Exhibit 10.13

 

FIRST AMENDMENT TO CREDIT AGREEMENT

 

THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is made as of the
3rd day of September, 2004, by and among AMERICAN CAPITAL STRATEGIES, LTD., as
Borrower and Servicer, WELLS FARGO BANK, NATIONAL ASSOCIATION, as Backup
Servicer and as the Collateral Custodian, BRANCH BANKING AND TRUST COMPANY, as
Administrative Agent and a Bank, and LASALLE BANK NATIONAL ASSOCIATION, FIFTH
THIRD BANK and HIBERNIA NATIONAL BANK (collectively referred to herein as the
“Banks”).

 

R E C I T A L S:

 

The Borrower, the Servicer, the Backup Servicer, the Collateral Custodian, the
Administrative Agent and the Banks have entered into a certain Credit Agreement
dated as of March 25, 2004 (referred to herein as the “Credit Agreement”).
Capitalized terms used in this Amendment which are not otherwise defined in this
Amendment shall have the respective meanings assigned to them in the Credit
Agreement.

 

The Borrower has requested the Administrative Agent and the Banks to amend the
Credit Agreement to modify certain provisions of the Credit Agreement as more
fully set forth herein. The Banks, the Administrative Agent, the Servicer, the
Backup Servicer, the Collateral Custodian and the Borrower desire to amend the
Credit Agreement upon the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the Recitals and the mutual promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Servicer, the
Backup Servicer, the Collateral Custodian, the Administrative Agent and the
Banks, intending to be legally bound hereby, agree as follows:

 

SECTION 1. Recitals. The Recitals are incorporated herein by reference and shall
be deemed to be a part of this Amendment.

 

SECTION 2. Amendments. The Credit Agreement is hereby amended as set forth in
this Section 2.

 

SECTION 2.01. Amendment to Section 1.01. (a) Section 1.01 of the Credit
Agreement is amended to add the following new definitions:

 

“Charged-Off Portfolio Loan” means any Portfolio Loan: (i) that is one hundred
eighty (180) days or more past due with respect to any interest or principal
payment, (ii) for which an Insolvency Event has occurred with respect to the
related Obligor, (iii) for which the related Obligor has suffered any Material

 

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Adverse Change, (iv) that is or should be written off as uncollectible by the
Servicer in accordance with the Credit and Collection Policy, (v) that has been
placed on non-accrual status by the Servicer in accordance with the Credit and
Collection Policy, (vi) all or any portion of which has been converted into or
exchanged for an Equity Security or (vii) has been sold for less than its
Portfolio Outstanding Loan Balance upon foreclosure or upon exercise of
remedies, provided, that, only the portion of the Portfolio Loan not recouped in
such sale shall be deemed to be “charged-off” for purposes of clause (vii).

 

“Defaulted Portfolio Loan” means any Portfolio Loan (that is not a Charged-Off
Portfolio Loan): (a) that is 45 days or more past due with respect to any
interest or principal payments, or (b) that is or otherwise should be considered
a Defaulted Portfolio Loan by the Servicer in accordance with the Credit and
Collection Policy.

 

“Equity Security” means any equity security or other obligation or security that
does not entitle the holder thereof to receive periodic payments of interest and
one or more installments of principal.

 

“Portfolio Aggregate Outstanding Loan Balance” means with respect to all
Portfolio Loans, as of any Determination Date, the sum of the Portfolio
Outstanding Loan Balances of such Portfolio Loans on such date minus the
Portfolio Outstanding Loan Balances of any Defaulted Portfolio Loans and
Charged-Off Portfolio Loans on such date.

 

“Portfolio Loan” means any Loan serviced by the Servicer, but excluding any Loan
which the Servicer services for an unaffiliated third party.

 

“Portfolio Outstanding Loan Balance” means with respect to any Portfolio Loan,
as of any date of determination, the total remaining amounts of principal
payable by the Obligor thereof exclusive of (a) interest payments and (b)
Accreted Interest.

