Exhibit 10.1

 

 

 

AMENDED AND RESTATED
SENIOR SECURED REVOLVING CREDIT AGREEMENT

 

dated as of

 

September 18, 2020

 

among

 

STELLUS CAPITAL INVESTMENT CORPORATION
as Borrower

 

ZIONS BANCORPORATION, N.A. dba AMEGY BANK
as Administrative Agent

 

and

 

THE LENDERS PARTY HERETO

 

 

 

FROST BANK

as Documentation Agent

 

CADENCE BANK, N.A. and HANCOCK WHITNEY BANK

as Co-Syndication Agents

 

ZIONS BANCORPORATION, N.A. dba AMEGY BANK
as Sole Lead Arranger and Sole Book Runner

 

 

 

   

 

 

TABLE OF CONTENTS

 

    Page       Article I DEFINITIONS 1 Section 1.01 Defined Terms 1 Section 1.02
Classification of Loans and Borrowings 26 Section 1.03 Terms Generally 26
Section 1.04 Accounting Terms; GAAP 27 Section 1.05 Currencies; Currency
Equivalents 27       Article II THE CREDITS 27 Section 2.01 The Commitments 27
Section 2.02 Loans and Borrowings 29 Section 2.03 Requests for Syndicated
Borrowings and Multicurrency Loans 29 Section 2.04 Swingline Loans 30 Section
2.05 Letters of Credit 32 Section 2.06 Funding of Borrowings 36 Section 2.07
Interest Elections 36 Section 2.08 Termination, Reduction or Increase of the
Commitments 37 Section 2.09 Repayment of Loans; Evidence of Debt 40 Section 2.10
Prepayment of Loans 41 Section 2.11 Fees 42 Section 2.12 Interest 44 Section
2.13 Alternate Rate of Interest 44 Section 2.14 Increased Costs 45 Section 2.15
Break Funding Payments 46 Section 2.16 Taxes 46 Section 2.17 Payments Generally;
Pro Rata Treatment: Sharing of Set-offs 50 Section 2.18 Mitigation Obligations;
Replacement of Lenders 52 Section 2.19 Defaulting Lenders 52 Section 2.20
Acknowledgement and Consent to Bail-In of Affected Financial Institutions 56
Section 2.21 LIBOR Replacement 56       Article III REPRESENTATIONS AND
WARRANTIES 60 Section 3.0 Organization; Powers 60 Section 3.02 Authorization;
Enforceability 60 Section 3.03 Governmental Approvals; No Conflicts 60 Section
3.04 No Material Adverse Effect 60 Section 3.05 Litigation 60 Section 3.06
Compliance with Laws and Agreements 61 Section 3.07 Taxes 61 Section 3.08 ERISA
61 Section 3.09 Disclosure 61 Section 3.10 Investment Company Act; Margin
Regulations 61 Section 3.11 Material Agreements and Liens 62 Section 3.12
Subsidiaries and Investments 62 Section 3.13 Properties 62 Section 3.14
Affiliate Agreements 62 Section 3.15 Sanctions Laws and Regulations 63 Section
3.16 Patriot Act 63 Section 3.17 Collateral Documents 63

 

 i 

 

 

Article IV CONDITIONS 63 Section 4.01 Effective Date 63 Section 4.02 Each Credit
Event 65       Article V AFFIRMATIVE COVENANTS 65 Section 5.01 Financial
Statements and Other Information 65 Section 5.02 Notices of Material Events 67
Section 5.03 Existence: Conduct of Business 67 Section 5.04 Payment of
Obligations 67 Section 5.05 Maintenance of Properties; Insurance 68 Section 5.06
Books and Records; Inspection and Audit Rights 68 Section 5.07 Compliance with
Laws 68 Section 5.08 Certain Obligations Respecting Subsidiaries; Further
Assurances 68 Section 5.09 Use of Proceeds 69 Section 5.10 Status of RIC and BDC
69 Section 5.11 Investment Policies 69 Section 5.12 Portfolio Valuation and
Diversification Etc 69 Section 5.13 Calculation of Borrowing Base 72 Section
5.14 Refinancing of Unsecured Notes Due 2022 77       Article VI NEGATIVE
COVENANTS 77 Section 6.01 Indebtedness 77 Section 6.02 Liens 77 Section 6.03
Fundamental Changes 78 Section 6.04 Investments 79 Section 6.05 Restricted
Payments 80 Section 6.06 Certain Restrictions on Subsidiaries 81 Section 6.07
Certain Financial Covenants 81 Section 6.08 Transactions with Affiliates 82
Section 6.09 Lines of Business 82 Section 6.10 No Further Negative Pledge 82
Section 6.11 Modifications of Unsecured Notes Due 2022 and Unsecured Longer-Term
Indebtedness Documents 83 Section 6.12 Payments of Unsecured Notes Due 2022, SBA
Debentures, and Unsecured Longer-Term Indebtedness 83 Section 6.13 Accounting
Changes 83 Section 6.14 SBIC Guarantee 83 Section 6.15 Sanctions Laws and
Regulations 83       Article VII EVENTS OF DEFAULT 84       Article VIII THE
ADMINISTRATIVE AGENT 87 Section 8.01 Appointment of the Administrative Agent 87
Section 8.02 Capacity as Lender 87 Section 8.03 Limitation of Duties;
Exculpation 88 Section 8.04 Reliance 88 Section 8.05 Sub-Agents 88 Section 8.06
Resignation; Successor Administrative Agent 89 Section 8.07 Reliance by Lenders
89 Section 8.08 Modifications to Loan Documents 89

 

 ii 

 

 

Article IX MISCELLANEOUS 90 Section 9.01 Notices; Electronic Communications 90
Section 9.02 Waivers; Amendments 92 Section 9.03 Expenses; Indemnity; Damage
Waiver 94 Section 9.04 Successors and Assigns 95 Section 9.05 Survival 100
Section 9.06 Counterparts; Integration; Effectiveness; Electronic Execution 100
Section 9.07 Severability 100 Section 9.08 Right of Setoff 100 Section 9.09
Governing Law; Jurisdiction; Etc 101 Section 9.10 WAIVER OF JURY TRIAL 102
Section 9.11 Judgment Currency 102 Section 9.12 Headings 102 Section 9.13
Treatment of Certain Information; No Fiduciary Duty; Confidentiality 102 Section
9.14 USA PATRIOT Act 104

 

SCHEDULE 1.01(a) - Approved Dealers and Approved Pricing Services SCHEDULE
1.01(b) - Commitments SCHEDULE 1.01(c) - Industry Classification Group List
SCHEDULE 3.11 - Material Agreements and Liens SCHEDULE 3.12(a) - Subsidiaries
SCHEDULE 3.12(b) - Investments SCHEDULE 6.08 - Transactions with Affiliates
EXHIBIT A - Form of Assignment and Assumption EXHIBIT B - Form of Borrowing Base
Certificate EXHIBIT C - Form of Borrowing Request

 

 iii 

 

 

AMENDED AND RESTATED SENIOR SECURED REVOLVING CREDIT AGREEMENT dated as of
September 18, 2020 (as amended, restated, supplemented, or otherwise modified
from time to time, this “Agreement”), among STELLUS CAPITAL INVESTMENT
CORPORATION, a Maryland corporation (the “Borrower”), the LENDERS from time to
time party hereto, and ZIONS BANCORPORATION, N.A. dba AMEGY BANK, as
Administrative Agent.

