Exhibit 10(B)

 

EXECUTION COPY

 

CREDIT AND SECURITY AGREEMENT

 

by and between

 

MVC CAPITAL, INC.,

 

as Borrower,

 

and

 

MVC FINANCIAL SERVICES, INC.,

MVC CAYMAN,

MVC GP II, LLC

and

 

MVC PARTNERS LLC

 

As Guarantors

 

and

THE LENDERS FROM TIME TO TIME PARTIES

HERETO,

 

as Lenders,

 

and

SANTANDER BANK, N.A.

as

Agent

 

and

 

Wintrust Bank

 

as

 

Syndication Agent

 

Dated: December 9, 2015

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE 1

DEFINITIONS

1

 

 

 

1.1

Defined Terms

1

1.2

Interpretative Provisions

40

1.3

Accounting Terms

41

1.4

Rounding

42

 

 

 

ARTICLE 2

CREDIT FACILITY

42

 

 

 

2.1

Revolving Loans

42

2.2

Requests for Borrowings

43

2.3

Incremental Facility

43

 

 

 

ARTICLE 3

INTEREST AND FEES

45

 

 

 

3.1

Rates and Payment of Interest

45

3.2

Computation of Interest and Fees

45

3.3

Unused Line Fee

45

3.4

Termination Fee

46

3.5

Commitment Fee

46

3.6

Agency Fee

46

3.7

Inability to Determine Applicable Interest Rate

46

3.8

Illegality

47

3.9

Increased Costs

47

3.10

Capital Requirements

47

3.11

Certificates for Reimbursement

47

3.12

Delay in Requests

48

3.13

Maximum Interest

48

 

 

 

ARTICLE 4

PAYMENTS AND ADMINISTRATION

48

 

 

 

4.1

Payments Generally, Allocation of Proceeds

48

4.2

Indemnity for Returned Payments

49

4.3

Repayments

50

4.4

Prepayments

50

4.5

Statements

50

4.6

Borrower’s Loan Account; Evidence of Debt

50

4.7

Taxes

51

 

 

 

ARTICLE 5

SECURITY INTEREST

52

 

 

 

5.1

Grant of Security Interest

52

5.2

Financing Statement Filings

52

 

 

 

ARTICLE 6

CONDITIONS PRECEDENT

53

 

 

 

6.1

Conditions Precedent to Effectiveness of Agreement to Make Initial Revolving
Loans

53

 

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6.2

Conditions Precedent to All Revolving Loans

53

 

 

 

ARTICLE 7

REPRESENTATIONS AND WARRANTIES

54

 

 

 

7.1

Organization; Powers

54

7.2

Authorization; Enforceability

54

7.3

No Conflicts

54

7.4

Governmental Approvals

55

7.5

Financial Statements; No Material Adverse Effect; Solvent

55

7.6

Assets; No Liens

56

7.7

Litigation

56

7.8

Compliance with Laws

56

7.9

Environmental Condition

56

7.10

No Defaults

56

7.11

Material Contracts

56

7.12

Restrictive Agreements

56

7.13

Taxes

57

7.14

ERISA

57

7.15

Insurance

57

7.16

Capitalization and Subsidiaries

57

7.17

Security Interest in Collateral

57

7.18

Brokers

58

7.19

Intellectual Property

58

7.20

Reserved

58

7.21

Labor Relations

58

7.22

Payable Practices

58

7.23

Margin Stock

58

7.24

Investment Company Act; Regulated Investment Company

58

7.25

Anti-Terrorism Laws; Anti-Money Laundering Laws

59

7.26

Equity Investments and Debt Investments

60

7.27

Credit and Compliance Policies

61

7.28

Pledge Agreement

61

7.29

Complete Disclosure

61

 

 

 

ARTICLE 8

AFFIRMATIVE COVENANTS

62

 

 

 

8.1

Financial Statements, Borrowing Base Certificate and Other Information

62

8.2

Notices of Material Events

62

8.3

Existence; Business Development Company; Regulated Investment Company

63

8.4

Payment of Obligations

63

8.5

Maintenance of Properties

63

8.6

Compliance with Laws

63

8.7

Insurance

63

8.8

Inspection Rights; Field Examinations; Valuations

63

8.9

Use of Proceeds

64

8.10

Cash Management; Collection of Proceeds of Collateral

64

8.11

Additional Collateral; Further Assurances

65

8.12

End of Fiscal Years; Fiscal Quarters

66

8.13

Required Pledged Cash Amount

66

8.14

Investment Documents

66

8.15

Maintenance of Current Administrative Procedures

66

 

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8.16

Credit Policy

66

8.17

Investments

67

8.18

Subordination

67

8.19

Costs and Expenses

67

 

 

 

ARTICLE 9

NEGATIVE COVENANTS

68

 

 

 

9.1

Indebtedness

68

9.2

Liens

68

9.3

Fundamental Changes

68

9.4

Asset Sales

68

9.5

Loans, Advances, Investments, Etc.

68

9.6

Investments

69

9.7

Transactions with Affiliates

69

9.8

Change in Business

69

9.9

Restricted Payments

69

9.10

Restrictive Agreements

69

9.11

Certain Payments of Indebtedness, Etc.

70

9.12

Amendment of Material Documents

70

9.13

Sale and Leasebacks

70

 

 

 

ARTICLE 10

FINANCIAL COVENANTS

70

 

 

 

10.1

Maximum Balance Sheet Leverage

70

10.2

Minimum Interest Coverage Ratio

70

10.3

Financial Covenant Cure Provisions

71

 

 

 

ARTICLE 11

EVENTS OF DEFAULT AND REMEDIES

72

 

 

 

11.1

Events of Default

72

11.2

Remedies

74

 

 

 

ARTICLE 12

ASSIGNMENTS AND PARTICIPATIONS; APPOINTMENT OF AGENT

75

 

 

 

12.1

Assignment and Participations

75

12.2

Appointment of Agent

77

12.3

Agent’s Reliance, Etc.

78

12.4

Agent and Affiliates

79

12.5

Lender Credit Decision

79

12.6

Indemnification

79

12.7

Successor Agent

80

12.8

Setoff and Sharing of Payments

80

12.9

Revolving Loans; Payments; Non-Funding Lenders; Defaulting Lenders; Information;
Actions in Concert

81

12.10

Amendments and Waivers

83

 

 

 

ARTICLE 13

JURY TRIAL WAIVER; OTHER WAIVERS; CONSENTS; GOVERNING LAW

84

 

 

 

13.1

Obligations and Liabilities of Lender

84

13.2

Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver

85

13.3

Waiver of Notices

86

 

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13.4

Amendments and Waivers

86

13.5

Waiver of Counterclaims

86

13.6

Indemnification

86

 

 

 

ARTICLE 14

NOTICES; MISCELLANEOUS

87

 

 

 

14.1

Notices

87

14.2

Partial Invalidity

89

14.3

Successors

89

14.4

Entire Agreement

90

14.5

USA Patriot Act

90

14.6

Counterparts, Etc.

90

 

iv

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INDEX

TO

EXHIBITS AND SCHEDULES

 

Exhibit A

 

Form of Borrowing Base Certificate

 

 

 

Exhibit B

 

Form of Compliance Certificate

 

 

 

Exhibit C

 

Form of Assignment and Acceptance Agreement

 

 

 

Exhibit D

 

Wire Instructions

 

 

 

Exhibit E

 

Supplemental Agreement

 

 

 

Exhibit F

 

Form of Revolving Note

 

 

 

Exhibit G

 

MVC Capital Debt Investing Guidelines

 

 

 

Schedule 1.1

 

Lenders’ Commitment Amounts

 

 

 

Schedule 5.1(b)

 

Excluded Collateral

 

 

 

Schedule 6.1

 

Conditions Precedent to Initial Loans

 

 

 

Schedule 7.7

 

Litigation

 

 

 

Schedule 7.9

 

Environmental Matters

 

 

 

Schedule 7.12

 

Restrictive Agreements

 

 

 

Schedule 7.15

 

Insurance

 

 

 

Schedule 7.16

 

Subsidiaries

 

 

 

Schedule 7.19

 

Intellectual Property

 

 

 

Schedule 7.21

 

Collective Bargaining Agreements

 

 

 

Schedule 7.26(a)

 

Equity Investments

 

 

 

Schedule 7.26(b)

 

Debt Investments

 

 

 

Schedule 7.26(c)

 

Remaining Equity Interests

 

 

 

Schedule 8.1

 

Financial and Collateral Reporting

 

1

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Schedule 8.5

 

Permitted Investments

 

 

 

Schedule 8.10

 

Bank Accounts

 

 

 

Schedule 9.1

 

Permitted Indebtedness

 

 

 

Schedule 9.2

 

Permitted Liens

 

 

 

Schedule 12.1(b)

 

Disqualified Lenders

 

2

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CREDIT AND SECURITY AGREEMENT

 

This Credit and Security Agreement (“Agreement”) dated as of December 9, 2015 is
entered into by and between MVC CAPITAL, INC., a corporation formed under the
laws of the State of Delaware (the “Borrower”), MVC FINANCIAL SERVICES, INC., a
corporation formed under the laws of the State of Delaware, MVC CAYMAN, an
exempted company incorporated under the laws of the Cayman Islands, MVC GP II,
LLC, a limited liability company formed under the laws of the State of Delaware,
and MVC PARTNERS LLC, a limited liability company formed under the laws of the
State of Delaware, (collectively and individually, the “Guarantors”), the
financial institutions or entities from time to time parties to this Agreement
(collectively and individually, the “Lenders”), and SANTANDER BANK, N.A., as
agent, (“Agent”) and WINTRUST BANK, as syndication agent.

 

WITNESSETH:

 

WHEREAS, Borrower has requested that Agent and Lenders provide a credit facility
to Borrower and Agent and Lenders are willing to provide such credit facility on
the terms and conditions set forth herein and in the other Loan Documents (as
defined below);

 

NOW, THEREFORE, in consideration of the mutual conditions and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

 

ARTICLE 1 DEFINITIONS

 

1.1          Defined Terms. For purposes of this Agreement, the following terms
shall have the respective meanings given to them below:

 

“Additional Disqualified Lender” has the meaning set forth in the definition of
Disqualified Lenders.

 

“Additional Disqualified Lender Notice” has the meaning set forth in the
definition of Disqualified Lenders.

 

“Affiliate” means, with respect to a specified Person, any other Person
(excluding any Subsidiary) which directly or indirectly, through one or more
intermediaries, controls or is controlled by or is under common control with
such Person. For the purposes of this definition, the term “control” (including
with correlative meanings, the terms “controlled by” and “under common control
with”), as used with respect to any Person, means the possession, directly or
indirectly, of the power either (a) to vote ten percent (10%) or more of the
securities having ordinary voting power for the election of directors of such
Person or (b) to direct or cause the direction of the management and policies,
whether through the ownership of Equity Interests, by agreement or otherwise.
Notwithstanding the foregoing, the term “Affiliate” shall not include any Person
that is an “Affiliate” solely by reason of Borrower’s or any Subsidiary’s
investment therein in connection with an Equity Interest owned by the Borrower
or Debt Investment made in the ordinary course of business and consistent with
the Credit Policy.

 

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“Agent” has the meaning set forth hereinabove, in its capacity as the arranger
of the Commitments and as the administrative and collateral agent for the
Lenders under this Agreement and the other Loan Documents, together with any of
its successors and assigns.

 

“Agent’s Bailee” shall mean any Person at any time designated by Agent as bailee
for Agent with respect to any of the Equity Documents or Debt Investment Loan
Documents; provided, that, (a) from and after the Closing Date, Agent’s Bailee
shall be U.S. Bank National Association for the Equity Documents and the Debt
Investment Loan Documents pursuant to the U.S. Bank Securities Control
Agreement, subject to the right of Agent to designate at any time, in its sole
discretion, a successor Agent’s Bailee to replace U.S. Bank National
Association, as provided for in the Bailment Agreement and (b) in the event that
Agent exercises such right, Agent shall give the Borrower ten (10) days’ prior
written notice of any replacement Agent’s Bailee.

 

“Agreement” means, this Credit and Security Agreement, as it may be amended,
modified or restated hereafter.

 

“Anti-Money Laundering Laws” means all applicable laws, regulations and
government guidance on the prevention and detection of money laundering,
including 18 U.S.C. Section 1956 and 1957, and the BSA.

 

“Anti-Terrorism Laws” means the OFAC Laws and Regulations and the Executive
Orders as each of such terms is defined in Section 5.32 and the USA Patriot Act.

 

“Applicable Margin” means, with respect to LIBOR Loans, three and three-quarters
percent (3.75%) and with respect to Prime Rate Loans, one percent (1%).

 

“Asset Sale” means any transaction, or series of related transactions, pursuant
to which any Person or any of its Subsidiaries sells, assigns, transfers,
conveys, leases or subleases, licenses or otherwise disposes of any property or
assets (whether now owned or hereafter acquired) to any other Person, in each
case, whether or not the consideration therefor consists of cash, securities or
other assets owned by the acquiring Person.

 

“Assignment Agreement” means an Assignment and Acceptance Agreement
substantially in the form of Exhibit C.

 

“Availability Block” means, on the Closing Date and at all times after the
Closing Date, Five Million Dollars ($5,000,000).

 

“Balance Sheet Leverage Ratio” means (a) total senior debt less any outstanding
principal on the BB&T Credit Facility divided by (b) Shareholders’ Equity plus
Subordinated Debt.

 

“Bank Product Agreement” means an agreement entered into at any time by any
Credit Party with Agent, a Lender or an Affiliate of Agent or a Lender,
governing the terms and conditions with respect to a Bank Product provided by
Agent, a Lender or an Affiliate of Agent or a Lender to any Credit Party.

 

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“Bank Product Obligations” means any obligation of Credit Parties on account of
any Bank Product.

 

“Bank Products” means any one or more of the following types of services or
facilities provided to Credit Parties by Agent or a Lender (or an Affiliate of
Agent or a Lender): (a) credit cards, debit cards or stored value cards or the
processing of payments and other administrative services with respect to credit
cards, debit cards or stored value cards or (b) cash management or related
services, including (i) the automated clearinghouse transfer of funds for the
account of Borrower pursuant to agreement or overdraft for any accounts of
Credit Parties maintained at Agent or at a Lender, (ii) controlled disbursement
services and (iii) Hedge Agreements, to the extent permitted hereunder.

 

“BB&T” means Branch Banking and Trust Company, a North Carolina banking
corporation.

 

“BB&T Intercreditor Agreement” means the intercreditor agreement by and between
the Agent and BB&T.

 

“Borrower” has the meaning set forth hereinabove.

 

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

 

(a)           Sixty-five percent (65%) multiplied by the lower of (i) the
outstanding principal balance or (ii) the Fair Market Value, of all Eligible
Senior Debt Investments; plus

 

(b)           Fifty percent (50%) (which shall reduce to forty (40%) percent
after the first anniversary of the Closing Date) multiplied by the lower of
(i) the outstanding principal balance or (ii) the Fair Market Value, of all
Eligible Subordinate Debt Investments; minus

 

(c)           Reserves; minus

 

(d)           the Availability Block.

 

“Borrowing Base Certificate” means a certificate substantially in the form of
Exhibit A hereto, as such form, subject to the terms hereof, may from time to
time be modified by Agent, which is duly completed (including all schedules
thereto) and executed by a Responsible Officer of the Borrower and delivered to
Agent.

 

“BSA” means the Bank Secrecy Act (31 U.S.C. Section 5311 et. seq.), and it’s
implementing regulations, Title 31 Part 103 of the U.S. Code of Federal
Regulations.

 

“Business Day” means any day other than a Saturday, Sunday, or other day on
which commercial banks are authorized or required to close under the laws of the
State of New York, and a day on which Agent is open for the transaction of
business, except that if a determination of a Business Day shall relate to any
LIBOR Loans, the term Business Day shall also exclude any day on which banks are
closed for dealings in dollar deposits in the London interbank market.

 

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“Capital Expenditures” means with respect to any Person for any period the
aggregate of all expenditures by such Person and its Subsidiaries made during
such period that in accordance with GAAP are or should be included in “property,
plant and equipment” or in a similar fixed asset account on its balance sheet,
whether such expenditures are paid in cash or financed and including all Capital
Lease Obligations paid or payable during such period, other than the interest
component of any Capital Lease Obligation (without duplication as to any
period).

 

“Capital Lease Obligations” means, as to any Person, the obligations of such
Person under a lease that are required to be classified and accounted for as
capital lease obligations under GAAP and, for purposes of this definition, the
amount of such obligations at any date shall be the capitalized amount of such
obligations at such date on a balance sheet prepared in accordance with GAAP.

 

“Cash Equivalents” means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within six (6) months from the date of acquisition thereof;
(b) commercial paper maturing no more than six (6) months from the date issued
and, at the time of acquisition, having a rating of at least A-1 from Standard &
Poor’s Corporation or at least P-1 from Moody’s Investors Service, Inc.; and
(c) certificates of deposit or bankers’ acceptances maturing within six
(6) months from the date of issuance thereof issued by, or overnight reverse
repurchase agreements from, any commercial bank organized under the laws of the
United States, or any state thereof or the District of Columbia, having combined
capital and surplus of not less than Two Hundred Fifty Million Dollars and
00/100 ($250,000,000.00) and not subject to setoff rights in favor of such bank.

 

“Cash Management Bank” shall have the meaning set forth in Section 8.10.

 

“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental Authority;
provided, that, notwithstanding anything herein to the contrary, (i) the
Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests,
rules, guidelines or directives thereunder or issued in connection therewith and
(ii) all requests, rules, guidelines or directives promulgated by the Bank for
International Settlements, the Basel Committee on Banking Supervision (or any
successor or similar authority) or the United States or foreign regulatory
authorities, in each case pursuant to Basel III, shall in each case be deemed to
be a “Change in Law”, regardless of the date enacted, adopted or issued.

 

“Change of Control” shall mean (a) the liquidation or dissolution of Borrower or
the adoption of a plan by the stockholders of Borrower relating to the
dissolution or liquidation of Borrower; (b) the acquisition by any Person or
group (as such term is used in Section 13(d)(3) of the Exchange Act) of
beneficial ownership, directly or indirectly, of thirty (30%) percent or more of
the voting power of the total outstanding voting stock of Borrower, except as
otherwise consented to in writing by Agent; (c) during any period of two
(2) years, individuals who at the beginning of such period constituted the Board
of Directors of Borrower (together with any new

 

4

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directors whose nomination for election was approved by a vote of at least a
majority of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of Borrower then still in office; (d) the failure of Borrower
to own, directly or indirectly, one hundred (100%) percent of the voting power
of the total outstanding voting stock of the Guarantors; or (e) termination of
the Investment Agreement.

 

“Closing Date” means the date on which the conditions specified in Section 6.1
are satisfied or waived in writing by Agent.

 

“Code” means the Internal Revenue Code of 1986, as the same now exists or may
from time to time hereafter be amended, modified, recodified or supplemented,
together with all rules, regulations and interpretations thereunder or related
thereto.

 

“Collateral” means any and all of the following property owned, leased, or
operated by Credit Parties and any and all other property of Credit Parties, now
existing or hereafter acquired, that may at any time be, become or be intended
to be, subject to a security interest or Lien in favor of Agent, for the benefit
of Agent, the Lenders and providers of Bank Products, to secure the Obligations:

 

(a)           all Accounts;

 

(b)           all Goods, including Equipment, Inventory and Fixtures;

 

(c)           all Documents, Instruments and Chattel Paper, including without
limitation, all Debt Investments and Debt Investment Loan Documents;

 

(d)           all Letters of Credit and Letter-of-Credit Rights;

 

(e)           all Securities Collateral;

 

(f)            all Investment Property, including, without limitation, the
Equity Investments listed on Schedule 7.26(a) and the Equity Interests owned by
the Borrower in the Remaining Equity Interests listed on Schedule 7.26(c);

 

(g)           all Intellectual Property Collateral;

 

(h)           all Commercial Tort Claims;

 

(i)            all General Intangibles, including, without limitation, all
Payment Intangibles;

 

(j)            all Money and all Deposit Accounts;

 

(k)           all Supporting Obligations;

 

(l)            all books and records, customer lists, credit files, computer
files, programs, printouts and other computer materials and records relating to
the Collateral; and

 

5

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(m)          to the extent not covered by clauses (a) through (l) of this
sentence, all other personal property of the Credit Parties, whether tangible or
intangible and all Proceeds and products of each of the foregoing and all
accessions to, substitutions and replacements for, and rents, profits and
products of, each of the foregoing, any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to the Credit Parties from time to time
with respect to any of the foregoing.

 

Notwithstanding anything to the contrary set forth herein, “Collateral” shall
not include any of the Excluded Collateral.

 

“Collateral Access Agreement” means an agreement in writing, in form and
substance satisfactory to Agent, from any lessor of premises to Borrower or any
other person to whom any Collateral is consigned or who has custody, control or
possession of any such Collateral or is otherwise the owner or operator of any
premises on which any of such Collateral is located, in favor of Agent.

 

“Commitment” means, with respect to each Lender, the commitment of such Lender
to make Revolving Loans and, subject to, and in accordance with the terms
hereof, as such commitment may be reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 2.3 and 12.1.
The initial amount of each Lender’s Commitment is set forth on Schedule 1.1, or
in the Assignment and Assumption pursuant to which such Lender shall have
assumed its Commitment, as applicable. The initial aggregate principal amount of
the Lenders’ Commitments on the Closing Date is equal to the Maximum Credit.

 

“Compliance Certificate” means a certificate substantially in the form of
Exhibit B.

 

“Consenting Lenders” shall have the meaning set forth in
Section 12.10(b) hereof.

 

“Consent Rights Trigger Events” means the occurrence of one of the following
events:

 

(a)           the Borrower’s receipt of a Notice of Acceleration;

 

(b)           the Agent and/or the Lenders commence exercising their remedies
pursuant to Section 11.2; or

 

(c)           the occurrence of an Event of Default described in Sections
11.1(e) and 11.1(f).

 

“Control Agreements” means, collectively and individually, a control agreement,
in form and substance reasonably satisfactory to Agent, executed and delivered
by Credit Parties, Agent, Agent’s Bailee and/or the applicable securities
intermediary (with respect to a securities account) or bank (with respect to a
Deposit Account) with respect to a securities account or Deposit Account, or
bailee (with respect to the Debt Investment Loan Documents and Equity
Investments), as the case may be, that is sufficient to perfect the security
interests of Agent for the ratable benefit of Agent and the Lenders therein and
provides such other rights with respect thereto as Agent, for the ratable
benefit of Agent and the Lenders, requires.

 

6

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“Credit Facility” means the Revolving Loans provided to or for the benefit of
Borrower pursuant to Sections 2.1 and 2.3 hereof.

 

“Credit Parties” means, collectively, Borrower and Guarantors, and “Credit
Party” means Borrower or any Guarantor, individually.

 

“Credit Policy” means the MVC Capital Debt Investing Guidelines and MVC
Investment Limits/Guidelines of Borrower and all other documents listed on
Exhibit G hereto by which Borrower from time to time originates, manages,
services and collects Debt Investments as in effect on the Closing Date, as such
Credit Policy may be amended or supplemented from time to time in accordance
with the provisions of Section 9.12 of this Agreement.

 

“Cure Notice” shall have the meaning as defined in Section 10.3.

 

“Cure Period” shall have the meaning as defined in Section 10.3.

 

“Cure Right” shall have the meaning as defined in Section 10.3.

 

“Debt Investment” means any Investment in the form of a loan or advance to a
Debt Investment Obligor, making of a time deposit with a Debt Investment
Obligor, or guarantee or assumption of any obligations of a Debt Investment
Obligor or otherwise.

 

“Debt Investment Collateral” means any and all property of a Debt Investment
Obligor that secures its obligations under the applicable Debt Investment Loan
Documents.

 

“Debt Investment Loan Documents” means collectively and individually, the Senior
Debt Investment Loan Documents and the Subordinate Debt Investment Loan
Documents.

 

“Debt Investment Obligor EBITDA” means for any Debt Investment Obligor for any
period, “EBITDA” (or, if applicable, “Consolidated EBITDA”) of such Debt
Investment Obligor and, if applicable, its Subsidiaries, as defined in the
applicable Debt Investment Loan Documents. In the event “EBITDA” (or, if
applicable, “Consolidated EBITDA”) is not defined in the Debt Investment Loan
Documents for a particular Debt Investment, then “EBITDA” (or, if applicable,
“Consolidated EBITDA”) shall mean the calculation resulting from applying the
definition of “EBITDA” in this Agreement to the applicable Debt Investment
Obligor for the applicable period.

 

“Debt Investment Obligors” means, collectively and individually, the Senior Debt
Investment Obligors and the Subordinate Debt Investment Obligors.

 

“Debt Investment Obligor Material Adverse Effect” means, as to any Debt
Investment Obligor, a material adverse effect on any of (a) the operations,
business, assets, properties or condition (financial or otherwise) of such Debt
Investment Obligor, (b) the ability of such Debt Investment Obligor to perform
its material obligations under the Debt Investment Loan Documents to which it is
a party, (c) the legality, validity or enforceability of the Debt Investment of
Borrower in such Debt Investment Obligor or any of the Debt Investment Loan
Documents related thereto, (d) the rights and remedies of Borrower in respect of
its Debt Investment in such Debt Investment Obligor or under any of the Debt
Investment Loan

 

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Documents related thereto or the ability of Borrower to realize on its Debt
Investment in such Debt Investment Obligor.

 

“Default” means an act, condition or event which with notice or passage of time
or both would constitute an Event of Default.

 

“Default Rate” means, for any Obligation (including, to the extent permitted by
law, interest not paid when due), two percent (2%) plus the interest rate
otherwise applicable thereto.

 

“Defaulting Lender” means any Lender, as determined by Agent in its Permitted
Discretion, that has (a) become a Non-Funding Lender, (b) notified the Borrower,
the Agent or any other Lender in writing that it does not intend to comply with
any of its funding obligations under this Agreement or has made a public
statement to the effect that it does not intend to comply with its funding
obligations under this Agreement or under other agreements in which it commits
to extend credit, (c) failed to fund, and not cured, loans, participations,
advances, or reimbursement obligations under one or more other syndicated credit
facilities, unless subject to a good faith dispute, (d) failed, within two
(2) Business Days after written request by the Agent, to confirm that it will
comply with the terms of this Agreement relating to its obligations to fund
Revolving Loans, (e) otherwise failed to pay over to the Agent or any other
Lender any other amount required to be paid by it hereunder within two
(2) Business Days of the date when due, unless the subject of a good faith
dispute, (f) become or is insolvent or any Person that directly or indirectly
controls such Lender has become or is insolvent, (g) has become the subject of a
bankruptcy or insolvency proceeding or any Person that directly or indirectly
controls such Lender has become the subject of a bankruptcy or insolvency
proceeding, (h) has had a receiver, conservator, trustee, custodian or similar
official appointed for it or any substantial part of its assets or any Person
that directly or indirectly controls such Lender has had a receiver,
conservator, trustee, custodian or similar official appointed for it or any
substantial part of its assets, (i) made a general assignment for the benefit of
creditors, been liquidated, or otherwise been adjudicated as, or determined by
any Governmental Authority having regulatory authority over such Person or its
assets to be, insolvent or bankrupt, or (j) has, or any Person that directly or
indirectly controls such Lender has, taken any action in furtherance of, or
indicating its consent to, approval of or acquiescence in any proceeding or
appointment described in the foregoing paragraphs (e), (f), (g), (h) or (i).

 

“Deposit Accounts” means, collectively and individually (a) all deposit accounts
as such term is defined in the UCC and all accounts and sub-accounts relating to
any of the foregoing accounts and (b) all cash, funds, checks, notes and
instruments from time to time on deposit in any of the accounts or sub-accounts
described in clause (a) of this definition.

 

“Designated Person” shall have the meaning as defined in Section 7.25(a).

 

“Disqualified Lenders” means any of the following, which shall be subject to the
Agent’s agreement (in consultation with Lenders) in its Permitted Discretion,
(a) each bank, financial institution, business development company or fund,
which are competitors of Borrower, (including all Affiliates of and funds
managed or advised by each such Person to the extent reasonably identifiable, on
the basis of such Person’s name, as an Affiliate or fund managed or advised by
such Person) and in each case identified to Agent by Borrower in writing as a

 

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“Disqualified Lender” as set forth on Schedule 12.1(b) and (b) each additional
Person who shall become a competitor of Borrower specified by Borrower from time
to time after the Closing Date (including all Affiliates of and funds managed or
advised by each such Person to the extent reasonably identifiable, on the basis
of such Person’s name, as an Affiliate or fund managed or advised by such
Person) (“Additional Disqualified Lender”) in a written notice to Agent and
Lenders by Borrower (each such notice, an “Additional Disqualified Lender
Notice”). Each Additional Disqualified Lender Notice shall become effective two
(2) Business Days after the date approved by the Agent (in consultation with
Lenders) or all Lenders in their Permitted Discretion, but which shall not apply
retroactively to disqualify any Persons that have previously acquired an
assignment or participation interests in the Loans and/or Commitments as
permitted herein.

 

“EBITDA” means, for any period for any Person, Net Income for such period plus
(a) without duplication and to the extent deducted in determining Net Income for
such period, the sum of (i) Interest Expense for such period, (ii) income tax
expense for such period net of tax refunds, (iii) all amounts attributable to
depreciation and amortization expense for such period, (iv) any extraordinary
non-cash charges for such period and (v) any other non-cash charges for such
period (but excluding any non-cash charge in respect of an item that was
included in Net Income in a prior period and any non-cash charge that relates to
the write-down or write-off of Debt Investments and Equity Interests owned by
such Person) , minus (b) without duplication and to the extent included in Net
Income, (i) any cash payments made during such period in respect of non-cash
charges described in clause (a)(v) taken in a prior period and (ii) any
extraordinary gains and any non-cash items of income for such period, all
calculated for such Person on a consolidated basis in accordance with GAAP.

 

“Eligible Debt Investments” shall mean Debt Investments that have been
originated, purchased or otherwise acquired by Borrower in the ordinary course
of business, net of purchase discount, to the extent funded by Borrower but not
yet collected, that in each case at the time of creation and at all times
thereafter no such Debt Investment shall be an Eligible Debt Investment unless:

 

(a)           such Debt Investment is owned by the Borrower and is subject to a
perfected first priority security interest in favor of Agent for the ratable
benefit of Agent, Lenders and Bank Product providers;

 

(b)           such Debt Investment is evidenced by Debt Investment Loan
Documents that has been duly authorized, executed and delivered and are
enforceable against the Debt Investment Obligor thereof;

 

(c)           such Debt Investment is denominated and payable in either United
States or Canadian Dollars;

 

(d)           such Debt Investment is owed by a Debt Investment Obligor that has
not sold all or substantially all its assets (unless such Debt Investment has
been assumed by a Person that shall have acquired such assets and otherwise
satisfies the requirements set forth in this definition);

 

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(e)           such Debt Investment and the Debt Investment Loan Documents
evidencing Borrower’s security interest in the Debt Investment Collateral is not
subject to any Lien (other than Liens arising under the Loan Documents);

 

(f)            no right of rescission, set-off, counterclaim, defense or other
material dispute has been asserted with respect to such Debt Investment or any
instrument or agreement evidencing Borrower’s security interest in any Debt
Investment Collateral;

 

(g)           the Debt Investment Obligor in respect of such Debt Investment is
not (i) an individual, (ii) organized or incorporated under the laws of a
jurisdiction other than the United States of America or Canada (including any
state, territory or insular area thereof, but excluding the Province of Quebec),
(iii) the subject of an Insolvency Proceeding or (iv) sixty (60) days (or such
shorter number of days as may be applicable for determining when an Investment
is to be considered as a default Debt Investment under any debt instrument to
which Borrower or any of their Subsidiaries is a party, but in no event less
than forty-five (45) days) or more past due with respect to any interest or
principal payments or that is or otherwise should be considered a non-accrual or
charged-off loan by Borrower in accordance with the Credit Policy;

 

(h)           such Debt Investment is not owed by the government (or any
department, agency, public corporation, or instrumentality thereof) of any
country;

 

(i)            such Debt Investment is not owed, directly or indirectly, by a
Credit Party or any of their Affiliates, or any employee, officer, director or
agent of a Credit Party or their Affiliates;

 

(j)            Borrower and its Subsidiaries are not indebted to the Debt
Investment Obligor or any Affiliate of such Debt Investment Obligor, but only to
the extent of such indebtedness;

 

(k)           such Debt Investment is not subject to any counterclaim,
deduction, defense, setoff or dispute;

 

(l)            such Debt Investment shall not be evidenced by or arise under any
promissory note, lease, chattel paper, or instrument, other than the Debt
Investment Loan Documents;

 

(m)          such Debt Investment complies in all material respects with the
requirements of all applicable laws and regulations, whether Federal, State or
local;

 

(n)           such Debt Investment has an internal rating of at least one
(1) and not more than five (5) under the Investment Rating Policy;

 

(o)           there are no material covenant defaults under the Debt Investment
Loan Documents;

 

(p)           such Debt Investment has a valuation of not less than ninety
percent (90%) of par value from an external valuation prepared by a valuation
agency acceptable to the Agent

 

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(the Borrower’s current valuation agency, Murray Devine & Company are acceptable
to the Agent);

 

(q)           to the extent the aggregate amount of Eligible Debt Investments
owing by any Industry Class exceeds twenty percent (20%) of the aggregate amount
of Debt Investments, the amount in excess of twenty percent (20%) shall not be
Eligible Debt Investments;

 

(r)            to the extent the aggregate amount of Eligible Debt Investments
owing by any one Debt Instrument Obligor and its Subsidiaries and Affiliates
exceeds fifteen percent (15%) (which shall reduce to ten percent (10%) after the
first anniversary of the Closing Date) of the aggregate amount of Debt
Investments, the amount in excess of such limits shall not be Eligible Debt
Investments;

 

(s)            there shall be at least eight (8) Eligible Debt Investments at
any time;

 

(t)            the amount of Eligible Debt Investment for each Senior Debt
Investment shall be limited to (i) four and one-half (4.5) (which shall reduce
to four (4) after the first anniversary of the Closing Date) multiplied by
(ii) the Senior Debt Investment Obligor’s trailing twelve (12) month Debt
Investment Obligor EBITDA for the period being measured;

 

(u)           the amount of Eligible Debt Investment for each Subordinate Debt
Investment shall be limited to (i) four and one-half (4.5) (which shall reduce
to four (4) after the first anniversary of the Closing Date) multiplied, by
(ii) the Subordinate Debt Investment Obligor’s trailing twelve (12) month Debt
Investment Obligor EBITDA for such period being measured;

 

(v)           the Debt Investment Obligor shall have a Fixed Charge Coverage
Ratio, as such term is defined in the applicable Debt Investment Loan Document,
of not less than 1.0 to 1 computed on a trailing twelve (12) month basis;

 

(w)          notwithstanding anything herein to the contrary, subject to the
limitations otherwise set forth herein, the Debt Investments to Biogenic
Reagents shall be eligible as Senior Debt Investments until the first
anniversary of the Closing Date and thereafter it shall be considered as Senior
Debt Investments or Subordinate Debt Investments, as applicable;

 

(x)           at the time the Debt Investment was made, it was in substantial
compliance with the Credit Policy;

 

(y)           (i) the Debt Investment Loan Documents do not restrict (A) the
Borrower’s ability to grant the Agent a security interest in the Debt Investment
and the Debt Investment Loan Documents, (B) if required hereunder, the
Borrower’s ability to assign or transfer all of its right, title and interest in
the Debt Investment and the Debt Investment Loan Documents to the Agent, for the
benefit of the Agent and the Lenders and (C) the Agent’s ability to foreclose on
and take ownership of the Borrower’s interest in the Debt Investment and the
Debt Investment Loan Documents, or (ii) the Debt Investment Obligor, its lenders
and the Agent have executed a Joinder Agreement, in form and substance
satisfactory to the Agent in its Permitted Discretion; and

 

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(z)           which Agent otherwise determines is unacceptable in its Permitted
Discretion and provides the Borrower with 10 days prior written notice before it
is no longer an Eligible Debt Investment.

 

Upon 10 days prior written notice to the Borrower, the criteria for Eligible
Debt Investments set forth above may be changed and any new criteria for
Eligible Debt Investments may be established by Agent in the exercise of its
Permitted Discretion solely based on either: (i) an event, condition or other
circumstance arising after the Closing Date, or (ii) an event, condition or
other circumstance existing on the Closing Date to the extent that such event,
condition or circumstance has not been identified by Borrower to the field
examiners of Agent prior to the Closing Date (except to the extent that it may
have been identified but Agent has elected not to establish eligibility criteria
with respect thereto as of the Closing Date), in either case under clause (i) or
(ii) which adversely affects or would reasonably be expected to adversely affect
the Debt Investments or Agent’s ability to realize upon the Debt Investments as
determined by Agent in its Permitted Discretion. Any Debt Investments that are
not Eligible Debt Investments shall nevertheless be part of the Collateral. In
determining the amount of the Debt Investments to be included in the Borrowing
Base, the face amount of a Debt Investments shall be reduced, to the extent not
reflected in such face amount, by (i) the amount of all accrued and actual set
off, discounts, claims, credits or credits pending, or other reductions
(including any amount that Borrower may be obligated to reduce the Debt
Investments pursuant to the terms of any agreement or understanding (written or
oral)) and (ii) the aggregate amount of all cash received or being held by
Borrower as cash collateral in respect of such Debt Investments but not yet
applied by Borrower to reduce the amount of such Eligible Debt Investments.

 

“Eligible Senior Debt Investments” means Eligible Debt Investments consisting of
Senior Debt Investments.

 

“Eligible Subordinate Debt Investments” means Eligible Debt Investments
consisting of Subordinate Debt Investments.

 

“Environmental Laws” means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material or to health
and safety matters.

 

“Equipment” means now owned and hereafter acquired equipment of the Credit
Parties, wherever located, including machinery, data processing and computer
equipment (whether owned or leased and including embedded software that is
licensed as part of such computer equipment), vehicles, rolling stock, tools,
furniture, fixtures, all attachments, accessions and property now or hereafter
affixed thereto or used in connection therewith, and substitutions and
replacements thereof, wherever located.

 

“Equity Documents” means all shareholder agreements, limited liability operating
agreements and any agreements, instruments and documents executed in connection
therewith or pursuant thereto and related to Portfolio Company, and including
any registration rights agreement, any proxy, voting rights agreements,
operating agreement, certificate of incorporation

 

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or formation, articles of incorporation, certificate of formation, member
agreement, by-laws, and any similar agreements or documents) and certificates,
documents or other tangible evidence or representation of the Equity Interests
in such Portfolio Company.

 

“Equity Interests” means, with respect to any Person, all of the shares,
interests, participations or other equivalents (however designated) of such
Person’s capital stock or partnership, limited liability company or other
equity, ownership or profit interests at any time outstanding, all of the
warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other interests in) such Person, all of
the securities convertible into or exchangeable for shares of capital stock of
(or other interests in) such Person or warrants, rights or options for the
purchase or acquisition from such Person of such shares (or such other
interests), but excluding any interests in phantom equity plans and any debt
security that is convertible into or exchangeable for such shares, and all of
the other ownership or profit interests in such Person (including partnership,
member or trust interests therein), whether voting or nonvoting, and whether or
not such shares, warrants, options, rights or other interests are outstanding on
any date of determination.

 

“Equity Investments” means (i) all Equity Interests in any Portfolio Company
directly and beneficially owned by Borrower consisting of common stock or
preferred stock, membership interests, limited partnership interests or similar
non-contingent equity ownership interests, (ii) which are listed on Schedule
7.26(a) and (iii) are subject to a first priority Lien in favor of the Lender.

 

“Equity Issuance” means (a) any issuance or sale by Borrower or any other Credit
Party on or after the Closing Date of (i) any of such Person’s Equity Interests
(including, without limitation, any Equity Interests issued upon the exercise of
any warrants or options referred to in clause (ii)), (ii) any warrants or
options exercisable in respect of such person’s Equity Interests (other than any
Equity Interests, warrants or options issued to directors, officers or employees
of the Credit Parties and Tokarz Group pursuant to employee benefit plans,
equity compensation plan, restricted stock plan, employee stock ownership plan
and/or employment agreement established in the ordinary course of business and
any Equity Interests issued upon the exercise of such warrants or options) or
(iii) any other security or instrument representing a membership or other equity
interest (or the right to obtain a membership or other equity interest) in such
person or (b) the receipt by the Credit Parties of any capital contribution
(whether or not evidenced by an membership interest or other equity security
issued by such person upon such contribution).

 

“ERISA” means the Employee Retirement Income Security Act of 1974.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with the Credit Parties, is 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 of the Code.