 

“Rolling Twelve-Month Portfolio Charged-Off Ratio” means as of any Determination
Date, the percentage equivalent of a fraction (i) the numerator of which is
equal to the sum of the Portfolio Outstanding Loan Balances of all Portfolio
Loans that became Charged-Off Portfolio Loans during the Collection Period
related to such Determination Date and each of the 11 preceding Determination
Dates (or such lesser number as shall have elapsed as of such Determination
Date), and (ii) the denominator of which is equal to a fraction the numerator of
which is equal to the sum of the Portfolio Aggregate Outstanding Loan Balance as
of the first day of the Collection Period related to such Determination Date and
each of the 11 preceding Determination Dates (or such lesser number as shall
have elapsed as of such Determination Date) and the

 

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denominator of which is equal to 12 (or the corresponding lesser number of
Determination Dates included in the calculations described herein).

 

“Rolling Twelve-Month Portfolio Default Ratio” means as of any Determination
Date, the percentage equivalent of a fraction (i) the numerator of which is
equal to the sum of the Portfolio Outstanding Loan Balance of all Portfolio
Loans that became Defaulted Portfolio Loans during the Collection Period related
to such Determination Date and each of 11 preceding Determination Dates (or such
lesser number as shall have elapsed as of such Determination Date), and (ii) the
denominator of which is equal to a fraction the numerator of which is equal to
the sum of the Portfolio Aggregate Outstanding Loan Balance as of the first day
of the Collection Period related to such Determination Date and each of the 11
preceding Determination Dates (or such lesser number as shall have elapsed as of
such Determination Date) and the denominator of which is equal to 12 (or the
corresponding lesser number of Determination Dates included in the calculations
described herein).

 

(b) Section 1.01 of the Credit Agreement is amended to amend and restate the
following definitions:

 

“Aggregate Net Mark to Market Amount” means as of each Determination Date, the
sum of all Net Mark to Market Amounts for such date for all Hedge
Counterparties, provided, however, that if such sum shall be a negative number,
the Aggregate Net Mark to Market Amount shall be deemed to be zero (0).

 

“Charged-Off Loan” means any Pledged Loan: (i) that is one hundred eighty (180)
days or more past due with respect to any interest or principal payment, (ii)
for which an Insolvency Event has occurred with respect to the related Obligor,
(iii) for which the related Obligor has suffered any Material Adverse Change,
(iv) that is or should be written off as uncollectible by the Servicer in
accordance with the Credit and Collection Policy, (v) that has been placed on
non-accrual status by the Servicer in accordance with the Credit and Collection
Policy, (vi) all or any portion of which has been converted into or exchanged
for an Equity Security, or (vii) has been sold for less than its Outstanding
Loan Balance upon foreclosure or upon exercise of remedies, provided, that, only
the portion of the Pledged Loan not recouped in such sale shall be deemed to be
“charged-off” for purposes of clause (vii).

 

“Charged-Off Ratio” means with respect to any Collection Period, the percentage
equivalent of a fraction, calculated as of the Determination Date for such
Collection Period, (a) the numerator of which is equal to the aggregate
Outstanding Loan Balance of all Pledged Loans that became Charged-Off Loans
during such Collection Period and (b) the denominator of which is equal to the
decimal equivalent of a fraction (x) the numerator of which is equal to the sum
of

 

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(A) the Aggregate Outstanding Pledged Loan Balance as of the first day of such
Collection Period and (B) the Aggregate Outstanding Pledged Loan Balance as of
the last day of such Collection Period and (y) the denominator of which is 2.

 

“Collateral” means all right, title and interest, whether now owned or hereafter
acquired or arising, and wherever located, of the Borrower in all accounts, cash
and currency, chattel paper, tangible chattel paper, electronic chattel paper,
copyrights, copyright licenses, equipment, fixtures, general intangibles,
instruments, commercial tort claims, deposit accounts, inventory, investment
property, letter-of-credit rights, software, supporting obligations, accessions,
and other property consisting of, arising out of, or related to any of the
following (in each case excluding the Retained Interest and the Excluded
Amounts):

 