 

WHEREAS, the Borrower, Lenders and Administrative Agent desire to amend and
restate that certain Senior Secured Revolving Credit Agreement dated October 10,
2017 (as amended prior to the date hereof, the “2017 Credit Agreement”), and
certain other documents executed and delivered in connection therewith, in each
case, as amended, restated, supplemented or otherwise modified prior to the date
hereof.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, and subject to the satisfaction of each
condition precedent contained herein, the parties hereto agree that the 2017
Credit Agreement is hereby amended, renewed, extended and restated in its
entirety on (and subject to) the terms and conditions set forth herein. The
parties hereto further agree as follows:

 

Article I
DEFINITIONS

 

Section 1.01            Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:

 

“ABR”, when used in reference to any Loan or Borrowing, refers to whether such
Loan or the Loans constituting such Borrowing are denominated in Dollars and
bearing interest at a rate determined by reference to the Alternate Base Rate.

 

“Adjusted Covered Debt Balance” means, on any date, the aggregate Covered Debt
Amount on such date minus the aggregate amount of Cash and Cash Equivalents
included in the Portfolio Investments held by the Obligors (provided that, Cash
Collateral for outstanding Letters of Credit shall not be treated as a portion
of the Portfolio Investments).

 

“Adjusted LIBO Rate” means, for the Interest Period for any Eurocurrency
Borrowing, an interest rate per annum (rounded upwards, if necessary, to the
next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied
by (b) the Statutory Reserve Rate for such Interest Period, provided that if the
Adjusted LIBO Rate shall be less than 0.25%, such rate shall be deemed to be
0.25% for purposes of this Agreement.

 

“Administrative Agent” means Amegy Bank, in its capacity as administrative agent
for the Lenders hereunder.

 

“Administrative Agent’s Account” means, for each Currency, an account in respect
of such Currency designated by the Administrative Agent in a notice to the
Borrower and the Lenders.

 

“Administrative Questionnaire” means an administrative questionnaire in a form
supplied by the Administrative Agent.

 

“Advance Rate” has the meaning assigned to such term in Section 5.13.

 

“Affected Currency” has the meaning assigned to such term in Section 2.13.

 

   

 

 

“Affected Financial Institution” means (a) any EEA Financial Institution or (b)
any UK Financial Institution.

 

“Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified. Anything
herein to the contrary notwithstanding, the term “Affiliate” shall not include
any Person that constitutes an Investment held by any Obligor in the ordinary
course of business.

 

“Affiliate Agreements” means (a) the Investment Advisory Agreement, dated as of
October 26, 2012, between the Borrower and Stellus Capital Management, L.L.C.,
(b) the License Agreement, dated as of September 24, 2012, between the Borrower
and Stellus Capital Management, L.L.C., (c) the Administration Agreement, dated
as of October 26, 2012, between the Borrower and Stellus Capital Management,
L.L.C. and (d) the Letter Agreement, dated as of November 1, 2012, between
Borrower and Stellus Capital Management, L.L.C.

 

“Agreed Foreign Currency” means CAD.

 

“Agreement” has the meaning assigned to such term in the preamble to this
Agreement.

 

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest
of (a) the greater of the Prime Rate in effect on such day and 3.00%, (b) the
Federal Funds Effective Rate for such day plus 1/2 of 1%, and (c) the rate per
annum equal to 1% plus the Adjusted LIBO Rate with a one-month Interest Period
on such day (or if such day is not a Business Day, the immediately preceding
Business Day); provided that, the Adjusted LIBO Rate for any day shall be based
on the LIBO Rate at approximately 11:00 a.m. London time on such day, subject to
any interest rate floors set forth therein. Any change in the Alternate Base
Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the
rate as displayed in the Bloomberg Financial Markets System (or successor
therefor) as set forth above shall be effective from and including the effective
date of such change in the Prime Rate, the Federal Funds Effective Rate or such
rate as displayed in the Bloomberg Financial Markets System (or successor
therefor), respectively.

 

“Amegy” or “Amegy Bank” means Zions Bancorporation, N.A. dba Amegy Bank.

 

“Applicable Dollar Percentage” means, with respect to any Dollar Lender, the
percentage of the total Commitments represented by such Dollar Lender’s
Commitment. If the Commitments have terminated or expired, the Applicable Dollar
Percentages shall be determined based upon the Commitments most recently in
effect, giving effect to any assignments.

 

“Applicable Financial Statements” means, as at any date, the most-recent audited
financial statements of the Borrower delivered to the Lenders; provided that if
immediately prior to the delivery to the Lenders of new audited financial
statements of the Borrower a Material Adverse Effect (the “Pre-existing MAE”)
shall exist (regardless of when it occurred), then the “Applicable Financial
Statements” as at said date means the Applicable Financial Statements in effect
immediately prior to such delivery until such time as the Pre-existing MAE shall
no longer exist.

 

2

 

 

“Applicable Margin” shall mean, as of any date, with respect to interest on all
Loans outstanding on any date, as the case may be, a percentage per annum
determined by reference to the applicable Level in effect on such date as set
forth in the table below for such Loans (based on the Asset Coverage Ratio in
effect from time to time and as determined as of the last day of each March,
June, September, and December); provided that a change in the Applicable Margin
resulting from a change in the Asset Coverage Ratio shall be effective on the
second Business Day after which the Borrower delivers each of the financial
statements required by Section 5.01(a) and (b) and the Compliance Certificate;
provided, further that if at any time the Borrower shall have failed to deliver
such financial statements and the Compliance Certificate when so required, the
Applicable Margin shall be at Level I as set forth in the table below until the
second Business Day after which such financial statements and Compliance
Certificate are delivered, at which time the Applicable Margin shall be
determined as provided above. Notwithstanding the foregoing, the Applicable
Margin from the Effective Date until the second Business Day after which the
financial statements and Compliance Certificate for the fiscal quarter ending
September 30, 2020 are required to be delivered shall be at Level II as set
forth in the table below.

 

Level Asset Coverage Ratio Eurocurrency Loans ABR Loans I < 1.90 : 1.00 2.75%
1.75% II > 1.90 : 1.00 2.50% 1.50%

 

In the event that any financial statement or Compliance Certificate delivered
hereunder is shown to be inaccurate (regardless of whether this Agreement or the
Commitments are in effect when such inaccuracy is discovered), and such
inaccuracy, if corrected, would have led to the application of a higher
Applicable Margin based upon the pricing grid set forth in the table above (the
“Accurate Applicable Margin”) for any period for which such financial statement
or Compliance Certificate determined the Applicable Margin, then (a) the
Borrower shall immediately deliver to the Administrative Agent a correct
financial statement or Compliance Certificate, as the case may be, for such
period, (b) the Applicable Margin shall be adjusted such that after giving
effect to the corrected financial statements or Compliance Certificate, as the
case may be, the Applicable Margin shall be reset to the Accurate Applicable
Margin based upon the pricing grid set forth in the table above for such period,
and (c) the Borrower shall immediately pay to the Administrative Agent, for the
account of the Lenders, the accrued additional interest owing as a result of
such Accurate Applicable Margin for such period.

 

“Applicable Multicurrency Percentage” means, with respect to any Multicurrency
Lender, such Multicurrency Lender’s commitment percentage of the total
Multicurrency Sublimit.

 

“Applicable Percentage” means, with respect to any Lender, the percentage of the
total Commitments represented by such Lender’s Commitment. If the Commitments
have terminated or expired, the Applicable Percentages shall be determined based
upon the Commitments most recently in effect, giving effect to any assignments.