 

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 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) the failure to
satisfy the “minimum funding standard” (as

 

13

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defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(c) of the 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 Credit Parties or
any of their ERISA Affiliates of any liability under Title IV of ERISA with
respect to the termination of any Plan; (e) the receipt by the Credit Parties or
any ERISA Affiliate from the PBGC or a plan administrator of any notice relating
to an intention to terminate any Plan or Plans or to appoint a trustee to
administer any Plan; (f) the incurrence by the Credit Parties or any of their
ERISA Affiliates of any liability with respect to the withdrawal or partial
withdrawal of the Credit Parties or any of their ERISA Affiliates from any Plan
or Multiemployer Plan; or (g) the receipt by the Credit Parties or any ERISA
Affiliate of any notice, or the receipt by any Multiemployer Plan from the
Credit Parties or any ERISA Affiliate of any notice, concerning the imposition
upon the Credit Parties or any of their ERISA Affiliates of withdrawal liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.

 

“Event of Default” shall have the meaning set forth in Section 11.1 hereof.

 

“Excess Availability” means the amount, as determined by Agent, calculated at
any date, equal to: (a) the Borrowing Base (after giving effect to any
applicable Reserves), minus (b) the aggregate outstanding and unpaid principal
balance of all Revolving Loans.

 

“Excluded Collateral” means:

 

(a)           motor vehicles covered by a certificate of title law of any state
or other Equipment subject to a certificate of title statute;

 

(b)           Excluded Deposit Accounts;

 

(c)           any securities, cash or Cash Equivalents held as collateral by
BB&T and subject to the BB&T Intercreditor Agreement;

 

(d)           any leasehold interests in Real Property;

 

(e)           any United States intent-to-use trademark applications to the
extent that, and solely during the period in which, the grant of a security
interest therein would impair the validity or enforceability of such
intent-to-use trademark applications under applicable Federal law; provided,
that, upon submission and acceptance by the United States Patent and Trademark
Office of an amendment to allege use pursuant to 15 U.S.C. Section 1060(a), such
intent-to-use trademark application shall cease to be Excluded Collateral and
shall be considered Collateral;

 

(f)            any leases, licenses, contracts, permits and agreements which
under the terms of such lease, license, contract, permit or agreement, or
applicable law with respect thereto, the grant of a Lien therein or in such
assets to Agent is prohibited and such prohibition is enforceable under
applicable law and has not been or is not waived or the consent of the other
party to such lease, license, contract, permit or agreement has not been or is
not otherwise obtained or under applicable law such prohibition cannot be
waived;

 

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(g)           Equity Interests in any Portfolio Companies not formed in the
United States of America;

 

(h)           the Third Party Pledged Equity Interests; and

 

(i)            any asset with respect to which Agent shall have determined in
consultation with Borrower that the cost of obtaining a security interest in
such asset is excessive in relation to the value of the security to be afforded
thereby.

 

“Excluded Deposit Account” shall mean (a) any Deposit Account that is
specifically and exclusively used for payroll, payroll taxes, employee wages and
benefits, withholding tax payments, earnest money and escrow deposits, (b) any
Deposit Account in which BB&T holds a perfected first priority security interest
as provided for in the BB&T Intercreditor Agreement, (c) other Deposit Accounts
so long as the aggregate amount on deposit in all such other Deposit Accounts
under this clause (c) does not exceed One Million Dollars ($1,000,000) for any
period of three or more consecutive Business Days, and (d) the JPM Letter of
Credit Deposit Account.

 

“Excluded Taxes” means any of the following Taxes imposed on or with respect to
Agent or Lenders or required to be withheld or deducted from a payment to Agent
or Lenders: (a) Taxes imposed on or measured by net income (however
denominated), franchise Taxes, and branch profits Taxes, in each case, imposed
as a result of the Agent or Lenders being organized under the laws of, or having
its principal office or its applicable lending office located in, the
jurisdiction imposing such Tax (or any political subdivision thereof), and
(b) any U.S. Federal withholding Taxes imposed under Sections 1471 through 1474
of the Code.

 

“Executive Orders” shall have the meaning as defined in Section 7.25(a).

 

“Fair Market Value” means, with respect to any Investment of Borrower, at any
time, the fair market value of such Investment as required by, and determined in
accordance with, the Investment Company Act and any orders of the SEC issued to
Borrower or its Subsidiaries (other than MVC PE Fund), all as determined by the
Board of Directors of Borrower and their independent accountants in a manner
consistent with the current Investment Ratings Policy and Credit Policy;
provided, that, if such Investment has been subject to a Third Party Valuation,
the Fair Market Value as to such Investment shall be the lesser of the fair
market value determined as described above and the most recent value thereof
pursuant to the most recent Third Party Valuation with respect thereto.

 

“Fee Letter” means that certain Fee Letter of even date herewith between the
Borrower and the Agent.

 

“Financial Covenants” shall have the meaning as defined in Section 10.3.

 

“Financial Covenant Default” shall have the meaning as defined in Section 10.3.

 

“Financial Statements” means the consolidated and consolidating income
statements, statements of cash flows and balance sheets of the Credit Parties
delivered in accordance with Sections 7.5 and 8.1.

 

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“GAAP” means generally accepted accounting principles in effect from time to
time in the United States of America, applied on a consistent basis (other than
such changes, with respect to Borrower, as are appropriate to reflect Borrower’s
election to become a business development company under the Investment Company
Act); provided, that, (a) for the purpose of Section 10.1 hereof and the
definitions used therein, “GAAP” shall mean generally accepted accounting
principles in effect on the date hereof and (b) in the event of any change in
GAAP after the date hereof that affects the covenants in Section 10.1 hereof,
Borrower may by notice to Agent, or Agent may, and at the request of Required
Lenders shall, by notice to Borrower require that such covenants be calculated
in accordance with GAAP as in effect, and as applied by Borrower, immediately
before the applicable change in GAAP became effective, until either the notice
from the applicable party is withdrawn or such covenant is amended in a manner
satisfactory to Borrower and Agent.

 

“Governmental Authority” means the government of the United States of America,
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 body exercising such function, such as the European Union or
the European Central Bank).

 

“Guarantors” means, collectively and individually, the “Guarantors” defined in
the preamble hereto and any other Person guaranteeing the Obligations of
Borrower to the Agent and Lenders from time to time.

 

“Guaranty Agreements” collectively and individually, each guaranty agreement
executed by a Guarantor in favor of the Agent, for the benefit of itself and the
Lenders, as the same may be modified, amended, supplemented or restated from
time to time.

 

“Guaranty Obligations” means, with respect to any Person, without duplication,
any obligations of such Person (other than endorsements in the ordinary course
of business of negotiable instruments for deposit or collection) guaranteeing or
intended to guarantee any Indebtedness of any other Person in any manner,
whether direct or indirect, and including, without limitation, any obligation,
whether or not contingent, (a) to purchase any such Indebtedness or any property
constituting security therefor, (b) to advance or provide funds or other support
for the payment or purchase of any such Indebtedness or to maintain working
capital, solvency or other balance sheet condition of such other Person
(including, without limitation, keep-well agreements, maintenance agreements,
comfort letters or similar agreements or arrangements) for the benefit of any
holder of Indebtedness of such other Person, (c) to lease or purchase property,
securities or services primarily for the purpose of assuring the holder of such
Indebtedness, or (d) to otherwise assure or hold harmless the holder of such
Indebtedness against loss in respect thereof. The amount of any Guaranty
Obligation hereunder shall (subject to any limitations set forth therein) be
deemed to be an amount equal to the outstanding principal amount (or maximum
principal amount, if larger) of the Indebtedness in respect of which such
Guaranty Obligation is made.

 

“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum

 

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distillates, asbestos or asbestos containing materials, polychlorinated
biphenyls, radon gas, infectious or medical wastes and all other substances or
wastes of any nature regulated pursuant to any Environmental Law.

 

“Hedge Agreement” means any agreement with respect to any swap, forward, spot,
future, credit default or derivative transaction or option or similar agreement
involving, or settled by reference to, one or more rates, currencies,
commodities, equity or debt instruments or securities, or economic, financial or
pricing indices or measures of economic, financial or pricing risk or value or
any similar transaction or any combination of these transactions.

 

“Increased Amount Date” shall have the meaning set forth in
Section 2.3(a) hereof.

 

“Increasing Lender” shall have the meaning set forth in Section 2.3(a) hereof.

 

“Indebtedness” means, with respect to any Person, without duplication, (a) all
indebtedness of such Person for borrowed money; (b) all obligations of such
Person for the deferred purchase price of property or services (excluding
(i) compensation of employees and consultants in the ordinary course of
business, (ii) trade payables and (iii) other accounts payable incurred in the
ordinary course of such Person’s business and not outstanding for more than
ninety (90) days after the date such payable was due under its original terms
nor such trade payables if outstanding longer that are being contested or
disputed by such Person in good faith in the ordinary course of business shall
be deemed to constitute Indebtedness) and including any earn-outs or similar
arrangements in connection with any acquisition of businesses by such Person,
whether contingent or otherwise subject to any conditions or limitations;
(c) all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments or upon which interest payments are customarily made;
(d) all reimbursement, payment or other obligations and liabilities of such
Person created or arising under any conditional sales or other title retention
agreement with respect to property used and/or acquired by such Person, even
though the rights and remedies of the lessor, seller and/or lender thereunder
may be limited to repossession or sale of such property and all obligations and
liabilities arising in connection with factoring arrangements or other
arrangements with respect to the sale of receivables; (e) that portion of
Capitalized Lease Obligations of such Person that is (or is required to be)
classified as a liability on its balance sheet in conformity with GAAP, but
excluding landlord financing of leasehold improvements; (f) all obligations and
liabilities, contingent or otherwise, of such Person, in respect of letters of
credit, acceptances and similar facilities; (g) all net obligations and
liabilities, calculated on a basis satisfactory to Agent and in accordance with
accepted practice, of such Person under Hedging Agreements; (h) all Contingent
Obligations; (i) liabilities incurred under Title IV of ERISA with respect to
any plan (other than a Multiemployer Plan) covered by Title IV of ERISA and
maintained for employees of such Person or any of its ERISA Affiliates;
(j) withdrawal liability incurred under ERISA by such Person or any of its ERISA
Affiliates with respect to any Multiemployer Plan; and (k) all obligations
referred to in clauses (a) through (j) of this definition of another Person
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) a Lien upon property owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness. The Indebtedness of any Person shall include the
Indebtedness of any partnership of or joint venture in which such Person is a
general partner or a joint venturer to the extent such Person is liable therefor
as a result of such Person’s ownership interest in such entity, except to

 

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the extent the terms of such Indebtedness expressly provide that such Person is
not liable therefor.

 

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of Borrower
under any Loan Document and (b) to the extent not otherwise described in
subsection (a), Other Taxes.

 

“Industry Class” means the following industries: Transportation, Consumer
Services, Distribution, Energy Services, Environmental Services, Food Services,
Pipe Fitting, Renewable Energy, Software, Specialty Chemical, Agriculture,
Forestry, Fishing and Hunting, Automotive, Business Process Outsourcing,
Consumer Goods Manufacturing, Financial Services, Food Manufacturing,
Healthcare, Hospitality, Industrial Manufacturing, Professional Scientific and
Technical Services and Retail.

 

“Insolvency Proceeding” means (a) any proceeding by or against any Person
seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
liquidation, winding up, reorganization, administration, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency, reorganization or relief of debtors
(including, but not limited to, any case with respect to any such Person under
any provision of the Bankruptcy Code), or seeking the entry of an order for
relief or the appointment of a receiver, administrative receiver, administrator,
manager, examiner, trustee, custodian, liquidator, sequestrator or other similar
official for any such Person or for any substantial part of its property under
any provision of the Bankruptcy Code or under any other Federal, State or other
foreign bankruptcy, insolvency, receivership, liquidation or similar law now or
hereafter in effect, or (b) the appointment of a receiver, administrative
receiver, administrator, manager, examiner, trustee, liquidator, custodian,
sequestrator or similar official for such Person or a substantial part of its
assets shall occur under any Federal, State or foreign bankruptcy, insolvency,
receivership, liquidation or similar law now or hereafter in effect.

 

“Intellectual Property” means Borrower’s now owned and hereafter arising or
acquired: trademarks, servicemarks, trade names, trade styles, trademark and
service mark applications, and licenses and rights to use any of the foregoing
and all applications, registrations and recordings relating to any of the
foregoing as may be filed in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof, any
political subdivision thereof or in any other country or jurisdiction, together
with all rights and privileges arising under applicable law with respect to
Borrower’s use of any of the foregoing; all extensions, renewals, reissues,
divisions, continuations, and continuations-in-part of any of the foregoing; all
rights to sue for past, present and future infringement of any of the foregoing;
inventions, trade secrets, formulae, processes, compounds, drawings, designs,
blueprints, surveys, reports, manuals, and operating standards; goodwill
(including any goodwill associated with any trademark or servicemark, or the
license of any trademark or servicemark); customer and other lists in whatever
form maintained; trade secret rights, copyright rights, rights in works of
authorship; software and contract rights relating to computer software programs,
in whatever form created or maintained.

 

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“Intellectual Property Security Agreement” means any trademark security
agreement executed and delivered by Borrower and Agent, in each case, in such
form as is satisfactory to Agent.

 

“Interest Coverage Ratio” means, for any period, the ratio of (a) (i) Net
Operating Income before taxes plus (ii) interest and other borrowing costs
plus/minus (iii) Non-Cash Net Incentive Compensation minus (iv) payment-in-kind
dividend income minus (v) payment-in-kind Interest Income minus (vi) other
non-cash income, divided by (b) Cash Interest Expense.

 

“Interest Expense” means, for any period, as to any Person, as determined in
accordance with GAAP, the amount equal to total interest expense of such Person
and its Subsidiaries on a consolidated basis for such period, whether paid or
accrued (including the interest component of any Capital Lease for such period),
and in any event, including, without limitation, (a) discounts in connection
with the sale of any Debt Investments, (b) bank fees, commissions, discounts and
other fees and charges owed with respect to letters of credit, banker’s
acceptances or similar instruments or any factoring, securitization or similar
arrangements, (c) interest payable by addition to principal or in the form of
property other than cash and any other interest expense not payable in cash, and
(d) the costs or fees for such period associated with Hedging Agreements to the
extent not otherwise included in such total interest expense (excluding breakage
costs incurred in connection with the termination of Hedging Agreements on or
about the date hereof, if any).

 

“Interest Payment Date” means (a) as to any Prime Rate Loan, the last Business
Day of each calendar month while such Loan is outstanding, (b) as to any LIBOR
Rate Loan, the last Business Day of such LIBOR Period, and (c) as to all
Revolving Loans, the Termination Date.

 

“Interest Rate” means (a) subject to clause (b) of this definition below: (i) as
to Prime Rate Loans, a rate equal to the then Applicable Margin for Prime Rate
Loans on a per annum basis plus the Prime Rate, and (ii) as to LIBOR Loans, a
rate equal to the then Applicable Margin for LIBOR Loans on a per annum basis
plus LIBOR and (b) notwithstanding anything to the contrary contained herein, to
the extent provided for herein, the Default Rate.

 

“Investment” shall have the meaning set forth in Section 9.5 hereof.

 

“Investment Agreement” means that Amended and Restated Investment Advisory and
Management Agreement between Borrower and Tokarz Group dated April 14, 2009, as
same may be amended, modified or restated from time to time.

 

“Investment Books” means, in respect of an Investment, all books and records in
respect thereof.

 

“Investment Company Act” means the Investment Company Act of 1940, as amended,
and all rules, regulations, judgments, decrees and orders arising thereunder.

 

“Investment Ratings Policy” means the written policy of Borrower by which it
from time to time assigns an investment rating to each Debt Investment of
Borrower; as such investment rating policy may be amended or supplemented from
time to time in accordance with the provision of Section 9.11 of this Agreement.

 

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“Joinder Agreements” collectively and individually, each joinder agreement
executed by a Debt Investment Obligor’s lenders, the Borrower and the Agent, for
the benefit of itself and the Lenders, as the same may be modified, amended,
supplemented or restated from time to time.

 

“JPM Letter of Credit Deposit Account” means a Deposit Account maintained by
Borrower with JPMorgan Chase having a balance of not more than Six Million Five
Hundred Thousand Dollars ($6,500,000) to secure a letter of credit reimbursement
obligation of the Borrower.

 

“Lenders” means the parties from time to time hereto as lenders, whether by
execution of this Agreement or an Assignment and Acceptance, and their
respective successors and assigns; each sometimes being referred to herein
individually as a “Lender”.

 

“Lien” means any mortgage, deed of trust, deed to secure debt or similar
instrument, pledge, lien (statutory or otherwise), security interest, charge,
attachment, assignment or other encumbrance or security or preferential
arrangement of any nature, including, without limitation, any conditional sale
or title retention arrangement, any Capitalized Leases and any assignment,
deposit arrangement or financing lease intended as, or having the effect of,
security.

 

“LIBOR Loans” means any Revolving Loans or portion thereof on which interest is
payable based on LIBOR in accordance with the terms hereof.

 

“LIBOR Period” means, with respect to any LIBOR Loan, (a) initially, the period
commencing on (and including) the date on which such LIBOR Rate Loan is made,
continued or converted, as the case may be, and ending on (but excluding) the
day which numerically corresponds to such date one (1), two (2) or three
(3) months thereafter (or, if such month has no numerically corresponding day,
on the last Business Day of such month); and (b) thereafter, each period
commencing on the last day of the next preceding Libor Period applicable to such
LIBOR Rate Loan and ending one (1), two (2) or three (3) months thereafter;
provided, that, all of the foregoing provisions relating to Libor Periods are
subject to the following:

 

(a)           if any LIBOR Period would otherwise end on a day that is not a
Business Day, such LIBOR Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to carry such LIBOR
Period into another calendar month in which event such LIBOR Period shall end on
the immediately preceding Business Day;

 

(b)           the Borrower may not select a LIBOR Period that would extend
beyond the Termination Date; and

 

(c)           any LIBOR Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such LIBOR Period) shall end on the last
Business Day of a calendar month.

 

“LIBOR Rate” for each LIBOR Period, a rate of interest determined by Agent equal
to:

 

(a)           the offered rate for deposits in United States Dollars for the
applicable LIBOR Period that appears on ICE Benchmark Administration Official
Libor Fixings as of 10:00 a.m. London time on the day which is two (2) full
LIBOR Banking Days prior to the

 

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beginning of such Libor Period (unless such date is not a Business Day, in which
event the next succeeding Business Day will be used); divided by

 

(b)           a number equal to 1.0 minus the LIBOR Reserve Percentage.

 

(c)           If such interest rates shall cease to be available from ICE
Benchmark Administration Official Libor Fixings, the LIBOR Rate shall be
determined from such financial reporting service or other information as shall
be mutually acceptable to Agent and Borrower.

 

“LIBOR Reserve Percentage” means, relative to any day of any LIBOR Period for
LIBOR Rate Loans, the aggregate (without duplication) of the rates (expressed as
a decimal fraction) of reserve requirements in effect on the day that is two
(2) LIBOR Banking Days prior to the beginning of such LIBOR Period (including
all basic, emergency, supplemental, marginal and other reserves and taking into
account any transitional adjustments or other scheduled changes in reserve
requirements) under any regulations of the Board or other Governmental Authority
having jurisdiction with respect thereto as issued from time to time and then
applicable to assets or liabilities consisting of “Eurocurrency Liabilities”, as
currently defined in Regulation D of the Board, having a term approximately
equal or comparable to such LIBOR Period.

 

“Lien” means any security interest, security title, mortgage, deed to secure
debt, deed of trust, lien, pledge, charge, conditional sale or other title
retention agreement, or other encumbrance of any kind in respect of any
property, including the interest of each lessor under any capitalized lease and
the interest of any bondsman under any payment or performance bond, in, of or on
any assets or properties of a Person, whether now owned or hereafter acquired
and whether arising by agreement or operation of law.

 

“Liquidity” means, at any time, the sum of (a) Excess Availability at such time
plus (b) the aggregate amount of Pledged Cash at such time minus (c) the
Required Pledged Cash Amount at such time.

 

“Lists” shall have the meaning as defined in Section 7.25(a).

 

“Loan Documents” means, collectively, this Agreement and all notes, guarantees,
intercreditor agreements and all other agreements, documents and instruments now
or at any time hereafter executed and/or delivered by Borrower in connection
with this Agreement.

 

“Margin Stock” means “margin stock” as defined in Regulations T, U or X of the
Board of Governors of the Federal Reserve System, as in effect from time to
time, together with all official rulings and interpretations issued thereunder.

 

“Material Adverse Effect” means a material adverse effect on (a) business,
assets, liabilities, results of operations, property or financial condition of
the Credit Parties, taken as a whole; (b) the ability of the Credit Parties to
perform their obligations, when such obligations are required to be performed
under this Agreement or any of the other Loan Documents; or (c) the validity or
enforceability of this Agreement or any of the other Loan Documents or the
rights or remedies of Agent and Lenders hereunder or thereunder or the
perfection or priority of any security interest or Lien on any material portion
of the Collateral in favor of Agent for the ratable benefit of Agent and the
Lenders.

 

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“Material Contract” means (a) any contract or other agreement (other than the
Loan Documents and Bank Product Agreements), written or oral, of Credit Parties
involving monetary liability of or to any Person in an amount in excess of One
Million Dollars ($1,000,000) in any fiscal year (but excluding for this purpose
contracts or other agreements for the purchase and sale of goods or services
where the other party thereto has no obligation to purchase or sell such goods
or services under such contract or other agreement) and (b) any other contract
or other agreement (other than the Loan Documents and Bank Product Agreements),
whether written or oral, to which any Credit Party is a party as to which the
breach, nonperformance, cancellation or failure to renew by any party thereto
has or could reasonably be expected to have a Material Adverse Effect.

 

“Material Indebtedness” means Indebtedness (other than the Revolving Loans or
obligations in respect of one or more Bank Product Agreements), of Credit
Parties in an aggregate principal amount exceeding One Million Dollars
($1,000,000). For purposes of determining Material Indebtedness, the “principal
amount” of the obligations of Credit Parties in respect of any Hedge Agreement
at any time shall be the maximum aggregate amount (giving effect to any netting
agreements) that Credit Parties would be required to pay if such Hedge Agreement
were terminated at such time.

 

“Maturity Date” means December   , 2018.

 

“Maximum Credit” means the initial amount of Fifty Million Dollars ($50,000,000)
as the same may be increased in accordance with Section 2.3 of this Agreement.

 

“Maximum Interest Rate” means the maximum non-usurious rate of interest under
applicable Federal or State law as in effect from time to time that may be
contracted for, taken, reserved, charged or received in respect of the
indebtedness of Borrower to Agent and Lenders, or to the extent that at any time
such applicable law may thereafter permit a higher maximum non-usurious rate of
interest, then such higher rate.

 

“Multiemployer Plan” means a “multi-employer plan” as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding six (6) years contributed to by Borrower or any
ERISA Affiliate or with respect to which Borrower or any ERISA Affiliate may
incur any liability.

 

“MVC PE Fund” means MVC Private Equity L.P., a Delaware limited partnership.

 

“Net Cash Proceeds” means the aggregate cash proceeds received by Credit Parties
in respect of any sale, lease, transfer or other disposition of any assets or
properties, or interest in assets and properties or as proceeds of any loans or
other financial accommodations provided to it or as proceeds from the issuance
and/or sale of any Equity Interests or Indebtedness, in each case net of the
reasonable and customary direct costs relating to such sale, lease, transfer or
other disposition or loans or other financial accommodation or issuance and/or
sale (including, without limitation, legal, accounting and investment banking
fees, and sales commissions) and taxes paid or payable as a result thereof and
in the case of a sale of any assets or properties or interest in assets and
properties, amounts applied to the repayment of Indebtedness secured by a valid
and enforceable Lien (other than a Lien created under the Loan Documents) on the
asset or assets

 

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that are the subject of such sale or other disposition required to be repaid in
connection with such transaction.

 

“Net Income” means, with respect to any Person for any period, the aggregate of
the Net Operating (Loss) Income Before Taxes of such Person and its
Subsidiaries, on a consolidated basis, for such period, all as determined in
accordance with GAAP.

 

“New Commitments” shall have the meaning set forth in Section 2.3(a) hereof.

 

“New Lender” shall have the meaning set forth in Section 2.3(a) hereof.

 

“Non-Consenting Lenders” shall have the meaning set forth in
Section 12.10(b) hereof.

 

“Non-Funding Lender” means the Lender defined in Section 12.9(d).

 

“Notice of Acceleration” means Agent has notified the Borrower in writing that
it has accelerated the payment of all Obligations and demanded immediate payment
thereof to Agent and Lenders (provided, that, upon the occurrence of any Event
of Default described in Sections 11.1(e) and 11.1(f), all Obligations shall
automatically become immediately due and payable).

 

“Obligations” means any and all Revolving Loans, Bank Product Obligations and
all other obligations, liabilities and indebtedness of every kind, nature and
description owing by Credit Parties to Agent and Lenders (or in the case of Bank
Product Agreements, Affiliates of Agent and Lenders), including principal,
interest, charges, fees, costs and expenses, however evidenced, whether as
principal, surety, endorser, guarantor or otherwise, arising under any of the
Loan Documents or the Bank Product Agreements, whether now existing or hereafter
arising, whether arising before, during or after the initial or any renewal term
of this Agreement or after the commencement of any case under the United States
Bankruptcy Code or any similar statute (including the payment of interest and
other amounts which would accrue and become due but for the commencement of such
case, whether or not such amounts are allowed or allowable in whole or in part
in such case), whether direct or indirect, absolute or contingent, joint or
several, due or not due, primary or secondary, liquidated or unliquidated, or
secured or unsecured.

 

“OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets
Control.

 

“OFAC Laws and Regulations” shall have the meaning as defined in
Section 7.25(a).

 

“Ohio Medical” means Ohio Medical Corporation, A Delaware corporation.

 

“Organization Documents” means, with respect to any Person, the certificate or
articles of incorporation, by-laws, or other organizational documents of such
Person.

 

“Other Taxes” means present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies of the United States or any
political subdivision thereof or any applicable foreign jurisdiction, and all
liabilities with respect thereto, in each case arising from any payment made
hereunder or under any of the other Loan Documents or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
of the other Loan Documents.

 

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“Pension Plan” means a pension plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA which Borrower sponsors, maintains, or to which
Borrower or an ERISA Affiliate makes, is making, or is obligated to make
contributions, other than a Multiemployer Plan.

 

“Permitted Discretion” means as used in this Agreement with reference to Agent
or a Lender, as applicable, a determination made in good faith in the exercise
of its reasonable business judgment based on how an asset-based lender with
similar rights providing a credit facility of the type set forth herein would
act in similar circumstances at the time with the information then available to
it.

 

“Permitted Dispositions” means each of the following:

 

(a)                                 the sale or other disposition of property by
any Subsidiary of Borrower to Borrower or to any other Subsidiary of Borrower;

 

(b)                                 the transfer of cash for the payment of
Indebtedness to the extent such payments are permitted hereunder and for the
payment of other payables in the ordinary course of the business of Credit
Parties;

 

(c)                                  sales or other dispositions of Debt
Investments not otherwise subject to the provisions set forth in this
definition, provided that, as to any such sale or other disposition, each of the
following conditions is satisfied:

 

(i)                                     in the case of any sale or other
disposition of Debt Investments by the Borrower the Net Cash Proceeds shall be
deposited by the Credit Parties into the operating Deposit Account the Borrower
maintains with the Agent;

 

(ii)                                  the consideration paid or payable in cash
and shall be in an amount not less than eighty-five percent (85%) of the Fair
Market Value of the Debt Investment disposed of;

 

(iii)                               such sale or other disposition, shall be to
a bona fide third party unaffiliated with the Credit Parties; and

 

(iv)                              as of the date of any such sale or other
disposition, and in each case after giving effect thereto, no Default or Event
of Default shall exist or have occurred and be continuing;

 

(d)                                 sales or other dispositions of assets of the
Credit Parties (other than Debt Investments) not otherwise subject to the
provisions set forth in this definition, provided that, as to any such sale or
other disposition, each of the following conditions is satisfied:

 

(i)                                     in the case of any sale or other
disposition of Equity Interests by the Credit Parties the Net Cash Proceeds
shall be deposited by the Credit Parties into the operating Deposit Account the
Borrower maintains with the Agent;

 

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(ii)                                  the consideration paid or payable in cash
and shall be in an amount not less than eighty-five percent (85%) of the fair
market value of the property disposed of (and as to any Equity Investment of
Borrower, not less than eighty-five percent (85%) of the most recently
determined Fair Market Value);

 

(iii)                               such transaction shall not involve the sale
or other disposition of any Equity Interest in any of the Credit Parties, other
than the Borrower;

 

(iv)                              such sale or other disposition, shall be to a
bona fide third party unaffiliated with the Credit Parties; and

 

(v)                                 as of the date of any such sale or other
disposition, and in each case after giving effect thereto, no Default or Event
of Default shall exist or have occurred and be continuing.

 

“Permitted Indebtedness” means:

 

(a)                                 the Obligations (excluding Obligations under
Hedge Agreements permitted pursuant to clause (c) below) and the Senior Notes;

 

(b)                                 Indebtedness (including Capital Lease
Obligations) arising after the date hereof to the extent secured by security
interests in Equipment and mortgages on Real Property acquired after the date
hereof in an aggregate outstanding principal amount not to exceed Two Hundred
Fifty Thousand Dollars ($250,000) at any time; provided, that, (i) such security
interests and mortgages do not apply to any property of Borrower other than
specific items of Equipment or Real Property, (ii) the Indebtedness secured
thereby does not exceed the cost of the applicable Equipment or Real Property,
as the case may be and (iii) as of the date any such Indebtedness is incurred
and after giving effect thereto, no Default or Event of Default shall exist or
have occurred and be continuing;

 

(c)                                  Indebtedness of Borrower entered into in
the ordinary course of business pursuant to a Hedge Agreement; provided, that,
(i) such arrangements are not for speculative purposes, and (ii) such
Indebtedness shall be unsecured, except to the extent such Indebtedness
constitutes part of the Obligations arising under or pursuant to Hedge
Agreements with Agent or Lenders (or their respective Affiliates) that are
secured under the terms hereof, provided, however, in the event the Borrower is
able to obtain a better offer for a Hedge Agreement than offered by the Agent or
any Lender and the Agent (or such Lender) fails to match the terms of such Hedge
Agreement within ten (10) Business Days of written notice of such better offer,
then the Borrower shall be permitted to enter into such Hedge Agreement on a
secured basis with another financial institution in an amount not to exceed Ten
Million Dollars ($10,000,000) in the aggregate exposure at any one time;

 

(d)                                 Indebtedness in respect of netting services,
overdraft protections and otherwise in connection with Deposit Accounts and
Indebtedness arising from the honoring by a bank or other financial institution
of a check, draft or similar instrument inadvertently (except in the case of
daylight overdrafts) drawn against insufficient funds in the ordinary course of
business; provided, that, such Indebtedness is extinguished within five
(5) Business Days of incurrence;

 

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(e)                                  Guaranty Obligations in respect of
Indebtedness of Credit Parties to the extent that such Indebtedness is otherwise
permitted pursuant to this definition of Permitted Indebtedness;

 

(f)                                   Indebtedness of Credit Parties in respect
of bid, payment and performance bonds, workers’ compensation claims,
unemployment insurance, health, disability and other employee benefits or
property, casualty or liability insurance, or guarantees of the foregoing types
of Indebtedness, in the ordinary course of business and consistent with current
practices as of the date hereof;

 

(g)                                  Indebtedness to BB&T at the end of each of
Borrower’s fiscal quarters to be outstanding for a period not to exceed
forty-five (45) days in an amount not to exceed One Hundred Million Dollars
($100,000,000) to be used to purchase U.S. Treasury Bills which are held by BB&T
as collateral for such loan;

 

(h)                                 Refinancing Indebtedness;

 

(i)                                     the Indebtedness set forth in Schedule
9.1, which is not otherwise permitted by the other clauses of this definition;

 

(j)                                    (i) the unsecured guaranties by the
Borrower of (A) not more than One Million Dollars ($1,000,000) for the
obligations of Turf Products, LLC, (B) Sabiedrieba ar ierobezotu atbildibu
“Tekers Invest” and Ford Wien Autohaus and (ii) the guaranty by the Borrower of
not more than One Million Dollars ($1,000,000) for the obligations of Inland
Environmental and Remediation Inc. which is secured by cash collateral in an
amount not to exceed One Million Dollars ($1,000,000) held in account number
1182001184 with Branch Banking and Trust Company subject to a Control Agreement
dated September 23, 2015 between the Borrower, and Branch Banking and Trust
Company, as Custodian and Lender, as same may be amended or modified from time
to time; and

 

(k)                                 unsecured Indebtedness and unsecured
Guaranty Obligations for Indebtedness of the Portfolio Companies not listed on
Schedule 7.26(a) and not otherwise permitted by the other clauses of this
definition in an aggregate principal amount not to exceed Five Million Dollars
($5,000,000).

 

“Permitted Investments” means each of the following:

 

(a)                                 Investments consisting of Debt Investments
made by Borrower if created or acquired in the ordinary course of business and
payable or dischargeable in accordance with customary terms and the Credit
Policy;

 

(b)                                 Investments consisting of (i) the Debt
Investments listed on Schedule 7.26(b), (ii) the Equity Investments listed on
Schedules 7.26(a) and (c), and (iii) “follow-on” Investments consisting of
Equity Interests in Portfolio Companies currently owned by Credit Parties in an
aggregate amount not to exceed Two Million Dollars ($2,000,000);

 

(c)                                  the endorsement of instruments for
collection or deposit in the ordinary course of business;

 

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(d)                                 Investments in cash or Cash Equivalents;
provided, that, Borrower may make deposits of cash or other immediately
available funds (i) in Deposit Accounts maintained with the Agent; or (ii) in
Excluded Deposit Accounts subject to the applicable limitations set forth in the
definition of “Excluded Deposit Accounts”;

 

(e)                                  cash deposited in the Required Pledged
Deposit Accounts;

 

(f)                                   deposits of cash for leases, utilities,
worker’s compensation and similar matters in the ordinary course of business;

 

(g)                                  obligations under Hedge Agreements
permitted under clause (c) of the definition of Permitted Indebtedness hereof
which may be secured by cash or Cash Equivalents in an aggregate amount not to
exceed Ten Million Dollars ($10,000,000);

 

(h)                                 payroll, travel, commission and similar
advances to cover matters that in good faith are expected at the time of such
advances to be treated as expenses for accounting purposes in accordance with
GAAP and that are made in the ordinary course of business consistent with
current practices as of the date hereof;

 

(i)                                     loans and advances by Credit Parties to
directors, officers and employees of Credit Parties and Tokarz Group in the
ordinary course of business for bona fide (including, without limitation, in
connection with the purchase of Equity Interests by such directors, officers and
employees) business purposes not in excess of Two Hundred Fifty Thousand Dollars
($250,000) at any time outstanding;

 

(j)                                    stock or obligations issued to Credit
Parties by any Person (or the representative of such Person) in respect of
Indebtedness of such Person owing to Borrower in connection with the insolvency,
bankruptcy, receivership or reorganization of such Person or a composition or
readjustment of the debts of such Person;

 

(k)                                 investment in U.S. Treasury Bills, cash and
Cash Equivalents at the end of Borrower’s fiscal quarters for a period not to
exceed forty-five (45) days in an amount not to exceed One Hundred Million
Dollars ($100,000,000) purchased with proceeds of loans from BB&T plus an amount
not to exceed Eight Million Dollars ($8,000,000) deposited by the Borrower,
which is all pledged to BB&T as collateral for such loan;

 

(l)                                     obligations of Debt Investment Obligors
to Borrower arising from Debt Investments which are past due evidenced by a
promissory note made by such Debt Investment Obligors payable to Borrower;

 

(m)                             Investments consisting of loans and advances set
forth on Schedule 8.5 which are not otherwise permitted by the other clauses of
this definition;

 

(n)                                 Additional Investments in MVC PE Fund in an
amount not to exceed Five Million Five Hundred Thousand Dollars ($5,500,000) in
the aggregate during the term of this Agreement;

 

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(o)                                 Investments consisting of cash or Cash
Equivalents in an amount not to exceed Ten Million Dollars ($10,000,000) pledged
to secure Hedge Agreements permitted pursuant to Subsection (c) of the
definition of Permitted Indebtedness;

 

(p)                                 Provided Liquidity is in excess of Fifteen
Million Dollars ($15,000,000) prior to and immediately after making such Equity
Investment, Equity Investments in Debt Investment Obligors after the Closing
Date made simultaneously with the Debt Investment in an amount not to exceed
Five Million Dollars ($5,000,000) in the aggregate; and

 

(q)                                 Investments not otherwise permitted by the
other clauses of this definition, provided that the aggregate consideration paid
by Credit Parties (other than MVC PE Fund) after the Closing Date for all such
Investments pursuant to this clause (p) shall not exceed Five Hundred Thousand
Dollars ($500,000).

 

“Permitted Liens” means:

 

(a)                                 the security interests and Liens of Agent
for the ratable benefit of Agent and Lenders and the rights of setoff of Agent
and Lenders provided for herein or under applicable law;

 

(b)                                 Liens securing the payment of taxes,
assessments or other governmental charges or levies either not yet overdue or
the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to Credit Parties, which
proceedings (or orders entered in connection with such proceedings) have the
effect of preventing the forfeiture or sale of the property subject to any such
Lien and with respect to which adequate reserves have been set aside on their
books in accordance with GAAP;

 

(c)                                  non-consensual statutory Liens (other than
Liens arising under ERISA or securing the payment of taxes) arising in the
ordinary course of the Credit Parties’ businesses that do not secure
Indebtedness for borrowed money, such as carriers’, warehousemen’s,
materialmen’s, landlords’, workmen’s suppliers’, repairmen’s and mechanics’
Liens, to the extent: (i) such Liens do not in the aggregate materially detract
from the value of the property of Credit Parties and do not materially impair
the use thereof in the operation of Credit Parties, and (ii) such Liens secure
Indebtedness which is not overdue or is fully insured and being defended at the
sole cost and expense and at the sole risk of the insurer or being contested in
good faith by appropriate proceedings diligently pursued and available to Credit
Parties, in each case prior to the commencement of foreclosure or other similar
proceedings, which proceedings (or orders entered in connection with such
proceeding) have the effect of preventing the forfeiture or sale of the property
subject to any such Lien and with respect to which adequate reserves have been
set aside on their books in accordance with GAAP;

 

(d)                                 zoning restrictions, easements, licenses,
covenants and other restrictions affecting the use of Real Property which do not
interfere in any material respect with the use of such Real Property or ordinary
conduct of the business of Credit Parties as presently conducted thereon or
materially impair the value or marketability of the Real Property which may be
subject thereto;

 

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(e)                                  security interests in Equipment and Real
Property arising after the date hereof to secure Indebtedness permitted under
clause (b) of the definition of Permitted Indebtedness, whether such
Indebtedness is assumed or incurred by Credit Parties;

 

(f)                                   pledges and deposits of cash by Credit
Parties after the date hereof in the ordinary course of business in connection
with workers’ compensation, unemployment insurance and other types of social
security benefits consistent with the current practices of Credit Parties as of
the date hereof;

 

(g)                                  pledges and deposits of cash by Credit
Parties after the date hereof to secure the performance of tenders, bids,
leases, trade contracts (other than for the repayment of Indebtedness),
statutory obligations and other similar obligations in each case in the ordinary
course of business consistent with the current practices of Credit Parties as of
the date hereof;

 

(h)                                 Liens arising from (i) operating leases and
the precautionary UCC financing statement filings in respect thereof and
(ii) equipment or other materials which are not owned by Credit Parties located
on the premises of Credit Parties (but not in connection with, or as part of,
the financing thereof) from time to time in the ordinary course of business and
consistent with current practices of Credit Parties and the precautionary UCC
financing statement filings in respect thereof;

 

(i)                                     statutory or common law Liens or rights
of setoff of depository banks with respect to funds of Credit Parties at such
banks to secure fees and charges in connection with returned items or the
standard fees and charges of such banks in connection with the Deposit Accounts
maintained by Credit Parties at such banks (but not any other Indebtedness or
obligations);

 

(j)                                    judgments and other similar Liens arising
in connection with court proceedings that do not constitute an Event of Default,
provided, that, (i) such Liens are being contested in good faith and by
appropriate proceedings diligently pursued, (ii) adequate reserves or other
appropriate provision, if any, as are required by GAAP have been made therefor,
(iii) a stay of enforcement of any such Liens is in effect and (iv) Agent may
establish a Reserve with respect thereto;

 

(k)                                 leases or subleases of Real Property granted
by Credit Parties in the ordinary course of business and consistent with current
practices of Credit Parties to any Person so long as any such leases or
subleases do not interfere in any material respect with the ordinary conduct of
the business of Credit Parties as presently conducted thereon;

 

(l)                                     Liens on goods in favor of customs and
revenue authorities arising as a matter of law to secure custom duties in
connection with the importation of such goods;

 

(m)                             Liens on U.S. Treasury Bills, cash and Cash
Equivalents at the end of Borrower’s fiscal quarters for a period not to exceed
forty-five (45) days in an amount not to exceed One Hundred Million Dollars
($100,000,000) to secure Indebtedness permitted under clause (g) of the
definition of Permitted Indebtedness;

 

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(n)                                 carriers’, warehousemen’s’, mechanics’ or
other like liens arising in the ordinary course of business and not overdue for
a period of more than thirty (30) days or which are being contested diligently
in good faith by appropriate proceedings with adequate reserves set aside, in a
manner which will not jeopardize or diminish in any material respect the
interest of the Agent in any of the Collateral for the Obligations;

 

(o)                                 the security interests and Liens set forth
on Schedule 9.2 which are not otherwise permitted under the other clauses of
this definition and any security interests and Liens to secure Refinancing
Indebtedness of the Indebtedness secured by such security interests and Liens to
the extent permitted under the definition of Refinancing Indebtedness;

 

(p)                                 Liens existing on the assets of a Debt
Investment Obligor at the time Borrower or any of its Subsidiaries acquires such
assets following a default under any Debt Investment Loan Documents;

 

(q)                                 Liens on Third Party Pledged Equity
Interests and Liens on additional equity purchased or contributed after the
Closing Date in such Portfolio Companies which are Third Party Pledged Equity
Interests as of the Closing Date and pledged to secure indebtedness of the
issuer of the Equity Interest; and

 

(r)                                    Liens not otherwise permitted under this
definition securing Indebtedness not in excess of Five Hundred Thousand Dollars
($500,000).