(i) the Pledged Loans (whether or not such loan is classified as an Eligible
Loan), and all monies due or to become due in payment of such Pledged Loans
(whether or not such loan is classified as an Eligible Loan), including but not
limited to all Collections;

 

(ii) any Related Property securing the Pledged Loans (to the extent the
Borrower, other than solely in its capacity as collateral agent under any loan
agreement with an Obligor has been granted a Lien thereon) including the related
security interest granted by the Obligor under such Pledged Loans, all proceeds
from any sale or other disposition of such Related Property;

 

(iii) all security interests, liens, guaranties, warranties, letters of credit,
accounts, bank accounts, mortgages or other encumbrances and property subject
thereto from time to time purporting to secure payment of any Pledged Loan,
together with all UCC financing statements or similar filings relating thereto;

 

(iv) all claims (including “claims” as defined in Bankruptcy Code § 101(5)),
suits, causes of action, and any other right of the Originator, whether known or
unknown, against the related Borrower, the related Obligors, if any, or any of
their respective Affiliates, agents, representatives, contractors, advisors, or
any other Person that in any way is based upon, arises out of or is related to
any of the foregoing, including, to the extent permitted to be assigned under
applicable law, all claims (including contract claims, tort claims, malpractice
claims, and claims under any law governing the purchase and sale of, or
indentures for, securities), suits, causes of action, and any other right of the
Originator against any attorney, accountant, financial advisor, or other Person
arising under or in connection with the related Loan Documents;

 

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(v) all cash, securities, or other property, and all setoffs and recoupments,
received or effected by or for the account of the Originator under such Pledged
Loans (whether for principal, interest, fees, reimbursement obligations, or
otherwise), including all distributions obtained by or through redemption,
consummation of a plan of reorganization, restructuring, liquidation, or
otherwise of any related Obligor or the related Loan Documents, and all cash,
securities, interest, dividends, and other property that may be exchanged for,
or distributed or collected with respect to, any of the foregoing;

 

(vi) all Insurance Policies;

 

(vii) the Pledged Loan Documents;

 

(viii) the Collection Account, each Lockbox and all Lockbox Accounts, together
with all funds held in such accounts, and all certificates and instruments, if
any, from time to time representing or evidencing each of the foregoing or such
funds;

 

(ix) all books, Records, files, computer tapes, programs, disks, Computer
Records and other material or documents relating to the recording, billing or
analyzing of any of the above;

 

(x) any Hedging Agreement and any payment due thereunder; and

 

(xi) the proceeds of each of the foregoing.

 

“Concentration Limits” means on any day, each of the following (calculated on
the basis of a percentage of the Aggregate Outstanding Pledged Loan Balance):

 

(a) the sum of the Outstanding Loan Balances of Eligible Loans to Obligors whose
chief executive office, principal business operations or principal business
assets is in the same state shall not exceed 35%;

 

(b) the sum of the Outstanding Loan Balances of Eligible Loans to Obligors which
are in the same Industry shall not exceed 10%;

 

(c) the sum of the Outstanding Loan Balances of Eligible Loans to any one
Obligor shall not exceed the Large Loan Limit;

 

(d) the sum of the Outstanding Loan Balances of Eligible Loans the Obligors of
which are Grade 2 Obligors shall not exceed 7.5%;

 

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(e) the sum of the Outstanding Loan Balances of Eligible Loans that have
interest: (i) due and payable monthly shall not be less than 50%; and (ii) due
and payable less frequently than quarterly shall not be more than 0%.

 

(f) the sum of the Outstanding Loan Balances of Eligible Loans that are secured
by a security interest in all assets of the related Obligor shall not be less
than 75%;

 

(g) the sum of the Outstanding Loan Balances of Eligible Loans that have at
least a portion of the monthly or quarterly interest that is due under such
Loans payable on a current basis by the Obligors thereof in cash (or such
Obligors shall have other Loans included as part of the Collateral that pay
current monthly or quarterly interest on a current basis in cash) shall not be
less than 100%;

 

(h) the sum of the Outstanding Loan Balances of each Eligible Loan which is a
PIK Loan and which is either (a) a Fixed Rate Loan having a Loan Rate of less
than 12% per annum or (b) a Floating Rate Loan having a Loan Rate of less than
9% per annum shall not exceed 0%;