 

“Approved Dealer” means (a) in the case of any Investment that is not a U.S.
Government Security, a bank or a broker-dealer registered under the Securities
Exchange Act of 1934 (as amended) of nationally recognized standing or an
Affiliate thereof, (b) in the case of a U.S. Government Security, any primary
dealer in U.S. Government Securities, and (c) in the case of any foreign
Investment, any foreign broker-dealer of internationally recognized standing or
an Affiliate thereof, in the case of each of clauses (a), (b) and (c) above, as
set forth on Schedule 1.01(a) or any other bank or broker-dealer acceptable to
the Administrative Agent in its reasonable determination.

 

“Approved Pricing Service” means a pricing or quotation service as set forth in
Schedule 1.01(a) or any other pricing or quotation service approved by the board
of directors of the Borrower and designated in writing to the Administrative
Agent (which designation shall be accompanied by a copy of a resolution of the
board of directors of the Borrower that such pricing or quotation service has
been approved by the Borrower).

 

3

 

 

“Approved Third-Party Appraiser” means any Independent nationally recognized
third-party appraisal firm (a) designated by the Borrower in writing to the
Administrative Agent (which designation shall be accompanied by a copy of a
resolution of the board of directors of the Borrower that such firm has been
approved by the Borrower for purposes of assisting the board of directors of the
Borrower in making valuations of portfolio assets to determine the Borrower’s
compliance with the applicable provisions of the Investment Company Act) and
(b) acceptable to the Administrative Agent. It is understood and agreed that
Houlihan Lokey Howard & Zukin Capital, Inc., Duff & Phelps LLC, Murray, Devine
and Company, Lincoln International LLC (formerly known as Lincoln Partners LLC)
and Valuation Research Corporation are acceptable to the Administrative Agent.
As used in Section 5.12 hereof, an “Approved Third-Party Appraiser selected by
the Administrative Agent” shall mean any of the firms identified in the
preceding sentence and any other Independent nationally recognized third-party
appraisal firm identified by the Administrative Agent and consented to by the
Borrower (such consent not to be unreasonably withheld).

 

“Asset Coverage Ratio” means the ratio, determined on a consolidated basis for
Borrower and its Subsidiaries, without duplication, of (a) the value of total
assets of the Borrower and its Subsidiaries, less all liabilities and
indebtedness not represented by senior securities, to (b) the aggregate amount
of senior securities representing indebtedness of Borrower and its Subsidiaries
(including this Agreement), in each case as determined pursuant to the
Investment Company Act and any orders of the Securities and Exchange Commission
issued to or with respect to Borrower thereunder, including any exemptive relief
granted by the Securities and Exchange Commission with respect to the
indebtedness of any SBIC Subsidiary.

 

“Assignment and Assumption” means an Assignment and Assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by Section 9.04), and accepted by the Administrative Agent, in the form of
Exhibit A or any other form approved by the Administrative Agent.

 

“Assuming Lender” has the meaning assigned to such term in Section 2.08(e).

 

“Availability Period” means the period from and including the Effective Date to
but excluding the earlier of the Commitment Termination Date and the date of
termination of the Commitments.

 

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by
the applicable Resolution Authority in respect of any liability of an Affected
Financial Institution.

 

“Bail-In Legislation” means (a) with respect to any EEA Member Country
implementing Article 55 of Directive 2014/59/EU of the European Parliament and
of the Council of the European Union, the implementing law, regulation, rule or
requirement for such EEA Member Country from time to time which is described in
the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom,
Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and
any other law, regulation or rule applicable in the United Kingdom relating to
the resolution of unsound or failing banks, investment firms or other financial
institutions or their affiliates (other than through liquidation, administration
or other insolvency proceedings).

 

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

 

“Borrower” has the meaning assigned to such term in the preamble to this
Agreement.

 

4

 

 

“Borrowing” means (a) all Syndicated ABR Loans of the same Class made, converted
or continued on the same date, (b) all Eurocurrency Loans of the same Class
denominated in the same Currency that have the same Interest Period or (c) a
Swingline Loan.

 

“Borrowing Base” has the meaning assigned to such term in Section 5.13.

 

“Borrowing Base Certificate” means a certificate of a Financial Officer of the
Borrower, substantially in the form of Exhibit B and appropriately completed.

 

“Borrowing Base Deficiency” means, at any date on which the same is determined,
the amount, if any, that (a) the aggregate Covered Debt Amount as of such date
exceeds (b) the Borrowing Base as of such date.

 

“Borrowing Request” means a request by the Borrower for a Syndicated Borrowing
in accordance with Section 2.03, which, if in writing, shall be substantially in
the form of Exhibit C.

 

“Business Day” means any day (a) that is not a Saturday, Sunday or other day on
which commercial banks in Houston, Texas are authorized or required by law to
remain closed, (b) when used in connection with a Eurocurrency Loan denominated
in Dollars, the term “Business Day” shall also exclude any day on which banks
are not open for dealings in deposits in Dollars in London, and (c) with respect
to any date for the payment or purchase of, or the fixing of an interest rate in
relation to CAD, the term “Business Day” shall also exclude any day on which
banks are not open for international business in the principal financial center
of Canada.

 

“CAD” or “C$” means the lawful currency of Canada.

 

“CAD Screen Rate” has the meaning assigned to such term in the definition of
CDOR Rate.

 

“Calculation Amount” shall mean, as of the end of any Testing Period, an amount
equal to the greater of: (a) (i) 125% of the Adjusted Covered Debt Balance (as
of the end of such Testing Period) minus (ii) the aggregate Value of all Quoted
Investments included in the Borrowing Base (as of the end of such Testing
Period) and (b) 10% of the aggregate Value of all Unquoted Investments included
in the Borrowing Base (as of the end of such Testing Period); provided that in
no event shall more than 25% (or, if clause (b) applies, 10%, or as near thereto
as reasonably practicable) of the aggregate Value of the Unquoted Investments in
the Borrowing Base be tested in respect of any applicable Testing Period.

 

“CAM Exchange” means the exchange of the Lenders’ interests provided for in
Article VII.

 

“CAM Exchange Date” means the date on which any Event of Default referred to in
clause (j) of Article VII shall occur or the date on which the Borrower receives
written notice from the Administrative Agent that any Event of Default referred
to in clause (i) of Article VII has occurred.

 

“CAM Percentage” means, as to each Lender, a fraction, expressed as a decimal,
of which (a) the numerator shall be the aggregate Dollar Equivalent of the
Designated Obligations owed to such Lender (whether or not at the time due and
payable) immediately prior to the CAM Exchange Date and (b) the denominator
shall be the aggregate Dollar Equivalent amount of the Designated Obligations
owed to all the Lenders (whether or not at the time due and payable) immediately
prior to the CAM Exchange Date.

 

5

 

 

“Canadian Prime Rate” means, on any day, the rate determined by the
Administrative Agent to be the higher of (a) the higher of (i) the rate equal to
the PRIMCAN index rate that appears on the Bloomberg screen at 10:15 am Toronto
time on such day (or, in the event that the PRIMCAN index is not published by
Bloomberg, any other information services that publishes such index from time to
time, as selected by the Administrative Agent in its reasonable discretion), and
(ii) 3.00% and (b) the CDOR Rate for thirty (30) days plus 1% per annum. Any
change in the Canadian Prime Rate due to a change in the PRIMCAN index or the
CDOR Rate shall be effective from and including the effective date of such
change in the PRIMCAN index or CDOR Rate, respectively.

 

“Capital Lease Obligations” of any Person means the obligations of such Person
to pay rent or other amounts under any lease of (or other arrangement conveying
the right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP.

 

“Cash” means any immediately available funds in Dollars or in any currency other
than Dollars (measured in terms of the Dollar Equivalent thereof) which is a
freely convertible currency.

