FIRST AMENDMENT TO CREDIT AGREEMENT

This FIRST AMENDMENT TO CREDIT AGREEMENT (this "Agreement"), dated as of
December 16, 2005, is made by and among AMERICAN CAPITAL STRATEGIES, LTD., a
Delaware corporation ("Borrower"), the Lenders (as defined below) signatory
hereto, and WACHOVIA BANK, NATIONAL ASSOCIATION, individually and in its
capacity as administrative agent ("Agent").

RECITALS

A. Borrower, the lenders party thereto (collectively, "Lenders") and Agent are
parties to that certain Credit Agreement dated as of June 17, 2005 (as amended
or modified from time to time the "Credit Agreement").

B. Borrower has requested that the cap on Commitment Increases be increased by
$200,000,000 and certain other amendments to the Credit Agreement, and that
Agent and Lender's grant certain limited waivers with respect to the Credit
Agreement as set forth herein.

C. Agent and Lenders are willing to enter into this Agreement to amend the
Credit Agreement and grant certain limited waivers with respect to the Credit
Agreement upon the terms and conditions set forth below.

NOW THEREFORE, in consideration of the matters set forth in the recitals and the
covenants and provisions herein set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

AGREEMENT

Section 1. Definitions. Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed thereto in the Credit Agreement.

Section 2. Limited Waiver. Subject to the terms and conditions set forth herein
and in reliance on the representations and warranties of the Borrower herein
contained, the Agent and the Lenders hereby waive the Event of Default existing
as of the date hereof (such waiver applying only for the period referenced and
not to any future requirement under such referenced section) under Section
7.1(c) of the Credit Agreement resulting solely from Borrower, prior to the date
hereof, breaching Section 5.12 of the Credit Agreement by granting Liens to
secure Debt in respect of total return swaps permitted under Section 5.29(b) of
the Credit Agreement. Except as set forth in this Section 2, the Agent and
Lenders hereby reserve all rights and remedies granted to the Agent and Lenders
under the Credit Agreement or applicable law or otherwise and nothing contained
herein shall be construed to limit, impair or otherwise affect the right of the
Agent and Lenders to declare an Event of Default with respect to any other
existing or any future non-compliance with any covenant, term or provision of
the Credit Agreement or any other document now or hereafter executed and
delivered in connection therewith.

Section 3. Amendment. Sections 1.1, 2.2, 5.12 and 5.29 of the Credit Agreement
are modified and amended as follows:

(a) Section 1.1 of the Credit Agreement is hereby modified and amended by
deleting clause (xi) in the definition of "Debt" in its entirety and
substituting the following in lieu thereof:

"(xi) all obligations, direct or indirect (absolute or contingent) of such
Person to repurchase property or assets sold or otherwise transferred by such
Persons (excluding any customary obligations to repurchase property or assets
sold or otherwise transferred in connection with a securitization transaction or
total return swap),"

(b) Section 2.2(a) of the Credit Agreement is hereby modified and amended by
deleting clause (ii) of Section 2.2(a) in its entirety and substituting the
following in lieu thereof:

"(ii) immediately after giving effect to such Commitment Increase, the total
Commitments of all the Lenders hereunder shall not exceed $500,000,000;"

(c) Section 5.12 of the Credit Agreement is hereby modified and amended by
deleting Section 5.12 in its entirety and substituting the following in lieu
thereof:

Neither the Borrower nor any Subsidiary of the Borrower will create, assume or
suffer to exist any Lien on any asset now owned or hereafter acquired by it,
except: (a) Liens granted by a SPE Subsidiary in Securitization Transaction
assets; (b) Liens granted by the Borrower to secure Debt permitted under Section
5.29(c); (c) Liens granted by the Borrower to secure Debt permitted under
Section 5.29(d); and (d) Liens granted by the Borrower to secure Debt in respect
of total return swaps permitted under Section 5.29(b).

(d) Section 5.29 of the Credit Agreement is hereby modified and amended by
deleting Section 5.29 in its entirety and substituting the following in lieu
thereof:

The Borrower shall not directly or indirectly issue, assume, create, incur or
suffer to exist any Debt or the equivalent (including obligations under Capital
Leases), except for: (a) the Debt owed to the Lenders and Swingline Lender under
this Agreement and the Credit Documents; (b) the Debt existing and outstanding
on the Closing Date described on Schedule 5.29 as such Debt may be amended,
restated or refinanced from time to time, provided that such amendment,
restatement or refinancing shall not cause the principal amount of such Debt to
exceed the amount set forth on Schedule 5.29; (c) Debt in respect of which
recourse for payment is contractually limited to specific assets of the Borrower
or its Subsidiaries encumbered by a Lien securing such Debt; (d) Debt (other
than Debt described in clause (c) of this Section 5.29) secured by a Lien upon
assets of the Borrower if the aggregate outstanding principal amount of such
Debt does not, at any time prior to March 31, 2006, exceed $125,000,000 and
$75,000,000 at any time thereafter; (e) Subordinated Debt; and (f) unsecured
Debt of the Borrower not permitted under clause (e) of this Section 5.29 with
respect to which no scheduled principal payment shall be prior to the date six
months after the Commitment Termination Date; provided that after giving effect
to the issuance, assumption, creation, incurrence or existence of the Debt
permitted by clauses (a), (b), (c), (d), (e), and (f) of this Section 5.29, no
Default shall have occurred and be continuing.

Section 4. Representations and Warranties. To induce Agent and Lenders to
execute this Agreement, Borrower hereby represents and warrants to Agent and
Lenders as follows:

(a) the execution, delivery and performance of this Agreement have been duly
authorized by all requisite action of Borrower and this Agreement constitutes
the legal, valid and binding obligation of Borrower enforceable against Borrower
in accordance with its terms, subject to bankruptcy, insolvency and similar laws
affecting the enforceability of creditors' rights generally and to general
principles of equity;

(b) the execution, delivery and performance of this Agreement does not and will
not contravene, conflict with, violate or constitute a default under (i) the
articles of incorporation or bylaws of Borrower, or (ii) any applicable law,
rule or regulation, or any judgment, decree or order, or any agreement,
indenture or instrument to which Borrower is a party or is bound or which is
binding upon or applicable to all or a portion of its property, in any material
respect;

(c) after giving effect to this Agreement and the consummation of the
transactions hereby each of the representations and warranties in the Credit
Agreement are true and correct in all material respects with the same effect as
though made on and as of the date hereof (except, in each case, to the extent
stated to relate to an earlier date, in which case such representation or
warranty shall have been true and correct on and as of such earlier date) and no
Event of Default or Default exists under the Credit Agreement after giving
effect to this Agreement and the consummation of the transactions contemplated
hereby;

Section 5. Conditions of Effectiveness. The effectiveness of this Agreement
shall be subject to the satisfaction of all of the following conditions in a
manner, form and substance satisfactory to the Agent:

(a) All of the representations and warranties of Borrower set forth in this
Agreement and in the Credit Agreement, after giving effect to this Agreement,
shall be true and correct in all respects, except to the extent such
representations and warranties expressly related to an earlier date, in which
case such representations and warranties shall have been true and correct in all
respects as of such earlier date.

(b) The execution and delivery of this Agreement by each of the parties hereto.

(c) With respect to the amendments set forth in Section 3(b) of this Agreement
receipt by Agent of an officer's or secretary's certification of resolutions
adopted by the Board of Directors of the Borrower authorizing an increase in the
cap on Commitment Increases to $500,000,000.

Section 6. No Further Amendments or Waivers. Except for the waivers specifically
granted in Section 2 of this Agreement and the amendments set forth in Section 3
of this Agreement, the Credit Agreement and each of the other Credit Documents
shall remain in full force and effect in accordance with their respective terms.
Borrower hereby ratifies, confirms and reaffirms its liabilities, its payment
and performance obligations (contingent or otherwise) and its agreements under
the Credit Agreement and the other Credit Documents, as amended by this
Agreement. Borrower hereby acknowledges and agrees that except as specifically
set forth herein, neither this Agreement nor any actions pursuant to this
Agreement nor any negotiations or discussions among Borrower, any of its agents,
officers or principals and Agent or Lenders, shall be deemed or construed to
cure any existing defaults under the Credit Documents, constitute a
reinstatement, novation or release of the Loan or the Credit Documents, or
constitute a modification, amendment or waiver of the Loan or Credit Documents.

Section 7. No Defenses, Counterclaims or Rights of Offset. Borrower for itself
and its successors and assigns, and by its execution hereof (i) hereby
acknowledges, admits and agrees that, as of the date of execution and delivery
of this Agreement, there are no defenses, counterclaims or offsets relating to
its obligations under or in respect of the Credit Documents or to the
enforcement or exercise by Lenders of any of their rights, powers or remedies
under or in respect of the Credit Documents, or alternatively (ii) hereby
irrevocably waives, relinquishes and releases any and all such objections,
claims, defenses, counterclaims or offsets, that may exist as of the date
hereof, including, without limitation, any and all such objections, claims,
defenses, counterclaims or offsets that are unknown, unsuspected, unanticipated
or undisclosed as of such date.

