures or similar instruments that have no
analogous provisions in the Senior Secured Credit Agreement or credit agreements
generally) or other terms, as applicable, in the Senior Secured Credit Agreement
shall be as restrictive as such covenants in the Secured Longer-Term
Indebtedness, and (c) is not secured by any assets of any Obligor or any other
Person other than an Obligor pursuant to the Senior Secured Credit Agreement or
the Security Documents (as defined in the Senior Secured Credit Agreement) and
the holders of which (or an authorized agent, representative or trustee of such
holders) have either executed (i) a joinder agreement to the Guarantee and
Security Agreement or (ii) such other document or agreement, in a form
reasonably satisfactory to the Administrative Agent and the Collateral Agent,
pursuant to which the holders (or an authorized agent, representative or trustee
of such holders) of such Secured Longer-Term Indebtedness shall have become a
party to the Guarantee and Security Agreement and assumed the obligations of a
Financing Agent or Designated Indebtedness Holder (in each case, as defined in
the Guarantee and Security Agreement). “Secured Longer-Term Indebtedness” shall
also include the Company’s 5.875% Senior Secured Notes due May 10, 2017.

“Secured Obligations” shall have the meaning assigned thereto in the Guarantee
and Security Agreement.

“Secured Shorter-Term Indebtedness” means, collectively, (a) any Indebtedness of
the Company or any other Obligor that is secured by any assets of any Obligor
and that does not constitute Secured Longer-Term Indebtedness and (b) any
Indebtedness that is designated as “Secured Shorter-Term Indebtedness” pursuant
to Section 6.11(a) of the Senior Secured Credit Agreement.

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time in
effect.

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

 

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“Senior Secured Credit Agreement” means that certain Senior Secured Credit
Agreement dated as of June 29, 2012 (as amended by that certain Amendment No. 1
to Senior Secured Credit Agreement and Second Amended and Restated Guarantee and
Security Agreement dated as of July 24, 2013 and Amendment No. 2 to Senior
Secured Credit Agreement dated as of September 30, 2016), among the Company, the
lenders party thereto from time to time, the Bank Administrative Agent and
JPMorgan Chase Bank, N.A., as syndication agent, as the same may from time to
time be modified, supplemented, amended, renewed, restated or replaced,
including, for the avoidance of doubt, with notes issued in public or private
offerings in each case, in any amount.

“Senior Unsecured Indebtedness” means all Indebtedness of the Company that is
not expressed to be subordinate or junior in rank to any other Indebtedness of
the Company and that is not secured.

“Series” means any series of Notes issued pursuant to this Agreement or any
Supplement hereto.

“Series 2016A Notes” is defined in Section 1.1 of this Agreement.

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

“Source” is defined in Section 6.2.

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

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

 

B-17

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“Subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the parent in the
parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent. Anything herein to the
contrary notwithstanding, the term “Subsidiary” shall not include any Person
that constitutes an Investment held by any Obligor in the ordinary course of
business and that is not, under GAAP, consolidated on the financial statements
of the Company and its Subsidiaries, provided that a Person that constitutes
such an Investment that is not consolidated pursuant to the foregoing at any
time shall continue not to be a “Subsidiary” even if such Person is subsequently
required to be consolidated on the financial statements of the Company as a
result of any change in GAAP after the Closing. Unless otherwise specified,
“Subsidiary” means a Subsidiary of the Company.

“Subsidiary Guarantee” is defined in Section 9.7(a).

“Subsidiary Guarantor” means any Subsidiary that is a Guarantor under a
Subsidiary Guarantee.

“Supplement” is defined in Section 2.4.

“SVO” means the Securities Valuation Office of the NAIC or any successor of such
Office.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.

“tranche” means all Notes of a Series having the same maturity, interest rate,
currency and schedule for mandatory prepayments.

“Transactions” means the execution, delivery and performance by the Company of
this Agreement and the other Note Documents to which it is a party, the issuance
of the Notes and the use of the proceeds thereof.

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

“Unsecured Longer-Term Indebtedness” means Indebtedness of any Obligor (which
may be Guaranteed by any other Obligor) that (a) (other than Indebtedness in a
principal amount no greater than $375,000,000 issued within six (6) months after
September 30, 2016 that has a maturity date of at least five (5) years from its
date of issue) has no scheduled amortization prior to, and a final maturity date
not earlier than, six months after September 30, 2021 (it being

 