 

“Cash Collateralize” means, in respect of a Letter of Credit or any obligation
hereunder, to provide and pledge cash collateral pursuant to Section 2.05(k), at
a location and pursuant to documentation in form and substance reasonably
satisfactory to Administrative Agent and the Issuing Bank. “Cash Collateral”
shall have a meaning correlative to the foregoing and shall include the proceeds
of such cash collateral and other credit support.

 

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

 

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

 

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

 

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

 

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

 

(e)               investments in money market funds that invest solely, and
which are restricted by their respective charters to invest solely, in
investments of the type described in the immediately preceding clauses (a)
through (d) above (including as to credit quality and maturity).

 

6

 

 

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

 

“CDOR Rate” means, on any day and for any period, an annual rate of interest
equal to the average rate applicable to CAD bankers’ acceptances for the
applicable period that appears on the Reuters Screen CDOR Page (or, in the event
such rate does not appear on such page or screen, on any successor or substitute
page or screen that displays such rate, or on the appropriate page of such other
information service that publishes such rate from time to time, as selected by
the Administrative Agent in its reasonable discretion), rounded to the nearest
1/100th of 1% (with .005% being rounded up), at approximately 10:15 am Toronto
time on such day, or if such day is not a Business Day, then on the immediately
preceding Business Day (the “CAD Screen Rate”); provided that if such CAD Screen
Rate shall be less than 0.25%, such rate shall be deemed to be 0.25% for
purposes of this Agreement.

 

“Change in Control” means the External Manager ceases to be Controlled by any or
all of Robert Ladd, Dean D’Angelo, Joshua Davis, W. Todd Huskinson and/or Todd
Overbergen, or any of their successors who have been approved by the
Administrative Agent in its reasonable discretion within ninety days.

 

“Change in Law” means the occurrence, after the date of this Agreement, of (a)
the adoption of any law, treaty or governmental rule or regulation or any change
in any law, treaty or governmental rule or regulation or in the interpretation,
administration or application thereof (regardless of whether the underlying law,
treaty or governmental rule or regulation was issued or enacted prior to the
date hereof), but excluding proposals thereof, or any determination of a court
or Governmental Authority, (b) any guideline, request or directive by any
Governmental Authority (whether or not having the force of law) or any
implementation rules or interpretations of previously issued guidelines,
requests or directives, in each case that is issued or made after the date
hereof or (c) compliance by any Lender (or its applicable lending office) or any
company controlling such Lender with any guideline, request or directive
regarding capital adequacy or liquidity (whether or not having the force of law)
of any such Governmental Authority, in each case adopted after the date hereof.
For the avoidance of doubt, all requests, rules, guidelines or directives
concerning liquidity and capital adequacy issued (i) by any United States
regulatory authority under or in connection with the implementation of the
Dodd-Frank Wall Street Reform and Consumer Protection Act and (ii) in connection
with the implementation of the recommendations of the Bank for International
Settlements or the Basel Committee on Banking Regulations and Supervisory
Practices (or any successor or similar authority), in each case pursuant to
Basel III, shall in each case be deemed to be a “Change in Law”, regardless of
the date adopted, issued, promulgated or implemented.

 

“Class”, when used in reference to any Loan or Borrowing, refers to whether such
Loan or the Loans constituting such Borrowing are Syndicated Dollar Loans,
Multicurrency Loans or Swingline Loans; when used in reference to any Lender,
refers to whether such Lender is a Dollar Lender or a Multicurrency Lender. The
“Class” of a Letter of Credit refers to whether such Letter of Credit is a
Dollar Letter of Credit or a Multicurrency Letter of Credit.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

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

 

7

 

 

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

 

“Commitments” means with respect to each Dollar Lender, the commitment of such
Dollar Lender to make Syndicated Loans, and to acquire participations
denominated in Dollars in Letters of Credit, Swingline Loans, and Multicurrency
Loans, expressed as an amount representing the maximum aggregate amount of such
Lender’s Revolving Credit Exposure hereunder, as such commitment may be
(a) reduced from time to time pursuant to Section 2.08 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04. The initial amount of each Dollar Lender’s Commitment
is set forth on Schedule 1.01(b) or in the Assignment and Assumption pursuant to
which such Lender shall have assumed its Commitment, as applicable. The
aggregate amount of all Dollar Lenders’ Commitments as of the Effective Date is
$230,000,000.

 

“Commitment Increase” has the meaning assigned to such term in Section 2.08(e).

 

“Commitment Increase Date” has the meaning assigned to such term in
Section 2.08(e).

 

“Commitment Termination Date” means September 18, 2024, as such date may be
extended upon the consent of each affected Lender and the payment by Borrower of
a then-market commitment fee.

 

“Compliance Certificate” means the certificate of a Financial Officer of the
Borrower furnished to the Administrative Agent as required by Section 5.01(c).

 

“Consolidated EBITDA” means, for Borrower and its Subsidiaries a consolidated
basis for any period and without duplication, (a) Consolidated Net Investment
Income, plus (b) to the extent subtracted in determining Consolidated Net
Investment Income, (i) Consolidated Interest Expense, (ii) federal and state
income Tax expense, and (iii) depreciation and amortization expense, minus (c)
to the extent added in determining Consolidated Net Investment Income, any
accretion of any discounts.

 

“Consolidated Group” has the meaning assigned to such term in Section 5.13(a).

 

“Consolidated Interest Expense” means, for Borrower and its Subsidiaries on a
consolidated basis for any period, interest expense for such period (including
interest expense attributable to Capital Lease Obligations and all net payment
obligations pursuant to Hedging Agreements).

 

“Consolidated Net Investment Income” means, for Borrower and its Subsidiaries on
a consolidated basis for any period, the consolidated net investment income (or
loss) of such Person for such period as determined in accordance with GAAP.

 

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

 

“Covered Debt Amount” means, on any date, the sum of (x) all of the Revolving
Credit Exposures of all Lenders on such date minus (y) the LC Exposures fully
Cash Collateralized on such date pursuant to Section 2.05(k) and the last
paragraph of Section 2.09(a).

 

“Currency” means Dollars or any Foreign Currency.

 

8

 

 

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

 