 

“Permitted Restricted Payment” means:

 

(a)                                 the payment by any Subsidiary of Borrower of
cash dividends or distributions to Borrower or to any Subsidiary of Borrower;

 

(b)                                 the making of any dividend or distribution
by Borrower to its stockholders in the form of additional Equity Interests,
warrants, options or other rights for the purchase or acquisition of shares of
any class of Equity Interests of Borrower, provided, that no such Equity
Interest, warrant, option or other purchase right shall require any payment of
cash by Borrower or any of its Subsidiaries (other than MVC PE Fund) prior to
the Maturity Date;

 

(c)                                  the payment by Borrower of dividends and
distributions to Borrower’s shareholders in cash in the Borrower’s discretion,
all at such times and solely in such amounts (i) as necessary to satisfy the
requirements for Borrower to remain qualified as a “regulated investment
company” under Subchapter M, Section 851 of the Code (as the same may be
amended, modified, supplemented or superseded from time to time) and (ii) to
avoid excise taxes that might otherwise be imposed on Borrower as a “regulated
investment company” under the Code;

 

(d)                                 Regular Quarterly Dividends shall be
permitted to be declared and paid quarterly in cash at the then applicable QDPS
Amount so long as (i) no Event of Default has occurred and is continuing at the
time of declaration or payment of such Regular Quarterly Dividends or (ii) if an
Event of Default has occurred and is continuing at the time of declaration or
payment, if, after giving effect to such payments, Liquidity is equal to or
greater than Ten Million Dollars ($10,000,000);

 

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(e)                                  the payment by Borrower of one-time
additional special distributions in each case so long as (i) no Event of Default
has occurred and is continuing at the time of declaration or payment of any
distributions and (ii) after giving effect to any such distributions, Liquidity
is equal to or greater than Thirty Million Dollars ($30,000,000);

 

(f)                                   the repurchase by the Borrower of its own
Equity Interests, in each case so long as (i) no Event of Default has occurred
and is continuing prior to or immediately after the making of any such
repurchase and (ii) after giving effect to any such repurchase, Liquidity is
equal to or greater than Thirty Million Dollars ($30,000,000);

 

(g)                                  the regularly scheduled payment of the
principal amount of, or repurchase, redemption, retirement or defeasance of the
Senior Notes, in each case so long as (i) no Default or Event of Default shall
have occurred and be continuing prior to or immediately after the making of any
such payment and (ii) prior to and after making any such payment the Borrower
has Liquidity in an amount equal to or greater than Thirty Million Dollars
($30,000,000);

 

(h)                                 the repurchase by Borrower in cash of Equity
Interests of Borrower (including, warrants, options and other purchase rights)
issued to employees or directors of Tokarz Group or Borrower in connection with
the termination or resignation of such employees or directors, provided, that
(i) the aggregate amount of cash paid by Borrower for all repurchases under this
clause (e) during any calendar year shall not exceed Five Hundred Thousand
Dollars ($500,000) and (ii) no Default or Event of Default shall have occurred
or be continuing at the time of each such repurchase;

 

(i)                                     the payment by Borrower of incentive
compensation to employees of Tokarz Group in accordance with the Investment
Agreement; and

 

(j)                                    the payment by Borrower of the management
fees and other fees and expenses (including the reimbursement thereof by
Borrower) in the amounts and on the dates provided for in the Investment
Agreement as in effect on the date hereof.

 

“Person” or “person” means any individual, sole proprietorship, partnership,
corporation (including any corporation which elects subchapter S status under
the Code), limited liability company, limited liability partnership, business
trust, unincorporated association, joint stock corporation, trust, joint venture
or other entity or any government or any agency or instrumentality or political
subdivision thereof.

 

“Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA)
which any Credit Party sponsors, maintains, or to which it makes, is making, or
is obligated to make contributions, or in the case of a Multiemployer Plan have
made contributions at any time during the immediately preceding six (6) plan
years or with respect to which any Credit Party may incur liability.

 

“Pledge Agreement” collectively and individually, each pledge agreement executed
by Borrower, any Subsidiary, Affiliate or a Guarantor in favor of the Agent, for
the benefit of itself and the Lenders, as the same may be modified, amended,
supplemented or restated from time to time.

 

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“Pledged Cash” means the aggregate amount of cash of Borrower held in Deposit
Accounts with Lenders.

 

“Prime Rate” means, for any day, a fluctuating rate per annum equal to the rate
of interest in effect for such day as publicly announced from time to time by
Agent as its “prime rate,” whether or not such prime rate is the best rate
available at it. The “prime lending rate” is a rate set by Agent based upon
various factors and is used as a reference point for pricing some loans, which
may be priced at, above, or below such announced rate. Any change in such rate
announced by Agent shall take effect at the opening of business on the day
specified in the public announcement of such change.

 

“Prime Rate Loans” means any Revolving Loans or portion thereof on which
interest is payable based on the Prime Rate in accordance with the terms hereof.

 

“Pro Rata Share” means with respect to all matters relating to any Lender
(a) with respect to the Revolving Loans, the percentage obtained by dividing
(i) the Revolving Loan Commitment of that Lender by (ii) the aggregate Revolving
Loan Commitments of all Lenders; and (b) with respect to Revolving Loans on and
after the Termination Date, the percentage obtained by dividing (i) the
aggregate outstanding principal balance of the Revolving Loans held by that
Lender, by (ii) the outstanding principal balance of the Revolving Loans held by
all Lenders.

 

“Portfolio Company” means a corporation, limited liability company or limited
partnership in which Borrower is the direct and beneficial owner of Equity
Interests issued by such corporation, limited liability company or limited
partnership in the ordinary of their business, that is a Person that is
accounted for under GAAP as a portfolio investment of Borrower.

 

“Portfolio Company Material Adverse Effect” means, as to any Portfolio Company,
a material adverse effect on any of (a) the operations, business, assets,
properties, condition (financial or otherwise) or prospects of such Portfolio
Company, (b) the ability of such Portfolio Company to perform any of its
obligations under the Equity Documents to which it is a party, (c) the legality,
validity or enforceability of the Equity Interest of Borrower in such Portfolio
Company or any of the Equity Documents related thereto, or (d) the rights and
remedies of Borrower in respect of their Equity Interest in such Portfolio
Company or under any of the Equity Documents related thereto or the ability of
Borrower to realize on its Equity Interest in such Portfolio Company.

 

“Provision for Taxes” means an amount equal to all taxes imposed on or measured
by net income, whether Federal, State, county or local, and whether foreign or
domestic, that are paid.

 

“QDPS Amount” means the amount of the quarterly dividend per share, which shall
initially be Thirteen and One-Half Cents ($0.135) per share per quarter. The
QDPS Amount shall be subject to increase from time to time by the Borrowers’
Board of Directors by up to a maximum of fifteen percent (15%) per annum over
the prior QDPS Amount (by way of example, (x) for the first year the Borrower
can increase the QDPS Amount by a maximum of Two and Twenty-Five Thousandths of
Cents ($.02025) per share per quarter based upon the initial QDPS

 

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Amount and (y) assuming the Borrower increases the QDPS Amount by the full
fifteen percent (15%) for the first year, then for the second year, the Borrower
can increase the QDPS Amount by a maximum of Two and Thirty-Two Thousand Eight
Hundred Seventy-Five Hundred-Thousandths Cents ($.0232875) per share per
quarter), so long as (i) no Default or Event of Default shall have occurred and
be continuing and (ii) Liquidity, at the time the Borrowers’ Board of Directors
increases the QDPS Amount, after giving effect to each such quarterly dividend
payment, is equal to or greater than Ten Million Dollars ($10,000,000).
Following any permitted increase by the Borrowers’ Board of Directors, the QDPS
Amount shall thereafter be fixed at the new QDPS Amount until such time as the
Borrowers’ Board of Directors elects to further change the QDPS Amount.

 

“Qualified Assignee” means (a) any Lender, any Affiliate of any Lender and, with
respect to any Lender that is an investment fund that invests in commercial
loans, any other investment fund that invests in commercial loans and that is
managed or advised by the same investment advisor as such Lender or by an
Affiliate of such investment advisor, and (b) any commercial bank, savings and
loan association or savings bank or any other entity which is an “accredited
investor” (as defined in Regulation D under the Securities Act of 1933) which
extends credit or buys loans as one of its businesses, including insurance
companies, mutual funds, lease financing companies and commercial finance
companies, in each case, which has a rating of BBB or higher from S&P and a
rating of Baa2 or higher from Moody’s at the date that it becomes a Lender and
which, through its applicable lending office, is capable of lending to Borrower
without the imposition of any withholding or similar taxes; provided that prior
to the occurrence of a Default or an Event of Default (i) no Person determined
by Agent in its Permitted Discretion to be acting in the capacity of a vulture
fund or distressed debt purchaser shall be a Qualified Assignee and (ii) no
Person or Affiliate of such Person (other than a Person that is already a
Lender) holding Indebtedness subordinated to the Obligations of Borrower to the
Agent and Lenders or holding any Stock issued by Borrower shall be a “Qualified
Assignee”. Prior to the occurrence of a Consent Rights Trigger Event, no
Disqualified Lender shall be a “Qualified Assignee”. After the occurrence of a
Consent Rights Trigger Event, any Lender may make an assignment to a
non-Qualified Assignee with the consent of the Agent (not to be unreasonably
withheld or delayed).

 

“Real Property” means all now owned and hereafter acquired real property of
Credit Parties, including leasehold interests, together with all buildings,
structures, and other improvements located thereon and all licenses, easements
and appurtenances relating thereto, wherever located.

 

“Records” means all present and future books of account of the Credit Parties of
every kind or nature, purchase and sale agreements, ledger cards, statements,
correspondence, memoranda, credit files and other data relating to the
Collateral, any Debt Investment or any Equity Interests of Portfolio Companies,
together with the tapes, disks, diskettes and other data and software storage
media and devices, file cabinets or containers in or on which the foregoing are
stored (including any rights of Credit Parties with respect to the foregoing
maintained with or by any other person).

 

“Refinancing Indebtedness” means Indebtedness of Credit Parties arising after
the Closing Date issued in exchange for, or the proceeds of which are used to
extend, refinance,

 

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replace or substitute for other Indebtedness (such extended, refinanced,
replaced or substituted Indebtedness, the “Refinanced Obligations”) to the
extent permitted hereunder; provided, that: (a) Agent shall have received not
less than ten (10) Business Days’ prior written notice of the intention to incur
such Indebtedness, which notice shall set forth in reasonable detail reasonably
satisfactory to Agent the amount of such Indebtedness, the schedule of
repayments and maturity date with respect thereto and such other information
with respect thereto as Agent may reasonably request; (b) the principal amount
of such Refinancing Indebtedness shall not exceed the principal amount of the
Refinanced Obligations (plus the amount of reasonable refinancing fees and
expenses incurred in connection therewith), any prepayment premiums and any
accrued interest on account thereof; (c) such Indebtedness shall have a final
maturity that is no earlier than the final maturity of the Refinanced
Obligations; (d) such Indebtedness shall have a Weighted Average Life to
Maturity not less than the Weighted Average Life to Maturity of the Refinanced
Obligations; (e) such Indebtedness shall rank in right of payment no more senior
than, and be subordinated (if subordinated) to the Obligations on terms no less
favorable to Credit Parties than the Refinanced Obligations; (f) if the
Refinanced Obligations or any guarantees thereof are unsecured, such
Indebtedness and any guarantees thereof shall be unsecured; (g) if the
Refinanced Obligations or any guarantees thereof are secured, such Indebtedness
and any guarantees thereof shall be secured in all material respects by
substantially the same or less collateral as secured such Refinanced Obligations
or any guarantees thereof; (h) if the Refinanced Obligations or any guarantees
thereof are secured, the Liens to secure such Indebtedness shall not have a
priority more senior than the Liens securing the Refinanced Obligations and if
subordinated to any other Liens on such property, shall be subordinated to
Agent’s security interests; (i) if the Refinanced Obligations or any guarantees
thereof are subordinated to any Indebtedness of Credit Parties other than the
Obligations, such Refinancing Indebtedness and any guarantees thereof shall be
subordinated to the Obligations on terms (including intercreditor terms) no less
favorable to Agent and Lenders; (j) the obligors in respect of the Refinanced
Obligations immediately prior to such refinancing, refunding, extending,
renewing or replacing thereof shall be the only obligors on such Indebtedness;
and (k) the terms and conditions (excluding as to pricing, premiums and optional
prepayment or redemption provisions) of any such Indebtedness, taken as a whole,
are not more restrictive with respect to Credit Parties, as reasonably
determined by Credit Parties in good faith, than the terms and conditions of the
Refinanced Obligations.

 

“Register” shall have the meaning set forth in Section 12.1(a) hereof.

 

“Regular Quarterly Dividends” means regular quarterly dividends and/or
distributions made by the Borrower to its shareholders.

 

“Relevant Quarterly Period” shall have the meaning as defined in Section 10.3.

 

“Remaining Equity Interests” means the Equity Interests owned by the Borrower in
the Portfolio Companies listed on Schedule 7.26(c).

 

“Reporting Date” shall have the meaning as defined in Section 12.9(a) (ii).

 

“Required Lenders” means the Lenders having more than (a) sixty-six and
two-thirds percent (66 2/3%) of the Revolving Loan Commitment Amount, or (b) if
the Commitments have

 

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been terminated, more than sixty-six and two-thirds percent (66 2/3%) of the
aggregate outstanding amount of all Revolving Loans; provided, however, that if
there shall be two Lenders or more, Required Lenders shall mean at least two
(2) Lenders.

 

“Required Pledged Cash Deposit Accounts” means, collectively and individually,
the Deposit Accounts maintained at Lenders pursuant to Control Agreements which
accounts are separate from any other investment account or Deposit Account of
Borrower, and the cash held in such Deposit Accounts is not subject to any other
security interest, pledge, lien, encumbrance or claim (other than customary
liens or rights of setoff of the institution maintaining such accounts permitted
hereunder solely in its capacity as a depository).

 

“Required Pledged Cash Amount” means Ten Million Dollars ($10,000,000); provided
that at any time after the first anniversary of the Closing Date, Borrower shall
be permitted to reduce the Required Pledged Cash Amount to an amount equal to
not less than Five Million Dollars ($5,000,000) so long as (i) no Event of
Default shall have occurred and be continuing and (ii) Liquidity for the prior
six (6) calendar months shall have equaled or exceeded Thirty Million Dollars
($30,000,000).

 

“Reserves” means as of any date of determination, upon 10 days prior written
notice to the Borrower, such amounts as Agent may from time to time establish
and revise in its Permitted Discretion reducing the amount of Revolving Loans
which would otherwise be available to Borrower under the lending
formula(s) provided for herein: (a) to reflect events, conditions, contingencies
or risks which, as determined by Agent in its Permitted Discretion, adversely
affect, or would have a reasonable likelihood of adversely affecting, either
(i) the Collateral or any other property which is security for the Obligations,
its value or the amount that might be received by Agent and the Lenders from the
sale or other disposition or realization upon such Collateral, or (ii) the
assets or business of Borrower or (iii) the security interests and other rights
of Agent in the Collateral (including the enforceability, perfection and
priority thereof) or (b) to reflect Agent’s good faith belief that any
collateral report or financial information furnished by or on behalf of Borrower
to Agent is or may have been incomplete, inaccurate or misleading in any
material respect or (c) in respect of any Default or an Event of Default. To the
extent that such Reserve is in respect of amounts that may be payable to third
parties Agent may, at its option, deduct such Reserve from the Maximum Credit at
any time that such limit is less than the amount of the Borrowing Base.

 

“Responsible Officer” means the chief executive officer, president or chief
financial officer, of Borrower, or any of the other individuals designated in
writing by an existing Responsible Officer of Borrower as an authorized
signatory of any certificate or other document to be delivered hereunder. Any
document delivered hereunder that is signed by a Responsible Officer of Borrower
shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of Borrower and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
Borrower.

 

“Restricted Payment” means any of the following:

 

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(a)                                 the declaration or payment of any dividend
or other distribution by Borrower, or permit any Subsidiary to declare or pay
any dividend or other distribution, in each case directly or indirectly, on
account of any Equity Interests of Borrower, except:

 

(i)                                     Any Subsidiary of Guarantor may pay
dividends or make other distributions to Borrower;

 

(ii)                                  Borrower may make distributions or other
issuances in the form of Equity Interests consisting of membership interests or
preferred membership interests otherwise permitted to be issued hereunder (but
in no event in the form of redeemable preferred Equity Interests requiring any
payment prior to the Maturity Date unless such payment is subordinated to the
repayment of all of the Obligations);

 

(iii)                               Borrower may pay dividends and other
distributions in respect of its Equity Interests as permitted by the definition
of Permitted Restricted Payments; or

 

(b)                                 Other than as permitted by the definition of
Permitted Restricted Payments, the repurchase, redemption, retirement,
defeasance, establishment of a sinking fund or making of similar payment,
purchase or other acquisition for value, direct or indirect, of any Equity
Interests of Borrower, now or hereafter outstanding or the making of any payment
to retire, or to obtain the surrender of, any outstanding warrants, options or
other rights for the purchase or acquisition of shares of any class of Equity
Interests of Borrower, now or hereafter outstanding;

 

(c)                                  Return any Equity Interests to any
shareholders or other equity holders of Borrower or any of its Subsidiaries, or
make any other distribution of property, assets, shares of Equity Interests,
warrants, rights, options, obligations or securities thereto as such, or, in the
case of such distribution of property or assets, to the extent not otherwise
prohibited hereunder);

 

(d)                                 The payment of any extraordinary salary,
bonus or other form of compensation to any Person who is directly or indirectly
a significant partner, shareholder, owner or executive officer of Borrower, to
the extent such extraordinary salary, bonus or other form of compensation is not
included in the corporate overhead of Borrower;

 

(e)                                  Pay any management fees or any other fees
or expenses (including the reimbursement thereof by Borrower) pursuant to any
management, consulting or other services agreement to any of the shareholders or
other equity holders of Borrower or other Affiliates except, provided no Default
or Event of Default has occurred, any such management fees or any other fees or
expenses paid to Borrower and except for the fees and expenses payable by
Borrower under the Investment Agreement as in effect on the date hereof; or

 

(f)                                   The payment of any principal amount,
repurchase, redemption, retirement, or defeasance of the Senior Notes, except as
permitted under the definition of Permitted Restricted Payments.

 

“Revolving Loan Commitment” means as to any Revolving Lender, the obligation of
such Lender, if any, to make Revolving Loans in an aggregate principal and/or
face amount not to exceed the amount set forth under the heading “Commitment”
opposite such Lender’s name

 

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on Schedule 1.1 or in the Assignment Agreement pursuant to which such Lender
became a party hereto, as the same may be changed from time to time pursuant to
the terms hereof.

 

“Revolving Loans” means loans now or hereafter made by Lenders on a revolving
basis pursuant to the Credit Facility (involving advances, repayments and
readvances) as set forth in Sections 2.1 and 2.3 hereof.

 

“Revolving Notes” shall have the meaning as defined in Section 2.1(b).

 

“Sale and Leaseback Transaction” shall have the meaning set forth in
Section 9.12.

 

“Sanctioned Entity” means an agency of the government of, or an organization
directly or indirectly controlled by, or a person resident in, a country that is
subject to Sanctions, or a country or territory that is at any time subject to
Sanctions.

 

“Sanctioned Person” means a person named on the list of Specially Designated
Nationals or Blocked Persons maintained by OFAC.

 

“Sanctions” means (a) economic or financial sanctions or trade embargoes
imposed, administered or enforced from time to time by the U.S. government and
administered by OFAC and (b) economic or financial sanctions imposed,
administered or enforced from time to time by the U.S. State Department, the
U.S. Department of Commerce or the U.S. Department of the Treasury.

 

“SEC” means the Securities and Exchange Commission or any other similar or
successor agency of the Federal government administering the Securities Act.

 

“Securities Act” means the Securities Act of 1933, as amended, or any similar
Federal statute, and the rules and regulations of the SEC thereunder, all as the
same shall be in effect from time to time.

 

“Senior Debt Investment” means a Debt Investment secured by a first priority
lien on the Debt Investment Obligor’s property.

 

“Senior Debt Investment Collateral” means the collateral securing a Senior Debt
Investment.

 

“Senior Debt Investment Loan Documents” with respect to each Senior Debt
Investment, each promissory note, each loan agreement, each security agreement
and all other documents, instruments and certificates executed and/or delivered
by such Senior Debt Investment Obligor in connection therewith, including
amendments and modifications thereto and all instruments, security agreements,
deeds of trust, mortgages, guaranties, financing statements and other
documentation evidencing any security for such Senior Debt Investment.

 

“Senior Debt Investment Obligor” means such Person who is obligated to the
Borrower under a Senior Debt Investment as evidenced by Senior Debt Investment
Loan Documents.

 

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“Senior Notes” means those notes issued pursuant to that certain Indenture dated
as of February 26, 2013 between Borrower as Issuer and U.S. Bank National
Association as Trustee and the First Supplemental Indenture of even date thereof
between the Issuer and the Trustee. For purposes of this Agreement, the Senior
Notes shall be considered Subordinated Debt.

 

“Settlement Date” shall have the meaning as defined in Section 12.9(a) (ii).

 

“Solvent” means, at any time with respect to any Person, that at such time such
Person (a) is able to pay its debts as they mature and has (and has a reasonable
basis to believe it will continue to have) sufficient capital (and not
unreasonably small capital) to carry on its business consistent with its
practices as of the date hereof, and (b) the assets and properties of such
Person at a fair valuation (and including as assets for this purpose at a fair
valuation all rights of subrogation, contribution or indemnification arising
pursuant to any guarantees given by such Person) are greater than the
Indebtedness of such Person, and including subordinated and contingent
liabilities computed at the amount which, such person has a reasonable basis to
believe, represents an amount which can reasonably be expected to become an
actual or matured liability (and including as to contingent liabilities arising
pursuant to any guarantee the face amount of such liability as reduced to
reflect the probability of it becoming a matured liability).

 

“Subordinated Debt” means any Indebtedness of Credit Parties that is subject to,
and subordinate in right of payment to, the right of Agent for the ratable
benefit of Agent and Lenders to receive payment in full of all of the
Obligations and is otherwise on terms (including maturity, interest, fees,
repayment, covenants and subordination) satisfactory to Required Lenders.

 

“Subordinate Debt Investment” means a Debt Investment secured by a second
priority lien on the Debt Investment Obligor’s property subject only to a senior
lien acceptable to the Borrower in accordance with their Credit Policy.

 

“Subordinate Debt Investment Collateral” means collateral securing a Subordinate
Debt Investment.

 

“Subordinate Debt Investment Loan Documents” with respect to each Subordinate
Debt Investment, each promissory note, each loan agreement, each security
agreement and all other documents, instruments and certificates executed and/or
delivered by such Subordinate Debt Investment Obligor in connection therewith,
including amendments and modifications thereto and all instruments, security
agreements, deeds of trust, mortgages, guaranties, financing statements and
other documentation evidencing any security for such Subordinate Debt
Investment.

 

“Subordinate Debt Investment Obligor” means such Person who is obligated to the
Borrower under a Subordinate Debt Investment as evidenced by Subordinate Debt
Investment Loan Documents.

 

“Subordination Agreements” means, collectively and individually, any
subordination agreement executed after the date hereof relating to Subordinated
Debt, in form and substance reasonably satisfactory to Required Lenders, as the
same may be modified or amended from time to time.

 

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“Subsidiary” or “subsidiary” means, with respect to any Person, any corporation,
limited liability company, limited liability partnership or other limited or
general partnership, trust, association or other business entity of which an
aggregate of at least a majority of the outstanding Equity Interests or other
interests entitled to vote in the election of the board of directors of such
corporation (irrespective of whether, at the time, Equity Interests of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency), managers, trustees or other
controlling persons, or an equivalent controlling interest therein, of such
Person is, at the time, directly or indirectly, owned by such Person and/or one
or more subsidiaries of such Person.

 

“Supplemental Agreement” means a Supplemental Agreement substantially in the
form of Exhibit E, as such Supplemental Agreement may be supplemented in a
manner agreed to by Borrower, the Increasing Lender(s) (if applicable), the New
Lender(s) (if applicable) and the Agent.

 

“Syndication Agent” shall have the meaning as defined in the preamble.

 

“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.

 

“Termination Date” means the earlier of (a) the Maturity Date or (b) the date on
which the Lenders’ agreement to make Revolving Loans shall have terminated
pursuant to this Agreement.

 

“Third Party Pledged Equity Interests” means the Equity Interests of Ohio
Medical and US Gas & Electric owned by the Borrower which are subject to a lien
of the third party lenders to Ohio Medical and US Gas & Electric, respectively.

 

“Third Party Valuation” means written appraisals as to the Debt Investments in
form, scope and methodology acceptable to Agent and by an appraiser acceptable
to Agent, addressed to Agent and Lenders and upon which Agent and Lenders are
expressly permitted to rely.

 

“Tokarz Group” means The Tokarz Group Advisors LLC, a limited liability company
organized under the laws of the State of Delaware.

 

“UCC” means the Uniform Commercial Code as in effect in the State of New York on
the date hereof and any successor statute, as in effect from time to time
(except that terms used herein which are not otherwise defined herein and
defined in the Uniform Commercial Code as in effect in the State of New York on
the date hereof shall continue to have the same meaning notwithstanding any
replacement or amendment of such statute except as Agent may otherwise
determine).

 

“USA Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub.
L. No. 107-56, 115 Stat. 272 (2001), as amended.

 

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“U.S. Bank Securities Account Control Agreement” means, that certain Securities
Account Control Agreement dated as of December , 2015 among Borrower, as
Pledgor, Agent, as Pledgee and U.S. Bank.

 

“US Gas & Electric” means US Gas & Electric, Inc., a Delaware corporation.

 

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at
any date, the number of years obtained by dividing (a) the then outstanding
principal amount of such Indebtedness into (b) the total of the product obtained
by multiplying (i) the amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal, including payment at
final maturity, in respect thereof, by (ii) the number of years (calculated to
the nearest one-twelfth) that will elapse between such date and the making of
such payment.

 

1.2                               Interpretative Provisions. With reference to
this Agreement and each other Loan Document, unless otherwise specified herein
or in such other Loan Document:

 

(a)                                 General. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words “include,” “includes” and
“including” shall be deemed to be followed by the phrase “without limitation.”
The word “will” shall be construed to have the same meaning and effect as the
word “shall.” Unless the context requires otherwise, (i) any definition of or
reference to any agreement, instrument or other document shall be construed as
referring to such agreement, instrument or other document as from time to time
amended, modified, supplemented, extended, renewed, restated or replaced
(subject to any restrictions on such amendments, supplements or modifications
set forth herein or in any other Loan Document), (ii) any reference herein to
any Person shall be construed to include such Person’s successors and assigns,
(iii) the words “herein,” “hereof” and “hereunder,” and words of similar import
when used in any Loan Document, shall be construed to refer to such Loan
Document in its entirety and not to any particular provision thereof, (iv) all
references in a Loan Document to Sections, Exhibits and Schedules shall be
construed to refer to Sections of, and Exhibits and Schedules to, the Loan
Document in which such references appear, (v) any reference to any law shall
include all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting such law and any reference
to any law or regulation shall, unless otherwise specified, refer to such law or
regulation as amended, modified or supplemented from time to time, and (vi) the
words “asset” and “property” shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.
Section headings herein and in the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this
Agreement or any other Loan Document. An Event of Default shall exist or
continue or be continuing until such Event of Default is waived in accordance
with Section 13.4 or is cured. Borrower shall have the burden of establishing
any alleged negligence, misconduct or lack of good faith by Agent or Lenders
under any Loan Documents. No provision of any Loan Documents shall be construed
against any party by reason of such party having, or being deemed to have,
drafted the provision. Reference to Borrower’s “knowledge” or similar concept
means actual knowledge of a Responsible Officer, or knowledge that a Responsible
Officer would have obtained if he or she had engaged in good faith and diligent
performance of his or

 

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her duties, including reasonably specific inquiries of employees or agents and a
good faith attempt to ascertain the matter.

 

(b)                                 UCC Terms. Any terms used in this Agreement
that are defined in the UCC shall be construed and defined as set forth in the
UCC unless otherwise defined herein; provided, that, to the extent that the UCC
is used to define any term herein and such term is defined differently in
different Articles of the UCC, the definition of such term contained in
Article 9 of the UCC shall govern.

 

(c)                                  Time References. Unless otherwise indicated
herein, all references to time of day refer to Eastern standard time or Eastern
daylight saving time, as in effect in New York City on such day. For purposes of
the computation of a period of time from a specified date to a later specified
date, the word “from” means “from and including” and the words “to” and “until”
each means “to and including”; provided, that, with respect to a computation of
fees or interest payable to Agent for the ratable benefit of Agent and Lenders,
such period shall in any event consist of at least one full day.

 

(d)                                 Payment in Full. Any reference herein or in
any other Loan Document to the satisfaction, repayment, or payment in full of
the Obligations shall mean (i) the payment in full in cash of the principal and
accrued and unpaid interest with respect to the Revolving Loans, (ii) the
payment in full of all fees, charges and expenses that have accrued and are
unpaid regardless of whether payment has been demanded or are otherwise due,
(iii) the delivery to Agent of cash collateral, or at Agent’s option, the
delivery to Agent of a letter of credit payable to Agent for the ratable benefit
of Agent and Lenders issued by a bank acceptable to Agent and in form and
substance satisfactory to Agent, in either case in respect of (A) Bank Product
Obligations (or, at the option of Agent and Lenders, the termination of the
applicable Bank Product or cash management arrangements and the payment in full
in cash of the Bank Product Obligations due and payable in connection with such
termination), (B) continuing obligations of Agent under Control Agreements and
(C) other contingent Obligations for which a claim or demand for payment has
been made at such time or in respect of matters or circumstances known to Agent
at the time, and which are reasonably expected to result in any loss, cost,
damage or expense (including attorneys’ fees and legal expenses) to Agent for
which Agent would be entitled to indemnification by Credit Parties hereunder and
(iv) the termination of the Commitment of Agent and Lenders and the financing
arrangements provided by Agent and Lenders to Credit Parties hereunder.

 

1.3                               Accounting Terms. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared in accordance with GAAP applied on a
basis consistent with the most recent audited consolidated financial statements
of Borrower delivered to Agent; provided, that, in the event of any change in
GAAP after the date hereof that affects the covenant in Section 10 hereof,
Borrower may by notice to Agent, or Agent may by notice to Borrower require that
such covenants be calculated in accordance with GAAP as in effect, and as
applied by Borrower immediately before the applicable change in GAAP became
effective, until either the notice from the applicable party is withdrawn or
such covenant is amended in a manner satisfactory to Borrower and Agent.
Borrower shall deliver to Agent at the same time as the delivery of any
financial statements

 

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given in accordance with the provisions of Section 8.1 hereof (i) a description
in reasonable detail of any material change in the application of accounting
principles employed in the preparation of such financial statements from those
applied in the most recently preceding monthly, quarterly or annual financial
statements and (ii) a reasonable estimate of the effect on the financial
statements on account of such changes in application. Notwithstanding anything
to the contrary contained herein, (i) all financial statements delivered
hereunder shall be prepared, and all financial covenants contained herein shall
be calculated, without giving effect to any election under the Statement of
Financial Accounting Standards No. 159 (or any similar accounting principle)
permitting a Person to value its financial liabilities or Indebtedness at the
fair value thereof, and (ii) the term “unqualified opinion” as used herein to
refer to opinions or reports provided by accountants shall mean an opinion or
report that is (A) unqualified, and (B) does not include any explanation,
supplemental comment, or other comment concerning the ability of the applicable
Person to continue as a going concern or concerning the scope of the audit.

 

1.4                               Rounding. Any financial ratios required to be
maintained by Borrower pursuant to this Agreement shall be calculated by
dividing the appropriate component by the other component, carrying the result
to one place more than the number of places by which such ratio is expressed
herein and rounding the result up or down to the nearest number (with a
rounding-up if there is no nearest number).

 

ARTICLE 2 CREDIT FACILITY

 

2.1                               Revolving Loans.

 

(a)                                 Subject to, and upon the terms and
conditions contained herein, each Lender agrees to make revolving credit loans
to Borrower from time to time during the term of this Agreement in an amount not
to exceed such Lender’s Pro Rata Share of such advances. The Pro Rata Share of
the Revolving Loan of any Lender shall not at any time exceed its separate
Revolving Loan Commitment. The obligations of each Lender hereunder shall be
several and not joint. Until the Termination Date, after giving effect to such
Revolving Loans, the aggregate principal amount of the Revolving Loans
outstanding shall not exceed the lesser of the Borrowing Base at such time or
the Maximum Credit. Subject to the terms and conditions hereof, Borrower may
from time to time borrow, prepay and reborrow Revolving Loans; provided that if
the aggregate amount of Revolving Loans at any time shall exceed the Borrowing
Base at such time, as a result of an Eligible Debt Investment no longer being
eligible for reasons that were unanticipated by the Borrower, the Borrower shall
have fifteen (15) days to repay the Revolving Loans to the extent required to
eliminate such excess or present to the Agent and Lenders a plan to repay
Revolving Loans to the extent required to eliminate such excess, that is
acceptable to the Required Lenders.

 

(b)                                 The Borrower shall execute and deliver to
each Revolving Lender a Revolving Note to evidence the Revolving Loan Commitment
of that Revolving Lender. Each Revolving Note shall be in the principal amount
of the Revolving Loan Commitment of the applicable Revolving Lender, dated the
Closing Date and substantially in the form of Schedule 2.1(b) (each, a
“Revolving Note” and collectively, the “Revolving Notes”). Each Revolving Note
shall represent the obligation of the Borrower to pay the amount of the
Revolving Lender’s

 

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Revolving Loan Commitment or, if less, such Revolving Lender’s Pro Rata Share of
the aggregate unpaid principal amount of all Revolving Loans to Borrower,
together with interest thereon as prescribed in Section 3.1.

 

2.2                               Requests for Borrowings.

 

(a)                                 To request a Revolving Loan, Borrower shall
notify Agent (for prompt further notification from Agent to Lenders) of such
request by telephone not later than 11:00 a.m. (New York time) on the same
Business Day as the date of the proposed Revolving Loan. Each such telephonic
request shall be irrevocable and to the extent required by Agent, shall be
confirmed promptly by hand delivery or facsimile to Agent of a written request
in a form approved by Agent and signed by a Responsible Officer of Borrower.
Each such telephonic and written request shall specify the following
information:

 

(i)                                     the aggregate amount of such Revolving
Loan;

 

(ii)                                  the date of such Revolving Loan, which
shall be a Business Day; and

 

(iii)                               the Deposit Account of Borrower specified on
Schedule 8.10 or any other account with Agent that shall be specified in a
written notice signed by a Responsible Officer of Borrower and delivered to and
approved by Agent (such approval not to be unreasonably withheld).

 

(b)                                 All Revolving Loans under this Agreement
shall be conclusively presumed to have been made to, and at the request of and
for the benefit of, Borrower when deposited to the credit of Borrower or
otherwise disbursed or established in accordance with the instructions of
Borrower or in accordance with the terms and conditions of this Agreement.
Except in Agent’s discretion, or as otherwise provided herein, the aggregate
amount of the Revolving Loans outstanding at any time shall not exceed the
lesser of the Maximum Credit or the Borrowing Base.

 

2.3                               Incremental Facility.

 

(a)                                 So long as no Default or Event of Default
has occurred and are continuing, the Borrower may request, by written notice to
the Agent, at any time the Lenders increase the existing Commitments (any such
increase, the “New Commitments”) by an amount such that the amount of the
Maximum Credit does not exceed Eighty Five Million Dollars ($85,000,000) in the
aggregate (or such lesser amount, provided, however, the New Commitments shall
be at least Five Million Dollars ($5,000,000)). Each such notice shall specify
the date (each, an “Increased Amount Date”) on which the Borrower proposes that
the New Commitments shall be effective, which shall be a date not less than ten
(10) Business Days after the date on which such notice is delivered to the
Agent. Borrower and Agent shall first offer to the existing Lenders at that time
such New Commitments (if an existing Lender agrees to an increase, they shall be
an “Increasing Lender”). In the event the existing Lenders decline to increase
their Commitments to the full amount of New Commitments requested by the
Borrower, Agent agrees to arrange such New Commitments and the Agent and the
Borrower shall mutually agree on one or more acceptable Qualified Assignees
(each, a “New Lender”) to provide the remaining amount of the New Commitments.
If the Agent is unable to identify any acceptable New Lenders, then Borrower

 

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shall be permitted to approach potential New Lenders identified to the Agent and
approved in writing by the Agent (which approval shall not be unreasonably
withheld or delayed). Borrower acknowledges the Agent is under no obligation to
identify and obtain New Commitments from New Lenders. Borrower shall upon
request of Agent provide such updated information as the Agent deems necessary
to syndicate the New Commitments and such other information as the Lenders and
any New Lender shall request. Any New Lender approached by the Agent or Borrower
to provide all or a portion of the New Commitments may elect or decline, in its
sole discretion, to provide a New Commitment. Such New Commitments shall become
effective as of such Increased Amount Date; provided, that (A) no Default or
Event of Default shall exist on such Increased Amount Date before or after
giving effect to such New Commitments; (B) the New Commitments shall be effected
pursuant to one or more Supplemental Agreements executed and delivered by the
Borrower, such Increasing Lender (if applicable), such New Lenders (if
applicable) and the Agent, and each of which shall be recorded in the Register
and each New Lender shall be bound by and subject to the terms and conditions of
this Agreement; (C) the Borrower shall make any payments required pursuant to
this Agreement and the Fee Letter in connection with the New Commitments and
shall pay any other required fees in connection with the New Commitments; and
(D) the Borrower shall deliver or cause to be delivered any legal opinions,
certificates, promissory notes or other customary closing documents
(substantially consistent with the documents set forth in Section 6 of this
Agreement) reasonably requested by Agent, an Increasing Lender (if applicable)
or a New Lender (if applicable) in connection with such transaction.

 

(b)                                 On any Increased Amount Date on which New
Commitments are effected, subject to the satisfaction of the foregoing terms and
conditions, (i) each of the existing Lenders shall assign to each of the
Increasing Lender or New Lenders, as applicable, and each of the Increasing
Lender or New Lenders, as applicable, shall purchase from each of the existing
Lenders, at the principal amount thereof (together with accrued interest and
fees), such interests in the Revolving Loans outstanding on such Increased
Amount Date as shall be necessary in order that, after giving effect to all such
assignments and purchases, such Revolving Loans will be held by the existing
Lenders Increasing Lender or New Lenders, as applicable, ratably in accordance
with their Commitments after giving effect to the addition of such New
Commitments to the Commitments, (ii) each New Commitment shall be deemed, for
all purpose, a Commitment, and each Revolving Loan made thereunder shall be
deemed, for all purposes, a Revolving Loan under this Agreement, (iii) each New
Lender if applicable, shall become a Lender with respect to the Commitments and
all matters relating thereto and (iv) the Borrower shall execute one or more new
Revolving Note(s), as required by the Agent, and deliver it to the Increasing
Lenders or New Lenders, as applicable.

 

(c)                                  The Agent shall notify the Lenders promptly
upon receipt of the Borrower’s notice of each Increased Amount Date and in
respect thereof (i) the New Commitments and the identities of the Increasing
Lenders and New Lenders, as applicable, and (ii) in the case of each notice to
any Lender, the respective interests in such Lender’s Loans, in each case
subject to the assignments contemplated by this Section 2.3.

 

(d)                                 The terms and provisions of the New Loans
shall be identical to the Revolving Loans made hereunder. Each Supplemental
Agreement may, without the consent of any other Lenders, effect such amendments
to this Agreement and the other Loan Documents as

 

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may be necessary or appropriate, in the Agent’s Permitted Discretion, and
consented to by the Borrower (such consent not to be unreasonably withheld), to
effect the provisions of this Section 2.3.