B-18

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understood that (A) none of: (w) the conversion features under convertible
notes; (x) the triggering and/or settlement thereof; and (y) any cash payment
made in respect thereof shall constitute “amortization” for the purposes of this
definition); and (B) any mandatory amortization that is contingent upon the
happening of an event that is not certain to occur (including, without
limitation, a change of control or bankruptcy) shall not in and of itself be
deemed to disqualify such Indebtedness under this clause (a); provided, with
respect to this clause (a)(B), the Company acknowledges that any payment prior
to September 30, 2021 in respect of any such obligation or right shall only be
made to the extent permitted by the Senior Secured Credit Agreement and
immediately upon such contingent event occurring the amount of such mandatory
amortization shall be included in the Covered Debt Amount), (b) is incurred
pursuant to terms that are substantially comparable to market terms for
substantially similar debt of other similarly situated borrowers as reasonably
determined in good faith by the Company or, if such transaction is not one in
which there are market terms for substantially similar debt of other similarly
situated borrowers, on terms that are negotiated in good faith on an arm’s
length basis (except, in each case, other than financial covenants and events of
default (other than events of default customary in indentures or similar
instruments that have no analogous provisions in the Senior Secured Credit
Agreement or credit agreements generally), which shall be no more restrictive
upon the Company and its Subsidiaries, while any Loans (as defined in the Senior
Secured Credit Agreement) or the Commitments (as defined in the Senior Secured
Credit Agreement) are outstanding, than those set forth in the Loan Documents
(as defined in the Senior Secured Credit Agreement); provided that, upon the
Company’s written request in connection with the incurrence of any Unsecured
Longer-Term Indebtedness that otherwise would not meet the requirements set
forth in this parenthetical of this clause (b), the Senior Secured Credit
Agreement will be deemed automatically amended (and, upon the request of the
Administrative Agent or the Required Lenders (as defined in the Senior Secured
Credit Agreement), the Company shall promptly enter into a written amendment
evidencing such amendment), mutatis mutandis, solely to the extent necessary
such that the financial covenants and events of default, as applicable, in the
Senior Secured Credit Agreement shall be as restrictive as such provisions in
the Unsecured Longer-Term Indebtedness) (it being understood that put rights or
repurchase or redemption obligations (x) in the case of convertible securities,
in connection with the suspension or delisting of the capital stock of the
Company or the failure of the Company to satisfy a continued listing rule with
respect to its capital stock or (y) arising out of circumstances that would
constitute a “fundamental change” (as such term is customarily defined in
convertible note offerings) or be Events of Default under the Senior Secured
Credit Agreement shall not be deemed to be more restrictive for purposes of this
definition) and (c) is not secured by any assets of any Obligor or other Person.
“Unsecured Longer-Term Indebtedness” shall also include the Company’s 6.75%
Senior Notes due 2042.

“Unsecured Shorter-Term Indebtedness” means, collectively, (a) any Indebtedness
of the Company or any Subsidiary that is not secured by any assets of any
Obligor and that does not constitute Unsecured Longer-Term Indebtedness and
(b) any Indebtedness that is designated as “Unsecured Shorter-Term Indebtedness”
pursuant to Section 6.11(a) of the Senior Secured Credit Agreement.

“U.S. Economic Sanctions” is defined in Section 5.16(a).

 

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“U.S. Government Securities” means securities that are direct obligations of,
and obligations the timely payment of principal and interest on which is fully
guaranteed by, the United States or any agency or instrumentality of the United
States the obligations of which are backed by the full faith and credit of the
United States and in the form of conventional bills, bonds, and notes.

“USA Patriot Act” means United States Public Law 107-56, Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time in
effect.

“Value” is defined in the Senior Secured Credit Agreement.

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
“complete withdrawal” or “partial withdrawal” from such Multiemployer Plan, as
such terms are defined in Section 4203 and 4205 in Part I of Subtitle E of
Title IV of ERISA.

 

B-20

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SUBSIDIARIES AND DIRECTORS AND SENIOR OFFICERS

(I)     SUBSIDIARIES (OTHER THAN ANY TAX BLOCKER OR INVESTMENT HELD BY SUCH TAX
BLOCKER):

NONE.

(II)     THE COMPANY’S DIRECTORS AND SENIOR OFFICERS:

 

NAME    TITLE(S) MICHAEL S. GROSS    CHIEF EXECUTIVE OFFICER, PRESIDENT,
CHAIRMAN OF THE BOARD AND DIRECTOR (PRINCIPAL EXECUTIVE OFFICER) STEVEN HOCHBERG
   DIRECTOR DAVID S. WACHTER    DIRECTOR LEONARD A. POTTER    DIRECTOR BRUCE
SPOHLER    CHIEF OPERATING OFFICER AND DIRECTOR RICHARD PETEKA    CHIEF
FINANCIAL OFFICER (PRINCIPAL FINANCIAL OFFICER), TREASURER AND SECRETARY GUY
TALARICO    CHIEF COMPLIANCE OFFICER

 

SCHEDULE 5.4

(to Note Purchase Agreement)

--------------------------------------------------------------------------------

DESCRIPTION OF NECESSARY CONSENTS, APPROVALS, ETC.

[NONE.]