“Defaulting Lender” means, subject to Section 2.19(b), any Lender that (a) has
failed to (i) fund all or any portion of its Loans or participations in Letters
of Credit within two Business Days of the date such Loans were required to be
funded hereunder unless such Lender notifies the Administrative Agent and the
Borrower in writing that such failure is the result of such Lender’s reasonable
determination that one or more conditions precedent to funding (each of which
conditions precedent, together with the applicable default, if any, shall be
specifically identified in detail in such writing) has not been satisfied, or
(ii) pay to the Administrative Agent, Issuing Bank, Swingline Lender or any
Lender any other amount required to be paid by it hereunder (including in
respect of its participation in Letters of Credit or Swingline Loans) within two
Business Days of the date when due, (b) has notified the Borrower, the
Administrative Agent, Issuing Bank or Swingline Lender in writing that it does
not intend to comply with its funding obligations hereunder, or has made a
public statement to that effect (unless such writing or public statement relates
to such Lender’s obligation to fund a Loan hereunder and states that such
position is based on such Lender’s reasonable determination that a condition
precedent to funding (which condition precedent, together with the applicable
default, if any, shall be specifically identified in detail in such writing or
public statement) cannot be satisfied), (c) has failed, within three Business
Days after written request by the Administrative Agent or the Borrower, to
confirm in writing to the Administrative Agent and the Borrower that it will
comply with its prospective funding obligations hereunder (provided that such
Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon
receipt of such written confirmation by Administrative Agent and Borrower), or
(d) Administrative Agent has received notification that such Lender has become,
or has a direct or indirect Parent Company that is, (i) insolvent, or is
generally unable to pay its debts as they become due, or admits in writing its
inability to pay its debts as they become due, or makes a general assignment for
the benefit of its creditors or (ii) other than via an Undisclosed
Administration, the subject of a bankruptcy, insolvency, reorganization,
liquidation or similar proceeding, or a receiver, trustee, conservator,
intervenor or sequestrator or the like has been appointed for such Lender or its
direct or indirect Parent Company, or such Lender or its direct or indirect
Parent Company has taken any action in furtherance of or indicating its consent
to or acquiescence in any such proceeding or appointment, or (iii) the subject
of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender
solely by virtue of the ownership or acquisition of any Equity Interest in that
Lender or any direct or indirect Parent Company thereof by a Governmental
Authority or instrumentality so long as such ownership interest does not result
in or provide such Lender with immunity from the jurisdiction of courts within
the United States or from the enforcement of judgments or writs of attachment on
its assets or permit such Lender (or such Governmental Authority or
instrumentality) to reject, repudiate, disavow or disaffirm any contracts or
agreements made with such Lender. Any determination by the Administrative Agent
that a Lender is a Defaulting Lender under any one or more of clauses (a)
through (d) above shall be conclusive and binding absent manifest error, and
such Lender shall be deemed to be a Defaulting Lender (subject to
Section 2.19(b)) upon such determination (and the Administrative Agent shall
deliver written notice of such determination to the Borrower, the Issuing Bank
and each Lender and the Swingline Lender).

 

“Designated Obligations” means all obligations of the Borrower with respect to
(a) principal of and interest on the Loans and (b) accrued and unpaid fees under
the Loan Documents.

 

“Designated Persons” means, at any time, (a) any Person listed in any
sanctions-related list of designated Persons maintained by OFAC, the U.S.
Department of State, the United Nations Security Council, the European Union,
Her Majesty’s Treasury, the Government of Canada, or other relevant sanctions
authority of a jurisdiction in which Borrower or any of its Subsidiaries conduct
their businesses and to which any such Persons are lawfully subject, or (b) any
Person owned or controlled by any such Person or Persons described in clause
(a).

 

9

 

 

“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any property by
any Person (or the granting of any option or other right to do any of the
foregoing), including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith; provided that the term “Disposition” or “Dispose” shall
not include the disposition of Investments originated by the Borrower and
immediately transferred to a Financing Subsidiary pursuant to a transaction not
prohibited hereunder.

 

“Dollar Equivalent” means, on any date of determination, with respect to an
amount denominated in any Foreign Currency, the amount of Dollars that would be
required to purchase such amount of such Foreign Currency on the date two
Business Days prior to such date, based upon the spot selling rate at which the
Administrative Agent offers to sell such Foreign Currency for Dollars in the
London foreign exchange market at approximately 11:00 a.m., London time, for
delivery two Business Days later.

 

“Dollar Lender” means the Persons listed on Schedule 1.01(b) as having
Commitments and any other Person that shall have become a party hereto pursuant
to an Assignment and Assumption that provides for it to assume a Commitment or
to acquire Revolving Credit Exposure, other than any such Person that ceases to
be a party hereto pursuant to an Assignment and Assumption.

 

“Dollar Letters of Credit” means Letters of Credit that utilize the Commitments.

 

“Dollar Loan” means a Loan denominated in Dollars.

 

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

 

“EEA Financial Institution” means (a) any credit institution or investment firm
established in any EEA Member Country which is subject to the supervision of an
EEA Resolution Authority, (b) any entity established in an EEA Member Country
which is a parent of an institution described in clause (a) of this definition,
or (c) any financial institution established in an EEA Member Country which is a
subsidiary of an institution described in clauses (a) or (b) of this definition
and is subject to consolidated supervision with its parent.

 

“EEA Member Country” means any of the member states of the European Union,
Iceland, Liechtenstein, and Norway.

 

“EEA Resolution Authority” means any public administrative authority or any
person entrusted with public administrative authority of any EEA Member Country
(including any delegee) having responsibility for the resolution of any EEA
Financial Institution.

 

“Effective Date” means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).

 

“Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests or equivalents (however designated,
including any instrument treated as equity for U.S. federal income tax purposes)
in a Person, and any warrants, options or other rights entitling the holder
thereof to purchase or acquire any such equity interest.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

 

10

 

 

 

“ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with the Borrower, 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) any failure by any Plan
to satisfy the minimum funding standard (within the meaning of Section 412 of
the Code or Section 302 of ERISA) applicable to such Plan; (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 Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower 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
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition 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.

 

“EU Bail-In Legislation Schedule means the EU Bail-In Legislation Schedule
published by the Loan Market Association (or any successor person), as in effect
from time to time.

 

“Eurocurrency”, when used in reference to any Loan or Borrowing, refers to
whether such Loan or the Loans constituting such Borrowing are bearing interest
at a rate determined by reference to the Adjusted LIBO Rate.

 

“Event of Default” has the meaning assigned to such term in Article VII.

 

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender,
the Issuing Bank or any other recipient of any payment to be made by or on
account of any obligation of the Borrower hereunder, (a) income, corporate,
franchise or other similar Taxes imposed on (or measured by) its net income or
profits by the United States of America (or any state or political subdivision
thereof), or by the jurisdiction (or any political subdivision thereof) under
the laws of which such recipient is organized or in which its principal office
is located or, in the case of any Lender, in which its applicable lending office
is located, (b) any branch profits Taxes imposed by the United States of America
or any similar Tax imposed by any other jurisdiction in which the Borrower is
located, (c) in the case of a Lender, any U.S. withholding Tax imposed on
amounts payable to such Lender at the time such Lender (i) becomes a party to
this Agreement (other than an assignee pursuant to a request by the Borrower
under Section 2.18(b)) or (ii) designates a new lending office, except to the
extent that such Lender’s assignor or such Lender was entitled to receive
additional amounts from the Borrower with respect to such withholding Tax
pursuant to Section 2.16, at the time of such assignment or designation (other
than to the extent such withholding is as a result of a CAM Exchange), (d) Taxes
attributable to such Lender’s failure or inability to comply with
Section 2.16(f), (e) any U.S. federal, state or local backup withholding Taxes
imposed on payments made under any Loan Document, and (f) any U.S. federal
withholding Tax that is imposed pursuant to FATCA.

 

“External Manager” means Stellus Capital Management, LLC.

 

11

 

 

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively
comparable), any current or future regulations or official interpretations
thereof and any agreements entered into pursuant to Section 1471(b)(1) of the
Code, any intergovernmental agreement entered into in connection with such
sections of the Code and any legislations, law, regulation or practice enacted
or promulgated pursuant to such intergovernmental agreement.

 

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it; provided that, if the Federal Funds
Effective Rate shall be less than zero, such rate shall be deemed to be zero for
purposes of this Agreement.

 

“Fee Letter” means that certain fee letter dated as of September 18, 2020,
between Borrower and Amegy Bank, as amended, restated, supplemented, or
otherwise modified from time to time.

 

“Final Maturity Date” means September 18, 2025.

 

“Financial Officer” means the chief financial officer or treasurer of the
Borrower.

 

“Financing Subsidiary” means an SPE Subsidiary or an SBIC Subsidiary.