 

ARTICLE 3 INTEREST AND FEES

 

3.1                               Rates and Payment of Interest.

 

(a)                                 All Obligations (including, to the extent
permitted by law, interest not paid when due) shall bear interest at the
following rates: (i) with respect to Prime Rate Loans, at a rate per annum equal
to the Prime Rate plus the Applicable Margin; and (ii) with respect to LIBOR
Loans, at a rate per annum equal to the LIBOR Rate plus the Applicable Margin,
except as otherwise provided in this Section 3 below. At any time an Event of
Default exists or has occurred and is continuing (and the Agent has sent, or the
Required Lenders have directed the Agent to send, the Borrower written notice
thereof) the Obligations shall bear interest at the Default Rate from the date
of such increase (whether before or after any judgment). Agent may, at its
option (or at the direction of Required Lenders, shall), after written notice to
the Borrower, increase the Interest Rate to the Default Rate from the date of
such increase for Revolving Loans during any time that the principal amount of
Revolving Loans outstanding is in excess of the Borrowing Base (in each case
whether or not such excess (es) arise or are made with or without the knowledge
or consent of Agent and whether made before or after an Event of Default).

 

(b)                                 Interest shall accrue from the date a
Revolving Loan is made or Obligation is incurred or payable until paid in full
by Borrower. If a Revolving Loan is repaid on the same day made, one day’s
interest shall accrue. Interest accrued on the Revolving Loans shall be due and
payable in arrears, (i) on the first day of each month and (ii) on the
Termination Date. Interest accrued on any other Obligations shall be due and
payable on each Interest Payment Date. Notwithstanding the foregoing, interest
accrued at the Default Rate shall be due and payable on demand.

 

3.2                               Computation of Interest and Fees. Interest and
fees calculated on a per annum basis shall be calculated on the basis of a three
hundred sixty (360) day year and actual days elapsed. The interest rate on
non-contingent Obligations shall increase or decrease as of the first day of
each LIBOR Period by an amount equal to each increase or decrease in the LIBOR
Rate since its determination for the prior LIBOR Period and shall remain in
effect until the end of the then current LIBOR Period (except that in the case
of any Prime Rate Loans, the interest rate shall increase or decrease effective
on the date any change in such Prime Rate and by an amount equal to each
increase or decrease in the Prime Rate). Each determination by Agent of any
interest, fees or interest rate hereunder shall be final, conclusive and binding
for all purposes, absent manifest error. All fees shall be fully earned when due
and shall not be subject to rebate, refund or proration.

 

3.3                               Unused Line Fee. Borrower shall pay to Agent
for the ratable benefit of Agent and Lenders an unused line fee on a monthly
basis at a rate equal to three-quarters of one percent (.75%) (on a per annum
basis) multiplied by the amount by which the Maximum Credit exceeds the average
daily principal balance of the outstanding Revolving Loans during the
immediately

 

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preceding calendar month (or part thereof) so long as any Obligations are
outstanding. Such fees shall be payable on the first day of each month in
arrears.

 

3.4                               Termination Fee. If Borrower prepays the
Revolving Loans and reduces or terminates the amount of the Maximum Credit,
whether voluntarily or involuntarily and whether before or after acceleration of
the Obligations, or if any of the Revolving Loan Commitments are otherwise
terminated, Borrower shall pay to Agent, for the benefit of Lenders as
liquidated damages and compensation for the costs of being prepared to make
funds available hereunder an amount equal to the Applicable Percentage (as
defined below) multiplied by the amount of the reduction of the Maximum Credit.
As used herein, the term “Applicable Percentage” shall mean (x) two percent
(2%), in the case of a permanent reduction or termination on or prior to the
first anniversary of the Closing Date, (y) one percent (1%), in the case of a
permanent reduction or termination after the first anniversary of the Closing
Date but on or prior to the second anniversary thereof and (z) one-half of one
percent (.5%), in the case of a permanent reduction or termination after the
second anniversary of the Closing Date but on or prior to the third anniversary
thereof. The Borrower agrees that the Applicable Percentages are a reasonable
calculation of Lenders’ lost profits in view of the difficulties and
impracticality of determining actual damages resulting from an early reduction
of the Maximum Credit or termination of the Revolving Loan Commitments.

 

3.5                               Commitment Fee. Borrower shall pay to the
Lenders a commitment fee in an amount equal to Five Hundred Thousand Dollars
($500,000), to be allocated among the Lenders based on their respective Pro Rata
Shares as of the Closing Date). The entire commitment fee shall be deemed fully
earned by the Lenders and shall be due and payable in full on the Closing Date.
In the event of an increase in the Commitments, the Borrower shall pay (i) to
Agent for the benefit of the Increasing Lenders or New Lenders, as applicable, a
commitment fee in such amount as shall be agreed upon by Agent, the Increasing
Lenders, New Lenders and Borrower and (ii) to the Agent, individually, such fee,
if any, specified in that certain fee letter of even date herewith between the
Borrower and the Agent, at the time specified for payment therein. All such fees
shall be deemed fully earned by the Agent, Increasing Lenders and/or New Lenders
and shall be due and payable in full as agreed upon by Agent, the Increasing
Lenders, New Lenders and Borrower.

 

3.6                               Agency Fee. Borrower shall pay to Agent,
individually, the fee specified in that certain fee letter of even date herewith
between Borrower and Agent, at the times specified for payment therein.

 

3.7                               Inability to Determine Applicable Interest
Rate. If Agent shall determine in good faith (which determination shall, absent
manifest error, be final and conclusive and binding on Borrower) that on any
date by reason of circumstances affecting the London interbank market adequate
and fair means do not exist for ascertaining the interest rate applicable to
LIBOR Loans on the basis provided for in the definition of LIBOR Rate, Agent
shall on such date give notice to Borrower of such determination. Upon such date
no Revolving Loans may be made as LIBOR Loans until such time as Agent notifies
Borrower that the circumstances giving rise to such notice no longer exist and
any Revolving Loans shall be made as Prime Rate Loans.

 

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3.8                               Illegality. Notwithstanding anything to the
contrary contained herein, if (a) any Change in Law makes it unlawful for
Lenders to make or maintain a LIBOR Loan or to maintain any Commitment with
respect to a LIBOR Loan or (b) Agent determines in good faith (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that it has become impracticable as a result of a
circumstance that adversely affects the London interbank market or the position
of Lenders in such market, then Agent shall give notice thereof to Borrower and
may (i) declare that LIBOR Loans will not thereafter be made by Lenders, such
that any Revolving Loans made shall be a Prime Rate Loan unless Agent’s
declaration has been withdrawn (and it shall be withdrawn promptly upon the
cessation of the circumstances described in clause (a) or (b) above and
(ii) require that all outstanding LIBOR Loans made by Lenders be converted to
Prime Rate Loans immediately, in which event all outstanding LIBOR Loans shall
be so converted.

 

3.9                               Increased Costs. If any Change in Law shall:
(a) impose, modify or deem applicable any reserve, special deposit, compulsory
loan, insurance charge or similar requirement against assets of, deposits with
or for the account of, or credit extended or participated in by, Agent or
Lenders; (b) subject Agent or Lenders to any tax of any kind whatsoever with
respect to this Agreement or any LIBOR Loan made by it, or change the basis of
taxation of payments to Agent or Lenders in respect thereof (except for Taxes or
Other Taxes covered by Section 4.7 and the imposition of, or any change in the
rate of, any taxes payable by Agent or Lenders described in Section 4.7); or
(c) impose on Agent or Lenders or the London interbank market any other
condition, cost or expense affecting this Agreement or LIBOR Loans made by Agent
or Lenders or participation therein, and the result of any of the foregoing
shall be to increase the cost to Agent or Lenders of making or maintaining any
LIBOR Loan (or of maintaining their obligation to make any such LIBOR Loan), or
to increase the cost to Agent or Lenders or to reduce the amount of any sum
received or receivable by Agent or Lenders hereunder (whether of principal,
interest or any other amount) then, upon request of Agent, Borrower will pay to
Agent or Lenders, as the case may be, such additional amount or amounts as will
compensate Agent or Lenders, as the case may be, for such additional costs
incurred or reduction suffered.

 

3.10                        Capital Requirements. If Agent determines that any
Change in Law affecting Agent or Lenders or any lending office of Lenders or
Lender’s holding company, if any, regarding capital requirements has or would
have the effect of reducing the rate of return on Agent’s or Lender’s capital or
on the capital of Agent’s or Lender’s holding company, if any, as a consequence
of this Agreement, the Commitments of Lenders or the Revolving Loans made by
Agent or Lenders to a level below that which Agent or Lenders or Lender’s
holding company could have achieved but for such Change in Law (taking into
consideration Agent’s or Lender’s policies and the policies of Agent’s or
Lender’s holding company with respect to capital adequacy), then from time to
time Borrower will pay to Agent or Lenders, as the case may be, such additional
amount or amounts as will compensate Agent or Lenders or Agent’s or Lender’s
holding company for any such reduction suffered.

 

3.11                        Certificates for Reimbursement. A certificate of
Agent or Lenders setting forth the amount or amounts necessary to compensate
Agent or Lenders or their holding companies, as the case may be, as specified in
Sections 3.9 or 3.10 and delivered to Borrower shall be conclusive absent
manifest error. Borrower shall pay Agent or Lenders, as the case may be, the
amount shown as due on any such certificate within thirty (30) days after
receipt thereof.

 

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3.12                        Delay in Requests. Failure or delay on the part of
Agent or Lenders to demand compensation pursuant to Sections 3.9 or 3.10 shall
not constitute a waiver of Agent’s or Lender’s right to demand such
compensation, provided that Borrower shall not be required to compensate Agent
or Lenders pursuant to this Section for any increased costs incurred or
reductions occurring more than ninety (90) days prior to the date that Agent or
Lenders, as the case may be, becomes aware of the event giving rise to Agent’s
or Lenders’ claim for compensation therefor (except that, if the Change in Law
giving rise to such increased costs or reductions is retroactive, then the
ninety (90) day period referred to above shall be extended to include the period
of retroactive effect thereof).

 

3.13                        Maximum Interest. Notwithstanding anything to the
contrary contained in this Agreement or any of the other Loan Documents, in no
event whatsoever shall the aggregate of all amounts that are contracted for,
charged or received by Agent or Lenders pursuant to the terms of this Agreement
or any of the other Loan Documents and that are deemed interest under applicable
law exceed the Maximum Interest Rate (including, to the extent applicable, the
provisions of Section 5197 of the Revised Statutes of the United States of
America as amended, 12 U.S.C. Section 85, as amended). In the event any interest
is charged or received in excess of the Maximum Interest Rate (“Excess”),
Borrower acknowledge and stipulate that any such charge or receipt shall be the
result of an accident and bona fide error, and that any Excess received by Agent
or Lender shall be applied, first, to the payment of the then outstanding and
unpaid principal hereunder; second to the payment of the other Obligations then
outstanding and unpaid; and third, returned to Borrower. All monies paid to
Agent and Lender hereunder or under any of the other Loan Documents, whether at
maturity or by prepayment, shall be subject to any rebate of unearned interest
as and to the extent required by applicable law.

 

ARTICLE 4 PAYMENTS AND ADMINISTRATION

 

4.1                               Payments Generally, Allocation of Proceeds.

 

(a)                                 All payments of Obligations shall be made in
Dollars, without offset, counterclaim or defense of any kind, free and clear of
(and without deduction for) any Taxes, and in immediately available funds, not
later than 2:00 P.M. (New York time) on the due date. Any payment after such
time shall be deemed made on the next Business Day. If any payment is due on a
day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day. All Obligations shall be made by payment to the
Agent or such other place as Agent may designate in writing to Borrower from
time to time.

 

(b)                                 Subject to the other terms and conditions
contained herein, Agent and Lenders shall apply payments received or collected
from Borrower or for the account of Borrower (including the monetary proceeds of
collections or of realization upon any Collateral) as follows: first, ratably,
to the payment in full of any fees, indemnities, or expense reimbursements then
due to Agent and Lenders from Borrower; second, ratably, to the payment in full
of interest due in respect of any Revolving Loans; third, ratably, to the
payment in full of principal in respect of the Revolving Loans and the Bank
Product Obligations then due (but as to Bank Product Obligations, only up to the
amount of any then effective Reserve established in respect of such Bank Product
Obligations), and fourth, to pay or prepay any other Obligations, whether or not
then due, in such order and manner as Agent directs. All references to the term

 

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“ratably” as used in this Section 4.1 means pro rata on the basis of the amount
owing to any one Person in relationship to the amounts owing to all Persons of
the same category of Obligations within the same level of priority.

 

(c)                                  Notwithstanding anything to the contrary
contained in this Agreement, to the extent Borrower uses any proceeds of the
Revolving Loans to acquire rights in or the use of any Collateral or to repay
any Indebtedness used to acquire rights in or the use of any Collateral,
payments in respect of the Obligations shall be deemed applied first to the
Obligations arising from Revolving Loans that were not used for such purposes
and second to the Obligations arising from Revolving Loans the proceeds of which
were used to acquire rights in or the use of any Collateral in the chronological
order in which Borrower acquired such rights in or the use of such Collateral.

 

(d)                                 At the election of Agent, all payments of
principal, interest, fees, expenses and other amounts payable under the Loan
Documents may be paid from the proceeds of Revolving Loans made hereunder in
accordance with the terms and conditions hereof whether made following a request
by Borrower or a deemed request as provided in this Section or may be deducted
from any Deposit Account of Borrower maintained with Agent and Lenders. Borrower
is hereby irrevocably deemed to request that, and authorize Agent and Lenders to
(i) make a Revolving Loan for the purpose of paying each payment of principal,
interest, fees, expenses and other amounts as it becomes due hereunder or under
any other Loan Document and agrees that all such amounts charged shall
constitute Revolving Loans and (ii) charge any Deposit Account of Borrower
maintained with the Agent or the Lenders for each payment of principal,
interest, fees, expenses and other amounts due hereunder or under any other Loan
Document. Agent shall be entitled to charge the loan account of Borrower that it
maintains for any sum due and payable by Borrower to Agent and Lenders hereunder
or under any of the other Loan Documents.

 

(e)                                  For purposes of calculating the amount of
the Revolving Loans available to Borrower, such payments will be applied
(conditional upon final collection) to the Obligations on the Business Day of
receipt by Lenders of immediately available funds provided such payments and
notice thereof are received in accordance with Agent’s usual and customary
practices as in effect from time to time and within sufficient time to credit
the applicable loan account on such day, and if not, then on the next Business
Day. For purposes of calculating interest only, credit for payments shall be
given no earlier than one (1) Business Day after payment is made and shall be
conditional upon final payment of the item.

 

4.2                               Indemnity for Returned Payments. If after
receipt of any payment of, or proceeds of Collateral applied to the payment of,
any of the Obligations, Agent or Lenders are required to surrender or return
such payment or proceeds to any Person for any reason, then the Obligations
intended to be satisfied by such payment or proceeds shall be reinstated and
continue and this Agreement shall continue in full force and effect as if such
payment or proceeds had not been received by Agent or Lenders. Borrower shall be
liable to pay to Agent and Lenders, and do hereby agree to indemnify and hold
Agent and Lenders harmless for the amount of any payments or proceeds
surrendered or returned. This Section 4.2 shall remain effective notwithstanding
any contrary action which may be taken by Agent or Lenders in reliance upon such
payment or proceeds. The preceding two sentences of this Section 4.2 shall
survive the payment of the Obligations and the termination of this Agreement.

 

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4.3                               Repayments. Revolving Loans shall be due and
payable in full on the Maturity Date, unless payment is sooner required
hereunder. Revolving Loans may be repaid from time to time, without penalty or
premium. All Obligations other than Revolving Loans and fees and reimbursement
for expenses, shall be paid by Borrower as provided herein and in the other Loan
Documents or, if no payment date is specified, on demand. Borrower shall make
payment in full of the Obligations on the Maturity Date or any other effective
date of termination of the Commitment.

 

4.4                               Prepayments.

 

(a)                                 Subject to the payment of the Termination
Fee, Borrower may permanently reduce the Maximum Credit, in whole or in part, at
any time upon five (5) Business Days’ prior written notice to Agent.

 

(b)                                 In the event that (i) the aggregate
principal amount of the Revolving Loans outstanding at any time exceeds the
Maximum Credit, or (ii) the aggregate principal amount of the Revolving Loans
outstanding exceeds the Borrowing Base, such event shall not limit, waive or
otherwise affect any rights of Agent and Lenders in such circumstances or on any
future occasions and Borrower shall, upon the earlier of (x) demand by Agent
which may be made at any time or from time to time, or (y) the date that is
fifteen (15) days after such occurrence (or such later date as the Required
Lenders in their discretion may agree) repay to Agent and Lenders the entire
amount of any such excess(es) for which payment is demanded without premium or
penalty on such excess amount.

 

(c)                                  Any payment made pursuant to this
Section 4.4 shall first be applied to accrued interest on the principal amount
being paid to the date of payment.

 

4.5                               Statements. Agent shall render to Borrower
each month a statement setting forth the balance in the Borrower’s loan
account(s) maintained by Agent for Borrower pursuant to the provisions of this
Agreement, including principal, interest, fees, costs and expenses. Each such
statement shall be subject to subsequent adjustment by Agent but shall, absent
manifest errors or omissions, be considered correct and deemed accepted by
Borrower and conclusively binding upon Borrower as an account stated except to
the extent that Agent receives a written notice from Borrower of any specific
exceptions of Borrower thereto within thirty (30) days after the date such
statement has been received by Borrower. Until such time as Agent shall have
rendered to Borrower a written statement as provided above, the balance in
Borrower’s loan account(s) shall be presumptive evidence of the amounts due and
owing to Agent and Lenders by Borrower, absent manifest error.

 

4.6                               Borrower’s Loan Account; Evidence of Debt.
Agent shall maintain in accordance with its usual practice an account or
accounts evidencing the Obligations of Borrower to Agent and Lenders, including
the amounts of the Revolving Loans made by it and each repayment and prepayment
in respect thereof, including the amounts of principal and interest payable and
paid to Agent and Lenders from time to time hereunder. Any such records shall be
presumptively correct, absent manifest error, provided, that, the failure to
make any entry or any error in such records, shall not affect any of the
Obligations in respect of any applicable Revolving Loans. The Revolving Loans
made by the Lenders shall be evidenced by a promissory note in the form

 

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of Exhibit F hereto. Borrower shall execute and deliver to Agent a promissory
note payable to the order of each Lender (or, if requested by a Lender, to its
registered assigns). Thereafter, the Revolving Loans evidenced by such
promissory note and interest thereon shall at all times be represented by one or
more promissory notes in such form payable to the order of the payee named
therein (or, if such promissory note is a registered note, to such payee and its
registered assigns).

 

4.7                               Taxes.

 

(a)                                 Withholding of Taxes; Gross-Up. Any and all
payments by or on account of any obligation of Borrower under any Loan Document
shall be made without deduction or withholding for any Taxes, except as required
by applicable law. If any applicable law (as determined in the good faith
discretion of an applicable withholding agent) requires the deduction or
withholding of any Tax from any such payment by a withholding agent, then the
applicable withholding agent shall be entitled to make such deduction or
withholding and shall timely pay the full amount deducted or withheld to the
relevant Governmental Authority in accordance with applicable law and, if such
Tax is an Indemnified Tax, then the sum payable by Borrower shall be increased
as necessary so that after such deduction or withholding has been made
(including such deductions and withholdings applicable to additional sums
payable under this Section 4.7) the Agent or Lenders receive an amount equal to
the sum they would have received had no such deduction or withholding been made.

 

(b)                                 Payment of Other Taxes by Borrower. Borrower
shall timely pay to the relevant Governmental Authority in accordance with
applicable law, or at the option of Agent timely reimburse it for, Other Taxes.

 

(c)                                  Evidence of Payments. As soon as
practicable after any payment of Taxes by Borrower to a Governmental Authority
pursuant to this Section 4.7, Borrower shall deliver to Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to Agent.

 

(d)                                 Indemnification by Borrower. Borrower shall
indemnify Agent and Lenders, within thirty (30) days after demand therefor, for
the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or
asserted on or attributable to amounts payable under this Section) payable or
paid by Agent and Lenders or required to be withheld or deducted from a payment
to Agent and Lenders and any reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to
the amount of such payment or liability delivered to Borrower by Agent shall be
conclusive absent manifest error.

 

(e)                                  Treatment of Certain Refunds. If Agent
determines, in its sole discretion, exercised in good faith, that Agent or
Lenders have received a refund of any Taxes as to which they has been
indemnified pursuant to this Section 4.7 (including by the payment of additional
amounts pursuant to this Section 4.7), they shall pay to the indemnifying party
an amount equal to such refund (but only to the extent of indemnity payments
made under this Section 4.7 with respect to the Taxes giving rise to such
refund), net of all out-of-pocket expenses (including

 

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Taxes) of Agent or Lenders and without interest (other than any interest paid by
the relevant Governmental Authority with respect to such refund). Such
indemnifying party, upon the request of Agent, shall repay to Agent and Lenders
the amount paid over pursuant to this Section 4.7(e) (plus any penalties,
interest or other charges imposed by the relevant Governmental Authority) in the
event that Agent or Lenders are required to repay such refund to such
Governmental Authority. Notwithstanding anything to the contrary in this
Section 4.7(e), in no event will Agent and Lenders be required to pay any amount
to an indemnifying party pursuant to this Section 4.7 the payment of which would
place Agent and Lenders in a less favorable net after-Tax position than Agent
and Lenders would have been in if the Tax subject to indemnification and giving
rise to such refund had not been deducted, withheld or otherwise imposed and the
indemnification payments or additional amounts giving rise to such refund had
never been paid. This Section 4.7(e) shall not be construed to require Agent and
Lenders to make available their Tax returns (or any other information relating
to its Taxes that they deem confidential) to the indemnifying party or any other
Person.

 

(f)                                   Survival. Each party’s obligations under
this Section 4.7 shall survive the termination of the Commitments and the
repayment, satisfaction or discharge of all obligations under any Loan Document.

 

ARTICLE 5 SECURITY INTEREST

 

5.1                               Grant of Security Interest.

 

(a)                                 As collateral security for the payment and
performance in full of all of the Obligations, each Credit Party hereby pledges
and grants to Agent, for the ratable benefit of Agent, the Lenders and Bank
Product providers, a Lien on and security interest in and to all of the right,
title and interest of such Credit Party in, to and under all of the Collateral.

 

(b)                                 Notwithstanding anything to the contrary
contained in this Agreement, the security interest created hereby shall not
extend to, and the term “Collateral” shall not include, any Excluded Collateral
and the Borrower shall from time to time at the request of Agent give written
notice to Agent identifying in reasonable detail the Excluded Collateral and
shall provide to Agent such other information regarding the Excluded Collateral
as Agent may from time to time reasonably request; provided, that, if and when
any property shall cease to be Excluded Collateral, a security interest in and
Lien on such property shall automatically and without further action be deemed
granted therein under this Agreement. Borrower hereby represents and warrants
that the Excluded Collateral (excluding the Third Party Pledged Equity
Interests, any Equity Interests in Portfolio Companies formed outside the United
States, the Equity Interests in Portfolio Companies listed on Schedule
5.1(b) hereto, and the JPM Letter of Credit Deposit Account), when taken as a
whole, is not material to the business operations or financial condition of
Borrower.

 

5.2                               Financing Statement Filings.

 

(a)                                 Each Credit Party hereby irrevocably
authorizes Agent at any time and from time to time to authenticate and file in
any relevant jurisdiction any financing statements (including fixture filings)
and amendments thereto that contain the information required by

 

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Article 9 of the Uniform Commercial Code of each applicable jurisdiction for the
filing of any financing statement or amendment relating to the Collateral,
including, without limitation, (i) whether such Credit Party is an organization,
the type of organization and any organizational identification number issued to
such Credit Party, (ii) a description of the Collateral as “all assets of the
Debtor, wherever located, whether now owned or hereafter acquired” and (iii) in
the case of a financing statement filed as a fixture filing, a sufficient
description of the real property to which such Collateral relates. Each Credit
Party agrees to provide all information described in the immediately preceding
sentence to Agent promptly upon request.

 

(b)                                 Each Credit Party hereby further authorizes
Agent to file with the United States Patent and Trademark Office and the United
States Copyright Office (and any successor office and any similar office in any
United States state or other country) this Agreement, each Intellectual Property
Security Agreement, and other documents for the purpose of perfecting,
confirming, continuing, enforcing or protecting the security interest granted by
such Credit Party hereunder, without the signature of such Credit Party where
permitted by law, and naming such Credit Party as debtor, and Agent as secured
party.

 

(c)                                  Each Credit Party hereby further authorizes
Agent at any time and from time to time, with respect to all motor vehicles
covered by a certificate of title law of any state, to file in any relevant
jurisdiction with the registrar of motor vehicles or other appropriate
Governmental Authority in such jurisdiction an application or other document
requesting the notation or other indication of the security interest created
hereunder on such certificate of title.

 

(d)                                 Each Credit Party hereby ratifies its prior
authorization for Agent to file in any relevant jurisdiction any financing
statements or amendments thereto relating to the Collateral if filed prior to
the date hereof.

 

ARTICLE 6 CONDITIONS PRECEDENT

 

6.1                               Conditions Precedent to Effectiveness of
Agreement to Make Initial Revolving Loans. The agreement of Lenders to make the
Revolving Loans shall become effective upon the satisfaction, or waiver,
immediately prior to or concurrently therewith of each of the conditions
precedent set forth on Schedule 6.1.

 

6.2                               Conditions Precedent to All Revolving Loans.
The obligation of Lenders to make the Revolving Loans, including the initial
Revolving Loans, is subject to the further satisfaction of, or waiver of,
immediately prior to or concurrently with the making of each such Revolving Loan
of each of the following conditions precedent:

 

(a)                                 All representations and warranties contained
herein and in the other Loan Documents that are qualified as to materiality or
Material Adverse Effect shall be true and correct and the representations and
warranties that are not so qualified shall be true and correct in all material
respects, in each case with the same effect as though such representations and
warranties had been made on and as of the date of the making of each such
Revolving Loan and after giving effect thereto, except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been

 

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true and correct to the extent required hereunder or under the other Loan
Documents on and as of such earlier date).

 

(b)                                 As of the date of any such Revolving Loan or
the use of the proceeds thereof, and after giving effect to any of the
foregoing, no Default or Event of Default shall exist or have occurred and be
continuing.

 

(c)                                  Agent shall have received a request for
such Revolving Loan in accordance with the requirements of this Agreement.

 

(d)                                 As of the date of any such Revolving Loan or
the use of the proceeds thereof, and after giving effect to any of the
foregoing, no event, condition or circumstance that has or individually or in
the aggregate could reasonably be expected to have a Material Adverse Effect
shall have occurred.

 

(e)                                  As of the date of any such Revolving Loan
or the use of the proceeds thereof, and after giving effect to any of the
foregoing, the aggregate principal amount of the Revolving Loans shall not
exceed the lesser of the Maximum Credit or the Borrowing Base.

 

Each request for a Revolving Loan (including any request for the conversion of a
Revolving Loan to a LIBOR Loan or a Prime Rate Loan) submitted by Borrower shall
be deemed to be a representation and warranty by Borrower that the conditions
specified in Section 6.2 have been satisfied on and as of the date of the
applicable Revolving Loan. The making of any Revolving Loan shall not be deemed
a modification or waiver by Agent or Lenders of any of the terms of this
Agreement or any Default or Event of Default.

 

ARTICLE 7 REPRESENTATIONS AND WARRANTIES

 

Each Credit Party hereby represents and warrants to Agent and each Lender the
following:

 

7.1                               Organization; Powers. Each of the Credit
Parties 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 is qualified to do business, and
is in good standing in, every jurisdiction where such qualification is required.

 

7.2                               Authorization; Enforceability. The execution,
delivery and performance by each of the Credit Parties of the Loan Documents to
which it is a party have been duly authorized by all necessary organizational
actions and, if required, actions by equity holders. Each Loan Document to which
such Credit Party is a party has been duly executed and delivered by such Credit
Party and constitutes a legal, valid and binding obligation of such Credit
Party, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors’ rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.

 

7.3                               No Conflicts. The execution, delivery, and
performance by each of the Credit Parties of the Loan Documents to which it is a
party do not and will not (a) violate any material provision of Federal, State,
or local law or regulation applicable to the Credit Parties, the

 

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Organization Documents of each of the Credit Parties, or any order, judgment, or
decree of any court or other Governmental Authority binding on the Credit
Parties or their property, (b) conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any
material agreement of the Credit Parties where any such conflict, breach or
default could individually or in the aggregate reasonably be expected to have a
Material Adverse Effect, (c) result in the creation or imposition of, or require
or give rise to any obligation to grant, any Lien, security interest, charge or
other encumbrance upon any property of the Credit Parties, other than Permitted
Liens, or (d) require any approval of any holder of Equity Interests of the
Credit Parties or any approval or consent of any Person under any material
agreement of the Credit Parties, other than consents or approvals that have been
obtained and that are still in force and effect and except, in the case of
material agreements, for consents or approvals, the failure to obtain could not
individually or in the aggregate reasonably be expected to cause a Material
Adverse Effect.

 

7.4                               Governmental Approvals. The execution,
delivery, and performance by the Credit Parties of the Loan Documents to which
the Credit Parties are a party and the consummation of the transactions
contemplated by the Loan Documents do not and will not require any registration
with, consent, or approval of, or notice to, or other action with or by, any
Governmental Authority, other than registrations, consents, approvals, notices,
or other actions that have been obtained and that are still in force and effect
and except for filings and recordings with respect to the Collateral to be made,
or otherwise delivered to Agent for filing or recordation, as of the Closing
Date.

 

7.5                               Financial Statements; No Material Adverse
Effect; Solvent. The consolidated balance sheets, and related statements of
income, cash flow and shareholders’ equity, of Borrower and its Subsidiaries
that have been and are hereafter delivered to Agent, have been prepared in
accordance with GAAP as applicable to a business development company as defined
in the Investment Company Act (except, in the case of unaudited financial
statements, for the lack of footnotes and being subject to year-end audit
adjustments) and present fairly in all material respects, the financial
condition of Borrower and its Subsidiaries as of the date thereof and results of
operations for the period then ended. Since January 31, 2015, no event,
circumstance, or change has occurred that has or could reasonably be expected to
have a Material Adverse Effect with respect to Borrower and its Subsidiaries,
taken as a whole. No financial statement delivered to Agent at any time contains
any untrue statement of a material fact, nor fails to disclose any material fact
necessary to make such statement not materially misleading. Projections
delivered to Agent have been prepared in light of the past operations of the
businesses of Borrower and its Subsidiaries and are based upon estimates and
assumptions stated therein, all of which Borrower and its Subsidiaries believe
to be reasonable and fair in light of the then current conditions and current
facts and reflect the good faith and reasonable estimates of Borrower and its
Subsidiaries of the future financial performance of Borrower and its
Subsidiaries and of the other information projected therein for the periods set
forth therein. It being recognized by Agent and the Lenders that any projections
as to future events are not to be viewed as facts and that actual results during
the period or periods covered by such projections may differ from the projected
results and that such differences may be material. The Credit Parties, taken as
a whole, are Solvent and will continue to be Solvent after the creation of the
Obligations, the security interests of Agent and the other transaction
contemplated hereunder.

 

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7.6                               Assets; No Liens. Each Credit Party has good
and marketable title or the contractual right to use or possess its assets
sufficient for the conduct of its business and none of such assets is subject to
any Lien except for Permitted Liens.

 

7.7                               Litigation. Except as set forth on Schedule
7.7, there are no actions, suits, proceedings or investigations pending or, to
best of Borrower’s knowledge, threatened against the Credit Parties, or their
business or assets, that (a) relate to any Loan Documents or transactions
contemplated thereby or (b) either individually or in the aggregate has or could
reasonably be expected to have a Material Adverse Effect.

 

7.8                               Compliance with Laws. Each of the Credit
Parties is in compliance with the requirements of all applicable laws, rules,
regulations, executive orders or codes (including Environmental Laws) and all
final judgments, orders, writs, injunctions, decrees, rules or regulations of
any court or any Governmental Authority, in each case where the failure to
comply individually or in the aggregate has or could reasonably be expected to
have a Material Adverse Effect. There have been no citations, notices or orders
of material noncompliance issued to the Credit Parties under any applicable
laws, rules, regulations, executive orders or codes.

 

7.9                               Environmental Condition. Except as set forth
on Schedule 7.9, (a) the Credit Parties’ assets have not been used by the Credit
Parties, or by previous owners or operators in the disposal of, or to produce,
store, handle, treat, release, or transport, any Hazardous Materials, where such
disposal, production, storage, handling, treatment, release or transport was in
violation, in any material respect, of any applicable Environmental Law, (b) the
Credit Parties’ assets have not been designated or identified in any manner
pursuant to any environmental protection statute as a Hazardous Materials
disposal site, (c) the Credit Parties have not received notice that a security
interest, Lien or other encumbrance arising under any Environmental Law has
attached to any assets of the Credit Parties, and (d) the Credit Parties and
their assets are not subject to any outstanding written order, consent decree,
or settlement agreement with any Person relating to any Environmental Law or
liability thereunder that, individually or in the aggregate, has or could
reasonably be expected to have a Material Adverse Effect.

 

7.10                        No Defaults. No event or circumstance has occurred
or exists that constitutes a Default or Event of Default.

 

7.11                        Material Contracts. Borrower has filed with the SEC
true, correct and complete copies of its Material Contracts that are in effect
as of the date hereof. The Credit Parties are not in breach or in default in any
material respect under any Material Contract and have not received any notice of
the intention of any other party thereto to terminate any Material Contract.

 

7.12                        Restrictive Agreements. None of the Credit Parties
are party to any agreement or other arrangement that prohibits, restricts or
imposes any condition on the ability of the Credit Parties to pay dividends or
make other distributions or pay any Indebtedness owed by or to the Credit
Parties or make loans or advances, or guaranty Indebtedness, or grant security
interests in or Liens on any of their assets or transfer any of their assets,
other than (a) this Agreement, (b) such agreements or other arrangements (i) in
effect on the Closing Date and listed on Schedule 7.12, or (ii) relating to
secured Indebtedness permitted hereunder, as long as the restrictions

 

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apply only to collateral for such Indebtedness, and (c) customary restrictions
on assignment in leases and other contracts as set forth on Schedule 7.12.

 

7.13                        Taxes. The Credit Parties have timely filed or
caused to be filed all Tax returns and reports required to have been filed and
has paid or caused to be paid all Taxes required to have been paid by them,
except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which the Credit Parties have set aside on their books
adequate reserves or (b) to the extent that the failure to do so could not
reasonably be expected to have a Material Adverse Effect. No tax Liens have been
filed and no claims are being asserted with respect to any such Taxes.

 

7.14                        ERISA. Neither Borrower nor any ERISA Affiliate of
Borrower (other than any Portfolio Company that may be considered an ERISA
Affiliate) has, or during the past three (3) years had, or is reasonably
expected to have an ERISA Event with respect to a Multiemployer Plan, and when
taken together with any other such ERISA Events for which liability is
reasonably expected to occur, could reasonably be expected to have a Material
Adverse Effect. To the extent a Portfolio Company may be considered an ERISA
Affiliate, any ERISA Events at such Portfolio Companies shall not be expected to
have a Material Adverse Effect. The present value of all accumulated benefit
obligations under each Plan (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No. 87) did not, as of the date of
the most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of such Plan, and the present value of all
accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed the fair market value of the assets of all such
underfunded Plans.

 

7.15                        Insurance. Schedule 7.15 sets forth a description of
all insurance maintained by or on behalf of the Credit Parties as of the date
hereof. As of the date hereof, all premiums in respect of such insurance have
been paid. The Credit Parties maintain with financially sound and reputable
insurance companies, insurance on all of their property in such amounts, subject
to such deductibles and self-insurance retentions and covering such properties
and risks as are adequate and customarily maintained by companies engaged in the
same or similar businesses operating in the same or similar locations.

 

7.16                        Capitalization and Subsidiaries. Schedule 7.16 sets
forth (a) a correct and complete list of the name and relationship to Borrower
of each Subsidiary, (b) a true and complete listing of each class of each of
Subsidiary’s authorized Equity Interests, all of which issued shares are validly
issued, outstanding, fully paid and non-assessable, and owned beneficially and
of record by the Persons identified on Schedule 7.16, and (c) the type of entity
of Borrower and each Subsidiary. There are no outstanding commitments or other
obligations of Borrower to issue, and no options, warrants or other rights of
any Person to acquire, any shares of any class of capital stock or other equity
interests of Borrower.

 

7.17                        Security Interest in Collateral. This Agreement
creates a legal and valid security interests in the Collateral in favor of Agent
for the benefit of Agent and Lenders, and such security interests constitute
perfected and continuing security interests on the Collateral, securing the
Obligations, enforceable against the Credit Parties and having priority over all
other security

 

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interests, Liens or other encumbrances on the Collateral except (a) Permitted
Liens, to the extent any such Permitted Liens would have priority over the
security interests of Agent for the benefit of Agent and Lenders pursuant to any
applicable law or agreement and (b) security interests perfected only by
possession or the notation of the security interest on the certificate of title
with respect thereto to the extent Agent for the benefit of Agent and Lenders
has not obtained or does not maintain possession of such Collateral or has not
had its security interest noted on the certificate of title.

 

7.18                        Brokers. Except for amounts payable by the Borrower
to JMP Securities at or the time of the Closing, there are no brokerage
commissions, finder’s fees or investment banking fees payable by the Credit
Parties in connection with any transactions contemplated by the Loan Documents.
For the avoidance of doubt, the parties acknowledge that brokerage commissions,
finder’s fees and/or referral fees may be payable by Borrower in connection with
Investments made by Borrower after the Closing Date and this Section 7.18 is not
intended to constitute a representation or warranty with respect to, or to
otherwise limit the Borrower from paying, any such brokerage commissions,
finder’s fees and/or referral fees. The Credit Parties acknowledge and agree
that the Agent and the Lenders do not have any responsibility or liability for
any such brokerage commissions, finder’s fees and/or referral fees referred to
in this Section 7.18.

 

7.19                        Intellectual Property. Each of the Credit Parties
owns, or is licensed to use, all Intellectual Property necessary to its business
as currently conducted, a correct and complete list of which, as of the date of
this Agreement, is set forth on Schedule 7.19, and the use thereof by Credit
Parties does not infringe on the rights of any other Person, and except as set
forth on such Schedule, the Credit Parties’ rights thereto are not subject to
any licensing agreement or similar arrangement. No material trademark,
servicemark, copyright or other material Intellectual Property at any time used
by the Credit Parties which is owned by another person, or owned by the Credit
Parties subject to any security interest, Lien or other encumbrance in favor of
any person other than Agent, is used by the Credit Parties, except to the extent
permitted under the terms of the license agreements listed on Schedule 7.19.

 

7.20                        Reserved.

 

7.21                        Labor Relations. Except as described on Schedule
7.21, none of the Credit Parties are party to or bound by any collective
bargaining agreement, management agreement or consulting agreement. There are no
material grievances, disputes or controversies with any union or other
organization of the Credit Parties’ employees or any threatened strikes, work
stoppages or demands for collective bargaining.

 

7.22                        Payable Practices. Borrower has not made any
material change in its historical accounts payable practices from those in
effect on the Closing Date.

 

7.23                        Margin Stock. Neither the Borrower nor any of its
Subsidiaries is engaged principally in the business of purchasing or carrying
any Margin Stock.

 

7.24                        Investment Company Act; Regulated Investment
Company.

 

(a)                                 Borrower is an “investment company” that has
elected to be regulated as a “business development company” within the meaning
of the Investment Company Act and

 

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qualifies as a regulated investment company under Subchapter M, Section 851 of
the Internal Revenue Code.

 

(b)                                 Borrower conducts its business and other
activities in compliance in all material respects with the applicable provisions
of the Investment Company Act and any applicable rules, regulations or orders
issued by the SEC thereunder.

 

(c)                                  The business and other activities of the
Credit Parties, including, but not limited to, the incurrence by the Credit
Parties of the Obligations hereunder, the application of the proceeds and the
repayment thereof by Credit Parties and the consummation of the transactions
contemplated by this Agreement do not violate in any material respect, with
respect to Borrower, the provisions of the Investment Company Act or any rules,
regulations or orders issued by the SEC thereunder.

 

7.25                        Anti-Terrorism Laws; Anti-Money Laundering Laws.
None of the Credit Parties are, and after making due inquiry no Person who owns
a controlling interest in or otherwise controls the Credit Parties is,
(i) listed on the Specially Designated Nationals and Blocked Persons List
maintained by OFAC, and/or on any other similar list (collectively, the “Lists”)
maintained by the OFAC pursuant to any authorizing statute, Executive Order or
regulation (collectively, “OFAC Laws and Regulations”); or (ii)a Person (a
“Designated Person”) either (A)included within the term “designated national” as
defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515, or
(B)designated under Sections 1(a), 1(b), 1(c) or 1(d) of Executive Order
No. 13224, 66 Fed. Reg. 49079 (published September 25, 2001) or similarly
designated under any related enabling legislation or any other similar Executive
Orders (collectively, the “Executive Orders”).