 

(i) the sum of the Outstanding Loan Balances of Eligible Loans that have been
outstanding 21 months or longer since the date such Loan was initially advanced
to the related Obligor shall not exceed 25%;

 

(j) with respect to Agented Notes included within the Collateral, if any of the
other notes of such Obligor which are part of the same syndicated loan
transaction as Agented Notes included in the Collateral are included within a
Securitization Transaction, the sum of the Outstanding Loan Balances of each
Eligible Loan where the servicer under such Securitization Transaction is not
the Borrower or American Capital Financial Services, Inc. or the trustee,
collateral custodian or, if applicable, back up servicer is not Wells Fargo
Bank, National Association (or another Person satisfactory to the Administrative
Agent and the Required Banks in their sole discretion) shall not exceed 0%;

 

(k) the sum of the Outstanding Loan Balances of Eligible Loans that are Senior
Loans or Senior B-Note Loans, shall not be less than 20%;

 

(l) the sum of the Outstanding Loan Balances of Eligible Loans (included as part
of the Collateral) evidenced by Agented Notes where the other notes of such
Obligor which are part of the same syndicated loan transaction as such Agented
Notes are held by Permitted Holders, shall not be less than 50% of the sum of
the Outstanding Loan Balances of Eligible Loans (included as part of the
Collateral) evidenced by Agented Notes. “Permitted Holder” shall mean: (i) the
Borrower; (ii) American Capital Financial Services, Inc.; (iii) Wachovia Bank,
National Association or an Affiliate thereof; and (iv) Wells Fargo Bank,
National

 

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Association (or other Person reasonably acceptable to the Administrative Agent
and Required Banks) in its capacity as a trustee under a Permitted
Securitization so long as the servicer of the notes under such Permitted
Securitization is the Borrower or American Capital Financial Services, Inc.; and

 

(m) the sum of the Outstanding Loan Balances of all Eligible Loans which have
been included as part of the Collateral for twelve (12) months or more shall not
exceed 10% of the Aggregate Outstanding Pledged Loan Balance (provided, that, if
a Loan or portion thereof has been transferred, sold, contributed or otherwise
conveyed to an Affiliate of the Borrower as part of a Securitization Transaction
that is a private placement collateralized loan or collateralized debt
obligation transaction, such amounts shall be calculated by treating any Loans
to the related Obligor remaining in the Collateral as if such Loans were newly
included in the Collateral as of the date of such Securitization Transaction).

 

“Defaulted Loan” means any Pledged Loan (that is not a Charged-Off Loan): (a)
that is forty-five (45) days or more past due with respect to any interest or
principal payments, or (b) that is or otherwise should be considered a Defaulted
Portfolio Loan by the Servicer in accordance with the Credit and Collection
Policy.

 

“Floating Rate Loan” means a Pledged Loan where the interest rate payable by the
Obligor thereof is based on the prime interest rate (daily rate) or the London
interbank offered rate (one-month, two-month, three-month, six-month or
twelve-month rate), plus some specified interest percentage in addition thereto,
and such Pledged Loan provides that such interest rate will reset immediately
upon any change in the related prime interest rate or London interbank offered
rate.

 

“Intercreditor Agreement” means the Fourth Amended and Restated Intercreditor
and Lockbox Administration Agreement, dated as of August 10, 2004, among Wells
Fargo Bank, National Association, as the indenture trustee, Wachovia Capital
Markets, LLC, as the conduit Administrative Agent, each Securitization
Administrative Agent that from time to time executes a joinder thereto, the
Administrative Agent and American Capital Strategies, Ltd., as such agreement
may be amended, modified, waived, supplemented or restated from time to time.

 

SECTION 2.02. Amendment to Definition of “Supplemental Interests”. The
definition of “Supplemental Interests” in Section 1.01 of the Credit Agreement
is hereby deleted in its entirety.

 

SECTION 2.03. Amendment to Section 4.17. Section 4.17(b) of the Credit Agreement
is hereby deleted in its entirety.