Section 8. Release. In consideration of the Lenders' agreements herein
contained, Borrower hereby irrevocably releases and forever discharges the
Agent, the Lenders and their affiliates, subsidiaries, successors, assigns,
participants, directors, officers, employees, agents, consultants and attorneys
(each, a "Released Person") of and from all damages, losses, claims, demands,
liabilities, obligations, actions and causes of action whatsoever arising on or
prior to the date hereof which such Borrower, or any of its Affiliates may now
have or claim to have against the Agent, the Lenders or any other Released
Person on account of or in any way touching, concerning, arising out of or
founded upon the Credit Agreement, after giving effect to this Agreement and the
transactions contemplated or otherwise evidenced thereby, whether presently
known or unknown and of every nature and extent whatsoever.

Section 9. Reimbursement of Expenses. Borrower hereby agrees to reimburse Agent
on demand for all reasonable fees and reasonable out-of-pocket costs and
expenses (including without limitation, reasonable fees and expenses of its
counsel) incurred by Agent in connection with the negotiation, documentation and
consummation of this Agreement and the transactions contemplated hereby.

Section 10. Miscellaneous.

(a) Effect of Agreement. The execution, delivery and effectiveness of this
Agreement shall not operate as a waiver of any right, power or remedy of Agent
or any Lender under the Credit Agreement or any Credit Document, nor constitute
a waiver of any provision of the Credit Agreement or any Credit Document, except
as specifically set forth herein.

(b) Counterparts. This Agreement may be executed in any number of counterparts
and by the different parties on separate counterparts, and each such counterpart
shall be deemed to be an original, but all such counterparts shall together
constitute but one and the same instrument. Delivery of the executed counterpart
of this Agreement by telecopy or electronic mail shall be as effective as
delivery of a manually executed counterpart to this Agreement.

(c) Severability. The illegality or unenforceability of any provision of this
Agreement or any instrument or agreement required hereunder shall not in any way
affect or impair the legality or enforceability of the remaining provisions of
this Agreement or any instrument or agreement required hereunder.

(d) Captions. Section captions used in this Agreement are for convenience only,
and shall not affect the construction of this Agreement.

(e) Entire Agreement. This Agreement, embodies the entire agreement and
understanding among the parties hereto and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof.

Section 11. Governing Law. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE
CONFLICT OF LAWS PRINCIPLES.

Section 12. JURY TRIAL WAIVER. BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY
JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY
JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH
REGARD TO THIS AGREEMENT, OR THE OTHER CREDIT DOCUMENTS, OR ANY CLAIM,
COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER, AND IS
INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE
RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. AGENT AND LENDERS ARE HEREBY
AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER BY BORROWER.

[signature page follows]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

 

BORROWER:

     

AMERICAN CAPITAL STRATEGIES, LTD.

, a Delaware corporation      

By: /s/ Cydonii Fairfax
Name: Cydonii Fairfax
Title: Vice President

   

 

AGENT:

     

WACHOVIA BANK, NATIONAL ASSOCIATION

,
as Administrative Agent and as a Lender      

By: /s/ Paul A. Burkhart
Name: Paul A. Burkhart
Title: Vice President

 

 

 

LENDER:

     

BRANCH BANKING AND TRUST COMPANY

,

as a Lender

     

By: /s/ James E. Davis
Name: James E. Davis
Title: Senior Vice President

 

 

 

LENDER:

     

JP MORGAN CHASE BANK, N.A.

,

as a Lender

     

By: /s/ Christine Herrick
Name: Christine Herrick
Title: Vice President

 

 

 

LENDER:

     

CITICORP NORTH AMERICA, INC.

,

as a Lender

     

By: /s/ Thomas Fontana
Name: Thomas Fontana
Title: Managing Director

 

 

 

LENDER:

     

BANK OF AMERICA, N.A.

,

as a Lender

     

By: /s/ Mary Pat Riggins
Name: Mary Pat Riggins
Title: Senior Vice President

 

 

 

LENDER:

     

BANK OF MONTREAL

,

as a Lender

     

By: /s/ Amy K. Dumser
Name: Amy K. Dumser
Title: Director

 

 

 

LENDER:

     

HIBERNIA NATIONAL BANK

,

as a Lender

     

By: /s/ Julie Nosser
Name: Julie Nosser
Title: Assistant Vice President

 

 

 

LENDER:

     

FIFTH THIRD BANK

,

as a Lender

     

By: /s/ Jennifer Schwartz
Name: Jennifer Schwartz
Title: Assistant Vice President

 

 

 

LENDER:

     

BAYERISCHE HYPO-UND VEREINSBANK AG

,

as a Lender

     

By: /s/ Michael F. Davis
Name: Michael F. Davis
Title: Director

 

By: /s/ M. A. Imperiale
Name: M. A. Imperiale
Title: Director