LIENS AND INDEBTEDNESS

PART A:

EXISTING INDEBTEDNESS

SENIOR SECURED CREDIT AGREEMENT AND RELATED DOCUMENTATION

TOTAL AMOUNT OUTSTANDING: $236,700,000

RATE OF INTEREST: FLOATING RATE BASED ON LIBOR

– THE SENIOR SECURED CREDIT AGREEMENT

– THE RESTATED GUARANTEE AND SECURITY AGREEMENT

– VARIOUS STANDBY LETTERS OF CREDIT ISSUED UNDER THE JUNE 2012 CREDIT AGREEMENT,
TOTALING $0

SOLAR CAPITAL LTD. SENIOR SECURED NOTES

TOTAL AMOUNT OUTSTANDING: $75,000,000

RATE OF INTEREST: 5.875%

– THE NOTE PURCHASE AGREEMENT, DATED AS OF MAY 10, 2012, AMONG THE COMPANY AND
EACH OF THE PURCHASERS LISTED IN SCHEDULE A THERETO, AS AMENDED (THE “2012 NOTE
PURCHASE AGREEMENT”)

– THE RESTATED GUARANTEE AND SECURITY AGREEMENT AND RELATED JOINDER AGREEMENTS

– THE NOTES ISSUED PURSUANT TO THE 2012 NOTE PURCHASE AGREEMENT

SOLAR CAPITAL LTD. SERIES 2016A SENIOR NOTES

TOTAL AMOUNT OUTSTANDING: $50,000,000

RATE OF INTEREST: 4.40%

– THE NOTE PURCHASE AGREEMENT, DATED AS OF NOVEMBER 8, 2016, AMONG THE COMPANY
AND EACH OF THE PURCHASERS LISTED IN SCHEDULE A THERETO, AS AMENDED (THE “2016
NOTE PURCHASE AGREEMENT”)

– THE NOTES ISSUED PURSUANT TO THE 2016 NOTE PURCHASE AGREEMENT

SOLAR CAPITAL LTD. SENIOR NOTES

TOTAL AMOUNT OUTSTANDING: $100,000,000

RATE OF INTEREST: 6.75%

– THE INDENTURE, DATED AS OF NOVEMBER 16, 2012, BETWEEN THE COMPANY AND U.S.
BANK NATIONAL ASSOCIATION AS TRUSTEE, AS SUPPLEMENTED (THE “INDENTURE”)

– THE NOTES ISSUED PURSUANT TO THE INDENTURE

INTERCOMPANY LOAN TO SLRC ADI CORPORATION

TOTAL AMOUNT OUTSTANDING: $30,500,000

RATE OF INTEREST: 18%

--------------------------------------------------------------------------------

– INTERCOMPANY LOAN, FROM THE COMPANY TO SLRC ADI CORPORATION, AS AMENDED (THE
“INTERCOMPANY LOAN”)

PART B:

LIENS:

LIENS ON SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY AND THE OTHER OBLIGORS
GRANTED PURSUANT TO THE RESTATED GUARANTEE AND SECURITY AGREEMENT.

INVESTMENTS

[Redacted]

PERMITTED TRANSFEREES/PERMITTED ADVISORS

[REDACTED]

AFFILIATE TRANSACTIONS

AMENDED AND RESTATED ADMINISTRATION AGREEMENT, DATED AS OF OCTOBER 29, 2013,
BETWEEN SOLAR CAPITAL LTD. AND SOLAR CAPITAL MANAGEMENT, LLC

FIRST AMENDED AND RESTATED INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT, DATED
AS OF AUGUST 2, 2016, BETWEEN SOLAR CAPITAL LTD. AND SOLAR CAPITAL PARTNERS, LLC

TRADEMARK LICENSE AGREEMENT, DATED AS OF DECEMBER 17, 2009, BETWEEN SOLAR
CAPITAL PARTNERS, LLC AND SOLAR CAPITAL LTD.

[FORM OF SERIES 2016A NOTE]

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF
ANY JURISDICTION. SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED, ASSIGNED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT
(I) PURSUANT TO A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES THAT IS
EFFECTIVE UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS, OR (II) IN A
TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE ACT OR APPLICABLE STATE
SECURITIES LAW, INCLUDING, WITHOUT LIMITATION, PURSUANT TO RULE 144 OR
RULE 144A, PROVIDED THAT AN OPINION OF COUNSEL (WHICH MAY BE INTERNAL COUNSEL)
SHALL BE FURNISHED TO THE COMPANY (IF REASONABLY REQUESTED BY THE COMPANY), IN
FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT
SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE ACT AND/OR APPLICABLE
STATE SECURITIES LAW.

 

S-2

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SOLAR CAPITAL LTD.

4.40% SERIES 2016A SENIOR NOTE, DUE MAY 8, 2022

No. [    ] [DATE]