 

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SECTION 2.04. Amendment to Section 5.08. Section 5.08 of the Credit Agreement is
amended and restated to read in its entirety as follows:

 

SECTION 5.08. Negative Pledge. 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 that prior to the occurrence of a Default,
the Borrower and Subsidiaries of the Borrower may grant Liens encumbering their
assets (other than Collateral) provided that at all times the Borrower maintains
Unencumbered Assets with a fair market value of no less than $200,000,000. As
used herein, “Unencumbered Assets” means debt and equity Portfolio Investments
owned by the Borrower which are not subject to any Lien and which are not
subject to any agreement or other restriction precluding the Borrower from
granting the Secured Parties a Lien upon such Unencumbered Assets.

 

Notwithstanding anything contained herein to the contrary neither the Borrower
nor any Subsidiary of the Borrower will create, assume or suffer to exist any
Lien on any Collateral except: (a) Permitted Liens; (b) Liens securing the
Administrative Agent and the Banks created or arising under the Transaction
Documents; and (c) Liens subordinate to the Liens described in Section 5.08(b)
which secure interest rate swap transactions (other than Hedging Agreements)
between the Borrower and a Hedge Counterparty.

 

SECTION 2.05. Amendment to Section 5.20. Section 5.20 of the Credit Agreement is
amended and restated to read in its entirety as follows:

 

SECTION 5.20 Additional Covenants, Etc. In the event that at any time this
Agreement is in effect or any Note remains unpaid the Borrower or any Subsidiary
of the Borrower (including, without limitation, ACS Funding Trust I) shall enter
into any agreement, guarantee, indenture or other instrument governing, relating
to, providing for commitments to advance or guaranteeing any Financing or to
amend any terms and conditions applicable to any Financing, which agreement,
guarantee, indenture or other instrument includes covenants, warranties,
pricing, representations, defaults or events of default (or any other type of
restriction which would have the practical effect of any of the foregoing,
including, without limitation, any “put” or mandatory prepayment of such debt)
or other terms or conditions not substantially as, or in addition to those,
provided in this Agreement or any other Transaction Document, or more favorable
to the lender or other counterparty thereunder than those provided in this
Agreement or any other Transaction Document, the Borrower shall promptly so
notify the Administrative Agent and the Banks. Thereupon, if the Administrative
Agent shall request by written notice to the Borrower (after a determination has
been made by the Required Banks that any of the above referenced documents or
instruments contain any provisions which either individually or in the aggregate
are more favorable than one of the provisions set forth herein), the Borrower,
the

 

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Administrative Agent and the Banks shall enter into an amendment to this
Agreement providing for substantially the same such covenants, warranties,
pricing, representations, defaults or events of default or other terms or
conditions as those provided for in such agreement, guarantee, indenture or
other instrument, to the extent required and as may be selected by the
Administrative Agent, such amendment to remain in effect, unless otherwise
specified in writing by the Administrative Agent, for the entire duration of the
stated term to maturity of such Financing (to and including the date to which
the same may be extended at the option of the Borrower or its Subsidiary),
notwithstanding that such Financing might be earlier terminated by prepayment,
refinancing, acceleration or otherwise, provided that if any such agreement,
guarantee, indenture or other instrument shall be modified, supplemented,
amended or restated so as to modify, amend or eliminate from such agreement,
guarantee, indenture or other instrument any such covenant, warranty,
representation, default or event of default or other term or condition so made a
part of this Agreement, then unless required by the Administrative Agent
pursuant to this Section, such modification, supplement or amendment shall not
operate to modify, amend or eliminate such covenant, warranty, representation,
default or event of default or other term or condition as so made a part of this
Agreement.