 

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

 

“Foreign Currency Equivalent” means, with respect to any amount in Dollars, the
amount of any Foreign Currency that could be purchased with such amount of
Dollars using the reciprocal of the foreign exchange rate(s) specified in the
definition of the term “Dollar Equivalent”, as determined by the Administrative
Agent.

 

“Foreign Lender” means any Lender that is not a “United States person” as
defined under Section 7701(a)(30) of the Code.

 

“Foreign Subsidiary” means any (a) direct or indirect Subsidiary of the Borrower
that is organized under the laws of any jurisdiction other than the United
States or its territories or possessions and that is treated as a corporation
for United States federal income Tax purposes, (b) direct or indirect Subsidiary
of the Borrower which is a “controlled foreign corporation” within the meaning
of the Code or (c) direct or indirect Subsidiary that is disregarded as an
entity that is separate from its owner for United States federal income Tax
purposes and substantially all of its assets consist of the Capital Stock of one
or more direct or indirect Foreign Subsidiaries.

 

“Fronting Exposure” means, at any time there is a Defaulting Lender, with
respect to any Issuing Bank, such Defaulting Lender’s Applicable Dollar
Percentage of the outstanding LC Exposure with respect to Letters of Credit
issued by such Issuing Bank other than LC Exposure as to which such Defaulting
Lender’s participation obligation has been reallocated to other Lenders or Cash
Collateralized in accordance with the terms hereof.

 

“GAAP” means generally accepted accounting principles in the United States of
America.

 

12

 

 

“Good Faith Tax Estimate” has the meaning assigned to such term in
Section 6.05(b).

 

“Governmental Authority” means the government of the United States of America,
or of any other nation, or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.

 

“Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided that the term Guarantee shall not include (i) endorsements
for collection or deposit in the ordinary course of business or (ii) customary
indemnification agreements entered into in the ordinary course of business,
provided that such indemnification obligations are unsecured, such Person has
determined that any liability thereunder is remote and such indemnification
obligations are not the functional equivalent of the guaranty of a payment
obligation of the primary obligor.

 

“Guarantee and Security Agreement” means that certain Amended and Restated
Guarantee and Security Agreement dated as of the date hereof, among the
Borrower, the Administrative Agent, each Subsidiary of the Borrower from time to
time party thereto and the Collateral Agent, as the same shall be modified and
supplemented and in effect from time to time.

 

“Guarantee Assumption Agreement” means a Guarantee Assumption Agreement
substantially in the form of Exhibit B to the Guarantee and Security Agreement
between the Collateral Agent and an entity that pursuant to Section 5.08 is
required to become a “Subsidiary Guarantor” under the Guarantee and Security
Agreement (with such changes as the Administrative Agent shall request
consistent with the requirements of Section 5.08).

 

“Hedging Agreement” means any interest rate protection agreement, foreign
currency exchange protection agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement
which is provided by a Lender or an Affiliate of a Lender and is documented on a
form of master agreement published by the International Swaps and Derivatives
Association, Inc., any International Foreign Exchange Master Agreement, or other
reasonable and customary manner.

 

“Immaterial Subsidiaries” means those Subsidiaries of the Borrower that are
“designated” as Immaterial Subsidiaries by the Borrower from time to time (it
being understood that the Borrower may at any time change any such designation);
provided that such designated Immaterial Subsidiaries shall collectively meet
all of the following criteria as of the date of the most recent balance sheet
required to be delivered pursuant to Section 5.01: (a) the aggregate assets of
such Subsidiaries and their Subsidiaries (on a consolidated basis) as of such
date do not exceed an amount equal to 2% of the consolidated assets of the
Borrower and its Subsidiaries as of such date; and (b) the aggregate revenues of
such Subsidiaries and their Subsidiaries (on a consolidated basis) for the
fiscal quarter ending on such date do not exceed an amount equal to 2% of the
consolidated revenues of the Borrower and its Subsidiaries for such period.

 

13

 

 

“Increasing Lender” has the meaning assigned to such term in Section 2.08(e).

 

“Indebtedness” of any Person means, without duplication, (a) all obligations of
such Person for borrowed money or with respect to deposits or advances of any
kind, (b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person under conditional
sale or other title retention agreements relating to property acquired by such
Person, (d) all obligations of such Person in respect of the deferred purchase
price of property or services (excluding accounts payable and accrued expenses
incurred in the ordinary course of business which are not overdue for a period
of more than 90 days), (e) all Indebtedness of others secured by any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed (with the value of such debt being the lower of
the outstanding amount of such debt and the fair market value of the property
subject to such Lien), (f) all Guarantees by such Person of Indebtedness of
others, (g) all Capital Lease Obligations of such Person, (h) all obligations,
contingent or otherwise, of such Person as an account party in respect of
letters of credit and letters of guaranty and (i) all obligations, contingent or
otherwise, of such Person in respect of bankers’ acceptances. The Indebtedness
of any Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such Person
is liable therefor as a result of such Person’s ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor. Notwithstanding
the foregoing, “Indebtedness” shall not include (x) purchase price holdbacks
arising in the ordinary course of business in respect of a portion of the
purchase price of an asset or Investment to satisfy unperformed obligations of
the seller of such asset or Investment or (y) a commitment arising in the
ordinary course of business to make a future Investment.

 

“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 the
Borrower under any Loan Document and (b) to the extent not otherwise described
in (a), Other Taxes.

 

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

 

“Industry Classification Group” means (a) any of the classification groups set
forth in Schedule 1.01(c) hereto, together with any such classification groups
that may be subsequently established by Moody’s and provided by the Borrower to
the Lenders, and (b) up to three additional industry group classifications
established by the Borrower pursuant to Section 5.12.

 

“Interest Coverage Ratio” means, as of any date of determination, the ratio of
(a) Consolidated EBITDA to (b) Consolidated Interest Expense, in each case for
the period of four consecutive fiscal quarters ending on such date.

 

“Interest Election Request” means a request by the Borrower to convert or
continue a Syndicated Borrowing in accordance with Section 2.07.

 

“Interest Payment Date” means (a) with respect to any Syndicated ABR Loan, each
Quarterly Date, (b) with respect to any Eurocurrency Loan, the last day of each
Interest Period therefor and, in the case of any Interest Period of more than
three months’ duration, each day prior to the last day of such Interest Period
that occurs at three-month intervals after the first day of such Interest Period
and (c) with respect to any Swingline Loan, the day that such Loan is required
to be repaid.

 

14

 

 

“Interest Period” means, for any Eurocurrency Loan or Borrowing (a) in Dollars,
the period commencing on the date of such Loan or Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months thereafter and (b) in CAD, the period commencing on the date of such
Loan or Borrowing and ending on the numerically corresponding day in the
calendar month that is one, two, three or six months thereafter; provided that
(i) if any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day,
and (ii) any Interest Period (other than an Interest Period pertaining to a
Eurocurrency Borrowing denominated in CAD that ends on the Final Maturity Date
that is permitted to be of less than one month’s duration as provided in this
definition) that commences on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the last calendar
month of such Interest Period) shall end on the last Business Day of the last
calendar month of such Interest Period. For purposes hereof, the date of a Loan
initially shall be the date on which such Loan is made and thereafter shall be
the effective date of the most recent conversion or continuation of such Loan,
and the date of a Syndicated Borrowing comprising Loans that have been converted
or continued shall be the effective date of the most recent conversion or
continuation of such Loans.