 

(a)                                 Neither the Borrower or its Subsidiaries
(i) is a Person or entity with which Agent or any Lender is prohibited from
dealing or otherwise engaging in any transaction by any Anti-Terrorism Law or
(ii) is a Person or entity that commits, threatens or conspires to commit or
supports “terrorism” as defined in the Executive Orders or (iii) is affiliated
or associated with a Person or entity listed in the preceding clause (i) or
clause (ii). To the knowledge of Borrower, none of the Credit Parties or their
Affiliates, nor any brokers or other agents acting in any capacity in connection
with the Revolving Loans hereunder (A) deals in, or otherwise engages in any
transaction relating to, any property or interests in property blocked pursuant
to the Executive Orders or (B) engages in or conspires to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in any Anti-Terrorism
Law.

 

(b)                                 To the best of the knowledge of the Borrower
after due inquiry, none of the Borrower or its Subsidiaries nor any holder of a
direct or indirect interest in the Borrower or any of its Subsidiaries (i) is
under investigation by any governmental authority for, or has been charged with,
or convicted of, money laundering under 18 U.S.C. §§ 1956 and 1957, drug
trafficking, terrorist-related activities or other money laundering predicate
crimes, or any violation of the BSA, (ii) has been assessed civil penalties
under any Anti-Money Laundering Laws, or (iii) has had any of its funds seized
or forfeited in an action under any Anti-Money Laundering Laws.

 

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7.26                        Equity Investments and Debt Investments.

 

(a)                                 Schedules 7.26(a) and 7.26(c) are complete
and correct lists of the name, jurisdiction of organization and ownership of
each Portfolio Company in which Borrower owns any Equity Interests on the date
hereof. Schedule 7.26(a) lists the Equity Interests in the Portfolio Companies
that are pledged to the Agent for the benefit of the Agent and the Lenders. At
the time of acquisition by the Borrower, to the knowledge of the Borrower, all
of the issued and outstanding Equity Interests of Borrower in each Portfolio
Company were validly issued and fully paid and non-assessable. Borrower is the
owner and holder of the Equity Interests in each Portfolio Company (except to
the extent that Agent’s Bailee may be in possession of any certificates or other
tangible evidence thereof for the Equity Investments). Borrower is the sole
owner, free and clear of all Liens (except for the Liens granted in the favor of
Agent for the benefit of Agent and Lenders and Permitted Liens) of all Equity
Investments and Remaining Equity Interests.

 

(b)                                 Schedule 7.26(b) is a complete and correct
list of the name, jurisdiction of organization, the original amount and current
outstanding balance of each Debt Investment. All of the issued and outstanding
Debt Investments of Borrower has been validly issued by the Debt Investment
Obligors and fully funded, and Borrower is the owner and holder thereof (except
to the extent that Agent’s Bailee may be in possession of any promissory notes
or other tangible evidence thereof). Borrower is the sole owner, free and clear
of all Liens (except for the Liens granted in the favor of Agent for the benefit
of Agent and Lenders and Permitted Liens) of all of the Debt Investments. Except
as described on Schedule 7.26(b), there are no outstanding debt securities of
any Debt Investment Obligors or any debt or equity securities of any Debt
Investment Obligors and no outstanding obligations of a Debt Investment Obligor
or any of its Subsidiaries, in each case, convertible into or exchangeable for,
or warrants, options or other rights for the purchase or acquisition from such
Debt Investment Obligor or any of its Subsidiaries, or other obligations of Debt
Investment Obligor or any of its Subsidiaries to issue, directly or indirectly,
any shares of Equity Interests of such Debt Investment Obligor or any of its
Subsidiaries. Schedule 7.26(b) sets forth all of the Indebtedness of each Debt
Investment Obligor.

 

(c)                                  With respect to each Debt Investment of
Borrower in a Debt Investment Obligor, except as specifically disclosed on the
most recent Borrowing Base Certificate received by Agent or other collateral
report delivered to Agent, (i) each Debt Investment and all related Debt
Investment Loan Documents represent Debt Investments acquired in the ordinary
course of Borrower’s business, (ii) each Debt Investment has been documented in
accordance with the Credit Policy and Investment Ratings Policy, (iii) there are
no setoffs, claims or disputes existing or asserted with respect to such Debt
Investment, (iv) Borrower has not made any agreement with the Debt Investment
Obligor or other owners or holders of Equity Interests in such Debt Investment
Obligor for any extension of time for the payment or performance of any
obligations at any time owing or payable by such Debt Investment Obligor to
Borrower, any compromise or settlement for less than the full amount thereof,
any release from liability therefor, or any deduction therefrom, except, in each
case, such as may be granted by Borrower in the ordinary course of its business,
(v) there are no facts, events or occurrences that in any way impair the
validity or enforceability of any Debt Investments at any time owing or payable
by such Debt Investment Obligor to Borrower thereof or could reasonably be
expected to reduce any amounts

 

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that may be payable by such Debt Investment Obligor to Borrower, (vi) Borrower
has not received any notice of proceedings or actions that are threatened or
pending against any Debt Investment Obligor that would reasonably be expected to
result in a Debt Investment Obligor Material Adverse Effect as to such Debt
Investment Obligor, and including, without limitation, notice of any actual or
imminent Insolvency Proceedings with respect to such Debt Investment Obligor,
(vii) Borrower has not received notice of any actual or threatened litigation
regarding the validity or enforceability of any Debt Investment, (viii) each
Debt Investment Obligor is Solvent and (ix) no event of default has occurred and
is continuing under the applicable Debt Investment Loan Documents or any other
agreements, documents or instruments relating to any Indebtedness of such Debt
Investment Obligor.

 

(d)                                 With respect to each of the Equity
Documents, Debt Investment Loan Documents and each document executed in
connection therewith as to any Investment of Borrower in a Portfolio Company or
a Debt Investment Obligor, (i) such agreement or document has been duly
authorized, executed and delivered to Borrower by the Portfolio Company or Debt
Investment Obligor party thereto, and is enforceable in accordance with its
terms, and (ii) all amounts at any time payable or owing by the Portfolio
Company or Debt Investment Obligor party thereto or any other party thereto
under or pursuant to such Equity Documents, Debt Investment Loan Documents or
related documents are payable without defense, setoff or counterclaim;
(iii) such Documents relating to each Eligible Investment and such Debt
Investment Loan Documents relating to each Debt Investment do not contain any
condition, restriction, limitation or prohibition with respect to the right of
Borrower or any subsequent assignee to sell, transfer, assign, pledge, encumber
and/or grant a security interest in, or to assign as collateral, to any other
Person any of Borrower’s right, title and interest in and to the Investments
subject to such Equity Documents and Debt Investment Loan Documents, except as
set forth on Schedules 7.26(a), 7.26(b) and 7.26(c).

 

(e)                                  The amounts reflected on all records and
reports that may be delivered to the Agent with respect to such Debt Investments
are correct and complete and each Debt Investment reflected in the computations
included in any Borrowing Base Certificate satisfies the criteria established
therefor in this Agreement.

 

7.27                        Credit and Compliance Policies. Exhibit G is a true
and complete list of all the MVC Capital Debt Investing Guidelines, Borrower’s
Compliance Manual and Tokarz Group Compliance Manual in full force and effect as
of the Closing Date, copies of which have been delivered to the Agent.

 

7.28                        Pledge Agreement. Upon delivery to Agent of any
original certificates evidencing certain Equity Interests of the Subsidiaries of
Borrower that are listed on Schedule 7.28 that are included within the
Collateral together with the filing of applicable UCC financing statements as to
other uncertificated Equity Interests of the Subsidiaries of Borrower, the
Pledge Agreement will be sufficient to create in favor of Agent, for the benefit
of itself and Lenders, a legal, valid and enforceable security interest in the
Equity Interests of the Subsidiaries of Borrower that are included within the
Collateral secured thereby.

 

7.29                        Complete Disclosure. No Loan Document contains any
untrue statement of a material fact, nor fails to disclose any material fact
necessary to make the statements contained

 

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therein not materially misleading. There is no fact or circumstance, when taken
as a whole, that the Credit Parties have failed to disclose to Agent in writing
that has, or could reasonably be expected to have, a Material Adverse Effect.

 

ARTICLE 8 AFFIRMATIVE COVENANTS

 

8.1                               Financial Statements, Borrowing Base
Certificate and Other Information. Borrower (a) will deliver to Agent and
Lenders each of the financial statements, reports, and other items set forth on
Schedule 8.1 no later than the times specified therein, provided, however,
notwithstanding the forgoing, for the avoidance of doubt, Agent agrees that the
Borrower shall have until March 11, 2016 to file its Form 10-Qs for the fiscal
quarters ending July 31, 2015 and January 31, 2016 and its Form 10-K for the
year ending October 31, 2015, (b) maintain a system of accounting that enables
Borrower and its Subsidiaries to produce financial statements in accordance with
GAAP, and (c) will (i) keep a reporting system that shows all Investments, and
(ii) maintain systems and practices substantially as in effect as of the Closing
Date and shall only make material modifications thereto with notice to, and with
the consent of, Agent.

 

8.2                               Notices of Material Events. Borrower will
promptly notify Agent (with reasonably prompt further notification from Agent to
Lenders) in writing of: (a) the occurrence of any Default or Event of Default;
(b) any Debt Investment Obligor Material Adverse Effect, (c) any matter that
has, or could reasonably be expected to have, a Material Adverse Effect; (d) any
default under, a Material Contract or with respect to Material Indebtedness of
the Credit Parties thereof; (e) any material dispute, litigation, investigation,
proceeding or suspension between the Credit Parties and any Governmental
Authority or the commencement of, or any material development in, any litigation
or proceeding affecting the Credit Parties, including pursuant to any applicable
Environmental Laws; (f) the occurrence of any ERISA Event; (g) any material
change in accounting policies or financial reporting practices of the Credit
Parties or any Debt Investment Obligor; (h) any change in Tokarz Group or
Borrower’s senior executive officers; (i) the discharge by Borrower of their
independent accountants or any withdrawal or resignation by such accountants;
(j) any collective bargaining agreement or other labor contract to which the
Credit Parties become a party, or the application for the certification of a
collective bargaining agent; (k) the filing of any Lien for unpaid Taxes against
the Credit Parties; (l) any loss, damage, or destruction to, or commencement of
any action or proceeding for the taking under eminent domain, condemnation or
similar proceeding, of Collateral, whether or not covered by insurance; and
(m) any transaction occurring after the Closing Date consisting of: (i) the
entry into a Material Contract, (ii) the incurrence of Material Indebtedness,
(iii) the voluntary or involuntary grant of any Lien other than a Permitted Lien
upon any property of the Credit Parties; (iv) the making of any Permitted
Investments, notify Agent at the same time as the next Borrowing Base
Certificate to be delivered to Agent); provided, that, each such notice under
these clauses (i), (ii), (iii) (as to a voluntary grant), or (iv) shall be
received by Agent not less than five (5) Business Days prior thereto, together
with such other information with respect thereto as Agent may request. Each
notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of Borrower setting forth details of the occurrence referred
to therein and stating what action Borrower has taken and proposes to take with
respect thereto.

 

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8.3                               Existence; Business Development Company;
Regulated Investment Company.

 

(a)                                 Each of the Credit Parties (other than MVC
PE Fund) will do or cause to be done all things reasonably necessary to
preserve, renew and keep in full force and effect its legal existence and the
rights, qualifications, licenses, permits, franchises, governmental
authorizations, intellectual property rights, licenses and permits material to
the conduct of its business, and maintain all requisite authority to conduct its
business in each jurisdiction in which its business is conducted.

 

(b)                                 Borrower shall maintain and not revoke the
election of Borrower to be a business development company under the Investment
Company Act, and its qualification as a regulated investment company under
Subchapter M, Section 851 of the Internal Revenue Code, and will conduct its
business and other activities in compliance with the applicable provisions of
the Investment Company Act and any applicable rules, regulations or orders
issued by the SEC thereunder.

 

8.4                               Payment of Obligations. Each of the Credit
Parties will pay or discharge all Material Indebtedness and all other material
liabilities and obligations, including Taxes, 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 Credit Parties
have set aside on their 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;
provided, that, the Credit Parties will remit withholding taxes and other
payroll taxes to the appropriate Governmental Authority as and when claimed to
be due, notwithstanding the foregoing exceptions.

 

8.5                               Maintenance of Properties. Each of the Credit
Parties will keep and maintain all property material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted.

 

8.6                               Compliance with Laws. Each Credit Party will
(a) comply in all material respects with all laws, rules, regulations, licenses,
approvals and orders applicable to it and duly observe all requirements of any
foreign, Federal, State or local Governmental Authority applicable to it or its
property (including without limitation Environmental Laws) and (b) perform in
all material respects its obligations under Material Contracts to which it is a
party in each case, where the failure to do so, individually or in the
aggregate, has or could reasonably be expected to have a Material Adverse
Effect.

 

8.7                               Insurance. Each of the Credit Parties will
maintain with financially sound and reputable carriers insurance in such amounts
(with no greater risk retention) and against such risks and such other hazards,
as is customarily maintained by companies of established repute engaged in the
same or similar businesses operating in the same or similar locations. Borrower
will from time to time upon Agent’s request furnish to Agent information in
reasonable detail as to the insurance so maintained.

 

8.8                               Inspection Rights; Field Examinations;
Valuations. Upon the request of Agent after reasonable prior notice to Borrower,
the Credit Parties will permit Agent or a firm engaged by Agent for such purpose
to (a) conduct field examinations, including, without limitation, with respect
to the Credit Parties’ practices in the calculation of the Borrowing Base and
the assets

 

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included in the Borrowing Base and related financial information such as, but
not limited to, valuations, investments, payables, accruals and reserves,
(b) conduct valuations of the Collateral for not less than seventy-five percent
(75%) of the Eligible Debt Investments and (c) have access to any and all of the
Credit Parties’ monitoring tools, including but not limited to valuations by
third parties and the Borrower’s Audit Committee’s risk ratings. Upon the
request of Agent, after reasonable prior notice to Borrower, the Credit Parties
will permit representatives and other professionals (including investment
bankers, consultants, accountants, and lawyers) engaged by Agent for such
purpose to visit and inspect any of their properties, to examine their
corporate, financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss their affairs, finances and accounts with their
directors, officers, and accountants, all at the expense of Borrower and at such
reasonable times during normal business hours and as often as may be reasonably
desired. Prior to the occurrence of a Default or an Event of Default, the
Borrower shall bear the cost and expenses of four (4) such examinations per
year, provided however, in the event the average Liquidity exceeds Twenty Five
Million Dollars ($25,000,000) for one hundred twenty (120) consecutive days, the
Borrower shall bear the cost and expenses of three (3) such examinations per
year. Prior to the occurrence of an Event of Default, the Borrower shall bear
the cost and expenses of two (2) such valuations per year. After the occurrence
of an Event of Default, the Borrower shall bear the cost and expense of all such
examinations and valuations and they shall be at such times and upon such notice
as the Agent shall determine in its discretion.

 

8.9                               Use of Proceeds. Borrower shall use the
initial proceeds of the Revolving Loans hereunder only for: (a) payments to each
of the persons listed in the pay proceeds letter furnished by Borrower to Agent
on or about the date hereof and (b) costs, expenses and fees in connection with
the preparation, negotiation, execution and delivery of this Agreement and the
other Loan Documents for the Agent and the Lenders. All other Revolving Loans
made shall be used by Borrower (a) to fund current and future Investment
opportunities of Borrower and (b) for working capital and other proper corporate
purposes not prohibited hereunder.

 

8.10                        Cash Management; Collection of Proceeds of
Collateral.

 

(a)                                 The Credit Parties shall establish and
maintain, at their expense, Deposit Accounts and cash management services of a
type and on terms, with the banks, set forth on Schedule 8.10 and, subject to
Section 8.10(b) below, such other banks as the Credit Parties may hereafter
select (such other banks, together with the banks set forth on Schedule 8.10,
collectively, the “Cash Management Banks” and individually, a “Cash Management
Bank”). The Credit Parties have designated the Agent as the Cash Management Bank
and shall maintain their Deposit Accounts with the Agent. In addition the
Borrower shall be permitted to maintain Deposit Accounts (i) with the Lenders
for the Pledged Cash, (ii) with BB&T as otherwise permitted in this Agreement,
and (iii) with U.S. Bank National Association (limited to no more Five Hundred
Thousand Dollars ($500,000) for each of Borrower and each other Credit Party,
provided, the aggregate amount does not exceed One Million Dollars ($1,000,000)
at any time, provided, further, that the Borrower shall be permitted to have on
deposit up to Ten Million Dollars ($10,000,000) in cash for no more than ten
(10) days (with respect to any particular Investment) with U.S. Bank National
Association in connection with the funding of new Investments permitted under
this Agreement). Borrower shall deliver, or cause to be delivered to Agent, a
Control Agreement with respect to each of their Deposit Accounts (other than
Excluded

 

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Deposit Accounts), including, without limitation, U.S. Bank National
Association, duly authorized, executed and delivered by each Cash Management
Bank where a Deposit Account is maintained (other than Excluded Deposit
Accounts), U.S. Bank National Association. Borrower shall direct all Debt
Investment Obligors and Portfolio Companies in respect of any amounts payable to
Borrower to make payment of all such amounts to the Borrower’s Deposit Account
maintained with the Agent and otherwise take all reasonable actions to cause
such payments to be made to the Borrower’s Deposit Account maintained with the
Agent. Each of the Borrower and its respective employees, agents and
Subsidiaries (other than MVC PE Fund) shall, acting as trustee for Agent,
receive, as the property of Borrower, any monies, checks, notes, drafts or any
other payment relating to and/or proceeds of Debt Investments, Equity Interests
or other Collateral which come into its possession or under its control and
promptly upon receipt thereof, shall deposit or cause the same to be deposited
in the Borrower’s Deposit Account maintained with the Agent.

 

(b)                                 So long as no Default or Event of Default
exists or has occurred and is continuing, upon not less than five (5) Business
Days’ prior written notice to Agent, Borrower may amend Schedule 8.10 to add or
replace a Deposit Account and shall upon such addition or replacement provide to
Agent an amended Schedule 8.10; provided, that, prior to the time of the opening
of such Deposit Account (other than Excluded Deposit Accounts) Borrower and such
prospective depository bank shall have executed and delivered to Agent a Control
Agreement. Such Deposit Accounts shall be subject to the limitations set forth
in this Agreement. Borrower shall close any of its Deposit Accounts (other than
Excluded Deposit Accounts) (and establish replacement Deposit Accounts in
accordance with the foregoing sentence) as promptly as practicable and in any
event within forty-five (45) days after notice from Agent that the operating
performance, funds transfer, or availability procedures or performance of the
depository bank with respect to Deposit Accounts (other than Excluded Deposit
Accounts) or Agent’s liability under any Control Agreement with such depository
bank is no longer satisfactory to Agent in Agent’s reasonable judgment.

 

8.11                        Additional Collateral; Further Assurances.

 

(a)                                 In the case of the formation or acquisition
by the Credit Parties of any Subsidiary after the date hereof, as to any such
Subsidiary, (i) such Credit Party shall cause such Subsidiary to execute and
deliver to Agent, in form and substance satisfactory to Agent, a joinder
agreement to the Loan Documents in order to make such Subsidiary a party to this
Agreement as a Guarantor and a Guaranty Agreement and shall cause it to execute
and deliver such other agreements, documents or instruments and to deliver other
consents, waivers, acknowledgments and other agreements from third persons which
Agent may deem reasonably necessary or desirable in order to permit, protect and
perfect its security interests in and Liens upon the assets of such Subsidiary
and the Equity Interests of such Credit Party in such Subsidiary, corporate
resolutions and other organization and authorizing documents of such Person, and
favorable opinions of counsel to such person and (ii) such Credit Party shall
execute and deliver to Agent, a pledge and security agreement, in form and
substance satisfactory to Agent, granting to Agent for the benefit of Agent and
Lenders a first pledge of and Lien on all of the issued and outstanding shares
of Equity Interests of any such Subsidiary, such other agreements, documents and
instruments as Agent may require in connection with the documents referred to
above,

 

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including, but not limited to, supplements and amendments hereto, corporate
resolutions and other organization and authorizing documents and favorable
opinions of counsel to such person.

 

(b)                                 Without limiting the foregoing, Borrower
will, and will cause each Subsidiary (other than the MVC PE Fund) to, execute
and deliver, or cause to be executed and delivered, to Agent such documents,
agreements and instruments, and take or cause to be taken such further actions
(including the filing and recording of financing statements, fixture filings,
mortgages, deeds of trust and other documents and such other actions or
deliveries of the type required by Section 6.1, as applicable), which Agent may,
from time to time, reasonably request to carry out the terms and conditions of
this Agreement and the other Loan Documents and to ensure perfection and
priority of the security interests and Liens created or intended to be created
hereunder, all in form and substance reasonably satisfactory to Agent and at the
expense of Borrower.

 

8.12                        End of Fiscal Years; Fiscal Quarters. Borrower and
its Subsidiaries shall, for financial reporting purposes, cause their fiscal
year to end on October 31 of each year, and fiscal quarters to end on the last
day of each of January, April, July and October of each year.

 

8.13                        Required Pledged Cash Amount. Borrower shall at all
times maintain Pledged Cash in the Required Pledged Cash Deposit Accounts in an
aggregate amount equal to or exceeding the Required Pledged Cash Amount. The
amount of Cash held in each Required Pledged Cash Deposit Account maintained by
each Lender shall equal or exceed such Lenders’ Pro Rata Share of the Required
Pledged Cash Amount. Notwithstanding anything herein to the contrary, the
Borrower shall have ten (10) Business Days from the Closing Date to open and
deposit the Required Pledged Cash Amount in the Required Pledged Cash Deposit
Account with Wintrust Bank.

 

8.14                        Investment Documents. The Borrower shall maintain
all Equity Documents and Debt Investment Loan Documents (other than Equity
Documents and Debt Investment Loan Documents which have been delivered to Agent
or to Agent’s Bailee) in a secure manner in a location with fire, casualty and
theft protection reasonably satisfactory to Agent. Borrower will provide to
Agent true, correct and complete copies of any Equity Documents, Debt Investment
Loan Documents and Investment Books as Agent may from time to time request,
together with any agreements, documents or instruments relating to the
Indebtedness of any Portfolio Company, Debt Investment Loan
Documents, Investment Books and related matters.

 

8.15                        Maintenance of Current Administrative Procedures.
The Borrower shall maintain, at its own cost and expense, the current procedures
of Borrower for monitoring and administering the interests of Borrower in the
Debt Investment Obligors and Portfolio Companies and exercising all of its
rights under or pursuant to the Debt Investment Loan Documents and Equity
Documents with respect to any of the Investments.

 

8.16                        Credit Policy. The Borrower shall comply in all
material respects with the Credit Policy and furnish to Agent, prior to its
effective date, prompt notice of any material modification to the Credit Policy
and not modify the Credit Policy in any material respect, without the prior
written consent of Agent.

 

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8.17                        Investments. With respect to the Investments of
Borrower: (i) Borrower shall be the sole owner, free and clear of all Liens
(except for the Liens granted in the favor of Agent for the benefit of Agent and
Lenders and Permitted Liens), and shall be fully authorized with respect to each
Investment to sell, transfer, assign, pledge, encumber and/or grant a security
interest in, or to assign as collateral, to any other Person any of Borrower’s
right, title and interest in and to the Investments; (ii) none of the
transactions underlying or giving rise to any of the Investments shall violate
any applicable State or Federal laws or regulations, and all of the Documents or
any other documents relating thereto shall be legally enforceable under such
laws in accordance with their terms; (iii) all agreements, instruments and other
documents relating to any of the Investments shall be true and correct and in
all material respects what they purport to be; and (iv) shall maintain the
Investment Books and any other books and records pertaining to the Investments
in such detail, form and scope as Agent shall reasonably require.

 

8.18                        Subordination. The Borrower shall cause all
Indebtedness and other obligations now or hereafter owed by it to any of its
Affiliates to be subordinated in right of payment and security to the
Indebtedness and other Obligations owing to Agent and Lenders and promptly upon
the request of Agent or Required Lenders, deliver to Agent a Subordination
Agreement in form and substance satisfactory to Agent and Required Lenders duly
authorized, executed and delivered by Borrower and its Affiliates.

 

8.19                        Costs and Expenses. Borrower shall pay to Agent and
Lenders on demand all reasonable costs, expenses, filing fees and taxes paid or
payable in connection with the preparation, negotiation, execution, delivery,
recording, syndication, administration, collection, liquidation, enforcement and
defense of the Obligations, Agent’s, for the benefit of Agent and Lenders,
rights in the Collateral, this Agreement, the other Loan Documents and all other
documents related hereto or thereto, including any amendments, supplements or
consents which may hereafter be contemplated (whether or not executed) or
entered into in respect hereof and thereof, including: (a) all costs and
expenses of filing or recording (including UCC financing statement filing taxes
and fees, documentary taxes, intangibles taxes and mortgage recording taxes and
fees, if applicable), (b) costs and expenses and fees for insurance premiums,
environmental audits, title insurance premiums, surveys, assessments,
engineering reports and inspections, appraisal fees and search fees, background
checks, costs and expenses of remitting loan proceeds, collecting checks and
other items of payment, together with Agent’s customary charges and fees with
respect thereto; (c) actual costs and expenses of preserving and protecting the
Collateral; (d) actual costs and expenses paid or incurred in connection with
obtaining payment of the Obligations, enforcing the security interests and Liens
of Agent in the Collateral, selling or otherwise realizing upon the Collateral,
and otherwise enforcing the provisions of this Agreement and the other Loan
Documents or defending any claims made or threatened against Agent and Lenders
arising out of the transactions contemplated hereby and thereby (including
preparations for and consultations concerning any such matters); (e) all
out-of-pocket expenses and costs heretofore and from time to time hereafter
incurred by Agent during the course of periodic field examinations, plus a per
diem charge at Agent’s then standard rate for Agent’s examiners in the field and
office (which rate as of the date hereof is One Thousand Dollars ($1,000) per
person per day); (f) all out-of-pocket expenses and costs heretofore and from
time to time hereafter incurred by Agent during the course of periodic external
valuations to be performed at the Agent’s discretion for not less than
seventy-five percent (75%) of the Eligible Debt Investments, and (g) the
reasonable fees and disbursements of counsel (including legal

 

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assistants) to Agent in connection with any of the foregoing and after the
occurrence of an Event of Default, the reasonable fees and disbursements of
counsel (including legal assistants) to Lenders in connection with any of the
foregoing.

 

ARTICLE 9 NEGATIVE COVENANTS

 

9.1                               Indebtedness. The Credit Parties shall not
incur, create, assume, become or be liable in any manner with respect to, or
permit to exist, any Indebtedness, or guarantee, assume, endorse, or otherwise
become responsible for (directly or indirectly), the Indebtedness, performance,
obligations or dividends of any other Person, except for the Permitted
Indebtedness.

 

9.2                               Liens. The Credit Parties shall not create,
incur, assume or suffer to exist any security interest, mortgage, pledge, Lien,
charge or other encumbrance of any nature whatsoever on any of their assets or
properties, including the Collateral, or file or permit the filing of, or permit
to remain in effect, any financing statement or other similar notice of any
security interest or Lien with respect to any such assets or properties, except
Permitted Liens.

 

9.3                               Fundamental Changes. The Credit Parties shall
not, directly or indirectly, (a) change their name or conduct business under any
fictitious name; (b) change their tax, charter or other organizational
identification number; (c) change their form or state of organization;
(d) suspend operations, wind up, liquidate or dissolve; or (e) merge, combine or
consolidate with any Person, whether in a single transaction or in a series of
related transactions.

 

9.4                               Asset Sales. The Credit Parties shall not
sell, issue, assign, lease, license, transfer, abandon or otherwise dispose of
any Equity Interests, including, without limitation, Equity Interests of the
Borrower, or any of their assets to any other Person, except for Permitted
Dispositions or agree to do any of the foregoing, except to the extent that such
agreement contains a condition requiring the consent of Agent if the agreement
to do any of the foregoing is otherwise prohibited by the terms hereof.

 

9.5                               Loans, Advances, Investments, Etc. The Credit
Parties shall not make, directly or indirectly, any Investments or purchase or
repurchase Investments or all or a substantial part of the assets or property of
any person, or form or acquire any Subsidiaries, or agree to do any of the
foregoing, or permit any Subsidiary to do any of the foregoing, except:

 

(a)                                 loans existing on the date hereof as set
forth on Schedule 7.26(b) hereto;

 

(b)                                 Investments consisting of loans by Borrower
to another Borrower, provided, that, the Indebtedness arising pursuant to any
such loan shall constitute Subordinated Indebtedness;

 

(c)                                  Permitted Investments; and

 

(d)                                 dividends, redemptions, repurchases and
other distributions permitted under Section 9.9 hereof.

 

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9.6                               Investments. Except for (a) Permitted
Investments, (b) the Investments set forth on Schedule 7.26(a), 7.26(b) and
7.26(c) and (c) as otherwise permitted in this Agreement, the Credit Parties
shall not, directly or indirectly, purchase, hold or acquire (including pursuant
to any merger with any Person that was not a wholly owned Subsidiary immediately
prior to such merger) any Equity Interests, Debt Investments or other securities
(including any option, warrant or other right to acquire any of the foregoing)
of, make or permit to exist any loans or advances to, or make or permit to exist
any capital contribution or other investment or any other interest in, any other
Person, or purchase or otherwise acquire (in one transaction or a series of
transactions) any assets of any other Person constituting a business unit or all
or a substantial part of the assets or property of any other Person (whether
through purchase of assets, merger or otherwise), or form or acquire any
Subsidiaries, or agree to do any of the foregoing (each of the foregoing an
“Investment”). The Credit Parties shall not transfer to the Excluded Deposit
Accounts any funds in excess of those necessary for the then current expenses
that are to be paid from the Excluded Deposit Accounts.

 

9.7                               Transactions with Affiliates. The Credit
Parties shall not, directly or indirectly, purchase, acquire or lease any
property from, or sell, transfer or lease any property to, any officer, director
or other Affiliates of the Credit Parties, except pursuant to the reasonable
requirements of the Credit Parties’ business and upon fair and reasonable terms
no less favorable to the Credit Parties than the Credit Parties would obtain in
a comparable arm’s length transaction with an unaffiliated person, except for
the following: (a) any management, investment, employment or compensation
arrangement or agreement, employee benefit plan or arrangement, officer or
director indemnification agreement or any similar arrangement or other
compensation arrangement entered into by the Credit Parties in the ordinary
course of business and payments, issuance of securities or awards pursuant
thereto, and including the grant of stock options, restricted stock, stock
appreciation rights, phantom stock awards or similar rights to employees and
directors in each case approved by the board of directors or equivalent
governing body of the Credit Parties, and (b) Restricted Payments permitted
under Section 9.9 hereof.

 

9.8                               Change in Business. The Credit Parties shall
not engage in any business other than the business of the Credit Parties on the
date hereof and any business reasonably related, ancillary or complimentary to
the business in which the Credit Parties are engaged on the date hereof.

 

9.9                               Restricted Payments. The Credit Parties shall
not declare or make, or agree to pay or make, directly or indirectly, any
Restricted Payment other than Permitted Restricted Payments.

 

9.10                        Restrictive Agreements. The Credit Parties shall
not, directly, or indirectly, create or otherwise cause or suffer to exist any
agreement or other arrangement that prohibits, restricts or imposes any
condition on the ability of the Credit Parties to pay dividends or make other
distributions or pay any Indebtedness owed by or to the Credit Parties or make
loans or advances or grant security interests in or Liens on any of their assets
or transfer any of their assets, except such an agreement or other arrangement
that (a) is in effect on the Closing Date, (b) relates to secured Indebtedness
permitted hereunder, as long as the restrictions apply only to collateral for
such Indebtedness or (c) constitute customary restrictions on assignment in
leases and other contracts.

 

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9.11                        Certain Payments of Indebtedness, Etc. The Credit
Parties shall not make or agree to make, directly or indirectly, any payment or
other distribution (whether in cash, securities or other property) of or in
respect of principal of or interest on any Indebtedness, or any payment or other
distribution (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 Indebtedness,
except: (a) payment of the Obligations; (b) payment of regularly scheduled
principal and interest payments, and other mandatory payments, as and when due
in respect of any Permitted Indebtedness, other than payments in respect of
Subordinated Debt prohibited by the subordination provisions thereof;
(c) payments in respect of Permitted Indebtedness in each case with proceeds of
Refinancing Indebtedness with respect thereto to the extent permitted under the
definition of Permitted Indebtedness; (d) payment of secured Indebtedness that
becomes due as a result of the voluntary sale or transfer of the property or
assets securing such Indebtedness to the extent such sale or transfer is
permitted under Section 9.4 and (e) Permitted Restricted Payments.

 

9.12                        Amendment of Material Documents. None of the Credit
Parties shall amend, modify or waive any of the terms of: (a) its Organization
Documents except for amendments, modifications or other changes that do not
affect the rights and privileges of Credit Parties and do not affect the ability
of such Credit Party to amend, modify, renew or supplement the terms of this
Agreement or any of the other Loan Documents, or otherwise affect the interests
of Agent and Lenders and so long as at the time of any such amendment,
modification or waiver, no Default or Event of Default shall exist or have
occurred and be continuing, (b) the Credit Policy, (c) the Investment Ratings
Policy or (d) any agreement, document or instrument evidencing or governing any
Material Indebtedness, except, that, the Borrower may, after prior written
notice to Agent, amend or modify the terms thereof to forgive, or cancel any
portion of such Indebtedness (other than pursuant to payments thereof), or to
reduce the interest rate or any fees in connection therewith, or to make the
terms thereof less restrictive or burdensome to Borrower.

 

9.13                        Sale and Leasebacks. None of the Credit Parties
shall enter into any arrangement, directly or indirectly, whereby it shall sell
or transfer any property, real or personal, used or useful in its business,
whether now owned or hereafter acquired, and thereafter rent or lease such
property or other property that it intends to use for substantially the same
purpose or purposes as the property sold or transferred (a “Sale and Leaseback
Transaction”), except for any such sale of any fixed or capital assets by the
Credit Parties that is made for cash consideration in an amount not less than
the fair value of such fixed or capital asset and is consummated within ninety
(90) days after the Credit Parties acquires or completes the construction of
such fixed or capital asset and the obligations of the Credit Parties under such
lease constitute Permitted Indebtedness.

 

ARTICLE 10 FINANCIAL COVENANTS

 

10.1                        Maximum Balance Sheet Leverage. Commencing with the
quarterly fiscal period ending April 30, 2016 and for each quarterly fiscal
period thereafter, Borrower and its Subsidiaries shall have a Balance Sheet
Leverage Ratio not greater than 0.2 to 1.

 

10.2                        Minimum Interest Coverage Ratio. Commencing with the
quarterly fiscal period ending July 31, 2016 and for each quarterly fiscal
period thereafter, if average Liquidity for the most recent quarterly fiscal
period is less than Thirty Million Dollars ($30,000,000), then

 

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Borrower and its Subsidiaries shall have a Minimum Interest Coverage Ratio of
not less than the following amounts:

 

Period to be tested (if required to be

 

Minimum Interest

tested)

 

Coverage Ratio

For the quarterly fiscal period ending on July 31, 2016

 

1.00 to 1

For the trailing six month period ending on October 31, 2016

 

1.25 to 1

For the trailing nine month period ending on January 31, 2017

 

1.25 to 1

For the trailing twelve month period ending on April 30, 2017 and at the end of
each quarterly fiscal period thereafter

 

1.25 to 1

 

10.3                        Financial Covenant Cure Provisions. In the event
Borrower and its Subsidiaries fail to comply with either of the financial
covenants set forth in Section 10.1 or 10.2 (the “Financial Covenants”) as of
the last day of any quarterly fiscal period (a “Relevant Quarterly Period”), the
Borrower and its Subsidiaries shall have the right to cure (the “Cure Right”)
such failure (such failure being referred to herein as a “Financial Covenant
Default”) by selling any Investment or receiving proceeds of equity issued by
Borrower, in each case, after the last day of such Relevant Quarterly Period and
on or prior to the day that is thirty (30) days following the delivery of the
Compliance Certificate for such Relevant Quarterly Period (the “Cure Period”),
and including in the calculation of Net Income and shareholders’ equity, solely
for the purposes of determining compliance with the Financial Covenants for such
Relevant Quarterly Period (the proceeds of the sale of such Investment or any
such equity contribution, a “Cure Contribution”); provided that

 

(a)                                 notice of the intent to exercise its Cure
Right with respect to any Financial Covenant Default (a “Cure Notice”) shall be
delivered concurrently with the delivery by the Borrower to the Agent of the
Compliance Certificate for the Relevant Quarterly Period;

 

(b)                                 such Cure Contribution may be treated as Net
Income for such Relevant Quarterly Period only to the extent necessary to cure
the relevant Financial Covenant Default; and Cure Contributions treated as Net
Income for such Relevant Quarterly Period shall be treated as Net Income for the
following three (3) fiscal quarters in addition to such Relevant Quarterly
Period;

 

(c)                                  such Cure Contribution shall be included in
the calculation of shareholders’ equity for the Relevant Quarterly Period and
all subsequent quarterly fiscal periods; and

 

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(d)                                 the Borrower shall have the right to
exercise the Cure Right not more than three (3) times during the term of this
Agreement and provided that in each consecutive four (4) fiscal quarterly period
there will be at least two (2) consecutive fiscal quarters in which no Cure
Contribution is made;

 

Upon the receipt of evidence satisfactory to the Agent of Borrower’s receipt of
the Cure Contribution, the Financial Covenants shall be recalculated after
giving effect to the increase in Net Income and shareholders’ equity; provided
that nothing herein shall constitute a waiver of any Default or Event of Default
that exists as a result of the failure of the Borrower to satisfy the Financial
Covenants until such recalculation. If, after giving effect to such
recalculation, the Borrower shall be in compliance with the Financial Covenants,
the Borrower shall be deemed to have satisfied the requirements of the Financial
Covenants for the Relevant Quarterly Period with the same effect as though there
had been no failure to comply therewith. So long as the Borrower is entitled to
make a Cure Contribution pursuant to the foregoing terms and provisions of this
Section 10.3, from the date of the Cure Notice until the expiration of the
earlier to occur of the expiration of the Cure Period and the date on which the
Agent is notified that the Cure Contribution will not be made, neither the Agent
nor any Lender shall impose Default Interest, accelerate the Obligations or
exercise any enforcement remedy against any Loan Party solely on the basis of
the applicable Defaults or Events of Default arising from the Loan Parties
failure to satisfy the Financial Covenants; provided (i) until timely receipt of
the Cure Contribution, a Default or Event of Default shall be deemed to exist
for all other purposes of this Agreement, and any term or provision of any Loan
Document which prohibits any action to be taken by a Loan Party or any of its
Subsidiaries during the existence of a Default or Event of Default;
(ii) notwithstanding the foregoing, upon a deemed cure pursuant to this
Section 10.3, the requirements of the applicable Financial Covenants shall be
deemed to have been satisfied as of the applicable test date for the Relevant
Quarterly Period with the same effect as though there had been no Financial
Covenant Default at such date or thereafter; and (iii) at the request of the
Required Lenders, Agent shall have the right to charge Default Interest
retroactively from applicable test day for the Relevant Quarterly Period for
which such Financial Covenant default first occurred, if, for any reason, the
Cure Contribution shall not have been made by the earlier of the expiration of
the Cure Period and the date on which the Agent is notified that the Cure
Contribution will not be made.