$[        ] PPN 83413U A@9

FOR VALUE RECEIVED, THE UNDERSIGNED, SOLAR CAPITAL LTD. (HEREIN CALLED THE
“COMPANY”), A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF
MARYLAND, HEREBY PROMISES TO PAY TO [                    ], OR REGISTERED
ASSIGNS, THE PRINCIPAL SUM OF [            ] DOLLARS (OR SO MUCH THEREOF AS
SHALL NOT HAVE BEEN PREPAID) ON MAY 8, 2022, WITH INTEREST (COMPUTED ON THE
BASIS OF A 360-DAY YEAR OF TWELVE 30-DAY MONTHS) ON THE UNPAID BALANCE HEREOF AT
THE RATE OF (A) 4.40% PER ANNUM FROM THE DATE HEREOF, PAYABLE SEMIANNUALLY, ON
THE EIGHTH DAY OF MAY AND NOVEMBER IN EACH YEAR, COMMENCING WITH THE MAY 8 OR
NOVEMBER 8 NEXT SUCCEEDING THE DATE HEREOF, AND ON THE MATURITY DATE UNTIL THE
PRINCIPAL HEREOF SHALL HAVE BECOME DUE AND PAYABLE, AND (B) TO THE EXTENT
PERMITTED BY LAW, ON ANY OVERDUE PAYMENT OF INTEREST AND, DURING THE CONTINUANCE
OF AN EVENT OF DEFAULT, ON SUCH UNPAID BALANCE AND ON ANY OVERDUE PAYMENT OF ANY
MAKE-WHOLE AMOUNT, AT A RATE PER ANNUM FROM TIME TO TIME EQUAL TO THE DEFAULT
RATE (AS DEFINED IN THE HEREINAFTER DEFINED NOTE PURCHASE AGREEMENT).

PAYMENTS OF PRINCIPAL OF, INTEREST ON AND ANY MAKE-WHOLE AMOUNT WITH RESPECT TO
THIS NOTE ARE TO BE MADE IN LAWFUL MONEY OF THE UNITED STATES OF AMERICA AT THE
PRINCIPAL OFFICE OF GOLDMAN SACHS BANK USA IN NEW YORK, NEW YORK OR AT SUCH
OTHER PLACE AS THE COMPANY SHALL HAVE DESIGNATED BY WRITTEN NOTICE TO THE HOLDER
OF THIS NOTE AS PROVIDED IN THE NOTE PURCHASE AGREEMENT REFERRED TO BELOW.

THIS NOTE IS ONE OF A SERIES OF SENIOR NOTES (HEREIN CALLED THE “NOTES” ) ISSUED
PURSUANT TO THE NOTE PURCHASE AGREEMENT, DATED AS OF NOVEMBER 8, 2016 (AS FROM
TIME TO TIME AMENDED, SUPPLEMENTED OR MODIFIED, THE “NOTE PURCHASE AGREEMENT” ),
AMONG THE COMPANY AND THE RESPECTIVE PURCHASERS NAMED THEREIN AND ADDITIONAL
PURCHASERS OF NOTES FROM TIME TO TIME ISSUED PURSUANT TO ANY SUPPLEMENT TO THE
NOTE PURCHASE AGREEMENT. THIS NOTE AND THE HOLDER HEREOF ARE ENTITLED EQUALLY
AND RATABLY WITH THE HOLDERS OF ALL OTHER NOTES OF ALL SERIES FROM TIME TO TIME
OUTSTANDING UNDER THE NOTE PURCHASE AGREEMENT TO ALL THE BENEFITS PROVIDED FOR
THEREBY OR REFERRED TO THEREIN. EACH HOLDER OF THIS NOTE WILL BE DEEMED, BY ITS
ACCEPTANCE HEREOF, TO HAVE (I) AGREED TO THE CONFIDENTIALITY PROVISIONS SET
FORTH IN SECTION 20 OF THE NOTE PURCHASE AGREEMENT, (II) MADE THE
REPRESENTATIONS AND AGREEMENTS SET FORTH IN SECTIONS 6.2 AND 6.1(B), (D) AND
(F) OF THE NOTE PURCHASE AGREEMENT AND (III) AGREED THAT ANY TRANSFER OR OTHER
DISPOSITION OF THIS NOTE IS OTHERWISE SUBJECT TO THE TERMS AND CONDITIONS
CONTAINED IN THE NOTE PURCHASE AGREEMENT. UNLESS OTHERWISE INDICATED,
CAPITALIZED TERMS USED IN THIS NOTE SHALL HAVE THE RESPECTIVE MEANINGS ASCRIBED
TO SUCH TERMS IN THE NOTE PURCHASE AGREEMENT.

THIS NOTE IS A REGISTERED NOTE AND, AS PROVIDED IN THE NOTE PURCHASE AGREEMENT,
UPON SURRENDER OF THIS NOTE FOR REGISTRATION OF TRANSFER, DULY ENDORSED, OR
ACCOMPANIED BY A WRITTEN INSTRUMENT OF TRANSFER DULY EXECUTED, BY THE

 

S-3

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REGISTERED HOLDER HEREOF OR SUCH HOLDER’S ATTORNEY DULY AUTHORIZED IN WRITING, A
NEW NOTE OF THE SAME SERIES AND TRANCHE FOR A LIKE PRINCIPAL AMOUNT WILL BE
ISSUED TO, AND REGISTERED IN THE NAME OF, THE TRANSFEREE. PRIOR TO DUE
PRESENTMENT FOR REGISTRATION OF TRANSFER, THE COMPANY MAY TREAT THE PERSON IN
WHOSE NAME THIS NOTE IS REGISTERED AS THE OWNER HEREOF FOR THE PURPOSE OF
RECEIVING PAYMENT AND FOR ALL OTHER PURPOSES, AND THE COMPANY WILL NOT BE
AFFECTED BY ANY NOTICE TO THE CONTRARY.