 

“Interpolated Rate” means, at any time, for any Interest Period, the rate per
annum (rounded to the same number of decimal places as the applicable Screen
Rate) determined by the Administrative Agent (which determination shall be
conclusive and binding absent manifest error) to be equal to the rate that
results from interpolating on a linear basis between: (a) the applicable Screen
Rate for the longest period (for which such applicable Screen Rate is available)
that is shorter than the Impacted Interest Period and (b) the applicable Screen
Rate for the shortest period (for which the applicable Screen Rate is available)
that exceeds the Impacted Interest Period, in each case, at such time; provided
that, if the Interpolated Rate shall be less than 0.25%, such rate shall be
deemed to be 0.25% for purposes of this Agreement.

 

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

 

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

 

“Investment Policies” means the investment objectives, policies, restrictions
and limitations set forth in the “COMPANY” section of its Registration
Statement, and as the same may be changed, altered, expanded, amended, modified,
terminated or restated from time to time.

 

“IRS” means the United States Internal Revenue Service.

 

“Issuing Bank” means Amegy Bank, in its capacity as the issuer of Letters of
Credit hereunder, and its successors in such capacity as provided in
Section 2.05(j). In the case of any Letter of Credit to be issued in an Agreed
Foreign Currency, Amegy Bank may designate any of its affiliates as the “Issuing
Bank” for purposes of such Letter of Credit.

 

“LC Disbursement” means a payment made by the Issuing Bank pursuant to a Letter
of Credit.

 

15

 

 

“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount
(or Dollar Equivalent) of all outstanding Letters of Credit at such time plus
(b) the aggregate amount of all LC Disbursements (or Dollar Equivalent) in
respect of such Letters of Credit that have not yet been reimbursed by or on
behalf of the Borrower at such time. The LC Exposure of any Lender at any time
shall be its Applicable Dollar Percentage of the total LC Exposure at such time.

 

“Lenders” means, collectively, the Dollar Lenders and the Multicurrency Lenders.
Unless the context otherwise requires, the term “Lenders” includes the Swingline
Lender.

 

“Letter of Credit” means any letter of credit issued pursuant to this Agreement.

 

“Letter of Credit Collateral Account” has the meaning assigned to such term in
Section 2.05(k).

 

“Letter of Credit Documents” means, with respect to any Letter of Credit,
collectively, any application therefor and any other agreements, instruments,
guarantees or other documents (whether general in application or applicable only
to such Letter of Credit) governing or providing for (a) the rights and
obligations of the parties concerned or at risk with respect to such Letter of
Credit or (b) any collateral security for any of such obligations, each as the
same may be modified and supplemented and in effect from time to time.

 

“LIBO Rate” means, with respect to (a) any Eurocurrency Borrowing in Dollars and
for any applicable Interest Period, the London interbank offered rate
administered by ICE Benchmark Administration (or any other Person that takes
over the administration of such rate) for deposits in Dollars for a period equal
in length to such Interest Period, as displayed on pages LIBOR01 or LIBOR02 of
the Reuters screen or, in the event such rate does not appear on a Reuters page
or screen, on any successor or substitute page on such screen that displays such
rate, or on the appropriate page of such other information service that
publishes such rate as shall be selected by the Administrative Agent from time
to time in its reasonable discretion (the “LIBO Screen Rate”), at approximately
11:00 a.m., London time, two (2) Business Days prior to the commencement of such
Interest Period, and (b) any Eurocurrency Borrowing denominated in CAD and for
any applicable Interest Period, the CDOR Rate; provided that, if any LIBO Screen
Rate or any CAD Screen Rate, as applicable, shall not be available at the
applicable time for the applicable Interest Period (an “Impacted Interest
Period”), then the LIBO Rate shall be the Interpolated Rate at such time,
subject to Section 2.13, and provided further that, if the LIBO Rate shall be
less than 0.25, such rate shall be deemed to be 0.25 for purposes of this
Agreement. Notwithstanding the above, to the extent that “LIBO Rate” or
“Adjusted LIBO Rate” is used in connection with an ABR Borrowing, such rate
shall be determined as modified by the definition of Alternate Base Rate.

 

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

 

“Loan Documents” means, collectively, this Agreement, the Fee Letter, the Letter
of Credit Documents and the Security Documents.

 

“Loans” means the loans made by the Lenders to the Borrower pursuant to this
Agreement.

 

16

 

 

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

 

“Material Adverse Effect” means a material adverse effect on (a) the business,
Investments and other assets, liabilities or financial condition of the Borrower
or the Borrower and its Subsidiaries (other than Financing Subsidiaries) taken
as a whole (excluding in any case a decline in the net asset value of the
Borrower or a change in general market conditions or values of the Investments),
or (b) the validity or enforceability of any of the Loan Documents or the rights
or remedies of the Administrative Agent and the Lenders thereunder.

 

“Material Indebtedness” means (a) Indebtedness (other than the Loans, Letters of
Credit and Hedging Agreements), of any one or more of the Borrower and its
Subsidiaries in an aggregate principal amount exceeding $5,000,000 and (b)
obligations in respect of one or more Hedging Agreements under which the maximum
aggregate amount (giving effect to any netting agreements) that the Borrower and
its Subsidiaries would be required to pay if such Hedging Agreement(s) were
terminated at such time would exceed $5,000,000.

 

“Minimum Collateral Amount” means, at any time, with respect to Cash Collateral
consisting of Cash or deposit account balances, an amount equal to 100% of the
Fronting Exposure of Issuing Bank with respect to Letters of Credit issued and
outstanding at such time.

 

“Moody’s” means Moody’s Investors Service, Inc. or any successor to the ratings
business thereof.

 

“Multicurrency LC Exposure” means, at any time, the sum of (a) the aggregate
undrawn amount of all outstanding Multicurrency Letters of Credit at such time
plus (b) the aggregate amount of all LC Disbursements in respect of such
Multicurrency Letters of Credit that have not yet been reimbursed by or on
behalf of the Borrower at such time.

 

“Multicurrency Lender” means Amegy Bank in its capacity as lender of
Multicurrency Loans, and each other Lender from time to time approved by
Administrative Agent and Borrower to make Multicurrency Loans.

 

“Multicurrency Letters of Credit” means Letters of Credit denominated in an
Agreed Foreign Currency.

 

“Multicurrency Loan” means a Loan made pursuant to Section 2.01(b) and which is
denominated in an Agreed Foreign Currency.

 

“Multicurrency Loan Exposure” means, at any time, the aggregate principal amount
of all Multicurrency Loans outstanding at such time. The Multicurrency Loan
Exposure of any Multicurrency Lender at any time shall be its Applicable
Multicurrency Percentage of the total Multicurrency Loan Exposure.

 

“Multicurrency Sublimit” means the lesser of (a) $30,000,000, and (b) the
aggregate amount of the Commitments.

 

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3)
of ERISA.

 

“Non-Defaulting Lender” means, at any time, a Lender that is not a Defaulting
Lender at such time.

 

17

 

 

“Non-Public Information” means material non-public information (within the
meaning of United States federal, state or other applicable securities laws)
with respect to Borrower or its Affiliates or their Securities.

 

“Note” means a promissory note made by the Borrower in favor of a Lender
evidencing Loans made by such Lender, in form and substance reasonably
acceptable to the Administrative Agent.

 

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

 

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

 

“Original Currency” has the meaning assigned to such term in Section 2.17.