 

SECTION 2.06. Amendment to Section 5.25. Section 5.25 of the Credit Agreement is
hereby amended and restated to read in its entirety as follows:

 

SECTION 5.25. Additional Debt. 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 Banks and Swing Line Lender under this Agreement and the Transaction
Documents; (b) the Debt existing and outstanding on the Closing Date described
on Schedule 5.25; (c) Debt secured by a Lien upon assets of the Borrower
permitted under Section 5.08 if the liability of the Borrower for the repayment
of such Debt is limited to such pledged assets; (d) Subordinated Debt; (e)
unsecured Debt of the Borrower the aggregate outstanding principal amount of
which shall not, at any time, exceed $200,000,000 and with respect to which no
scheduled principal payment shall be prior to March 25, 2007; and (f) Debt not
otherwise permitted under this Section 5.25, the aggregate outstanding principal
amount of which shall not, at any time, exceed $25,000,000; 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,
no Default shall have occurred and be continuing.

 

SECTION 2.07. Amendment to Section 8.03. Section 8.03 of the Credit Agreement is
hereby deleted in its entirety.

 

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SECTION 2.08. Amendment to Section 7.13(b)(iii). The first sentence in Section
7.13(b)(iii) of the Credit Agreement is hereby amended by deleting the word
“and” immediately before clause (J) thereof and adding two new clauses (K) and
(L) thereto as follows:

 

(K) The Rolling Twelve-Month Portfolio Charged-Off Ratio; and

 

(L) The Rolling Twelve-Month Portfolio Default Ratio.”

 

SECTION 2.09. Amendment to Section 9.01. Section 9.01 of the Credit Agreement is
hereby amended as follows:

 

(a) Clause (t) is hereby amended and restated to read in its entirety as
follows:

 

(t) The Rolling Twelve-Month Portfolio Charged-Off Ratio shall exceed 12%; or”

 

(b) Clause (y) is hereby amended and restated to read in its entirety as
follows:

 

(y) The Rolling Twelve-Month Portfolio Default Ratio shall exceed 17.5%; or”

 

SECTION 2.10. Exhibit D. Exhibit D to the Credit Agreement is hereby amended and
restated to read in its entirety as set forth on Exhibit D attached hereto.

 

SECTION 3. Conditions to Effectiveness. The effectiveness of this Amendment and
the obligations of the Banks, the Backup Servicer and Collateral Custodian
hereunder are subject to the following conditions, unless the Required Banks
waive such conditions:

 

(a) receipt by the Administrative Agent from each of the parties hereto of a
duly executed counterpart of this Amendment signed by such party;

 

(b) the fact that the representations and warranties of the Borrower contained
in Section 5 of this Amendment shall be true on and as of the date hereof.

 

SECTION 4. No Other Amendment. Except for the amendments set forth above, the
text of the Credit Agreement shall remain unchanged and in full force and
effect. This Amendment is not intended to effect, nor shall it be construed as,
a novation. The Credit Agreement and this Amendment shall be construed together
as a single agreement. Nothing herein contained shall waive, annul, vary or
affect any provision, condition, covenant or agreement contained in the Credit
Agreement, except as herein amended, nor affect nor impair any rights, powers or
remedies under the Credit Agreement as hereby amended. The Banks and the
Administrative Agent do hereby reserve all of their rights and remedies against
all parties who may be or may hereafter become secondarily liable for the
repayment of the Obligations. The Borrower promises and agrees to perform all of
the requirements, conditions, agreements and

 

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obligations under the terms of the Credit Agreement, as heretofore and hereby
amended, the Credit Agreement, as amended, and the other Transaction Documents
being hereby ratified and affirmed. The Borrower hereby expressly agrees that
the Credit Agreement, as amended, and the other Transaction Documents are in
full force and effect.

 

SECTION 5. Representations and Warranties. The Borrower and Servicer hereby
represents and warrants to the Administrative Agent and each of the Banks as
follows:

 

(a) No Default or Event of Default, nor any act, event, condition or
circumstance which with the passage of time or the giving of notice, or both,
would constitute an Event of Default, under the Credit Agreement or any other
Transaction Document has occurred and is continuing unwaived by the Banks on the
date hereof.

 

(b) The Borrower and Servicer each have the power and authority to enter into
this Amendment and to do all acts and things as are required or contemplated
hereunder to be done, observed and performed by them.