THIS NOTE AND THE HOLDER HEREOF ARE ENTITLED EQUALLY AND RATABLY WITH THE
HOLDERS OF ALL OF THE NOTES TO THE RIGHTS AND BENEFITS PROVIDED PURSUANT TO THE
TERMS AND PROVISION OF THE SUBSIDIARY GUARANTEE (AS SUCH TERM IS DEFINED IN THE
NOTE PURCHASE AGREEMENT). REFERENCE IS HEREBY MADE TO THE FOREGOING FOR A
STATEMENT OF THE NATURE AND EXTENT OF THE BENEFITS FOR THE NOTES AFFORDED
THEREBY AND THE RIGHTS OF THE HOLDERS OF THE NOTES.

THIS NOTE IS SUBJECT TO OPTIONAL PREPAYMENT, IN WHOLE OR FROM TIME TO TIME IN
PART, AT THE TIMES AND ON THE TERMS SPECIFIED IN THE NOTE PURCHASE AGREEMENT,
BUT NOT OTHERWISE.

IF AN EVENT OF DEFAULT OCCURS AND IS CONTINUING, THE PRINCIPAL OF THIS NOTE MAY
BE DECLARED OR OTHERWISE BECOME DUE AND PAYABLE IN THE MANNER, AT THE PRICE
(INCLUDING ANY APPLICABLE MAKE-WHOLE AMOUNT) AND WITH THE EFFECT PROVIDED IN THE
NOTE PURCHASE AGREEMENT.

THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF
THE COMPANY AND THE HOLDER OF THIS NOTE SHALL BE GOVERNED BY, THE LAW OF THE
STATE OF NEW YORK, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE
THAT WOULD PERMIT APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH
STATE.

 

S-4

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SOLAR CAPITAL LTD.

 

BY

   

NAME:

 

TITLE:

SOLAR CAPITAL LTD.

 

[NUMBER] SUPPLEMENT TO NOTE PURCHASE AGREEMENT Dated as of                     
RE: $             % SERIES                  SENIOR NOTES Due
                     Solar Capital Ltd. 500 Park Ave. New York, New York 10022

 

Dated as of             , 20    

 

To the Series [                     ] Additional

Purchaser(s) named in

Schedule A hereto

 

S-5

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Ladies and Gentlemen:

This [Number] Supplement to Note Purchase Agreement (the “Supplement”) is among
Solar Capital Ltd., a Maryland corporation (the “Company”), and the
institutional investors named on Schedule A attached hereto (the
“Series [                ] Additional Purchasers”).

Reference is hereby made to that certain Note Purchase Agreement dated as of
November 8, 2016 (the “Note Purchase Agreement”) among the Company, the
Purchasers listed on Schedule A thereto. All capitalized terms not otherwise
defined herein shall have the same meanings as specified in the Note Purchase
Agreement. Reference is further made to Section 4.18 of the Note Purchase
Agreement which requires that, prior to the delivery of any Additional Notes,
the Company and each Additional Purchaser shall execute and deliver a
Supplement.

The Company hereby agrees with the Series [                    ] Additional
Purchaser(s) as follows:

1.    The Company has authorized the issue and sale of $         aggregate
principal amount of its     % Series                  Senior Notes due
            ,          (the “Series                  Notes”). The Series
                 Notes, together with the Series 2016A Notes issued pursuant to
the Note Purchase Agreement and each series of Additional Notes which may from
time to time hereafter be issued pursuant to the provisions of Section 2.4 of
the Note Purchase Agreement, are collectively referred to as the “Notes” (such
term shall also include any such notes issued in substitution therefor pursuant
to Section 13 of the Note Purchase Agreement). The Series                  Notes
shall be substantially in the form set out in Exhibit 1 hereto with such changes
therefrom, if any, as may be approved by the Series [                ]
Additional Purchaser(s) and the Company.

2.    Subject to the terms and conditions hereof and as set forth in the Note
Purchase Agreement and on the basis of the representations and warranties
hereinafter set forth, the Company agrees to issue and sell to each
Series [                ] Additional Purchaser, and each
Series [                ] Additional Purchaser agrees to purchase from the
Company, Series                  Notes in the principal amount set forth
opposite such Series [                ] Additional Purchaser’s name on
Schedule A hereto at a price of 100% of the principal amount thereof on the
closing date hereinafter mentioned.

3.    The sale and purchase of the Series                  Notes to be purchased
by each Series [                ] Additional Purchaser shall occur at the
offices of [Chapman and Cutler LLP, 111 West Monroe Street, Chicago, Illinois
60603,] at 10:00 a.m. [Chicago time], at a closing (the “Series
[                ] Closing”) on            ,          or on such other Business
Day thereafter on or prior to             ,          as may be agreed upon by
the Company and the Series [                ] Additional Purchasers. At the
Series [                ] Closing, the Company will deliver to each
Series [                ] Additional Purchaser the Series                  Notes
to be purchased by such Purchaser in the form of a single Series
                 Note (or such greater number of Series                  Notes
in denominations of at least $100,000 as such Series [                ]
Additional Purchaser may request) dated the date of the Series
[                ] Closing and registered in such Series [                ]
Additional Purchaser’s name (or in the name of such Series [                ]
Additional Purchaser’s nominee), against delivery by such
Series [                ] Additional Purchaser to the Company or its order of
immediately available funds in the amount of the purchase price therefor by wire
transfer of immediately available funds for the account of the Company to
account number [                                        ] at
                     Bank, [Insert Bank address, ABA number for wire transfers,
and any other relevant wire transfer information]. If, at the Series
[                ] Closing, the Company shall fail to tender such
Series                  Notes to any Series [                ] Additional
Purchaser