 

ARTICLE 11 EVENTS OF DEFAULT AND REMEDIES

 

11.1                        Events of Default. The occurrence or existence of
any one or more of the following events are referred to herein individually as
an “Event of Default”, and collectively as “Events of Default”:

 

(a)                                 (i) Borrower fails to make any principal
payment hereunder when due or fails to pay interest, fees or any of the other
Obligations, (ii) any Credit Party fails to perform any of the covenants
contained in Sections 8.1, 8.13, 9 and 10, (iii) any Credit Party fails to
perform any of the covenants contained in Sections 8.2, 8.7 or 8.10, and such
failure shall continue for five (5) Business Days or (iv) any Credit Party fails
to perform any of the terms, covenants, conditions or provisions contained in
this Agreement or any of the other Loan Documents other than those described in
Sections 11.1(a)(i), 11.1(a)(ii) and 11.1(a)(iii) above and such failure shall
continue for thirty (30) days;

 

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(b)                                 any representation, warranty or statement of
fact made by the Credit Parties to Agent and Lenders in this Agreement, the
other Loan Documents or any other written agreement, schedule, confirmatory
assignment or otherwise that are qualified as to materiality or Material Adverse
Effect shall when made or deemed made be incorrect, false or misleading and any
other such representation, warranty or statement of fact made by the Credit
Parties to Agent shall when made or deemed made be incorrect, false or
misleading in any material respect;

 

(c)                                  any judgment for the payment of money is
rendered against the Credit Parties in excess of Two Million Five Hundred
Thousand Dollars ($2,500,000) in the aggregate (to the extent not covered by
independent third party insurance where the insurer has not declined or disputed
coverage) and shall remain undischarged or unvacated for a period in excess of
thirty (30) consecutive days or execution shall at any time not be effectively
stayed, or any judgment other than for the payment of money, or injunction,
attachment, garnishment or execution is rendered against any Credit Party or any
of the Collateral having a value in excess of Two Million Five Hundred Thousand
Dollars ($2,500,000);

 

(d)                                 One of the Credit Parties makes an
assignment for the benefit of creditors;

 

(e)                                  a case or proceeding under the bankruptcy
laws of the United States of America now or hereafter in effect or under any
insolvency, reorganization, receivership, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction now or hereafter in effect
(whether at law or in equity) is filed against one of the Credit Parties or all
or any part of their properties and such petition or application is not
dismissed within sixty (60) days after the date of their filing or such Credit
Party shall file any answer admitting or not contesting such petition or
application or indicates their consent to, acquiescence in or approval of, any
such action or proceeding or the relief requested is granted sooner;

 

(f)                                   a case or proceeding under the bankruptcy
laws of the United States of America now or hereafter in effect or under any
insolvency, reorganization, receivership, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction now or hereafter in effect
(whether at law or equity) is filed by one of the Credit Parties or for all or
any part of their property;

 

(g)                                  any default in respect of any Material
Contract or Material Indebtedness, including, without limitation, a default
under the Senior Notes, which default continues for more than the applicable
cure period contained in the subject agreement, if any, with respect thereto, or
the subordination provisions contained in any agreement related to any
Subordinated Debt shall cease to be in full force and effect or to give Agent
for the benefit of Agent and Lenders the rights, powers and privileges purported
to be created thereby,

 

(h)                                 any material provision hereof or of any of
the other Loan Documents shall for any reason cease to be valid, binding and
enforceable with respect to any party hereto or thereto (other than Agent and
Lenders) in accordance with its terms, or any such party shall challenge the
enforceability hereof or thereof, or shall assert in writing, or take any action
or fail to take any action based on the assertion that any provision hereof or
of any of the other Loan Documents has ceased to be or is otherwise not valid,
binding or enforceable in accordance with its terms, or any security interest
provided for herein or in any of the other Loan Documents shall

 

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cease to be a valid and perfected first priority security interest in any of the
Collateral purported to be subject thereto (except as otherwise permitted herein
or therein);

 

(i)            an ERISA Event shall occur which results in or could be expected
to result in liability of the Credit Parties in an aggregate amount in excess of
Two Million Five Hundred Thousand Dollars ($2,500,000);

 

(j)            the Credit Parties shall be prohibited or otherwise restrained
from conducting the business theretofore conducted by them in any manner that
has or could reasonably be expected to result in a Material Adverse Effect by
virtue of any determination, ruling, decision, decree or order of any court or
Governmental Authority of competent jurisdiction;

 

(k)           failure of the Borrower to provide the Lender with copies of
interim, management prepared financial statements for the fiscal year ending
October 31, 2015 no later than January 31, 2016;

 

(l)            failure of the Borrower to file its Form 10-Qs for the fiscal
quarters ending July 31, 2015 and January 31, 2016 and its Form 10-K for the
year ending October 31, 2015 on or before March 11, 2016; and

 

(m)          any Change of Control.

 

11.2        Remedies.

 

(a)           At any time an Event of Default exists or has occurred and is
continuing, and after the applicable cure period, if any, has passed, and Agent
has provided the Borrower with a Notice of Acceleration, Agent and the Lenders
shall have all rights and remedies provided in this Agreement, the other Loan
Documents, the UCC and other applicable law, all of which rights and remedies
may be exercised without further notice to or consent by the Credit Parties,
except as such notice or consent is expressly provided for hereunder or required
by applicable law. All rights, remedies and powers granted to Agent and Lenders
hereunder, under any of the other Loan Documents, the UCC or other applicable
law, are cumulative, not exclusive and enforceable, in Agent’s and Lenders’
discretion, alternatively, successively, or concurrently on any one or more
occasions, and shall include, without limitation, the right to apply to a court
of equity for an injunction to restrain a breach or threatened breach by the
Credit Parties of this Agreement or any of the other Loan Documents. Agent may
(and at the written request of the Required Lenders shall) at any time or times
an Event of Default exists or has occurred and is continuing, and the Agent has
provided a Notice of Acceleration, proceed directly against the Credit Parties
to collect the Obligations without prior recourse to the Collateral.

 

(b)           Without limiting the generality of the foregoing, at any time an
Event of Default exists or has occurred and is continuing, and after the
applicable cure period, if any, has passed, and upon the Agent’s delivery of a
Notice of Acceleration, with the written approval of Required Lenders (which
approval (x) shall be deemed to have been given if no response is received by
Agent within three (3) Business Days of such approval being requested and
(y) shall not be required if Agent determines in its Permitted Discretion that
exigent circumstances exist that require the taking of action prior to approval
from Required Lenders) Agent may, and at the

 

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written request of the Required Lenders, Agent shall (i) accelerate the payment
of all Obligations and demand immediate payment thereof to Agent and Lenders
(provided, that, upon the occurrence of any Event of Default described in
Sections 11.1(e) and 11.1(f), all Obligations shall automatically become
immediately due and payable), (ii) terminate the commitment of Lenders to make
Revolving Loans hereunder whereupon the obligation of Lenders to make any
Revolving Loan shall immediately terminate (provided, that, upon the occurrence
of any Event of Default described in Sections 11.1(e) and 11.1(f), the
commitments and any other obligation of Agent or Lenders hereunder shall
automatically terminate), (iii) cease making Revolving Loans or reduce the
lending formulas or amounts of Revolving Loans available to Borrower,
(iv) establish such Reserves as Agent determines, without limitation or
restriction, notwithstanding anything to the contrary contained herein and/or
(v) require the Borrower to replace the portfolio manager and Chief Executive
Officer of the Borrower with Persons acceptable to the Agent, in its Permitted
Discretion.

 

ARTICLE 12 ASSIGNMENTS AND PARTICIPATIONS; APPOINTMENT OF AGENT

 

12.1        Assignment and Participations.

 

(a)           Subject to the terms of this Section 12.1, any Lender may make an
assignment to a Qualified Assignee of, at any time or times, the Loan Documents,
Revolving Loans and any Commitment or any portion thereof or interest therein,
including any Lender’s rights, title, interests, remedies, powers or duties
thereunder. Any assignment by a Lender shall: (i) require the consent of Agent
(which consent shall not be unreasonably withheld or delayed with respect to a
Qualified Assignee) and the execution of an Assignment Agreement in form and
substance reasonably satisfactory to, and acknowledged by, Agent; (ii) be
conditioned on such assignee Lender representing to the assigning Lender and
Agent that it is purchasing the applicable Revolving Loans to be assigned to it
for its own account, for investment purposes and not with a view to the
distribution thereof; (iii) except for an assignment to an Affiliate of such
Lender, after giving effect to any such partial assignment the assignee Lender
shall have Commitments in an amount at least equal to Five Million Dollars
($5,000,000) and the assignor Lender shall have Commitments in an amount at
least equal to Five Million Dollars ($5,000,000); (iv) with respect to any
assignment of the Revolving Loan Commitment and the Revolving Loan, be for a
ratable portion of the assigning Lender’s interest in the Revolving Loan
Commitment Amount and the Revolving Loan; (v) include a payment to Agent of an
assignment fee of three thousand five hundred dollars ($3,500) by assignee
Lender; (vi) so long as no Event of Default has occurred and is continuing,
require the consent of Borrower, which shall not be unreasonably withheld or
delayed; provided that no such consent shall be required for an assignment to a
Qualified Assignee; and (vii) unless such an assignment is to an Affiliate of
such Lender, Lender shall give notice to the other Lenders of any intent to
assign and such other Lenders shall be permitted to purchase such assignment on
terms agreed to by assignor Lender and assignee Lender. After the occurrence of
a Default or an Event of Default, any Lender may make an assignment to a
non-Qualified Assignee with the consent of the Agent (not to be unreasonably
withheld or delayed). If more than one Lender wishes to purchase Revolving Loans
or Commitments from the assigning Lender, such assignments to Lenders will be
allocated on a pro-rata basis. In the case of an assignment by a Lender under
this Section 12.1, the assignee shall have, to the extent of such assignment,
the same rights, benefits and obligations as all other Lenders hereunder. The
assigning Lender shall be relieved of its

 

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obligations hereunder with respect to its Commitments or assigned portion
thereof from and after the date of such assignment. The Credit Parties hereby
acknowledge and agree that any assignment shall give rise to a direct obligation
of the Credit Parties to the assignee and that the assignee shall be considered
to be a “Lender”. In all instances, each Lender’s agreement to make Revolving
Loans hereunder shall be several and not joint and shall be limited to such
Lender’s Pro Rata Share of the applicable Commitment. In the event Agent or any
Lender assigns or otherwise transfers all or any part of the Obligations, Agent
or any such Lender shall so notify Borrower and Borrower shall, upon the request
of Agent or such Lender, execute new Revolving Notes in exchange for the
Revolving Notes, if any, being assigned. Notwithstanding the foregoing
provisions of this Section 12.1(a), any Lender may at any time pledge the
Obligations held by it and such Lender’s rights under this Agreement and the
other Loan Documents to a Federal Reserve Bank; provided, that, no such pledge
to a Federal Reserve Bank shall release such Lender from such Lender’s
obligations hereunder or under any other Loan Document. The Agent shall maintain
at its address referred to in Section 13.1(a) a copy of each Assignment
Agreement delivered to and accepted by it and a register of the recordation of
the names and addresses of the Lenders and the Commitments, and principal
amounts thereunder owing to, each Lender from time to time (the “Register”). The
entries in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower, the Agent and the Lenders shall treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice. Notwithstanding anything to the contrary set forth
herein, prior to the occurrence of a Consent Rights Trigger Event, the Lenders
shall not assign any portion of their Commitments, Revolving Loans, rights or
responsibilities hereunder to any Disqualified Lender. After the occurrence of a
Consent Rights Trigger Event, the Lenders shall be permitted to assign any
portion of their Commitments, Revolving Loans, rights or responsibilities
hereunder to any Person approved by Agent (such approval not to be unreasonably
withheld or delayed).

 

(b)           Subject to the terms of this Section 12.1, any Lender may sell to
a Qualified Assignee participations in, at any time or times, the Loan
Documents, Revolving Loans and any Commitment or any portion thereof or interest
therein, including any Lender’s rights, title, remedies, powers or duties
thereunder. Any participation by a Lender of all or any part of its Commitment
shall be made with the understanding that all amounts payable by the Borrower
hereunder shall be determined as if that Lender had not sold such participation,
and that the holder of any such participation shall not be entitled to require
such Lender to take or omit to take any action hereunder except actions directly
affecting (i) any reduction in the principal amount of, or interest rate or fees
payable with respect to, any Loan in which such holder participates, (ii) any
extension of the scheduled amortization of the principal amount of any Loan in
which such holder participates or the final maturity date thereof, and (iii) any
release of all or substantially all of the Collateral (other than in accordance
with the terms of this Agreement or the other Loan Documents). Solely for
purposes of Section 12.8 (Setoff and Sharing of Payments), Section 3.9
(Increased Cost), Section 4.7 (Taxes), and Section 13.6 (Indemnification), the
Borrower acknowledges and agrees that a participation shall give rise to a
direct obligation of the Borrower to the participant and the participant shall
be considered to be a “Lender”. Except as set forth in the preceding sentence
the Borrower shall not have any obligation or duty to any participant. Neither
Agent nor any Lender (other than the Lender selling a participation) shall have
any duty to any participant and may continue to deal solely

 

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with the Lender selling a participation as if no such sale had occurred.
Notwithstanding anything to the contrary set forth herein, prior to the
occurrence of a Consent Rights Trigger Event, the Lenders shall not grant any
participations in any portion of their Commitments, Revolving Loans, rights or
responsibilities hereunder to any Disqualified Lender. After the occurrence of a
Consent Rights Trigger Event, the Lenders shall be permitted to grant
participations in any portion of their Commitments, Revolving Loans, rights or
responsibilities hereunder to any Person approved by Agent (such approval not to
be unreasonably withheld or delayed).

 

(c)           Except as expressly provided in this Section 12.1, no Lender
shall, as between the Borrower and that Lender, or Agent and that Lender, be
relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all or
any part of the Revolving Loans, the Revolving Notes or other Obligations owed
to such Lender.

 

(d)           Borrower shall assist any Lender permitted to sell assignments or
participations under this Section 12.1 as reasonably required to enable the
assigning or selling Lender to effect any such assignment or participation,
including the execution and delivery of any and all agreements, notes and other
documents and instruments as shall be requested and, if requested by Agent, the
preparation of informational materials for, and the participation of management
in meetings with, potential assignees or participants. Borrower shall certify
the correctness, completeness and accuracy of all descriptions of the Credit
Parties and their affairs contained in any selling materials provided by
Borrower and all other information provided by Borrower and included in such
materials, except that any projections delivered by Borrower shall only be
certified by Borrower as having been prepared by Borrower based upon any
estimates or assumptions stated therein which Borrower believed to be reasonable
and fair in light of the conditions and facts then known to Borrower and that
such projections reflected Borrower’s good faith and reasonable estimates of the
future financial performance of the Credit Parties and of the other information
projected therein for the periods set forth therein.

 

(e)           Any Lender may furnish any information concerning the Credit
Parties in the possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants), provided, all
such prospective assignees and participants shall have signed a confidentiality
agreement in form and substance acceptable to Borrower and Agent. After the
occurrence of an Event of Default, all such prospective assignees and
participants shall have signed a confidentiality agreement in form and substance
acceptable to Agent.

 

12.2        Appointment of Agents.

 

(a)           Agent is hereby appointed to act on behalf of all Lenders as Agent
under this Agreement and the other Loan Documents. The provisions of this
Section 12.2 are solely for the benefit of Agent and Lenders and neither the
Credit Parties nor any other Person shall have any rights as a third party
beneficiary of any of the provisions hereof. In performing its functions and
duties under this Agreement and the other Loan Documents, Agent shall act solely
as an agent of Lenders and does not assume and shall not be deemed to have
assumed any obligation toward or relationship of agency or trust with or for the
Credit Parties or any other Person. Agent shall have no duties or
responsibilities except for those expressly set forth in this

 

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Agreement and the other Loan Documents. The duties of Agent shall be mechanical
and administrative in nature and Agent shall not have, or be deemed to have, by
reason of this Agreement, any other Loan Document or otherwise a fiduciary
relationship in respect of any Lender. Except as expressly set forth in this
Agreement and the other Loan Documents, Agent shall not have any duty to
disclose, and shall not be liable for failure to disclose, any information
relating to the Credit Parties, the Portfolio Companies or the Debt Investment
Obligors that is communicated to or obtained by Agent in any capacity. Neither
Agent nor any of its Affiliates nor any of their respective officers, directors,
employees, agents or representatives shall be liable to any Lender for any
action taken or omitted to be taken by it hereunder or under any other Loan
Document, or in connection herewith or therewith, provided that Agent may be
liable for damages resulting from a breach by Agent of its Obligations hereunder
caused by its own gross negligence or willful misconduct.

 

If Agent shall request instructions from Required Lenders or all affected
Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any other Loan Document, then Agent shall be
entitled to refrain from such act or taking such action unless and until Agent
shall have received instructions from Required Lenders or all affected Lenders,
as the case may be, and Agent shall not incur liability to any Person by reason
of so refraining. Agent shall be fully justified in failing or refusing to take
any action hereunder or under any other Loan Document (a) if such action would,
in the reasonable opinion of Agent, be contrary to law or the terms of this
Agreement or any other Loan Document, (b) if such action would, in the
reasonable opinion of Agent, expose Agent to liability under any Environmental
Law (as such term is defined in the Environmental Agreement) or (c) if Agent
shall not first be indemnified to its reasonable satisfaction against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against Agent as a result of Agent
acting or refraining from acting hereunder or under any other Loan Document in
accordance with the instructions of Required Lenders or all affected Lenders, as
applicable.

 

(b)           Notwithstanding any other provision of this Agreement or any
provision of any other Loan Document, the Syndication Agent is named as such for
recognition purposes only, and in its capacity as such shall have no duties,
responsibilities or liabilities with respect to this Agreement or any other Loan
Document; it shall not be entitled to any additional fees as a result of such
designation; it being understood and agreed that the Syndication Agent shall be
entitled to all indemnification and reimbursement rights in favor of the Agent
provided herein and in the other Loan Documents. Without limitation of the
foregoing, the Syndication Agent in its capacity as such shall not, by reason of
this Agreement or any other Loan Document, have any fiduciary relationship in
respect of any Lender, Credit Party or any other Person.

 

12.3        Agent’s Reliance, Etc. Neither Agent nor any of its Affiliates nor
any of their respective directors, officers, agents or employees shall be liable
for any action taken or omitted to be taken by it or them under or in connection
with this Agreement or the other Loan Documents, except that Agent or its
Affiliates, as applicable, may be liable for damages caused by its or their own
gross negligence or willful misconduct. Without limiting the generality of the
foregoing, Agent: (a) may treat the payee of any Revolving Note as the holder
thereof until Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form reasonably satisfactory to Agent;
(b) may consult with legal counsel, independent public

 

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accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement or the other Loan Documents; (d) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms, covenants
or conditions of this Agreement or the other Loan Documents on the part of the
Credit Parties or any Guarantor or to inspect the Collateral (including the
books and records) of the Credit Parties or any Guarantor; (e) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or the other
Loan Documents or any other instrument or document furnished pursuant hereto or
thereto; and (f) shall incur no liability under or in respect of this Agreement
or the other Loan Documents by acting upon any notice, consent, certificate or
other instrument or writing (which may be by telecopy, telegram, cable or telex)
believed by it to be genuine and signed or sent by the proper party or parties.

 

12.4        Agent and Affiliates. With respect to its Commitments hereunder,
Agent shall have the same rights and powers under this Agreement and the other
Loan Documents as any other Lender and may exercise the same as though it were
not Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly
indicated, include Agent in its individual capacity. Agent and its Affiliates
may lend money to, invest in, and generally engage in any kind of business with,
the Credit Parties or any Guarantor, any of their Affiliates and any Person who
may do business with or own securities of the Credit Parties or any such
Affiliate, all as if Agent were not Agent and without any duty to account
therefor to Lenders. Agent and its Affiliates may accept fees and other
consideration from the Credit Parties or any Guarantor for services in
connection with this Agreement or otherwise without having to account for the
same to Lenders. Each Lender acknowledges the potential conflict of interest
between Agent as a Lender holding disproportionate interests in the Revolving
Loans and Agent as Agent. Each Lender acknowledges that it has not relied, and
will not rely, on any of the Lenders so identified in deciding to enter into
this Agreement or in taking or not taking action hereunder.

 

12.5        Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the Financial Statements referred to in Section 7.5 and Section 8.1 and such
other documents and information as it has deemed appropriate, made its own
credit and financial analysis of the Credit Parties and its own decision to
enter into this Agreement. Each Lender also acknowledges that it will,
independently and without reliance upon Agent or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement. Each Lender acknowledges the potential conflict of interest of
each other Lender as a result of Lenders holding disproportionate interests in
the Revolving Loans, and expressly consents to, and waives any claim based upon,
such conflict of interest.

 

12.6        Indemnification. Lenders agree to indemnify Agent (to the extent not
reimbursed by the Borrower or Guarantors and without limiting the obligations of
Borrower and Guarantors under the Loan Documents), ratably according to their
respective Pro Rata Shares, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on,

 

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incurred by, or asserted against Agent in any way relating to or arising out of
this Agreement or any other Loan Document or any action taken or omitted to be
taken by Agent in connection therewith; provided, that no Lender shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
Agent’s gross negligence or willful misconduct. Without limiting the foregoing,
each Lender agrees to reimburse Agent promptly upon demand for its ratable share
of any out-of-pocket expenses (including reasonable counsel fees) incurred by
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement and each other Loan Document, to the
extent that Agent is not reimbursed for such expenses by Borrower or Guarantors
and without limiting the obligations of Borrower and Guarantors under the Loan
Documents.

 

12.7        Successor Agent. Agent may resign at any time by giving not less
than 30 days’ prior written notice thereof to Lenders and Borrower. Upon any
such resignation, the Required Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days after
the resigning Agent’s giving notice of resignation, then the resigning Agent
may, on behalf of Lenders, appoint a successor Agent, which shall be a Lender,
if a Lender is willing to accept such appointment, or otherwise shall be a
commercial bank or financial institution or a subsidiary of a commercial bank or
financial institution if such commercial bank or financial institution is
organized under the laws of the United States of America or of any State thereof
and has a combined capital and surplus of at least Three Hundred Million Dollars
($300,000,000). If no successor Agent has been appointed pursuant to the
foregoing, within 30 days after the date such notice of resignation was given by
the resigning Agent, such resignation shall become effective and the Required
Lenders shall thereafter perform all the duties of Agent hereunder until such
time, if any, as the Required Lenders appoint a successor Agent as provided
above. Any successor Agent appointed by Required Lenders hereunder shall be
subject to the prior written approval of Borrower, such approval not to be
unreasonably withheld or delayed; provided that such approval after the first 30
days after the notice of resignation by the Agent shall not be required if a
Consent Rights Triggering Event has occurred and is continuing. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall succeed to and become vested with all the rights, powers,
privileges and duties of the resigning Agent. Upon the earlier of the acceptance
of any appointment as Agent hereunder by a successor Agent or the effective date
of the resigning Agent’s resignation, the resigning Agent shall be discharged
from its duties and obligations under this Agreement and the other Loan
Documents, except that any indemnity rights or other rights in favor of such
resigning Agent shall continue. After any resigning Agent’s resignation
hereunder, the provisions of this Section 12 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was acting as Agent
under this Agreement and the other Loan Documents.

 

12.8        Setoff and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default
and subject to Section 12.9(f), each Lender is hereby authorized at any time or
from time to time, without notice to Borrower or to any other Person, any such
notice being hereby expressly waived, to offset and to appropriate and to apply
any and all balances held by it at any of its offices for the account of
Borrower or

 

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any Guarantor (regardless of whether such balances are then due to Borrower or
Guarantor) and any other properties or assets at any time held or owing by that
Lender or that holder to or for the credit or for the account of Borrower or any
Guarantor against and on account of any of the Obligations that are not paid
when due. Any Lender exercising a right of setoff or otherwise receiving any
payment on account of the Obligations in excess of its Pro Rata Share thereof
shall purchase for cash (and the other Lenders or holders shall sell) such
participations in each such other Lender’s or holder’s Pro Rata Share of the
Obligations as would be necessary to cause such Lender to share the amount so
offset or otherwise received with each other Lender or holder in accordance with
their respective Pro Rata Shares (other than offset rights exercised by any
Lender with respect to Section 3.9 (Increased Cost), Section 4.7 (Taxes),
Section 13.6 (Indemnification)). The Credit Parties agree, to the fullest extent
permitted by law, that (a) any Lender may exercise its right to offset with
respect to amounts in excess of its Pro Rata Share of the Obligations and may
sell participations in such amounts of offset to other Lenders and holders and
(b) any Lender so purchasing a participation in the Revolving Loans made or
other Obligations held by other Lenders or holders may exercise all rights of
offset, bankers’ Lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender or holder were a direct holder of the
Revolving Loans and the other Obligations in the amount of such participation.
Notwithstanding the foregoing, if all or any portion of the offset amount or
payment otherwise received is thereafter recovered from the Lender that has
exercised the right of offset, the purchase of participations by that Lender
shall be rescinded and the purchase price restored together with interest at
such rate, if any, as such Lender is required to pay to Borrower or such other
Person, without setoff, counterclaim or deduction of any kind.

 

12.9        Revolving Loans; Payments; Non-Funding Lenders; Defaulting Lenders;
Information; Actions in Concert.

 

(a)           Revolving Loans; Payments.

 

(i)            Subject to the satisfaction of the funding conditions hereunder,
each Lender shall make the amount of such Lender’s Pro Rata Share of each
Revolving Loan available to Agent in same day funds by wire transfer to Agent’s
account as set forth in Exhibit D not later than 2:00 p.m. (New York time) on
the requested borrowing date. After receipt of such wire transfers (or, in the
Agent’s sole discretion, before receipt of such wire transfers), subject to the
terms hereof, Agent shall make the requested Revolving Loan to the Borrower on
the borrowing date set forth in the applicable Notice of Borrowing. All payments
by each Lender shall be made without setoff, counterclaim or deduction of any
kind. To the extent that any Lender (a “Non-Funding Lender”) fails to fund such
payments and Revolving Loans or fails to fund the purchase of any required
participations, Agent shall be entitled to set off the funding short-fall
against that Non-Funding Lender’s Pro Rata Share of all payments received from
Borrower.

 

(ii)           On the second Business Day of each calendar week or more
frequently at Agent’s election (each, a “Reporting Date”), Agent shall report to
each Lender by telephone, electronic mail, or telecopy of the amount of such
Lender’s Pro Rata Share of Revolving Loans funded by such Lender since the
previous Reporting Date and the amount of principal, interest and fees paid for
the benefit of Lenders with respect to the Obligations.

 

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(b)           Availability of Lenders’ Pro Rata Share. Each Lender’s obligation
to make its Pro Rata Share of each Revolving Loan shall be absolute and
unconditional and shall not be affected by any circumstance, other than an
inability of Borrower to satisfy the conditions precedent to borrowing set forth
in this Agreement at any time. If such Pro Rata Share is not, in fact, paid to
Agent by such Lender when due, Agent will be entitled to recover such amount on
demand from such Lender. If any Lender fails to pay the amount of its Pro Rata
Share forthwith upon Agent’s demand, Agent shall promptly notify Borrower and
Borrower shall immediately repay such amount to Agent. Nothing in this
Section 12.9(b) or elsewhere in this Agreement or the other Loan Documents shall
be deemed to require Agent to advance funds on behalf of any Lender or to
relieve any Revolving Lender from its obligation to fulfill its Commitments
hereunder or to prejudice any rights that Borrower may have against any Lender
as a result of any default by such Lender hereunder. To the extent that Agent
advances funds to Borrower on behalf of any Lender and is not reimbursed
therefor on the same Business Day as such Revolving Loan is made, Agent shall be
entitled to retain for its account all interest accrued on such Revolving Loan
until reimbursed by the applicable Lender.

 

(c)           Return of Payments.

 

(i)            If Agent pays an amount to a Lender under this Agreement in the
belief or expectation that a related payment has been or will be received by
Agent from Borrower and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender on demand without
setoff, counterclaim or deduction of any kind.

 

(ii)           If Agent determines at any time that any amount received by Agent
under this Agreement must be returned to Borrower or paid to any other Person
pursuant to any insolvency law or otherwise, then, notwithstanding any other
term or condition of this Agreement or any other Loan Document, Agent will not
be required to distribute any portion thereof to any Lender. In addition, each
Lender will repay to Agent on demand any portion of such amount that Agent has
distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to Borrower or such other Person, without setoff,
counterclaim or deduction of any kind.

 

(d)           Non-Funding Lenders; Defaulting Lenders.

 

(i)            The failure of any Non-Funding Lender to make any Revolving Loan
or any payment required by it hereunder shall not relieve any other Lender (each
such other Lender, an “Other Lender”) of its obligations to make such Revolving
Loan or purchase such participation on such date, but neither any Other Lender
nor Agent shall be responsible for the failure of any Non-Funding Lender to make
a Revolving Loan, purchase a participation or make any other payment required
hereunder.

 

(ii)           Notwithstanding anything set forth herein to the contrary, a
Defaulting Lender shall not have any voting or consent rights under or with
respect to any Loan Document or constitute a “Lender” (or be included in the
calculation of “Required Lenders” hereunder) for any voting or consent rights
under or with respect to any Loan Document. At Borrower’s request, Agent or a
Person reasonably acceptable to Agent shall have the right with Agent’s consent
and in Agent’s sole discretion (but shall have no obligation) to purchase from

 

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any Defaulting Lender, and each Defaulting Lender agrees that it shall, at
Agent’s request, sell and assign to Agent or such Person, all of the Commitments
of that Defaulting Lender for an amount equal to the principal balance of all
Revolving Loans held by such Defaulting Lender and all accrued interest and fees
with respect thereto through the date of sale, such purchase and sale to be
consummated pursuant to an executed Assignment Agreement. Notwithstanding
anything herein to the contrary, with respect to a Lender that is a Defaulting
Lender, the Agent may, but shall not be obligated to, obtain a substitute Lender
and execute an Assignment on behalf of such Defaulting Lender at any time with
three (3) Business Days’ prior notice to such Defaulting Lender (unless notice
is not practicable under the circumstances) and cause such Lender’s Revolving
Loans and Commitments to be sold and assigned, in whole or in part, at par.

 

(e)           Dissemination of Information. Agent shall use reasonable efforts
to provide Lenders with any notice of Default or Event of Default received by
Agent from, or delivered by Agent to, Borrower, with notice of any Event of
Default of which Agent has actually become aware and with notice of any action
taken by Agent following any Event of Default; provided, that Agent shall not be
liable to any Lender for any failure to do so, except to the extent that such
failure is attributable to Agent’s gross negligence or willful misconduct.
Lenders acknowledge that Borrower is required to provide financial statements,
collateral reports and other information to Lenders in accordance with
Section 8.1 and agree that Agent shall have no duty to provide the same to
Lenders.

 

(f)            Actions in Concert. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Agreement or the Revolving Notes (including exercising any rights of setoff)
without first obtaining the prior written consent of Agent and Required Lenders
as applicable, it being the intent of Lenders that any such action to protect or
enforce rights under this Agreement and the Revolving Notes shall be taken in
concert and at the direction or with the consent of Agent or Required Lenders,
as applicable, in accordance with the terms hereof.

 

12.10      Amendments and Waivers.

 

(a)           The Credit Parties and, with the written consent of the Required
Lenders, the Agent may, from time to time, enter into written (but not oral)
amendments, supplements or modifications hereto for the purpose of adding any
provisions to this Agreement, the Revolving Notes or any other Loan Documents or
changing in any manner the rights of the Lenders or of any other party hereunder
or thereunder, and with the consent of the Required Lenders, the Agent may
execute and deliver to the Borrower a written instrument waiving, on such terms
and conditions as the Agent or the Required Lenders may specify in such
instrument, any of the requirements of this Agreement, the Revolving Notes or
any other Loan Document; provided, however, that no such waiver and no such
amendment, supplement or modification shall (i) extend either the Maturity Date
or the maturity of any Revolving Note or any installment thereof, or reduce the
principal amount thereof, or change the rate or extend the time of payment of
interest thereon, or change the amount or extend the time of payment of any fee
payable to all of the Lenders hereunder, or change the amount of any Lender’s
commitment to grant Revolving Loans, or amend, modify or waive any provision of
Section 4.1(b), Section 8.1 or Section 11 or this Section 12.10, or any changes
or modifications to the definition of Required Lenders or

 

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modify the definitions of “Availability Block”, “Borrowing Base”, “Eligible Debt
Investments”, “Eligible Senior Debt Investments” or “Eligible Subordinate Debt
Investments” or consent to the assignment or transfer by Borrower of any of its
rights and obligations under this Agreement, or release, or subordinate the
Liens under the Loan Documents in, any Collateral in excess of Ten Million
Dollars ($10,000,000), or release any Guarantors from their obligations under
any Guaranty Agreements, or consent to any prepayment of the Senior Notes, in
each case without the written consent of all the Lenders, (ii) amend, modify or
waive any provision of Section 12 without the written consent of the Agent and
any Lenders affected by such waiver, amendment or modification or (iii) amend,
modify or waive any provision requiring the consent of all of the Lenders,
without the written consent of all of the Lenders.

 

(b)                                 In the event a Lender does not consent to an
amendment request requiring the consent of all Lenders (the “Non-Consenting
Lender”), but such request is approved by the Required Lenders (the “Consenting
Lenders”), the Agent, with the consent of the Borrower if occurring prior to the
occurrence of a Default or an Event of Default, shall be permitted to
(i) replace the Non-Consenting Lender by the Consenting Lenders increasing their
Commitments (ii) with a Lender acceptable to the Agent and with the consent of
the Borrower if occurring prior to the occurrence of a Default or an Event of
Default, or (iii) terminate the Non-Consenting Lenders Commitment subject to the
repayment, without any prepayment fee or penalty, of the Non-Consenting Lender’s
Pro Rata Share of the outstanding Revolving Loans.

 

(c)                                  Any such written waiver and any such
written amendment, supplement or modification shall apply equally to each of the
Lenders and shall be binding upon the Borrower, the Lenders, the Agent and all
future holders of the Revolving Notes. In the case of any waiver, the Borrower,
the Lenders and the Agent shall be restored to their former position and rights
hereunder and under the outstanding Revolving Notes, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; provided,
however, no such waiver shall extend to any subsequent or other Default or Event
of Default, or impair any right consequent thereto. An Event of Default shall be
deemed to be continuing unless waived by the Agent or the requisite number of
Lenders in accordance with this Section 12.10.

 

ARTICLE 13 JURY TRIAL WAIVER;

OTHER WAIVERS; CONSENTS; GOVERNING LAW

 

13.1                        Obligations and Liabilities of Lender. Neither the
Agent nor the Lenders shall be deemed to have assumed any liability or
responsibility to the Credit Parties or any other Person for the correctness,
validity or genuineness of any instruments or documents that may be released or
endorsed to the Credit Parties by the Agent and/or the Lenders (which shall
automatically be deemed to be without recourse to the Lenders in any event), or
for the existence, character, quantity, quality, condition, value or delivery of
any goods purporting to be represented by any such documents; and the Agent and
the Lenders, by accepting such Lien in the Collateral, or by releasing any
Collateral to the Borrower, shall not be deemed to have assumed any obligation
or liability to any supplier, Debt Investment Obligor or to any other Person,
and the Credit Parties agree to indemnify and defend the Agent and the Lenders
and hold them harmless in respect to any claim or proceeding arising out of any
matter referred to in this Section 13.1.

 

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13.2                        Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver.

 

(a)                                 The validity, interpretation and enforcement
of this Agreement and the other Loan Documents (except as otherwise provided
therein) and any dispute arising out of the relationship between the parties
hereto, whether in contract, tort, equity or otherwise, shall be governed by the
internal laws of the State of New York but excluding any principles of conflicts
of law or other rule of law that would cause the application of the law of any
jurisdiction other than the laws of the State of New York.

 

(b)                                 The Credit Parties, Agent, and Lenders
irrevocably consent and submit to the non-exclusive jurisdiction of the of the
Supreme Court of the State of New York, New York County and the United States
District Court for the Southern District of New York, whichever Agent may elect,
and waive any objection based on venue or forum non conveniens with respect to
any action instituted therein arising under this Agreement or any of the other
Loan Documents or in any way connected with or related or incidental to the
dealings of the parties hereto in respect of this Agreement or any of the other
Loan Documents or the transactions related hereto or thereto, in each case
whether now existing or hereafter arising, and whether in contract, tort, equity
or otherwise, and agree that any dispute with respect to any such matters shall
be heard only in the courts described above (except that Agent shall have the
right to bring any action or proceeding against Credit Parties or their property
in the courts of any other jurisdiction which Agent deems necessary or
appropriate in order to realize on the Collateral or to otherwise enforce its
rights against Credit Parties or their property).

 

(c)                                  The Credit Parties hereby waive personal
service of any and all process upon them and consent that all such service of
process may be made by certified mail (return receipt requested) directed to
their address set forth herein and service so made shall be deemed to be
completed five (5) days after the same shall have been so deposited in the U.S.
mails, or, at Agent’s option, by service upon the Credit Parties in any other
manner provided under the rules of any such courts. Within forty-five (45) days
after such service, the Credit Parties shall appear in answer to such process,
failing which the Credit Parties shall be deemed in default and judgment may be
entered by Agent against the Credit Parties for the amount of the claim and
other relief requested.

 

(d)                                 THE CREDIT PARTIES, AGENT, AND LENDERS EACH
HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. THE
CREDIT PARTIES, AGENT, AND LENDERS EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY AND THAT THE CREDIT PARTIES, AGENT, OR LENDERS MAY FILE AN ORIGINAL
COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

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(e)                                  Agent and Lenders shall not have any
liability to the Credit Parties (whether in tort, contract, equity or otherwise)
for losses suffered by the Credit Parties in connection with, arising out of, or
in any way related to the transactions or relationships contemplated by this
Agreement, or any act, omission or event occurring in connection herewith,
unless it is determined by a final and non-appealable judgment or court order
binding on Agent and Lenders that the losses were the result of a breach by
Agent or such Lender of its obligations hereunder or an act or omission of Agent
or such Lender constituting gross negligence or willful misconduct. The Credit
Parties: (i) certify that neither Agent, Lenders, nor any representative, agent
or attorney acting for or on behalf Agent or Lenders has represented, expressly
or otherwise, that Agent and Lenders would not, in the event of litigation, seek
to enforce any of the waivers provided for in this Agreement or any of the other
Loan Documents and (ii) acknowledges that in entering into this Agreement and
the other Loan Documents, Agent and Lenders are relying upon, among other
things, the waivers and certifications set forth in this Section 13.2 and
elsewhere herein and therein.

 

13.3                        Waiver of Notices. The Credit Parties hereby
expressly waive demand, presentment, protest and notice of protest and notice of
dishonor with respect to any and all instruments and chattel paper, included in
or evidencing any of the Obligations or the Collateral, and any and all other
demands and notices of any kind or nature whatsoever with respect to the
Obligations, the Collateral and this Agreement, except such as are expressly
provided for herein or required by applicable law and cannot be waived
thereunder. No notice to or demand on the Credit Parties which Agent may elect
to give shall entitle the Credit Parties to any other or further notice or
demand in the same, similar or other circumstances.

 

13.4                        Amendments and Waivers. Neither this Agreement nor
any other Loan Document nor any terms hereof or thereof may be amended, waived,
discharged or terminated unless such amendment, waiver, discharge or termination
is in writing signed by Agent, and as to amendments to any of the Loan
Documents, by the Credit Parties, as applicable, and such amendment, waiver,
discharge or termination shall be effective and binding as to Agent and Lenders
only in the specific instance and for the specific purpose for which given.
Agent and Lenders shall not, by any act, delay, omission or otherwise be deemed
to have expressly or impliedly waived any of its or their rights, powers and/or
remedies unless such waiver shall be in writing and signed as provided herein.
Any such waiver shall be enforceable only to the extent specifically set forth
therein. A waiver by Agent or Lenders of any right, power and/or remedy on any
one occasion shall not be construed as a bar to or waiver of any such right,
power and/or remedy which Agent or Lenders would otherwise have on any future
occasion, whether similar in kind or otherwise.

 

13.5                        Waiver of Counterclaims. The Credit Parties waive
all rights to interpose any claims, deductions, setoffs or counterclaims of any
nature (other than compulsory counterclaims) in any action or proceeding with
respect to this Agreement, the Obligations, the Collateral or any matter arising
therefrom or relating hereto or thereto.

 

13.6                        Indemnification. The Credit Parties shall indemnify
and hold Agent and Lenders, and their respective officers, directors, agents,
employees, advisors and counsel and their respective Affiliates (each such
person being an “Indemnitee”), harmless from and against any and all losses,
claims, damages, penalties, liabilities, costs or expenses (including attorneys’
fees

 

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and expenses) imposed on, incurred by or asserted against any of them in
connection with any litigation, investigation, claim or proceeding commenced or
threatened related to the negotiation, preparation, execution, delivery,
enforcement, performance or administration of this Agreement, any other Loan
Documents, or any undertaking or proceeding related to any of the transactions
contemplated hereby or any act, omission, event or transaction related or
attendant thereto, including amounts paid in settlement, court costs, and the
fees and expenses of counsel except the Credit Parties shall not have any
obligation under this Section 13.6 to indemnify an Indemnitee with respect to
(i) a matter covered hereby resulting from a breach by such Indemnitee of its
obligations hereunder which are the result of the gross negligence or willful
misconduct of such Indemnitee as determined pursuant to a final, non-appealable
order of a court of competent jurisdiction (but without limiting the obligations
of the Credit Parties as to any other Indemnitee) or (ii) any dispute between
any two (2) or more Indemnitees which is not the result of any act or failure to
act by the Credit Parties. To the extent that the undertaking to indemnify, pay
and hold harmless set forth in this Section may be unenforceable because it
violates any law or public policy, Borrower shall pay the maximum portion which
they are permitted to pay under applicable law to Agent and Lenders in
satisfaction of indemnified matters under this Section. To the extent permitted
by applicable law, the Credit Parties shall not assert, and the Credit Parties
hereby waive, any claim against any Indemnitee, on any theory of liability for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement, any of the other Loan Documents or any undertaking or transaction
contemplated hereby. No Indemnitee referred to above shall be liable for any
damages arising from the use by unintended recipients of any information or
other materials distributed by it through telecommunications, electronic or
other information transmission systems in connection with this Agreement or any
of the other Loan Documents or the transaction contemplated hereby or thereby.
All amounts due under this Section shall be payable upon demand. The foregoing
indemnity shall survive the payment of the Obligations and the termination or
non-renewal of this Agreement.