 

(c) This Amendment has been duly authorized, validly executed and delivered by
one or more authorized officers of the Borrower and Servicer and constitutes the
legal, valid and binding obligations of the Borrower and Servicer enforceable
against each of them in accordance with its terms, provided that such
enforceability is subject to general principles of equity.

 

(d) The execution and delivery of this Amendment and the performance by the
Borrower and Servicer hereunder do not and will not require the consent or
approval of any regulatory authority or governmental authority or agency having
jurisdiction over the Borrower or Servicer nor be in contravention of or in
conflict with the articles of incorporation, bylaws or other organizational
documents of the Borrower or Servicer or the provision of any statute, or any
judgment, order or indenture, instrument, agreement or undertaking, to which the
Borrower or Servicer is party or by which the assets or properties of the
Borrower or Servicer are or may become bound.

 

SECTION 6. Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute one and the same agreement.

 

SECTION 7. Governing Law. This Amendment shall be construed in accordance with
and governed by the laws of the State of North Carolina.

 

SECTION 8. Effective Date. This Amendment shall be effective as of September 3,
2004.

 

SECTION 9. Amendment Fee. On the date of this Amendment, the Borrower hereby
agrees to pay to the Administrative Agent for the ratable account of each Bank
an

 

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amendment fee equal to the product of: (i) such Bank’s Commitment, on the date
of this Agreement, times (ii) a per annum percentage equal to .025%.

 

SECTION 10. Termination and Release Agreement. The Banks consent to and
authorize the Administrative Agent to execute and deliver a Termination and
Release Agreement in the form attached hereto as Annex I.

 

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IN WITNESS WHEREOF, the parties hereto have executed and delivered, or have
caused their respective duly authorized officers or representatives to execute
and deliver, this Amendment as of the day and year first above written.

 

AMERICAN CAPITAL STRATEGIES, LTD., as Borrower and Servicer

By: 

 

/s/ Thomas A. McHale

 

(SEAL)

Title:

 

Thomas A. McHale, Vice President

   

 

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BRANCH BANKING AND TRUST COMPANY, as Administrative Agent, Swing Line Lender and
as a Bank

By: 

 

/s/ Cory Boyte

 

(SEAL)

Title:

 

Cory Boyte, SVP

   

 

[Remainder of this page intentionally left blank]

 

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FIFTH THIRD BANK

By: 

 

/s/ Jennifer Schwartz

 

(SEAL)

Title:

 

Jennifer Schwartz, AVP

 

[Remainder of this page intentionally left blank]

 

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LASALLE BANK NATIONAL ASSOCIATION

By: 

 

/s/ Christie Davis

 

(SEAL)

Title:

 

Christie Davis, Vice President

 

[Remainder of this page intentionally left blank]

 

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HIBERNIA NATIONAL BANK

By: 

 

/s/ Connie Disbrow

 

(SEAL)

Title:

 

Connie Disbrow, Relationship Manager

 

[Remainder of this page intentionally left blank]

 

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WELLS FARGO BANK, NATIONAL ASSOCIATION, as the Backup Servicer and as the
Collateral Custodian

By: 

 

/s/ Edna Barber

 

(SEAL)

Title:

 

Edna Barber, Assistant Vice President

 

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ANNEX 1

 

TERMINATION AND RELEASE AGREEMENT

 

This TERMINATION AND RELEASE AGREEMENT (the “Agreement”), dated as of April
[    ], 2004, is entered into by and among American Capital Strategies, Ltd., a
Delaware corporation (together with its successors and assigns, “American
Capital”), ACS Funding Trust I, a Delaware statutory trust (together with its
successors and assigns, “ACS Funding Trust I”), Branch Banking and Trust
Company, a North Carolina corporation (together with its successors and assigns,
“BB&T”) and Wells Fargo Bank, National Association, as the escrow agent
(together with its successors and assigns, the “Escrow Agent”).