 

S-6

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as provided above in this Section 3, or any of the conditions specified in
Section 4 shall not have been fulfilled to any Series [                ]
Additional Purchaser’s satisfaction, such Series [                ] Additional
Purchaser shall, at such Series [                ] Additional Purchaser’s
election, be relieved of all further obligations under this Agreement, without
thereby waiving any rights such Series [                ] Additional Purchaser
may have by reason of such failure or such nonfulfillment.

4.    The obligation of each Series [                ] Additional Purchaser to
purchase and pay for the Series                  Notes to be sold to such
Series [                ] Additional Purchaser at the Series [                ]
Closing is subject to the fulfillment to such Series [                ]
Additional Purchaser’s satisfaction, prior to the Series [                ]
Closing, of the conditions set forth in Section 4 of the Note Purchase Agreement
with respect to the Series                  Notes to be purchased at the Series
[                ] Closing as if each reference to “2016A Notes” or “Notes,”
“Closing” and “Purchaser” set forth therein was modified to refer the “Series
                 Notes,” the “Series [                ] Closing” and the
“Series [                ] Additional Purchaser” (each as defined in this
Supplement) and to the following additional conditions:

(a)    Except as supplemented, amended or superceded by the representations and
warranties set forth in Exhibit A hereto, each of the representations and
warranties of the Company set forth in Section 5 of the Note Purchase Agreement
shall be correct as of the date of Series [                ] Closing (except for
representations and warranties which apply to a specific earlier date which
shall be true as of such earlier date or as of the date specified in Exhibit A
to the extent such provision is superceded in Exhibit A) and the Company shall
have delivered to each Series [                ] Additional Purchaser an
Officer’s Certificate, dated the date of the Series [                ] Closing
certifying that such condition has been fulfilled.

(b)    Contemporaneously with the Series [                ] Closing, the Company
shall sell to each Series [                ] Additional Purchaser, and each
Series [                ] Additional Purchaser shall purchase, the
Series                  Notes to be purchased by such Series [                ]
Additional Purchaser at the Series [                ] Closing as specified in
Schedule A.

5.    [Here insert special provisions for Series                  Notes
including mandatory prepayment provisions applicable to Series                 
Notes and any series-specific closing conditions applicable to Series
                 Notes].

6.    Each Series [                ] Additional Purchaser represents and
warrants that the representations and warranties set forth in Section 6 of the
Note Purchase Agreement are true and correct on the date hereof with respect to
the purchase of the Series                  Notes by such
Series [                ] Additional Purchaser as if each reference to “2016A
Notes” or “Notes,” “Series [                ] Closing” and “Purchaser” set forth
therein was modified to refer the “Series                  Notes,” the “Series
[                ] Closing” and the “Series [                ] Additional
Purchaser” and each reference to “this Agreement” therein was modified to refer
to the Note Purchase Agreement as supplemented by this Supplement.

7.    The Company and each Series [                ] Additional Purchaser agree
to be bound by and comply with the terms and provisions of the Note Purchase
Agreement as fully and completely as if such Series [                ]
Additional Purchaser were an original signatory to the Note Purchase Agreement.

 

S-7

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The execution hereof shall constitute a contract between the Company and the
Series [                ] Additional Purchaser(s) for the uses and purposes
hereinabove set forth, and this agreement may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together only one agreement.

 

    Solar Capital Ltd.     By  

         

      Name:  

 

      Title:  

 

Accepted as of             ,                      [Series [                ]
Additional Purchaser]     By  

 

      Name:  

 

      Title:  

 

 

S-8

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INFORMATION RELATING TO SERIES [                ] ADDITIONAL PURCHASERS

 

Name and Address of Series [                ] Additional Purchaser   

Principal

Amount of Series

                Notes to Be

Purchased

 

[Name of Series [                ] Additional Purchaser]

   $                

(1)

 

All payments by wire transfer of immediately available funds to:

 

    

with sufficient information to identify the source and application of such
funds.

  

(2)

  All notices of payments and written confirmations of such wire transfers:   

(3)

  All other communications:   

 

SCHEDULE A

(to Supplement)

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SUPPLEMENTAL REPRESENTATIONS

The Company represents and warrants to each Purchaser that except as hereinafter
set forth in this Exhibit A, each of the representations and warranties set
forth in Section 5 of the Note Purchase Agreement (other than representations
and warranties that apply solely to a specific earlier date which shall be true
as of such earlier date) is true and correct in all material respects as of the
date hereof with respect to the Series                  Notes with the same
force and effect as if each reference to “Notes” set forth therein was modified
to refer the “Series                  Notes” and each reference to “this
Agreement” therein was modified to refer to the Note Purchase Agreement as
supplemented by the                      Supplement. The Section references
hereinafter set forth correspond to the similar sections of the Note Purchase
Agreement which are supplemented hereby:

Section 5.3.    Disclosure. [The Company, through its agent,
                     (the “Placement Agent”), has delivered to each Series
[                ] Additional Purchaser a copy of a                      (the
“Memorandum”), relating to the transactions contemplated hereby. The Memorandum
fairly describes, in all material respects, the general nature of the business
and principal properties of the Company and its Subsidiaries.]