 

ARTICLE 14 NOTICES; MISCELLANEOUS

 

14.1                        Notices.

 

(a)                                 Except in the case of notices and other
communications expressly permitted to be given by telephone or electronic method
of transmission (and subject in each case to clause (c) below), all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by facsimile or electronic transmission (as provided in
Section 14.1(c) below), as follows:

 

If to
Borrower:                                                                                                                                                                                                
MVC CAPITAL, INC.

287 Bowman Ave # 241

Purchase, NY 10577

Attention: Scott J. Schuenke

Telephone No.: 914-701-0301

Telecopy No. 914-701-0315

Email: sschuenke@mvccapital.com

 

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With a copy
to:                                                                                                                                                                                             
Locke Lord LLP

111 South Wacker Drive

Chicago, Illinois 60606

Attention: John L. Eisel, Esq.

Telephone No.: 312-201-2613

Telecopy No. 855-577-8443

Email: john.eisel@lockelord.com

 

If to Agent or
Lenders:                                                                                                                                                      
SANTANDER BANK, N.A.

830 Morris Turnpike, 3rd Floor

Short Hills, NJ 07078

Attention: Mr. Gregory R. Russano

Telephone No.: 973-232-8349

Telecopy No. 973-379-4175

Email: grussano@santander.us

 

With a copy
to:                                                                                                                                                                                             
Otterbourg P.C.

230 Park Avenue

New York, New York 10169

Attention: Jeffrey M. Rosenthal, Esq.

Telephone No.: 212-905-3634

Telecopy No. 212-682-6104

Email: jrosenthal@otterbourg.com

 

If to Wintrust
Bank:                                                                                                                                                                   
Wintrust Commercial Banking

at Wintrust Bank

231 S. LaSalle Street

2nd Floor

Chicago, IL 60604

Attention: Mr. John Paul Hills

Telephone No.: 312-291-2941

Telecopy No. 866-862-9548

Email: jhills@wintrust.com

 

With a copy
to:                                                                                                                                                                                             
Goldberg Kohn LTD.

55 East Monroe

Suite 3300 Chicago, IL 60603

Attention: Michael C. Hainen, Esq.

Telephone No.: 312-201-3913

 

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Telecopy No. 312-863-7413

Email: michael.hainen@goldbergkohn.com

 

Any party hereto may change its address, facsimile number or e-mail address for
notices and other communications hereunder by notice to the other parties
hereto.

 

(b)                                 All such notices and other communications
(i) sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received, (ii) sent by
facsimile shall be deemed to have been given when sent, provided that if not
given during normal business hours of the recipient, shall be deemed to have
been given at the opening of business on the next Business Day for the recipient
or (iii) delivered through an electronic method of transmission to the extent
provided in clause (c) below shall be effective as provided in such clause.

 

(c)                                  Notices and other communications to Agent
hereunder may be delivered or furnished by e-mail or any internet or
extranet-based site providing for access to data protected by passcodes or other
security systems approved by Agent for such purpose and in each case to the
extent that Agent may approve pursuant to procedures approved by the Agent;
provided, that, the foregoing shall not apply to notices pursuant to Section 2
or Section 8.2 or such other notices as Agent may specifically hereafter agree.
Unless otherwise specified by Agent, all such notices and other communications
(i) sent to an e-mail address shall be deemed received upon the sender’s receipt
of an acknowledgement from the intended recipient (such as by the “return
receipt requested” function, as available, return e-mail or other written
acknowledgement), provided that if not given during the normal business hours of
the recipient, such notice or communication shall be deemed to have been given
at the opening of business on the next Business Day for the recipient, and
(ii) posted to an internet or extranet-based site shall be deemed received upon
the deemed receipt by the intended recipient at its e-mail address as described
in the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor; provided that, for both
clauses (i) and (ii) above, if such notice, e-mail or other communication is not
sent during the 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 of the recipient.

 

14.2                        Partial Invalidity. If any provision of this
Agreement is held to be invalid or unenforceable, such invalidity or
unenforceability shall not invalidate this Agreement as a whole, but this
Agreement shall be construed as though it did not contain the particular
provision held to be invalid or unenforceable and the rights and obligations of
the parties shall be construed and enforced only to such extent as shall be
permitted by applicable law.

 

14.3                        Successors. This Agreement, the other Loan Documents
and any other document referred to herein or therein shall be binding upon and
inure to the benefit of and be enforceable by Agent, Lenders and the Credit
Parties and their respective successors and assigns, except that the Credit
Parties may not assign their rights under this Agreement, the other Loan
Documents and any other document referred to herein or therein without the prior
written consent of Agent. Any such purported assignment without such express
prior written consent shall be void. The terms and provisions of this Agreement
and the other Loan Documents are for the purpose of defining the relative rights
and obligations of the Credit Parties, Agent and Lenders with respect

 

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to the transactions contemplated hereby and there shall be no third party
beneficiaries of any of the terms and provisions of this Agreement or any of the
other Loan Documents.

 

14.4                        Entire Agreement. This Agreement, the other Loan
Documents, any supplements hereto or thereto, and any instruments or documents
delivered or to be delivered in connection herewith or therewith represents the
entire agreement and understanding concerning the subject matter hereof and
thereof between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written. In the event of any inconsistency between the
terms of this Agreement and any schedule or exhibit hereto, the terms of this
Agreement shall govern.

 

14.5                        USA Patriot Act. Agent hereby notifies Borrower that
pursuant to the requirements of the USA PATRIOT Act (Title III of Pub.L. 107-56
(signed into law October 26, 2001) (the “Act”), it is required to obtain, verify
and record information that identifies each person or corporation who opens an
account and/or enters into a business relationship with it, which information
includes the name and address of the Credit Parties and other information that
will allow Agent to identify such persons in accordance with the Act and any
other applicable law. The Credit Parties are hereby advised that any Revolving
Loans hereunder are subject to satisfactory results of such verification.

 

14.6                        Counterparts, Etc. This Agreement or any of the
other Loan Documents may be executed in any number of counterparts, each of
which shall be an original, but all of which taken together shall constitute one
and the same agreement. Delivery of an executed counterpart of this Agreement or
any of the other Loan Documents by telefacsimile or other electronic method of
transmission shall have the same force and effect as the delivery of an original
executed counterpart of this Agreement or any of such other Loan Documents. Any
party delivering an executed counterpart of any such agreement by telefacsimile
or other electronic method of transmission shall in a timely manner also deliver
an original executed counterpart, but the failure to do so shall not affect the
validity, enforceability or binding effect of such agreement.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, Agent, Lenders, Borrower and Guarantors have caused these
presents to be duly executed as of the day and year first above written.

 

 

BORROWER:

 

 

 

MVC CAPITAL, INC.

 

 

 

 

 

By:

/s/ Michael T. Tokarz

 

 

Name: Michael T. Tokarz

 

 

Title:

 

 

 

 

 

GUARANTORS:

 

 

 

MVC FINANCIAL SERVICES, INC.

 

 

 

By:

/s/ Michael T. Tokarz

 

 

Name: Michael T. Tokarz

 

 

Title:

 

 

 

 

 

MVC CAYMAN

 

 

 

By:

/s/ Michel T. Tokarz

 

 

Name: Michel T. Tokarz

 

 

Title:

 

 

 

 

 

MVC GP II, LLC

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

MVC PARTNERS LLC

 

 

 

By:

/s/ Michael T. Tokarz

 

 

Name: Michael T. Tokarz

 

 

Title:

 

[SIGNATURES CONTINUED ON NEXT PAGE]

 

Credit and Security Agreement

 

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IN WITNESS WHEREOF, Agent, Lenders, Borrower and Guarantors have caused these
presents to be duly executed as of the day and year first above written.

 

 

BORROWER:

 

 

 

MVC CAPITAL, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

GUARANTORS:

 

 

 

MVC FINANCIAL SERVICES, INC.

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

MVC CAYMAN

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

MVC GP II, LLC

 

 

 

By:

/s/ James Pinto

 

 

Name: James Pinto

 

 

Title: Manager, Chief Executive Officer

 

 

 

MVC PARTNERS LLC

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

[SIGNATURES CONTINUED ON NEXT PAGE]

 

Credit and Security Agreement

 

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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

 

 

SANTANDER BANK, N.A.,

as Agent

 

 

 

 

 

By:

/s/ Gregory R. Russano

 

 

Name: Gregory R. Russano

 

 

Title: Senior Vice President

 

 

 

 

 

SANTANDER BANK, N.A.,

as Lender

 

 

 

 

 

By:

/s/ Gregory R. Russano

 

 

Name: Gregory R. Russano

 

 

Title: Senior Vice President

 

[SIGNATURES CONTINUED ON NEXT PAGE]

 

Credit and Security Agreement

 

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

 

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

 

 

Wintrust Bank,

 

as Lender

 

 

 

 

 

By:

/s/ John Paul Hills

 

 

Name: John Paul Hills

 

 

Title: VP

 

[SIGNATURES CONTINUED ON NEXT PAGE]

 

Credit and Security Agreement

 

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

 

EXHIBIT A

TO

CREDIT AND SECURITY AGREEMENT

 

Form of Borrowing Base Certificate

See attached

 

A-1

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

 

MVC CAPITAL, INC.

BORROWING BASE CERTIFICATE

(Computation of Availability as of 12/08/2015)

 

This Certificate is being delivered to Santander Bank, N.A. (the “Agent”)
pursuant to Section 8.1 of that certain Credit Agreement dated December 8, 2015,
as amended thereafter (the “Agreement”) by and among MVC Capital Credit
Corporation (the “Borrower”), the lenders party or signatory to the Agreement
from time to time (the “Lenders”) and the Agent. Terms used in this Certificate
and not otherwise defined shall have the meanings assigned to them in the
Agreement.

 

The undersigned hereby certifies to the Agent that the following information,
including without limitation, information relating to Eligible First Lien Loans
Receivable and Eligible Second Lien Loans Receivable, is true and correct as of
the date of computation set forth above in this Certificate. The undersigned
further certifies that all representations and warranties of the Borrower in the
Agreement continue to be true and correct as of the date hereof (except those
representations that speak as of a specific date), and no Event of Default
exists under the Agreement.

 

 

 

 

 

 

 

Security Value of Eligible

 

COMPONENTS OF BORROWING BASE:

 

Security Value

 

Advance Rate

 

Loans Receivable

 

 

 

 

 

 

 

 

 

Eligible First Lien Loans Receivable (see Attachment 1)

 

$

22,054,428.50

 

65

%

$

14,335,378.53

 

 

 

 

 

 

 

 

 

Eligible Second Lien Loans Receivable (see Attachment 1)

 

$

68,635,284.06

 

50

%

$

34,317,642.03

 

 

 

 

 

 

 

 

 

Unsecured Loan Receivable (see Attachment 1)

 

$

6,167,220.05

 

0

%

$

—

 

 

 

 

 

 

 

 

 

Net Formula availability

 

$

96,856,932.61

 

 

 

$

48,653,020.55

 

 

 

 

 

 

 

 

 

Less: Minimum Excess Availability

 

 

 

 

 

$

(5,000,000.00

)

 

 

 

 

 

 

 

 

Reserves, if any, under Section 2.1(a) of Agreement

 

$

—

 

 

 

$

—

 

 

 

 

 

 

 

 

 

TOTAL BB AVAILABILITY

 

 

 

 

 

$

43,653,020.55

 

 

 

 

 

 

 

 

 

Revolving Commitment:

 

 

 

 

 

$

65,000,000.00

 

 

 

 

 

 

 

 

 

Borrowing Availability (lesser of Revolving Commitment or Total BB
Availability); minus:

 

 

 

 

 

$

43,653,020.55

 

 

 

 

 

 

 

 

 

Outstanding Revolving Loans as of computation date:

 

 

 

 

 

$

—

 

 

 

 

 

 

 

 

 

EXCESS BORROWING AVAILABILITY (Total Borrowing Availability minus Outstanding
Revolving Loans):

 

 

 

 

 

$

43,653,020.55

 

 

 

 

 

 

 

 

 

REQUESTED ADVANCE

 

 

 

 

 

$

—

 

INTEREST AND FEES COLLECTIONS

 

 

 

 

 

$

—

 

 

 

 

 

 

 

 

 

NEW OUTSTANDING

 

 

 

 

 

$

—

 

NEW EXCESS ELIGIBILITY

 

 

 

 

 

$

43,653,020.55

 

 

MVC CAPITAL INC

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

Note:

 

 

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

 

MVC Borrowing Base

Summary

10/31/2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Internal

 

External

 

External

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Original Loan

 

Origination

 

 

 

 

 

Risk

 

Financial Data

 

Valuation

 

Valuation

 

Valuation

 

Adj. Senior

 

Adj. 2nd

 

Adj. Total

 

Adj. Lev.

 

 

 

Company

 

Cash

 

PIK

 

Amount

 

Date

 

Industry

 

MVC Loan

 

Rating

 

As of:

 

Mark

 

Mark

 

Date

 

Lev.

 

Lien Lev.

 

Lev.

 

Thru MVC

 

Adj. FCCR

 

Biogenic Reagents

 

12.0

%

4.0

%

14,500,000

 

7/21/2013

 

Specialty Chemical

 

1st Lien

 

4.90

 

8/31/2015

 

100.43

 

99.48

 

10/31/2015

 

-2.65x

 

-2.65x

 

-6.04x

 

-2.65x

 

-5.45x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inland Environmental

 

12.0

%

0.0

%

12,292,467

 

4/17/2014

 

Environmental Services

 

1st Lien

 

6.89

 

9/30/2015

 

55.15

 

93.90

 

4/30/2015

 

28.14x

 

28.14x

 

28.94x

 

28.14x

 

0.14x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

US Spray Drying

 

12.0

%

0.0

%

1,500,000

 

5/2/2014

 

Specialty Chemical

 

1st Lien

 

3.98

 

8/31/2015

 

100.00

 

99.35

 

10/31/2015

 

0.00x

 

1.39x

 

1.39x

 

1.39x

 

3.49x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States Technologies

 

10.5

%

0.0

%

5,000,000

 

7/17/2015

 

Industrial Manufacturing

 

1st Lien

 

2.14

 

9/30/2015

 

100.00

 

100.55

 

10/31/2015

 

1.15x

 

1.26x

 

1.26x

 

1.15x

 

2.69x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agri-Carriers Group

 

12.0

%

3.0

%

11,774,486

 

12/31/2014

 

Transportation

 

2nd Lien

 

2.93

 

9/30/2015

 

100.00

 

99.40

 

10/31/2015

 

2.75x

 

4.46x

 

4.46x

 

4.46x

 

3.33x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Custom Alloy Corporation

 

7.3

%

3.7

%

23,000,000

 

10/31/2014

 

Pipe Fitting

 

2nd Lien

 

3.89

 

9/30/2015

 

99.36

 

99.45

 

10/31/2015

 

1.46x

 

3.00x

 

3.29x

 

3.00x

 

1.31x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Initials, Inc.

 

12.0

%

3.0

%

4,750,000

 

6/23/2015

 

Consumer Services

 

2nd Lien

 

2.64

 

9/30/2015

 

100.00

 

100.20

 

10/31/2015

 

1.10x

 

3.42x

 

3.42x

 

3.42x

 

1.17x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legal Solutions

 

12.0

%

2.0

%

8,705,000

 

12/30/2014

 

Business Process Outsourcing

 

2nd Lien

 

2.81

 

9/30/2015

 

100.00

 

100.75

 

10/31/2015

 

1.83x

 

2.81x

 

2.81x

 

2.81x

 

1.22x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Morey’s Seafood

 

6.0

%

9.0

%

15,500,000

 

8/13/2013

 

Food Services

 

2nd Lien

 

4.69

 

9/30/2015

 

89.56

 

99.65

 

4/30/2015

 

3.69x

 

6.51x

 

6.51x

 

6.51x

 

1.25x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RX Innovation

 

12.0

%

4.0

%

10,300,000

 

12/30/2014

 

Software

 

2nd Lien

 

3.54

 

9/30/2015

 

100.00

 

99.45

 

10/31/2015

 

1.80x

 

5.03x

 

5.03x

 

5.03x

 

1.15x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thunderdome Group

 

12.0

%

0.0

%

2,040,000

 

6/10/2015

 

Food Services

 

2nd Lien

 

2.00

 

10/31/2015

 

100.00

 

100.70

 

10/31/2015

 

0.39x

 

1.19x

 

1.19x

 

1.19x

 

3.29x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Turf Products

 

7.0

%

4.0

%

7,500,000

 

11/30/2005

 

Distribution

 

2nd Lien

 

4.27

 

9/30/2015

 

99.17

 

100.20

 

10/31/2015

 

1.47x

 

2.98x

 

3.11x

 

2.98x

 

1.42x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Gas & Electric

 

13.0

%

0.0

%

7,500,000

 

7/26/2007

 

Energy Services

 

2nd Lien

 

2.83

 

9/30/2015

 

100.00

 

NA

 

NA

 

0.07x

 

0.31x

 

0.46x

 

0.31x

 

7.80x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vestal Manufacturing

 

12.0

%

3.0

%

6,250,000

 

5/29/2015

 

Industrial Manufacturing

 

2nd Lien

 

2.38

 

9/30/2015

 

100.00

 

100.35

 

10/31/2015

 

1.67x

 

3.15x

 

3.15x

 

3.15x

 

3.79x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Custom Alloy Corporation

 

12.0

%

0.0

%

14,000,000

 

9/18/2007

 

Pipe Fitting

 

Unsecured

 

3.89

 

9/30/2015

 

100.00

 

100.20

 

10/31/2015

 

1.46x

 

3.00x

 

3.29x

 

3.39x

 

1.31x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Gas & Electric

 

10.0

%

4.0

%

3,000,000

 

5/30/2014

 

Energy Services

 

Unsecured

 

2.83

 

9/30/2015

 

100.00

 

NA

 

NA

 

0.07x

 

0.31x

 

0.46x

 

0.41x

 

7.80x

 

 

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

 

MVC Borrowing Base

Summary

10/31/2015

 

 

 

 

 

 

 

AVAILABILITY SCREENING

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maximum

 

 

 

 

 

 

 

Industry

 

 

 

 

 

Loan Amount (Min of

 

 

 

Under 15%

 

 

 

Covenant

 

 

 

Applicable

 

 

 

 

 

Partially Eligible

 

Concentration

 

Net Eligible x

 

Company

 

Par or Internal Mark)

 

% of BB

 

threshold

 

Risk Rating

 

Compliant

 

FCC

 

Leverage

 

Overall

 

Eligible Loans

 

Loans

 

Adjustment

 

Advance Rate

 

Biogenic Reagents

 

15,554,429

 

12.5

%

Yes

 

Yes

 

Yes

 

Yes

 

Yes

 

Yes

 

15,554,429

 

—

 

—

 

10,110,379

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inland Environmental

 

3,000,000

 

2.4

%

Yes

 

No

 

No

 

No

 

Yes

 

No

 

—

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

US Spray Drying

 

1,500,000

 

1.2

%

Yes

 

Yes

 

Yes

 

Yes

 

Yes

 

Yes

 

1,500,000

 

—

 

—

 

975,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States Technologies

 

5,000,000

 

4.0

%

Yes

 

Yes

 

Yes

 

Yes

 

Yes

 

Yes

 

5,000,000

 

—

 

—

 

3,250,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agri-Carriers Group

 

11,774,486

 

9.5

%

Yes

 

Yes

 

Yes

 

Yes

 

Yes

 

Yes

 

11,774,486

 

—

 

—

 

5,887,243

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Custom Alloy Corporation

 

23,638,469

 

19.0

%

No

 

Yes

 

Yes

 

Yes

 

Yes

 

Yes

 

18,661,020

 

—

 

—

 

9,330,510

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Initials, Inc.

 

4,750,000

 

3.8

%

Yes

 

Yes

 

No

 

Yes

 

Yes

 

No

 

—

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legal Solutions

 

8,705,000

 

7.0

%

Yes

 

Yes

 

Yes

 

Yes

 

Yes

 

Yes

 

8,705,000

 

—

 

—

 

4,352,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Morey’s Seafood

 

14,371,830

 

11.6

%

Yes

 

Yes

 

No

 

Yes

 

No

 

No

 

—

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RX Innovation

 

10,300,000

 

8.3

%

Yes

 

Yes

 

Yes

 

Yes

 

No

 

Partial

 

—

 

9,849,412

 

—

 

4,924,706

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thunderdome Group

 

1,965,251

 

1.6

%

Yes

 

Yes

 

Yes

 

Yes

 

Yes

 

Yes

 

1,965,251

 

—

 

—

 

982,626

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Turf Products

 

3,864,879

 

3.1

%

Yes

 

Yes

 

Yes

 

Yes

 

Yes

 

Yes

 

3,864,879

 

—

 

—

 

1,932,439

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Gas & Electric

 

7,500,000

 

6.0

%

Yes

 

Yes

 

Yes

 

Yes

 

Yes

 

Yes

 

7,500,000

 

—

 

—

 

3,750,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vestal Manufacturing

 

6,315,236

 

5.1

%

Yes

 

Yes

 

Yes

 

Yes

 

Yes

 

Yes

 

6,315,236

 

—

 

—

 

3,157,618

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Custom Alloy Corporation

 

3,000,000

 

2.4

%

Yes

 

Yes

 

Yes

 

Yes

 

Yes

 

Yes

 

3,000,000

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Gas & Electric

 

3,167,220

 

2.5

%

Yes

 

Yes

 

Yes

 

Yes

 

Yes

 

Yes

 

3,167,220

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Loan

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Eligible:

 

87,007,521

 

9,849,412

 

Total Available:

 

48,653,021

 

 

 

124,406,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eligibility & Advance Rate Assumptions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Minimum Fixed Charge Coverage:

 

1.00X

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Max Applicable Leverage

 

4.50X

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Minimum Risk Rating

 

5.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1st Lien Advance Rate

 

65.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2nd Lien Advance Rate

 

50.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unsecured Advance Rate

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partial Loan Amount for failed Lev Test

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Credit Exposure

 

124,406,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Eligible Loans

 

96,856,933

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Initial Availability:

 

48,653,021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Initial Availability Less $5MM:

 

43,653,021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

EXHIBIT B

TO

CREDIT AND SECURITY AGREEMENT

Form of Compliance Certificate

 

To:                             SANTANDER BANK, N.A.,

830 Morris Turnpike, 3rd Fl.

Short Hills, NJ 07078

Attention: Portfolio Manager for MVC CAPITAL, INC.

Telephone No. 973-232-8349

Telecopy No. 973-379-4175

 

Ladies and Gentlemen:

 

I hereby certify to you pursuant to Section 8.1 of the Credit Agreement (as
defined below) as follows:

 

1.                                      I am the duly elected Chief Financial
Officer of MVC CAPITAL, INC. and its Subsidiaries (“Borrower”). Capitalized
terms used herein without definition shall have the meanings given to such terms
in the Credit and Security Agreement, dated December 9, 2015, by and between
SANTANDER BANK, N.A. (“Agent”), and the lenders that are parties thereto, and
Borrower and the Guarantors that are parties thereto (as such Credit and
Security Agreement is amended, modified or supplemented, from time to time, the
“Credit Agreement”).

 

2.                                      I have reviewed the terms of the Credit
Agreement, and have made, or have caused to be made under my supervision, a
review in reasonable detail of the transactions and the financial condition of
Borrower and its Subsidiaries, during the immediately preceding fiscal
                           .

 

3.                                      The review described in Section 2 above
did not disclose the existence during or at the end of such fiscal quarter, and
I have no knowledge of the existence and continuance on the date hereof, of any
condition or event which constitutes a Default or an Event of Default, except as
set forth on Schedule I attached hereto. Described on Schedule I attached hereto
are the exceptions, if any, to this Section 3 listing, in detail, the nature of
the condition or event, the period during which it has existed and the action
which Borrower and its Subsidiaries have taken, are taking, or propose to take
with respect to such condition or event.

 

4.                                      I further certify that, based on the
review described in Section 2 above, Borrower and its Subsidiaries have not at
any time during or at the end of such fiscal quarter, except as specifically
described on Schedule II attached hereto or as permitted by the Loan Agreement,
done any of the following:

 

(a)                                 Permitted or suffered to exist any security
interest in or Liens on any of their properties, whether real or personal, other
than as specifically permitted in the Loan Documents; or

 

B-1

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

 

(b)                                 Become aware of, obtained knowledge of, or
received notification of, any breach or violation by the Credit Parties of any
material covenant contained in any instrument or agreement in respect of
Indebtedness for money borrowed.

 

5.                                      Attached hereto as Schedule III are the
calculations used in determining, as of the end of such quarterly fiscal period
whether Borrower and its Subsidiaries are or would be in compliance with the
covenant set forth in Section 10 of the Credit Agreement for such quarterly
fiscal period, whether or not such compliance is required under the terms
thereof.

 

6.                                      [To be included only in the fiscal year
end Compliance Certificate] I further certify that Borrower and its Subsidiaries
are in good standing or the substantive equivalent thereof in the jurisdiction
of incorporation, formation or organization for the Borrower and its
Subsidiaries.

 

The foregoing certifications are made and delivered this day of
                            , 20     .

 

 

 

MVC CAPITAL, INC.

 

 

 

 

 

By:

 

 

 

Title:

 

B-2

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

 

EXHIBIT C

TO

CREDIT AND SECURITY AGREEMENT

 

Form of Assignment and Assumption Agreement

See attached

 

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

 

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

 

This ASSIGNMENT AND ACCEPTANCE AGREEMENT (“Assignment Agreement”) is entered
into as of                 , 20     between
                                                  (“Assignor”) and
                                                  (“Assignee”). Reference is
made to the Credit Agreement described in Annex I hereto (as the same now exists
or may hereafter be amended, amended and restated, modified, supplemented,
extended, renewed, restated or replaced, the “Credit Agreement”). Capitalized
terms used herein and not otherwise defined shall have the meanings ascribed to
them in the Credit Agreement.

 

1.                                      In accordance with the terms and
conditions of Section 12.1 of the Credit Agreement, the Assignor hereby sells
and assigns to the Assignee, and the Assignee hereby purchases and assumes from
the Assignor, that interest in and to the Assignor’s rights and obligations
under the Loan Documents as of the date hereof with respect to the Obligations
owing to the Assignor, and Assignor’s portion of the Commitments, all to the
extent specified on Annex I.

 

2.                                      The Assignor (a) represents and warrants
that (i) it is the legal and beneficial owner of the interest being assigned by
it hereunder and that such interest is free and clear of any adverse claim and
(ii) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment Agreement and to consummate the transactions
contemplated hereby; (b) makes no representation or warranty and assumes no
responsibility with respect to (i) any statements, representations or warranties
made in or in connection with the Loan Documents, or (ii) the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Loan Documents or any other instrument or document furnished pursuant thereto;
(c) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of Borrower or any Guarantor or the
performance or observance by Borrower or any Guarantor of any of their
respective obligations under the Loan Documents or any other instrument or
document furnished pursuant thereto, and (d) represents and warrants that the
amount set forth as the Purchase Price on Annex I represents the amount owed by
Borrower to Assignor with respect to Assignor’s share of the Revolving Loans
assigned hereunder, as reflected on Assignor’s books and records.

 

3.                                      The Assignee (a) confirms that it has
received copies of the Credit Agreement and the other Loan Documents, together
with copies of the financial statements referred to therein and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment Agreement; (b) agrees that
it will, independently and without reliance upon Agent, Assignor, or any other
Lender, based upon such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
any action under the Loan Documents; (c) [confirms that it is an Qualified
Assignee]; (d) appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under the Loan Documents as are delegated
to Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; and (e) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender.

 

4.                                      Following the execution of this
Assignment Agreement by the Assignor and Assignee, the Assignor will deliver
this Assignment Agreement to the Agent for recording by the Agent. The effective
date of this Assignment (the “Settlement Date”) shall be the latest to occur of
(a) the date of the execution and delivery hereof by the Assignor and the
Assignee, (b) the receipt by Agent for its sole and separate account an
assignment fee in the amount of $3,500, (c) the receipt of any required consents
of the Agent and the Borrower, and (d) the date specified in Annex I.

 

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

 

5.                                      As of the Settlement Date (a) the
Assignee shall be a party to the Credit Agreement and, to the extent of the
interest assigned pursuant to this Assignment Agreement, have the rights and
obligations of a Lender thereunder and under the other Loan Documents, and
(b) the Assignor shall, to the extent of the interest assigned pursuant to this
Assignment Agreement, relinquish its rights and be released from its obligations
under the Credit Agreement and the other Loan Documents, provided, however, that
nothing contained herein shall release any assigning Lender from obligations
that survive the termination of this Agreement, including such assigning
Lender’s obligations under Article 11 of the Credit Agreement and be bound by
the provisions thereof.

 

6.                                      Upon the Settlement Date, Assignee shall
pay to Assignor the Purchase Price (as set forth in Annex I). From and after the
Settlement Date, Agent shall make all payments that are due and payable to the
holder of the interest assigned hereunder (including payments of principal,
interest, fees and other amounts) to Assignor for amounts which have accrued up
to but excluding the Settlement Date and to Assignee for amounts which have
accrued from and after the Settlement Date. On the Settlement Date, Assignor
shall pay to Assignee an amount equal to the portion of any interest, fee, or
any other charge that was paid to Assignor prior to the Settlement Date on
account of the interest assigned hereunder and that are due and payable to
Assignee with respect thereto, to the extent that such interest, fee or other
charge relates to the period of time from and after the Settlement Date.

 

7.                                      This Assignment Agreement may be
executed in counterparts and by the parties hereto in separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. This Assignment
Agreement may be executed and delivered by telecopier or other facsimile or
electronic transmission all with the same force and effect as if the same were a
fully executed and delivered original manual counterpart.

 

8.                                      THIS ASSIGNMENT AGREEMENT SHALL BE
SUBJECT TO THE PROVISIONS REGARDING CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER,
AND JUDICIAL REFERENCE SET FORTH IN ARTICLE 13 OF THE CREDIT AGREEMENT, AND SUCH
PROVISIONS ARE INCORPORATED HEREIN BY REFERENCE, MUTATIS MUTANDIS.

 

 

[Remainder of This Page Intentionally Left Blank]

 

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

 

IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement and
Annex I hereto to be executed by their respective officers, as of the first date
written above.

 

 

 

[NAME OF ASSIGNOR]

 

 

as Assignor

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

[NAME OF ASSIGNEE]

 

 

as Assignee

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

ACCEPTED THIS                 DAY OF

 

 

                                          , 20    

 

 

 

 

 

SANTANDER BANK, N.A.,

 

 

as Agent

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

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

 

ANNEX FOR ASSIGNMENT AND ACCEPTANCE

 

ANNEX I

 

 

(a) Borrower:

 

 

 

 

2.

Name and Date of Credit Agreement:

 

 

 

 

 

 

Credit and Security Agreement, dated as of December     , 2015, by and among the
lenders identified on the signature pages thereto (“Lenders”), SANTANDER BANK,
N.A., as agent for the Lenders (in such capacity, together with its successors
and assigns in such capacity, “Agent”), MVC CAPITAL, INC., a Delaware
corporation (“Borrower”), and MVC FINANCIAL SERVICES, INC., a Delaware
corporation, MVC CAYMAN, an exempted company incorporated under the laws of the
Cayman Islands, MVC GP II, LLC, a Delaware limited liability company, and MVC
PARTNERS LLC, a Delaware limited liability company.

 

 

 

 

3.

Date of Assignment Agreement:

 

 

 

 

4.

Amounts:

 

 

 

(A)

Assigned Amount of Revolving Loan Commitment

$

 

 

 

 

 

b.                                      Assigned Amount of Revolving Loans

$

 

 

 

 

 

5.

Settlement Date:

 

 

 

 

 

 

6.

Purchase Price

$

 

 

 

 

7.

Notice and Payment Instructions, etc.

 

 

 

 

 

Assignee:

 

Assignor:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

8.

Agreed and Accepted:

 

 

 

 

 

 

 

 

 

 

 

[ASSIGNOR]

 

[ASSIGNEE]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

By:

 

 

 

 

Name:

 

 

Name:

 

 

 

 

Title:

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accepted:

 

 

 

 

 

 

 

 

 

SANTANDER BANK, N.A.,

 

 

 

 

as Agent

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

 

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

 

 

EXHIBIT D

TO

CREDIT AND SECURITY AGREEMENT

 

Wire Instructions

 

Name of Borrower       MVC Capital Inc.

 

 

Account:     8507191500

 

ABA #:     231372691

 

ATTN:

 

Participations

Account Name:

 

Commercial Loan Operations

Street Address

 

601 Penn St

City, State and Zip Code

 

Reading PA 19601

 

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

 

EXHIBIT E

TO

CREDIT AND SECURITY AGREEMENT

 

Supplemental Agreement

See Attached

 

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

 

FORM OF SUPPLEMENTAL AGREEMENT

 

This SUPPLEMENTAL AGREEMENT, dated                   , 20  , (this “Agreement”),
is by and among                          (“New Lender”), MVC CAPITAL, INC.
(“Borrower”) and SANTANDER BANK, N.A. (“Agent”), as agent for the Lenders, and
is being delivered pursuant to that certain Credit and Security Agreement dated
as of December 9, 2015 (as from time to time amended, supplemented or otherwise
modified in accordance with the terms thereof, the “Credit Agreement”) among
Borrower, MVC FINANCIAL SERVICES, INC., a corporation formed under the laws of
the State of Delaware, MVC CAYMAN, an exempted company incorporated under the
laws of the Cayman Islands, MVC GP II, LLC, a limited liability company formed
under the laws of the State of Delaware, and MVC PARTNERS LLC, a limited
liability company formed under the laws of the State of Delaware, (collectively
and individually, the “Guarantors”), Lenders, Agent, and WINTRUST BANK, as
syndication agent.

 

W I T N E S S E T H:

 

WHEREAS, pursuant to Section 2.3 of the Credit Agreement, the Borrower has the
right, subject to the terms and conditions thereof, to request from time to
time, an increase in the Maximum Credit under the Credit Agreement by requesting
one or more new lenders to join the Credit Agreement and provide a New
Commitment; and

 

WHEREAS, the Borrowers have given a request to the Agent and the Agent has
elected to arrange such New Commitments to increase the Maximum Credit pursuant
to, and subject to the provisions of, Section 2.3 of the Credit Agreement; and

 

WHEREAS, subject to the approval of Agent, the undersigned New Lender desires to
become a party to the Credit Agreement and make Revolving Loans thereunder by
executing and delivering this Agreement to the Borrower and Agent;

 

NOW, THEREFORE, each of the parties hereto hereby agrees as follows:

 

1.             New Lender agrees to be bound by the provisions of the Credit
Agreement and agrees that it shall, on the date of this Agreement, become a
Lender for all purposes of the Credit Agreement, to the same extent as if
originally a party thereto, with a Revolving Loan Commitment with respect to
Revolving Loans of $                             .

 

2.             New Lender (a) represents and warrants that it is legally
authorized to enter into this Agreement; (b) confirms that it has received a
copy of the Credit Agreement, together with copies of the most recent financial
statements delivered pursuant to the Credit Agreement, and has reviewed such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Agreement; (c) agrees that it
will, independently and without reliance upon the Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Credit Agreement or any other instrument or document furnished
pursuant hereto or thereto; (d) appoints and authorizes the

 

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

 

Agent to take such action as an agent on New Lender’s behalf and to exercise
such powers and discretion under the Credit Agreement or any other Loan
Documents as are delegated to Agent by the terms thereof, together with such
powers as are incidental thereto; and (e) agrees that it will be bound by the
provisions of the Credit Agreement and will perform in accordance with its terms
all the obligations which by the terms of the Credit Agreement are required to
be performed by it as a Lender.

 

3.             New Lender’s address for notices for the purposes of the Credit
Agreement is as follows:

 

[                                                      ]

 

4.             Capitalized terms not defined herein shall be deemed to have the
definition given to such capitalized terms in the Credit Agreement.

 

5.             This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York.

 

6.             This Agreement may be executed in any number of counterparts and
by different parties thereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same document.

 

[Signature Page Follows]

 

3

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

 

IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be
executed and delivered by a duly authorized officer on the date first above
written.

 

 

 

[NEW LENDER]

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

Accepted and agreed to by:

 

SANTANDER BANK, N.A.,

as Agent

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

MVC CAPITAL, INC.,

as Borrower

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

1

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

 

EXHIBIT F

TO

CREDIT AND SECURITY AGREEMENT

 

Form of Revolving Note

See Attached

 

1

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

 

REVOLVING NOTE

 

$      ,       ,         

New York, NY

December     , 2015

 

FOR VALUE RECEIVED, MVC CAPITAL, INC., a Delaware corporation, (the “Borrower”),
hereby promises to pay to the order of                                  ,
(“Lender”), at the offices of Agent (as defined below) at 830 Morris Turnpike,
Short Hills, New Jersey 07078, or at such other place as the Agent may designate
from time to time in writing, in lawful money of the United States of America
and in immediately available funds, the principal amount of
                                  DOLLARS ($                   ) or, if less,
the aggregate unpaid amount of all Revolving Loans made to the undersigned under
the “Credit Agreement” (as hereinafter defined), plus interest on the unpaid
balance as provided in the Credit Agreement. All capitalized terms used but not
otherwise defined herein have the meanings given to them in the Credit
Agreement.

 

This Revolving Note is issued pursuant to that certain Credit and Security
Agreement of even date herewith by and among Borrower, MVC CAPITAL, INC., a
Delaware corporation, MVC FINANCIAL SERVICES, INC., a Delaware corporation, MVC
CAYMAN, a Cayman Islands exempted company, MVC GP II, LLC, a Delaware limited
liability company, and MVC PARTNERS LLC, a Delaware limited liability company,
(collectively, the “Guarantors”), Lender, the other financial institutions or
entities from time to time parties thereto, and Santander Bank, N.A., as agent
(in such capacity, the “Agent”) (including all annexes, exhibits and schedules
thereto, and as from time to time amended, restated, supplemented or otherwise
modified, the “Credit Agreement”), and is entitled to the benefit and security
of the Credit Agreement and all of the other Loan Documents defined therein.
Reference is hereby made to the Credit Agreement for a statement of all of the
terms and conditions under which the Revolving Loans evidenced hereby are made
and are to be repaid. The date and amount of each Revolving Loan made by Lender
to Borrower, the rates of interest applicable thereto, and each payment made on
account of the principal thereof, shall be recorded by Lender on its books;
provided that the failure of Lender to make any such recordation shall not
affect the obligations of Borrower to make a payment when due of any amount
owing under the Credit Agreement or this Revolving Note in respect of the
Revolving Loans made by Lender to Borrower.

 

The principal amount of the indebtedness evidenced hereby shall be payable in
the amounts and on the dates specified in the Credit Agreement, the terms of
which are hereby incorporated herein by reference. Interest thereon shall be
paid until such principal amount is paid in full at such interest rates and at
such times, and pursuant to such calculations, as are specified in the Credit
Agreement.

 

If any payment on this Revolving Note becomes due and payable on a day other
than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.

 

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

 

Upon the occurrence and during the continuation of any Event of Default, this
Revolving Note may, when and as provided in the Credit Agreement, and without
demand, prior notice or legal process of any kind, be declared, and immediately
shall become, due and payable.

 

Time is of the essence of this Revolving Note. Demand, presentment, protest and
notice of nonpayment and protest are hereby waived by Borrower.

 

THIS REVOLVING NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT
STATE. BORROWER HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF, BASED ON OR PERTAINING TO
THIS REVOLVING NOTE.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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

 

 

MVC CAPITAL, INC.

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

Signature Page to Revolving Note

 

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

 

SCHEDULE 1.1

 

Lenders’ Commitment Amounts

 

Lender

 

Commitment Amount

 

Commitment Percentage

 

Santander Bank, N.A.

 

35,000,000.00

 

70

%

Wintrust Bank

 

15,000,000.00

 

30

%

TOTAL

 

50,000,000.00

 

100

%

 

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

 

SCHEDULE 5.1(b)

 

Certain Equity Interests in Portfolio Companies

 

FOLIOfn, Inc.

MVC Private Equity Fund, L.P.

MVC Private Equity Fund, L.P.

NPWT Corporation

RuMe Inc.