 

RECITALS

 

WHEREAS, pursuant to that certain Second Amended and Restated Pledge Agreement
dated as of May 25, 2004, among American Capital, ACS Funding Trust I, BB&T and
the Escrow Agent (as amended, modified, waived, supplemented or restated, the
“Pledge and Security Agreement”), American Capital has pledged and assigned to
the Secured Parties all of its right, title and interest in and to the Pledged
Supplemental Interests, all as more fully set forth in the Pledge and Security
Agreement;

 

WHEREAS, American Capital desires to terminate this Pledge and Security
Agreement and the Secured Parties are willing to release, terminate, transfer
and reconvey to American Capital any and all right, title, claim or interest
they may have in the Pledged Supplemental Interests as provided herein;

 

AGREEMENT

 

NOW THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree as follows:

 

1. The parties hereto hereby agree to terminate the Pledge and Security
Agreement.

 

2. Each Secured Party does hereby release and discharge any and all right,
title, claim or interest that it may now or hereafter have, or may now or
hereafter be entitled to by virtue of the Pledged Supplemental Interests and
does hereby declare the same fully released and discharged from any and all
security interests or liens created by virtue of or in connection with the
Pledge and Security Agreement.

 

3. Each Secured Party hereby transfers and conveys to American Capital any and
all right, title, claim or interest it may have in the Pledged Supplemental
Interests, including, but not limited to, any and all ownership claimed or held
by such Secured Party in and to any of the Pledged Supplemental Interests.

 

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4. Notwithstanding the foregoing, nothing in this Agreement shall terminate any
provisions or release any party from any obligations under the Loan Funding
Agreement and Credit Agreement, including, without limitation, non-petition
covenants.

 

5. Capitalized terms used, but not defined, herein shall have the meanings
ascribed to them in the Pledge and Security Agreement.

 

6. This Agreement shall be governed by and construed in accordance with the laws
of the State of New York without regard to any applicable conflicts of laws
rules.

 

7. This Agreement may be executed in any number of counterparts, each of which
shall constitute an original and all of which, when taken together, shall
constitute one agreement. Delivery of an executed counterpart of a signature
page of this Agreement shall be effective as delivery of a manually executed
counterpart of this Agreement.

 

8. Each parties hereto covenants and agrees that, prior to the date that is one
(1) year and one (1) day after the Collection Date (as defined in the Loan
Funding Agreement), it will not institute against ACS Funding Trust I, or join
any other Person in instituting against ACS Funding Trust I, any Insolvency
Proceeding (as defined in the Loan Funding Agreement) under the laws of the
United States or any state of the United States. This paragraph will survive the
termination of this Agreement.

 

[Remainder of Page Intentionally Left Blank]

 

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

 

AMERICAN CAPITAL STRATEGIES, LTD. By:    

Name:

   

Title:

   

2 Bethesda Metro Center, 14th Floor

Bethesda, Maryland 20814

Attention: Compliance Officer

Facsimile No.: (301) 654-6714

Confirmation No.: (301) 951-6122

ACS FUNDING TRUST I By:   American Capital Strategies, Ltd.

By:    

Name:

   

Title:

   

2 Bethesda Metro Center, 14th Floor

Bethesda, Maryland 20814

Attention: Compliance Officer

Facsimile No.: (301) 654-6714

Confirmation No.: (301) 951-6122

 

[Signatures Continued on the Following Page]

 

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WELLS FARGO BANK, NATIONAL ASSOCIATION By:        

Name:

       

Title:

   

MAC 9311-161

Sixth and Marquette Avenue

Minneapolis, MN 55479

Attention:

 

Corporate Trust Services

   

Asset-Backed Administration

Facsimile No.: (612) 667-3539

Confirmation No.: (612) 667-8058

 

[Signatures Continued on the Following Page]

 

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Acknowledged and agreed: WACHOVIA CAPITAL MARKETS, LLC By:        

Name:

       

Title:

       

Wachovia Capital Markets, LLC

One Wachovia Center, Mail Code: NC0610

Charlotte, North Carolina 28288

Attention:

 

Raj Shah

Facsimile:

 

(704) 383-4012

Confirmation No.: (704) 374-6230

 

[Signatures Continued on the Following Page]

 

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BRANCH BANKING AND TRUST COMPANY

By:

   

Name:

   

Title:

   

1909 K Street, NW

2nd Floor

Washington, DC 20006

 

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