The Company has disclosed to the Series [                ] Additional Purchasers
all agreements, instruments and corporate or other restrictions to which it or
any of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. None of the reports, financial statements, certificates
or other information furnished by or on behalf of the Company to the Series
[                ] Additional Purchasers in connection with the negotiation of
this Agreement and the other Note Documents or delivered hereunder or thereunder
(as modified or supplemented by other information so furnished) when taken
together with the Company’s public filings contains any material misstatement of
fact therein (or omits to state any material fact necessary to make the
statements therein not misleading), in the light of the circumstances under
which they were made; provided that, with respect to projected financial
information, the Company represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.

Since the date of the most recent Applicable Financial Statements, there has not
been any event, development or circumstance that has had or could reasonably be
expected to have a material adverse effect on (i) the business, Portfolio
Investments and other assets, liabilities and financial condition of the Company
and its Subsidiaries taken as a whole (excluding in any case a decline in the
net asset value of the Company or a change in general market conditions or
values of the Company’s or any of its Subsidiaries’ Portfolio Investments), or
(ii) the validity or enforceability of any of the Note Documents or the rights
or remedies of the Purchasers and the holders of the Notes thereunder.

Section 5.4.    Organization and Ownership of Shares of Subsidiaries.
(a) Schedule 5.4 contains (except as noted therein) complete and correct lists
(i) of the Company’s Subsidiaries, showing, as to each Subsidiary, the correct
name thereof, the jurisdiction of its organization, and the percentage of shares
of each class of its capital stock or similar equity interests outstanding owned
by the Company and each other Subsidiary (other than any tax blocker or
investment held by such tax blocker), and (ii) of the Company’s directors and
senior officers.

--------------------------------------------------------------------------------

(b)    All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company
and its Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by the Company or another Subsidiary free and clear of any Lien
(except Permitted Liens, Liens created pursuant to the Security Documents or as
otherwise disclosed in Schedule 5.4).

(c)    Each Subsidiary identified in Schedule 5.4 is a corporation or other
legal entity duly organized, validly existing and, where legally applicable, in
good standing under the laws of its jurisdiction of organization, and is duly
qualified as a foreign corporation or other legal entity and, where legally
applicable, is in good standing in each jurisdiction in which such qualification
is required by law, other than those jurisdictions as to which the failure to be
so qualified or in good standing could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Each such Subsidiary
has the corporate or other power and authority to own or hold under lease the
properties it purports to own or hold under lease and to transact the business
it transacts and proposes to transact.

(d)    No Subsidiary is a party to, or otherwise subject to any legal,
regulatory, contractual or other restriction (other than this Agreement, the
Senior Secured Credit Agreement, the agreements listed on Schedule 5.4 and
customary limitations imposed by corporate law or similar statutes) restricting
the ability of such Subsidiary to pay dividends out of profits or make any other
similar distributions of profits to the Company or any of its Subsidiaries that
owns outstanding shares of capital stock or similar equity interests of such
Subsidiary.

Section 5.5.    Financial Statements; Material Liabilities. The Company has
heretofore delivered to each Purchaser the audited consolidated statement of
assets and liabilities (or balance sheet) and statements of operations, changes
in net assets and cash flows of the Company and its Subsidiaries as of and for
the fiscal year ending on December 31,         ; such financial statements
present fairly, in all material respects, the consolidated financial position
and results of operations and cash flows of the Company and its Subsidiaries as
of such date in accordance with GAAP. The Company and its Subsidiaries do not
have any Material liabilities that are not disclosed on such financial
statements.

Section 5.13.    Private Offering by the Company. Neither the Company nor anyone
acting on its behalf has offered the Notes or any similar Securities for sale
to, or solicited any offer to buy any of the same from, or otherwise approached
or negotiated in respect thereof with, any Person other than the Purchasers and
not more than                  other Institutional Investors, each of which has
been offered the Notes at a private sale for investment. Neither the Company nor
anyone acting on its behalf has taken, or will take, any action that would
subject the issuance or sale of the Notes to the registration requirements of
Section 5 of the Securities Act or to the registration requirements of any
Securities or blue sky laws of any applicable jurisdiction.