Turf Products

U.S. Spray Drying Holding Company

 

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

 

SCHEDULE 6.1

 

Conditions Precedent to Initial Revolving Loans

 

The obligation of Lenders to make the initial Revolving Loans on the Closing
Date is subject to the satisfaction of the conditions precedent to all Revolving
Loans provided for in Section 6.2 and each of the following conditions
precedent:

 

(a)           Credit Agreement and other Loan Documents. Agent shall have
received each of the following documents, in form and substance reasonably
satisfactory to Agent, duly executed and delivered, and each such document shall
be in full force and effect and the Credit Parties shall be in compliance with
the terms thereof:

 

(i)          the Agreement;

 

(ii)         the Revolving Notes;

 

(iii)        the Pledge Agreements;

 

(iv)       the Intellectual Property Security Agreement;

 

(v)        the Control Agreements, together with evidence satisfactory to Agent
that certificates or other tangible evidence of the Equity Investments and Debt
Investment Loan Documents are held by the Agent’s Bailee;

 

(vi)       the deposit of not less than the Required Pledged Cash Amount in the
Required Pledged Cash Deposit Accounts maintained with the Lenders;

 

(vii)      the Perfection Certificate;

 

(viii)     the BB&T Intercreditor Agreement;

 

(ix)       the Subordination Agreements;

 

(x)        a pay proceeds letter executed and delivered by Borrower to Agent
regarding the extensions of credit to be made on the Closing Date;

 

(xi)       opinion letter of counsel to the Credit Parties with respect to the
Loan Documents and such other matters as Agent may reasonably request;

 

(xii)      the Guaranty Agreement(s);

 

(xiii)     Form U-1;

 

(xiv)     a fully executed engagement letter with the Borrower’s auditors in
form and substance acceptable to the Agent in its Permitted Discretion;

 

(xv)      a Custodial Agreement for each of the Lenders;

 

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

 

(xvi)     the Joinder Agreements; and

 

(xvii)    the Equity Investment Side Letter.

 

(b)           Closing Excess Availability. The Excess Availability as of the
Closing Date shall be not less than Twenty Five Million Dollars ($25,000,000)
after giving effect to the initial Revolving Loans made or to be made in
connection with the initial transactions hereunder, after deducting payment of
all fees and expenses payable on the Closing Date.

 

(c)           Field Examination. Agent shall have conducted, or received the
final report of a firm engaged by Agent to conduct, a field examination of the
Collateral, the books and records and other matters relating to the operation of
the business of the Credit Parties the results of which are satisfactory to
Agent, and Agent (or a firm engaged by Agent for such purpose) shall have
completed an updated field review of the books and records of the Credit Parties
and such other updated information with respect to the Debt Investments as Agent
may require to determine the amount of Revolving Loans available to Borrower
(including, without limitation, roll-forwards of Debt Investments), with results
as of a date not more than five (5) days prior to the Closing Date (or such
earlier date as may be acceptable to Agent), the results of which shall be
reasonably satisfactory to Agent.

 

(d)           Valuations. Agent shall have received the final report of a third
party with respect to not less than seventy five percent (75%) of the Debt
Investments of Borrower, in form and containing assumptions and methods
satisfactory to Agent by a third party acceptable to Agent.

 

(e)           Know Your Customer; Patriot Act. Agent and Lenders shall have
received at least five (5) Business Days prior to the Closing Date all
documentation and information as is requested by Agent and Lenders that is
required by regulatory authorities under applicable “know your customer” and
anti-money-laundering rules and regulations, including, without limitation, the
Patriot Act, in each case to the extent requested in writing at least seven
(7) Business Days prior to the Closing Date.

 

(f)            Financial Statements; Projections. Agent shall have received at
least ten (10) Business Days prior to the Closing Date:

 

(i)          projected balance sheets, income statements, statements of cash
flows and availability of the Credit Parties on a monthly basis for the period
through the fiscal quarterly period of the Borrower and its Subsidiaries ending
after the first anniversary of the Closing Date and on an annual basis
thereafter for each fiscal year of the Borrower and its Subsidiaries for the
term of the Agreement, in each case with the results and assumptions in such
projections in form and substance reasonably satisfactory to Agent, and an
opening pro forma balance sheet for Borrower and its Subsidiaries in form and
substance reasonably satisfactory to Agent,

 

(ii)         any updates or modifications to the projected financial statements
of Borrower and its Subsidiaries previously received by Agent, in each case in
form and substance reasonably satisfactory to Agent,

 

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

 

(iii)        audited financial statements and Form 10-K of Borrower and its
Subsidiaries for each of the three fiscal years immediately preceding the
Closing Date, in form and substance acceptable to the Agent,

 

(iv)       interim unaudited financial statements of Borrower and its
Subsidiaries and Form 10-Q for the quarterly fiscal periods ending January 31,
2015 and April 30, 2015,

 

(v)        management prepared interim unaudited financial statements of
Borrower and its Subsidiaries and draft Form 10-Q for the quarterly fiscal
periods ending July 31, 2015,

 

(g)           Legal Due Diligence. Agent and its counsel shall have completed
all legal due diligence, the results of which shall be satisfactory to Agent.

 

(h)           Borrowing Base Certificate and Request. Agent shall have received
a borrowing request and a Borrowing Base Certificate which calculates the
Borrowing Base as of the end of the month immediately preceding the Closing Date
completed in a manner reasonably satisfactory to Agent and duly authorized,
executed and delivered by a Responsible Officer of Borrower and it shall
indicate Excess Availability of not less than Twenty Five Million Dollars
($25,000,000).

 

(i)            Solvency Certificate. Agent shall have received a solvency
certificate signed by a Responsible Officer of Borrower in form and substance
reasonably satisfactory to Agent and as of the Closing Date and after giving
effect to the Agreement and the transactions contemplated thereby, Borrower
shall not be insolvent or become insolvent as a result thereof.

 

(j)            Good Standing Certificates. Agent shall have received, if
applicable, a certificate of status with respect to the Credit Parties, dated
within ten (10) days of the Closing Date, such certificate to be issued by the
appropriate officer of the jurisdiction of organization of Credit Parties, which
certificate shall indicate that Credit Parties are in good standing in such
jurisdiction.

 

(k)           Certificate of Directors’ Resolutions, Incumbency, Etc. Agent
shall have received a certificate of a Responsible Officer of Borrower, in form
and substance satisfactory to it, certifying (i) that attached copies of the
Organization Documents of Borrower and its Subsidiaries are true and complete,
and in full force and effect, without amendment except as shown; (ii) that an
attached copy of resolutions authorizing execution, delivery and performance of
the Loan Documents is true and complete, and that such resolutions are in full
force and effect, were duly adopted, have not been amended, modified or revoked,
and constitute all resolutions adopted with respect to this Credit Facility; and
(iii) to the title, name and signature of each Person authorized to sign the
Loan Documents.

 

(l)            Closing Certificate. Agent shall have received a certificate,
signed by a Responsible Officer of Borrower, dated as of the Closing Date,
stating (i) that no Default or Event of Default exists or has occurred and is
continuing, (ii) all of the conditions to the closing of the Credit Facility
have been satisfied, (iii) the representations and warranties contained in the
Loan Documents are true and correct, (iv) the Credit Parties have complied with
all agreements

 

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

 

and conditions to be satisfied by them under the Loan Documents as of the
Closing Date and (iv) certifying any other factual matters as may be reasonably
requested by Agent.

 

(m)          Lien Searches. Agent shall have received the results of a recent
lien search in each jurisdiction where the Credit Parties are organized and
where the assets of the Credit Parties are located, and such search shall reveal
no security interests, liens or other encumbrances on any of the assets of the
Credit Parties except for Permitted Liens or security interests, liens or other
encumbrances to be discharged on or prior to the Closing Date pursuant to a
pay-off letter or other documentation satisfactory to Agent.

 

(n)           Pay-Off Letter. Agent shall have received pay-off letters, in form
and substance satisfactory to Agent, for all existing Indebtedness to be repaid
from the proceeds of the initial Revolving Loans confirming that all security
interests and liens upon any of the property of the Credit Parties constituting
Collateral will be terminated concurrently with such payment.

 

(o)           Pledged Equity Interests; Stock Powers; Pledged Notes. Agent or
Agent’s Bailee shall have received (i) the original certificates representing
Equity Interests pledged pursuant to the Pledge Agreement, together with an
undated stock power for each such certificate executed in blank by a duly
authorized officer of the pledgor thereof and (ii) each original promissory note
(if any) pledged to Agent for the benefit of Agent and Lenders pursuant to this
Agreement endorsed (without recourse) in blank (or accompanied by an executed
transfer form in blank) by the pledgor thereof.

 

(p)           Insurance. Agent shall have received evidence of insurance
coverage in form, scope and substance reasonably satisfactory to Agent, and loss
payee endorsements, in form and substance reasonably satisfactory to Agent, and
certificates of insurance policies and/or endorsements naming Agent for the
benefit of Agent and Lenders as lender loss payee and additional insured and an
assignment of credit insurance in an amount acceptable to the Agent.

 

(q)           Tax Withholding. Agent shall have received a properly completed
and signed IRS Form W-8 or W-9, as applicable, for the Credit Parties.

 

(r)            Cash Management. Borrower shall have established a cash
management system as provided in this Agreement.

 

(s)            Perfected Security Interest. Agent shall have received evidence,
in form and substance reasonably satisfactory to Agent, that Agent for the
benefit of Agent and Lenders has a valid perfected first priority security
interest in the Collateral (except as to priority, subject to the liens
permitted under clauses (b), (c), (i), (j) and (m) of the definition of
Permitted Liens, to the extent that such liens have priority over the liens of
Agent for the benefit of Agent and Lenders under applicable law and except for
such items of Collateral as Agent may determine not to perfect its security
interest in and none of the Collateral shall be subject to any other pledges,
security interests, mortgages or assignments as security, except for Permitted
Liens.

 

(t)            Engagement of new auditors. Agent shall have received a copy of a
fully executed engagement letter for Grant Thornton LLP as the auditors for the
Borrower and the other Credit Parties.

 

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

 

(u)           No Material Adverse Change. No material adverse change in the
business, operations, profits, assets or condition (financial or otherwise) of
Borrower and its Subsidiaries, taken as a whole, shall have occurred since
January 31, 2015 (other than as disclosed in Borrower’s public SEC filings to
date).

 

(v)           Closing Date: The Closing Date shall have occurred on or before
December 9, 2015.

 

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

 

SCHEDULE 7.7

 

Litigation

 

As of August 2014, U.S. Gas and Electric, Inc. (“USG&E”) and Borrower are named
defendants in a lawsuit filed by a former USG&E employee, Brian Rose (“Rose”).
USG&E is a portfolio company of Borrower. The lawsuit, case number
CACE-14-015788, is pending in the Circuit Court of the Seventeenth Judicial
Circuit, In and For Broward County, Florida. Rose asserts claims against USG&E
and MVC for breach of their alleged oral agreement to grant Rose a 1.75% equity
interest in USG&E, and for a constructive trust and specific performance to
enforce the alleged oral agreement. Rose also asserts a claim against USG&E for
breach of contract, asserting that USG&E breached his employment agreement when
he resigned by failing to pay him: $65,000 of a $165,000 bonus, 12 months of his
base salary, his health insurance premiums, disability insurance benefits and
accrued, unused vacation time. Finally, Rose is seeking a declaratory judgment
from the court stating that his non-compete agreement is unenforceable. USG&E
and MVC have strong defenses to each of Rose’s claims. The parties are engaged
in discovery which is ongoing and believe they are likely to prevail in this
matter.

 

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

 

SCHEDULE 7.9

 

Environmental Matters

 

None.

 

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

 

SCHEDULE 7.12

 

Restrictive Agreements

 

Secured Revolving Credit Agreement, dated as of July 31, 2013, between MVC
Capital, Inc., as borrower, and Branch Banking and Trust Company, as lender, as
amended.

 

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

 

SCHEDULE 7.15

 

Insurance

 

MVC Capital Inc.

SCHEDULE OF INSURANCE AS OF DECEMBER, 2015

 

COVERAGE AND LOCATION

 

AMOUNT
INSURED

 

CARRIER

 

POLICY NO:

 

TERM

 

PREMIUM

 

DIRECTORS & OFFICERS LIABILITY

 

 

 

Illinois National Insurance Company (AIG)

 

01-425-31-83

 

8/14/2014 - 12/31/2015

 

$356,393

 

Policy Aggregate Limit

 

$10,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Premium

 

$255,416

 

Retention:

 

 

 

 

 

 

 

TRIA

 

$2,554

 

Directors & Officers - Retention

 

$500,000

 

 

 

 

 

Extension Premium to 10/31/2015

 

$55,205

 

Employment Practices - Retention

 

$500,000

 

 

 

 

 

Total

 

$313,175

 

All Other - Retention

 

$500,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Extension Premium to 12/31/2015

 

$43,218

 

Continuity Date: 02/14/2003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXCESS DIRECTORS & OFFICERS LIABILITY

 

 

 

XL Specialty Insurance Company

 

ELU135505-14

 

8/14/2014 - 12/31/2015

 

$125,671

 

Policy Aggregate Limit

 

$5,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Premium

 

$91,000

 

 

 

 

 

 

 

 

 

Extension Premium to 10/31/2015

 

$19,474

 

 

 

 

 

 

 

 

 

Total

 

$110,474

 

 

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

 

 

 

 

 

 

 

 

 

Extension Premium to 12/31/2015

 

$15,197

 

 

 

 

 

 

 

 

 

 

 

 

 

FIDELITY BOND

 

 

 

National Union Fire Insurance Co. of Pittsburgh, PA

 

01-425-35-20

 

8/14/2014 - 12/31/2015

 

$22,768

 

Fidelity - No Deductible

 

$5,000,000

 

 

 

 

 

 

 

 

 

Audit Expense

 

$100,000

 

 

 

 

 

Premium

 

$16,505

 

On Premises

 

$5,000,000

 

 

 

 

 

Extension Premium to 10/31/2015

 

$3,502

 

In Transit

 

$5,000,000

 

 

 

 

 

Total

 

$20,007

 

Forgery or Altercation

 

$5,000,000

 

 

 

 

 

 

 

 

 

Securities

 

$5,000,000

 

 

 

 

 

Extension Premium to 12/31/2015

 

$2,761

 

Counterfeit Currency

 

$5,000,000

 

 

 

 

 

 

 

 

 

Stop Payment

 

$100,000

 

 

 

 

 

 

 

 

 

Uncollectible Items of Deposit

 

$100,000

 

 

 

 

 

 

 

 

 

Computer Systems

 

$5,000,000

 

 

 

 

 

 

 

 

 

Unauthorized Signatures

 

$100,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deductible(s)

 

 

 

 

 

 

 

 

 

 

 

Single Loss Deductible

 

$100,000

 

 

 

 

 

 

 

 

 

Except: Audit Expense, Stop Payment, Uncollectible Items of Deposit and
Unauthorized Signatures

 

$5,000

 

 

 

 

 

 

 

 

 

 

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

 

SCHEDULE 7.16

 

Subsidiaries

 

Name

 

Type and Jurisdiction

 

Authorized and Issued

 

Owner/Percentage
Owned

MVC Financial Services, Inc.

 

Delaware corporation

 

100 common shares, par value $0.01 per share

 

Borrower (100%)

MVC Cayman

 

Cayman Islands company

 

1 share, par value US$1.00

 

Borrower (100%)

MVC GP II, LLC (f/k/a MVC Financial Services, LLC)

 

Delaware limited liability company

 

membership interest

 

MVC Financial Services, Inc. (100%)

MVC Partners LLC

 

Delaware limited liability company

 

membership interest

 

MVC Cayman (100%)

MVC Private Equity Fund, L.P.

 

Delaware limited partnership

 

general partner and limited partnership interests

 

MVC GP II, LLC (0.48% - GP interest) and MVC Partners LLC (18.9% - LP interest)

 

MVC Capital, Inc. (Borrower) is a Delaware corporation whose stock is publicly
traded on the New York Stock Exchange. As of October 20, 2015, MVC Capital had
22,702,821 shares outstanding and approximately 5,976 shareholders.

 

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

 

SCHEDULE 7.19

 

Intellectual Property

 

United States of America

 

“MVC”                                                      Registered: April 20,
2010; Reg. No. 3,778,612; Filed Dec 21 2007; Ser. No. 77358154; Renewal
April 20, 2020

 

Class                   36

 

Services: Business development services, namely, providing long-term equity and
debt investment capital to fund growth, acquisitions and recapitalizations of
small and middle-market companies; venture capital investment management;
financial investment in the field of private equity and private lending funds;
financial portfolio management in the field of private equity and debt funds;
investment management; investment of funds for others; management of investments
of others through preferred and common stock, subordinated debt, term loans,
warrants or rights to acquire equity interests, senior and subordinated loans,
or convertible securities; purchase of securities and other financial
instruments for others; investment services, namely, asset acquisition,
development and management services

 

“MVC CAPITAL”                                            Registered: June 20,
2006; Reg. No. 3,107,427; Filed December 10, 2002; Ser. No. 76978091; Renewal:
June 20, 2026.

 

Class                   36

 

Services: Management of private equity and private lending funds, financial
investment in the field of private equity and private lending funds, financial
portfolio management in the field of private equity and debt funds

 

Canada

 

“MVC CAPITAL” Filed: June 30 2014; Application No. 1683333 Pending/Advertised
for Opposition

 

Services: Business development services, namely providing long-term equity and
debt investment capital to fund growth, acquisitions and recapitalizations of
small and middle-market companies; venture capital investment management;
financial investment in the field of private equity and private lending funds;
financial portfolio management in the field of private equity and debt funds;
investment management; investment of funds for others; management of investments
of others through preferred and common stock, subordinated debt, term loans,
warrants or rights to acquire equity interests, senior and subordinated loans,
or convertible securities; private financial placement of securities and
derivatives for others; investment services, namely asset acquisition,
development and management services. (2) Management of private equity and
private lending funds, financial investment

 

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

 

in the field of private equity and private lending funds, financial portfolio
management in the field of private equity and debt funds.

 

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

 

SCHEDULE 7.21

 

Collective Bargaining Agreements

 

None

 

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

 

SCHEDULE 7.26(a)

 

Equity Investments

 

 

 

 

 

 

 

 

 

 

 

Fair Value/

 

 

 

 

 

 

 

 

 

 

 

Market

 

Company

 

Industry

 

Investment

 

Principal

 

Cost

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

Schedule 7.26(a)

 

 

 

 

 

 

 

 

 

 

 

Actelis Networks, Inc.

 

Technology Investment

 

Preferred Stock (150,602 shares) (d, i)

 

 

 

$

5,000,003

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

FOLIOfn, Inc.

 

Technology Investment - Financial Services

 

Preferred Stock (5,802,259 shares) (d, i)

 

 

 

15,000,000

 

5,596,000

 

 

 

 

 

 

 

 

 

 

 

 

 

MainStream Data, Inc.

 

Technology Investment

 

Common Stock (5,786 shares) (d, i)

 

 

 

3,750,000

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

NPWT Corporation

 

Medical Device Manufacturer

 

Series B Common Stock (281 shares) (d)

 

 

 

1,231,638

 

2,000

 

 

 

 

 

Series A Convertible Preferred Stock (5,000 shares) (d)

 

 

 

—

 

36,000

 

 

 

 

 

 

 

 

 

1,231,638

 

38,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Advantage Insurance Holdings LTD

 

Insurance

 

Preferred Stock (750,000 shares) (d, e)

 

 

 

7,500,000

 

8,015,165

 

 

 

 

 

 

 

 

 

 

 

 

 

Biovation Acquisition CO.

 

Manufacturer of Laminate Material and Composites

 

Common Stock (90 shares)

 

 

 

784,622

 

555,869

 

 

 

 

 

 

 

 

 

 

 

 

 

Centile Holdings B.V.

 

Software

 

Common Equity Interest (d, e)

 

 

 

3,524,376

 

4,905,000

 

 

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

 

JSC Tekers Holdings

 

Real Estate Management

 

Common Stock (3,201 shares) (d, e)

 

 

 

4,500

 

4,000

 

 

 

 

 

Preferred Stock (9,159,085 shares) (d, e)

 

 

 

11,810,188

 

5,045,700

 

 

 

 

 

 

 

 

 

11,814,688

 

5,049,700

 

 

 

 

 

 

 

 

 

 

 

 

 

Security Holdings B.V.

 

Electrical Engineering

 

Common Equity Interest (d, e)

 

 

 

52,846,140

 

45,300,000

 

 

 

 

 

 

 

 

 

 

 

 

 

SGDA Europe B.V.

 

Environmental Services

 

Common Equity Interest (d, e)

 

 

 

28,544,800

 

6,020,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Equus Total Return, Inc.

 

Regulated Investment Company

 

Common Stock (4,444,644 shares) (d)

 

 

 

10,030,272

 

7,644,788

 

 

 

 

 

 

 

 

 

 

 

 

 

MVC Automotive Group GmbH

 

Automotive Dealerships

 

Common Equity Interest (a, d, e)

 

 

 

48,457,838

 

16,376,000

 

 

 

 

 

 

 

 

 

 

 

 

 

MVC Private Equity Fund LP

 

Private Equity

 

Limited Partnership Interest (a, d, j)

 

 

 

13,838,539

 

21,939,744

 

 

 

 

 

General Partnership Interest (a, d, j)

 

 

 

353,024

 

552,016

 

 

 

 

 

 

 

 

 

14,191,563

 

22,491,760

 

 

 

 

 

 

 

 

 

 

 

 

 

RuMe Inc.

 

Consumer Products

 

Common Stock (5,297,548 shares) (a, d)

 

 

 

924,475

 

924,475

 

 

 

 

 

Series C Preferred Stock (23,896,634 shares) (a, d)

 

 

 

3,410,694

 

6,467,772

 

 

 

 

 

Series B-1 Preferred Stock (4,999,076 shares) (a, d)

 

 

 

999,815

 

1,667,753

 

 

 

 

 

 

 

 

 

5,334,984

 

9,060,000

 

 

 

 

 

 

 

 

 

 

 

 

 

SIA Tekers Invest

 

Port Facilities

 

Common Stock (68,800 shares) (a, d, e)

 

 

 

2,300,000

 

342,000

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Spray Drying

 

Specialty Chemicals

 

Class B Common Stock (784 shares)

 

 

 

 

 

 

 

 

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

 

Holding Company

 

 

 

 

 

 

 

5,488,000

 

5,875,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Turf Products, LLC

 

Distributor - Landscaping and

 

Limited Liability Company Interest (a, d)

 

 

 

3,535,694

 

3,991,794

 

 

 

Irrigation Equipment

 

Guarantee (a)

 

1

 

—

 

(41,034

)

 

 

 

 

 

 

 

 

 

 

 

 

Vestal Manufacturing Enterprises, Inc.

 

Iron Foundries

 

Common Stock (5,610 shares) (a, d)

 

 

 

250,000

 

250,000

 

 

 

 

 

Warrants

 

 

 

—

 

—

 

 

 

 

 

 

 

 

 

250,000

 

250,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

219,584,618

 

$

141,470,042

 

 

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

 

SCHEDULE 7.26(b)

 

Debt Investments

 

 

 

 

 

 

 

 

 

 

 

Fair Value/

 

 

 

 

 

 

 

 

 

 

 

Market

 

Company

 

Industry

 

Investment

 

Principal

 

Cost

 

Value

 

Agri-Carriers Group, Inc.

 

Transportation

 

Senior Subordinated Debt 12.0000% Cash, 3.0000% PIK, 07/20/2017 (a, b)

 

$

11,774,486

 

$

11,787,114

 

$

11,774,486

 

 

 

 

 

 

 

 

 

 

 

 

 

Biogenic Reagents

 

Renewable energy

 

Senior Note 12.0000% Cash, 4.0000% PIK, 07/21/2018 (b)

 

5,463,002

 

5,463,002

 

5,463,002

 

 

 

 

 

Senior Convertible Note 12.0000% Cash, 4.0000% PIK, 07/21/2018 (b)

 

4,916,702

 

4,916,702

 

4,983,082

 

 

 

 

 

Senior Note 12.0000% Cash, 4.0000% PIK, 09/30/2015 (b)

 

4,165,169

 

4,165,169

 

4,165,169

 

 

 

 

 

Senior Subordinated Note 12.0000% Cash, 4.0000% PIK, 09/30/2015 (b)

 

1,009,556

 

1,009,556

 

1,009,556

 

 

 

 

 

Warrants (d)

 

2

 

620,077

 

1,660,689

 

 

 

 

 

 

 

 

 

16,174,506

 

17,281,498

 

 

 

 

 

 

 

 

 

 

 

 

 

Biovation Holdings, Inc.

 

Manufacturer of Laminate Material and Composites

 

Bridge Loan 6.0000% Cash, 6.0000% PIK, 10/31/2014 (b)

 

1,079,325

 

1,079,325

 

—

 

 

 

 

 

Warrants (d)

 

3

 

397,677

 

—

 

 

 

 

 

 

 

 

 

1,477,002

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

Custom Alloy Corporation

 

Manufacturer of Pipe Fittings

 

Second Lien Loan, 7.3000% Cash, 3.7000% PIK, 04/30/2020

 

23,791,903

 

23,791,903

 

23,638,469

 

 

 

 

 

Unsecured Subordinated Loan 12.0000% Cash, 09/04/2016

 

3,000,000

 

3,000,000

 

3,000,000

 

 

 

 

 

 

 

 

 

26,791,903

 

26,638,469

 

 

 

 

 

 

 

 

 

 

 

 

 

G3K Display, Inc.

 

Retail Store Fixtures

 

Senior Lien Loan 13.0000% Cash, 04/11/2019 (h)

 

5,625,000

 

5,625,000

 

—

 

 

 

 

 

Warrants (d)

 

1

 

—

 

—

 

 

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

 

 

 

 

 

 

 

 

 

5,625,000

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

Initials Inc

 

Consumer Products

 

Senior Subordinated Debt 12.0000% Cash, 3.0000% PIK, 06/22/2020 (a, b)

 

4,750,000

 

4,750,000

 

4,750,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Inland Environmental & Remediation LP

 

Environmental Services

 

Senior Secured Loan 12.0000% Cash, 04/17/2019

 

15,000,000

 

14,506,835

 

8,000,000

 

 

 

 

 

Warrants (d)

 

1

 

713,000

 

—

 

 

 

 

 

 

 

 

 

15,219,835

 

8,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Legal Solutions Holdings, Inc.

 

Business Services

 

Senior Subordinated Debt 12.0000% Cash, 2.0000% PIK, 07/01/2016 (a, b)

 

8,705,000

 

8,718,402

 

8,705,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Morey’s Seafood International, LLC

 

Food Services

 

Second Lien Loan 10.0000% Cash, 3.0000% PIK, 08/12/2018 (b)

 

16,047,333

 

16,047,333

 

14,371,830

 

 

 

 

 

 

 

 

 

 

 

 

 

The Results Companies, LLC

 

Business Services

 

Senior Subordinated Debt 13.0000% Cash, 2.5000% PIK, 07/01/2016 (a, b)

 

9,000,000

 

9,008,330

 

9,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

RX Innovation, Inc.

 

Software

 

Senior Subordinated Debt 12.0000% Cash, 4.0000% PIK, 03/01/2016 (a, b)

 

10,300,000

 

10,307,845

 

10,300,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Thunderdome Restaurants LLC

 

Restaurants

 

Second Lien Loan 12.0000% Cash, 06/10/2020

 

1,965,251

 

1,965,251

 

1,965,251

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Spray Drying Holding Company

 

Specialty Chemicals

 

Secured Loan 12.0000% Cash, 05/02/2019

 

1,500,000

 

1,500,000

 

1,500,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Turf Products, LLC

 

Distributor - Landscaping and

 

Senior Subordinated Debt 7.0000% Cash, 4.0000% PIK, 11/01/2018 (a, b)

 

3,895,262

 

3,895,262

 

3,862,994

 

 

 

 

 

Warrants (a, d)

 

150

 

—

 

—

 

 

 

 

 

 

 

 

 

3,895,262

 

3,862,994

 

 

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

 

United States Technologies Inc.

 

Electronis Manufacturer and Repais

 

Second Lien Loan 10.5000% Cash, 07/17/2020

 

5,000,000

 

5,000,000

 

5,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Vestal Manufacturing Enterprises, Inc.

 

Iron Foundries

 

Senior Subordinated Debt 12.0000% Cash 3.0000% PIK, 11/28/2021

 

6,315,236

 

6,315,236

 

6,315,236

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

144,583,019

 

$

129,464,764

 

 

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

 

SCHEDULE 7.26(a)

 

Remaining Equity Interests

 

 

 

 

 

 

 

 

 

 

 

Fair
Value/Market

 

(a) Company

 

Industry

 

Investment

 

Principal

 

Cost

 

Value

 

Ohio Medical Corporation

 

Medical Device Manufacturer

 

Common Stock (8,512 shares) (a, d)

 

 

 

$

15,763,637

 

$

—

 

 

 

 

 

Series A Convertible Preferred Stock 16.0000% PIK (31,346 shares) (a, b)

 

 

 

30,000,000

 

6,050,797

 

 

 

 

 

Series C Convertible Preferred Stock 16.0000% PIK (9,927shares) (a, b)

 

 

 

22,618,466

 

32,479,292

 

 

 

 

 

 

 

 

 

68,382,103

 

38,530,089

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Gas & Electric, Inc.

 

Energy Services

 

Second Lien Loan, 13.0000% Cash, 07/01/2019

 

$

7,500,000

 

7,500,000

 

7,500,000

 

 

 

 

 

Unsecured Loan 10.0000% Cash, 4.0000% PIK , 07/01/2018 (b)

 

3,167,220

 

3,167,220

 

3,167,220

 

 

 

 

 

Convertible Series I Preferred Stock (32,200 shares) (d, k)

 

 

 

500,000

 

83,667,607

 

 

 

 

 

Convertible Series J Preferred Stock (8,216 shares) (d)

 

 

 

—

 

—

 

 

 

 

 

 

 

 

 

11,167,220

 

94,334,827

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

79,549,323

 

$

132,864,916

 

 

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

 

SCHEDULE 8.1

 

Financial and Collateral Reporting

 

Borrower shall deliver, or cause to be delivered to Agent (and Lenders as to
(a), (b), (c) and (d) herein below) each of the following:

 

(a)                                 Annual Financial Statements. As soon as
available, but in any event within one hundred twenty (120) days after the end
of each fiscal year of Borrower and its Subsidiaries, their filed Form 10-K
together with their audited consolidated balance sheet and related statements of
operations, stockholders’ equity and cash flows as of the end of and for such
year, setting forth in each case in comparative form the figures for the
previous fiscal year, and the accompanying notes thereto, all in reasonable
detail, fairly presenting in all material respects the financial position and
results of operations of Borrower and its Subsidiaries;

 

(b)                                 Quarterly Financial Statements. As soon as
available, but in any event within forty-five (45) days after the end of each of
the first three fiscal quarters of each fiscal year of Borrower and its
Subsidiaries, their filed Form 10-Q together with their consolidated balance
sheet and related statements of operations, stockholders’ equity and cash flows
as of the end of and for such fiscal quarter, all in reasonable detail, fairly
presenting in all material respects the financial position and the results of
the operations of Borrower and its Subsidiaries as of the end of and through
such fiscal month, setting forth in each case in comparative form the figures
for the corresponding period or periods of (or, in the case of the balance
sheet, as of the end of) the previous fiscal year, subject to normal year-end
audit adjustments and the absence of footnotes;

 

(c)                                  Year End Financial Statements. As soon as
available, but in any event within forty-five (45) days after the end of each
fiscal year of Borrower and its Subsidiaries, their unaudited consolidated
balance sheet and related statements of operations, stockholders’ equity, and
cash flows as of the end of and for such year (without any footnotes) and
availability projections for the quarterly periods for the current fiscal year,
all in reasonable detail, fairly presenting in all material respects the
financial position and the results of the operations of Borrower and its
Subsidiaries as of the end of and through such fiscal periods, setting forth in
each case in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of) the previous
fiscal year, subject to normal year-end audit adjustments and the absence of
footnotes;

 

(d)                                 Accountant’s Certificate. Concurrently with
the delivery of the financial statements referred to in clause (a) above:
(i) the unqualified opinion of independent certified public accountants with
respect to the audited combined financial statements, which independent
accounting firm shall be selected by Borrower and reasonably acceptable to
Agent, that such audited combined financial statements have been prepared in
accordance with GAAP, and present fairly in all material respects the results of
operations and financial condition of Borrower and its Subsidiaries as of the
end of and for the fiscal year then ended, and (ii) a separate statement
certifying that, in making the examination necessary therefor no knowledge

 

1

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was obtained of any Default or Event of Default, or if any such Default or Event
of Default shall exist, stating the nature and status of such event;

 

(e)                                  Compliance Certificate. Concurrently with
the delivery of the financial statements referred to in clauses (a) and
(b) above, a Compliance Certificate by Responsible Officer of Borrower,
(i) certifying, in the case of the financial statements delivered under clause
(b), as presenting fairly in all material respects the financial condition and
results of operations of Borrower and its Subsidiaries on a combined basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes, (ii) certifying as to whether an Event
of Default has occurred and, if an Event of Default has occurred, specifying the
details thereof and any action taken or proposed to be taken with respect
thereto, (iii) setting forth reasonably detailed calculations demonstrating
compliance with Section 10 and (iv) stating whether any change in GAAP or in the
application thereof has occurred since the date of the audited financial
statements referred to in clause (a) above and, if any such change has occurred,
specifying the effect of such change on the financial statements accompanying
such certificate;

 

(f)                                   Borrowing Base Certificate. As soon as
possible after the end of each calendar month (but in any event within thirty
(30) days after the end thereof), or more frequently as Agent may require at any
time that the Borrower has Excess Availability of less than Five Million Dollars
($5,000,000), a Borrowing Base Certificate setting forth the calculation of the
Borrowing Base as of the last Business Day of the immediately preceding calendar
month, duly completed and executed by a Responsible Officer of Borrower (and
nothing contained in any Borrowing Base Certificate shall be deemed to limit,
impair or otherwise affect the rights of Agent and Lenders contained herein and
in the event of any conflict or inconsistency between the calculation of the
Borrowing Base as set forth in any Borrowing Base Certificate and as determined
by Agent in good faith, the determination of Agent shall govern and, absent
manifest error, be conclusive and binding upon Borrower) together with a
worksheet of calculations prepared by Borrower to determine Eligible Debt
Investments, such worksheets detailing the Debt Investments excluded from
Eligible Debt Investments and the reason for such exclusion and sales and
collection data for the prior calendar month;

 

(g)                                  Collateral Reports. As soon as possible
after the end of each calendar month (but in any event within thirty (30) Days
after the end thereof), or more frequently as Agent may require at any time that
the Borrower has Excess Availability of less than Five Million Dollars
($5,000,000):

 

(i)                             a schedule detailing the Investments, in form
satisfactory to Agent, indicating who has possession of the loan documents or
certificates evidencing such Investments, by industry;

 

(ii)                          Borrower’s standard form of Portfolio Review Sheet
with respect to each Debt Investment;

 

(iii)                       a detailed loan delinquency report prepared in a
manner reasonably acceptable to Agent;

 

2

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

 

(iv)                      a summary of all Deposit Accounts not maintained with
the Agent, including month end balances and all deposits and withdrawals for the
prior month;

 

(v)                         a reconciliation of the loan balance per Borrower’s
general ledger to the loan balance under this Agreement; and

 

(vi)                      such other reports as the Agent may require.

 

(h)                                 MVC Purchases and Sales Journal. As soon as
possible after the end of each calendar month (but in any event within thirty
(30) Days after the end thereof), or more frequently as Agent may require at any
time, a detailed report of all Portfolio Company acquisitions and sales, all
prepared in a manner reasonably acceptable to Agent;

 

(i)                                     Tax Returns. As soon as possible and in
any event within twenty (20) days of filing thereof, copies of all tax returns
filed by Borrower and all Guarantors;

 

(j)                                    Public Information. Promptly after the
same are available, copies of each annual report, proxy or annual or quarterly
financial statement or other report or communication sent to the equity holders
of Borrower, and copies of all annual, regular, periodic and special reports and
registration statements which Borrower may file or be required to file with the
Securities and Exchange Commission under Section 13 or 15(d) of the Securities
Exchange Act of 1934;

 

(k)                                 Management Letters, Etc. Promptly after any
request by Agent, copies of any detailed audit reports, management letters or
recommendations submitted to the board of directors or equivalent governing body
(or the audit committee of the board of directors or such equivalent governing
body) of Borrower by independent accountants in connection with the accounts or
books of Borrower and its Subsidiaries, or any audit of any of them;

 

(l)                                     Notices of Investigations. Promptly, and
in any event within five (5) Business Days after receipt thereof by Borrower,
copies of each notice or other correspondence received from the Securities and
Exchange Commission (or comparable agency in any applicable non-U.S.
jurisdiction) concerning any investigation or possible investigation or other
inquiry by such agency regarding financial or other operational results of the
Credit Parties;

 

(m)                             Insurance. Concurrently with the delivery of the
financial statements referred to in clause (a) above, a certificate by a
Responsible Officer of Borrower attaching the insurance binder or other evidence
of insurance for any insurance coverage of Borrower that was renewed, replaced
or modified during the period covered by such financial statements.

 

(n)                                 Within ten (10) Business Days of receipt
thereof by the Borrower, notice of any material issues that impact the Borrower
and its operations which are cited in the Borrower’s compliance and similar
reports regarding the operations and affairs of the Borrower prepared by third
parties, including, without limitation, the US Bancorp Fund Services, LLC
quarterly Fund Compliance Report and summary of compliance statistics and the
U.S. Bancorp Fund Services Risk Management/Compliance Review of Compliance
Controls; and

 

3

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

 

(o)                                 Additional Information. As soon as possible
after the end of each calendar month (but in any event within ten (10) Business
Days after the end thereof), in any month when any of the following events
occurs or upon the written request of the Agent,

 

(i)                                     a certificate by a Responsible Officer
of Borrower consisting of a report of any new Deposit Account established or
used by Borrower with any bank or other financial institution and any existing
Deposit Account currently established or used by Borrower with any bank or other
financial institution that is at any time identified after the date hereof and
was not set forth in the Perfection Certificate, including in each case, the
account number, the name and address of the financial institution at which such
account is maintained, the purpose of such account and, if any, the amount held
in such account on or about the date of such report,

 

(ii)                                  true, correct and complete copies of all
agreements, documents or instruments evidencing or otherwise related to
Indebtedness that Agent has not otherwise received; and

 

(p)                                 Additional Debt Investments Information. As
soon as possible, and in any event within ten (10) Business days after the
Borrower’s Chief Executive Officer or Chief Financial Officer obtaining
knowledge thereof, a written notice from the Borrower describing their knowledge
of a Debt Investment Obligor Material Adverse Effect, the acceleration of any
Debt Investment and any event or circumstance which, to the best of any
Borrower’s knowledge, would cause Agent to consider any then existing Debt
Investment as no longer constituting an Eligible Debt Investment;

 

(q)                                 Additional Portfolio Company Information. As
soon as possible, and in any event within ten (10) Business days after the
Borrower’s Chief Executive Officer or Chief Financial Officer obtaining
knowledge thereof, a written notice from the Borrower describing their knowledge
of a Portfolio Company Material Adverse Effect, a material decrease in the value
of any Equity Interest in any Portfolio Company; and

 

(r)                                    General. Promptly following any request
therefor, such other information regarding the operations, business affairs and
financial condition of Borrower or compliance with the terms of this Agreement,
as Agent may reasonably request.

 

4

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

 

SCHEDULE 8.5

 

Permitted Investments

 

None

 

1

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

 

SCHEDULE 8.10

 

Bank Accounts

 

(a) Credit Party

 

Bank Name

 

Account #

 

 

 

 

 

 

 

MVC Financial Services, Inc.

 

US Bank

 

190006154100

 

 

 

 

 

 

 

MVC Financial Services, Inc.

 

US Bank

 

190006154100A

 

 

 

 

 

 

 

MVC Financial Services, Inc.

 

US Bank

 

190006154100B

 

 

 

 

 

 

 

MVC Capital, Inc.

 

JPMorgan

 

W46795006

 

 

 

 

 

 

 

MVC Capital, Inc.

 

US Bank

 

19-5290

 

 

 

 

 

 

 

MVC Capital, Inc.

 

US Bank

 

19-5290A

 

 

 

 

 

 

 

MVC Capital, Inc.

 

US Bank

 

19-5290B

 

 

 

 

 

 

 

MVC Capital, Inc.

 

US Bank

 

19-5290D

 

 

 

 

 

 

 

MVC Capital, Inc.

 

US Bank

 

19-5290E

 

 

 

 

 

 

 

MVC Cayman

 

US Bank

 

19-5291

 

 

 

 

 

 

 

MVC Capital, Inc.

 

BB&T

 

1182001102

 

 

 

 

 

 

 

MVC Capital, Inc.

 

BB&T

 

1182000648

 

 

 

 

 

 

 

MVC Capital, Inc.

 

BB&T

 

1182000602

 

 

 

 

 

 

 

MVC Capital, Inc.

 

BB&T

 

30689144

 

 

1

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

 

SCHEDULE 9.1

 

Permitted Indebtedness

 

None

 

1

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

 

SCHEDULE 9.2

 

Permitted Liens

 

None

 

1

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

 

SCHEDULE 12.1(b)

 

Disqualified Lenders

 

Highland Capital Management, L.P.,

 

Longroad Asset Management, LLC,

 

Black Diamond Capital Management, L.L.C.

 

and any known Affiliate of any of the foregoing.

 

1

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