Section 5.14.    Use of Proceeds; Margin Regulations. The Company will apply the
proceeds of the sale of the Notes for [refinancing of existing debt and] general
corporate purposes and in

 

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compliance with all laws referenced in Section 5.16. Neither the Company nor any
of its Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose, whether
immediate, incidental or ultimate, of buying or carrying Margin Stock, and no
part of the proceeds of the sale of the Notes hereunder will be used to buy or
carry any Margin Stock, or to extend credit to others for the purpose of buying
or carrying Margin Stock. After application of the proceeds of the sale of the
Notes, not more than 25% of the value (as determined by any reasonable method)
of the assets of the Company subject to any provision of this Agreement under
which the sale, pledge or disposition of assets is restricted will consist of
Margin Stock.

[Add any additional Sections as appropriate at the time the Series
                 Notes are issued]

 

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[FORM OF SERIES                  NOTE]

The securities represented by this Certificate have not been registered under
the Securities Act of 1933, as amended (the “Act”), or the securities laws of
any jurisdiction. Such securities may not be offered, sold, transferred,
pledged, assigned, encumbered, hypothecated or otherwise disposed of except
(i) pursuant to a registration statement with respect to such securities that is
effective under the Act or applicable state securities laws, or (ii) in a
transaction that does not require registration under the Act or applicable state
securities law, including, without limitation, pursuant to Rule 144 or
rule 144A, provided that an opinion of counsel (which may be internal counsel)
shall be furnished to the Company (if reasonably requested by the Company), in
form and substance reasonably satisfactory to the Company, to the effect that
such transaction does not require registration under the Act and/or applicable
state securities law.

SOLAR CAPITAL LTD.

% SERIES                  SENIOR NOTE, DUE                     

 

No. [    ]    [Date] $[            ]    PPN 83413U [            ]

For Value Received, the undersigned, Solar Capital Ltd. (herein called the
“Company”), a corporation organized and existing under the laws of the State of
Maryland, hereby promises to pay to [                    ], or registered
assigns, the principal sum of [                    ] Dollars (or so much thereof
as shall not have been prepaid) on                     , with interest (computed
on the basis of a 360-day year of twelve 30-day months) on the unpaid balance
hereof at the rate of (a)     % per annum from the date hereof, payable
semiannually, on the [    ] day of                      and                     
in each year, commencing with the                     or
                    next succeeding the date hereof, and on the Maturity Date
until the principal hereof shall have become due and payable, and (b) to the
extent permitted by law, on any overdue payment of interest and, during the
continuance of an Event of Default, on such unpaid balance and on any overdue
payment of any Make-Whole Amount, at a rate per annum from time to time equal to
the Default Rate (as defined in the hereinafter defined Note Purchase
Agreement).

Payments of principal of, interest on and any Make-Whole Amount with respect to
this Note are to be made in lawful money of the United States of America at the
principal office of Goldman Sachs Bank USA in New York, New York or at such
other place as the Company shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreement referred to below.

This Note is one of a series of Senior Notes (herein called the “Notes”) issued
pursuant to a Supplement to the Note Purchase Agreement, dated as of November 8,
2016 (as from time to time amended, supplemented or modified, the “Note Purchase
Agreement”), among the Company and the respective Purchasers named therein and
Additional Purchasers of Notes from time to time issued pursuant to any
Supplement to the Note Purchase Agreement. This Note and the holder

 

EXHIBIT 1

(to Supplement)

--------------------------------------------------------------------------------

hereof are entitled equally and ratably with the holders of all other Notes of
all series from time to time outstanding under the Note Purchase Agreement to
all the benefits provided for thereby or referred to therein. Each holder of
this Note will be deemed, by its acceptance hereof, to have (i) agreed to the
confidentiality provisions set forth in Section 20 of the Note Purchase
Agreement, (ii) made the representations and agreements set forth in
Sections 6.2 and 6.1(b), (d) and (f) of the Note Purchase Agreement and
(iii) agreed that any transfer or other disposition of this Note is otherwise
subject to the terms and conditions contained in the Note Purchase Agreement.
Unless otherwise indicated, capitalized terms used in this Note shall have the
respective meanings ascribed to such terms in the Note Purchase Agreement.

This Note is a registered Note and, as provided in the Note Purchase Agreement,
upon surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder’s attorney duly authorized in writing, a new Note
of the same Series and tranche for a like principal amount will be issued to,
and registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.

This Note and the holder hereof are entitled equally and ratably with the
holders of all of the Notes to the rights and benefits provided pursuant to the
terms and provision of the Subsidiary Guarantee (as such term is defined in the
Note Purchase Agreement). Reference is hereby made to the foregoing for a
statement of the nature and extent of the benefits for the Notes afforded
thereby and the rights of the holders of the Notes.

This Note is subject to [mandatory] [optional] prepayment, in whole or from time
to time in part, at the times and on the terms specified in the Note Purchase
Agreement, but not otherwise.

If an Event of Default occurs and is continuing, the principal of this Note may
be declared or otherwise become due and payable in the manner, at the price
(including any applicable Make-Whole Amount) and with the effect provided in the
Note Purchase Agreement.

This Note shall be construed and enforced in accordance with, and the rights of
the Company and the holder of this Note shall be governed by, the law of the
State of New York, excluding choice-of-law principles of the law of such State
that would permit application of the laws of a jurisdiction other than such
State.

 

Solar Capital Ltd. By  

                                                               
                   

  Name:     Title:  

 

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