 

“Other Permitted Indebtedness” means (a) accrued expenses and current trade
accounts payable incurred in the ordinary course of the Borrower’s business
which are not overdue for a period of more than 90 days or which are being
contested in good faith by appropriate proceedings, (b) Indebtedness (other than
Indebtedness for borrowed money) arising in connection with transactions in the
ordinary course of the Borrower’s business in connection with its purchasing of
securities, derivatives transactions, reverse repurchase agreements or dollar
rolls to the extent such transactions are permitted under the Investment Company
Act and the Borrower’s Investment Policies (after giving effect to any Permitted
Policy Amendments), provided that, such Indebtedness does not arise in
connection with the purchase of Investments other than Cash Equivalents and U.S.
Government Securities, and (c) Indebtedness in respect of judgments or awards
that have been in force for less than the applicable period for taking an appeal
so long as such judgments or awards do not constitute an Event of Default under
clause (l) of Article VII; provided that, for the avoidance of doubt,
Indebtedness arising under Hedging Agreements shall not constitute “Other
Permitted Indebtedness” hereunder.

 

“Other Taxes” means any and all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes arising from any payment made
under any Loan Document or from the execution, delivery or enforcement of, or
otherwise with respect to, any Loan Document, excluding any such Taxes, charges
or similar levies resulting from an assignment by any Lender in accordance with
Section 9.04 hereof (unless such assignment is made pursuant to
Section 2.18(b)).

 

“Parent Company” means, with respect to a Lender, the bank holding company (as
defined in Federal Reserve Board Regulation Y), if any, of such Lender, and/or
any Person owning, beneficially or of record, directly or indirectly, a majority
of the shares of such Lender.

 

“Participant” has the meaning assigned to such term in Section 9.04.

 

“Participant Register” has the meaning assigned to such term in Section 9.04.

 

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.

 

18

 

 

“Permitted Liens” means (a) Liens imposed by any Governmental Authority for
Taxes, assessments or charges not yet due or that are being contested in good
faith and by appropriate proceedings if adequate reserves with respect thereto
are maintained on the books of the Borrower in accordance with GAAP; (b) Liens
of clearing agencies, broker-dealers and similar Liens incurred in the ordinary
course of business, provided that, such Liens (i) attach only to the securities
(or proceeds) being purchased or sold and (ii) secure only obligations incurred
in connection with such purchase or sale, and not any obligation in connection
with margin financing; (c) Liens imposed by law, such as materialmen’s,
mechanics’, carriers’, workmens’, storage and repairmen’s Liens and other
similar Liens arising in the ordinary course of business and securing
obligations (other than Indebtedness for borrowed money) not yet due or that are
being contested in good faith and by appropriate proceedings if adequate
reserves with respect thereto are maintained on the books of the Borrower in
accordance with GAAP; (d) Liens incurred or pledges or deposits made to secure
obligations incurred in the ordinary course of business under workers’
compensation laws, unemployment insurance or other similar social security
legislation (other than in respect of employee benefit plans subject to ERISA)
or to secure public or statutory obligations; (e) Liens securing the performance
of, or payment in respect of, bids, insurance premiums, deductibles or
co-insured amounts, tenders, government or utility contracts (other than for the
repayment of borrowed money), surety, stay, customs and appeal bonds and other
obligations of a similar nature incurred in the ordinary course of business; (f)
Liens arising out of judgments or awards that have been in force for less than
the applicable period for taking an appeal so long as such judgments or awards
do not constitute an Event of Default under clause (l) of Article VII; (g)
customary rights of setoff and liens upon (i) deposits of cash in favor of banks
or other depository institutions in which such cash is maintained in the
ordinary course of business, (ii) cash and financial assets held in securities
accounts in favor of banks and other financial institutions with which such
accounts are maintained in the ordinary course of business and (iii) assets held
by a custodian in favor of such custodian in the ordinary course of business
securing payment of fees, indemnities and other similar obligations; (h) Liens
arising solely from precautionary filings of financing statements under the
Uniform Commercial Code of the applicable jurisdictions in respect of operating
leases entered into by the Borrower or any of its Subsidiaries in the ordinary
course of business; and (i) deposits of money securing leases to which Borrower
is a party as lessee made in the ordinary course of business.

 

“Permitted Policy Amendment” means any change, alteration, expansion, amendment,
modification, termination or restatement of the Investment Policies that is
either (a) approved in writing by the Administrative Agent (with the consent of
the Required Lenders), (b) required by applicable law, rule, regulation or
Governmental Authority, or (c) not material in the reasonable discretion of the
Administrative Agent (for the avoidance of doubt, no change, alteration,
expansion, amendment, modification, termination or restatement of the Investment
Policies shall be deemed “material” if investment size proportionately increases
as the size of the Borrower’s capital base changes).

 

“Permitted Refinancing” mean any extension, renewal, exchange, replacement,
modification or refinancing of the Unsecured Notes Due 2022 that (a) has no
amortization prior to, and a final maturity date not earlier than, six months
after the Final Maturity Date after giving effect to any extension of the Final
Maturity Date at the time of incurrence of such extension, renewal, exchange,
replacement, modification or refinancing but not after, (b) is incurred pursuant
to documentation that is substantially comparable to market terms for
substantially similar debt of other similarly situated borrowers as determined
by the Borrower in its reasonable judgment and (c) is not secured by any assets
of any Obligor. It is understood and agreed that (i) conversion features and
conversion rights under convertible notes, (ii) the triggering and/or settlement
of conversion rights upon the exercise thereof or the repurchase of convertible
notes by such Obligor at the option of the holder, or (iii) any cash payment
made in respect of a triggering or settlement of conversion rights upon the
exercise thereof, shall not constitute “amortization” for purposes of this
clause (a).

 

“Permitted SBIC Guarantee” means a guarantee by the Borrower of Indebtedness of
an SBIC Subsidiary on the SBA’s then applicable form, provided that, the
recourse to the Borrower thereunder is expressly limited only to periods after
the occurrence of an event or condition that is an impermissible change in the
control of such SBIC Subsidiary (it being understood that, as provided in
clause (t) of Article VII, it shall be an Event of Default hereunder if any such
event or condition giving rise to such recourse occurs).

 

19

 

 

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

 

“Plan” means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

“Platform” means has the meaning set forth in Section 5.01.

 

“Portfolio Investment” means any Investment held by the Obligors in their asset
portfolio (and, solely for purposes of determining the Borrowing Base, Cash).
Without limiting the generality of the foregoing, the following Investments
shall not be considered Portfolio Investments under this Agreement or any other
Loan Document: (a) any Investment by an Obligor in any Subsidiary or Affiliate
of such Obligor or any Financing Subsidiary (including, for the avoidance of
doubt, any Investment by an Obligor in an entity constituting a portfolio
investment of such Obligor or an Affiliate of such Obligor); (b) any Investment
that provides in favor of the obligor in respect of such Portfolio Investment an
express right of rescission, set-off, counterclaim or any other defenses; (c)
any Investment, which if debt, is an obligation (other than a revolving loan or
delayed draw term loan) pursuant to which any future advances or payments to the
Obligor may be required to be made by the Borrower; (d) any Investment which is
made to a bankrupt entity (other than a debtor-in-possession financing and
current pay obligations); (f) any Investment, Cash or account in which a
Financing Subsidiary has an interest; and (g) any Investment that, when made,
was not made in accordance with Borrower’s Investment Policies in effect at such
time.

 

“Prime Rate” means the rate of interest per annum then most recently published
in The Wall Street Journal (or any successor publication if The Wall Street
Journal is no longer published) in the “Money Rates” Section (or such successor
section) as the “Prime Rate.” If a range of prime interest rates per annum is so
published, “Prime Rate” shall mean the highest rate per annum of all stated
rates in such published range. If the definition of “Prime Rate” is no longer
published in The Wall Street Journal (or any successor publication), “Prime
Rate” shall mean, at any time, the rate of interest per annum then most recently
established by Administrative Agent as its prime rate.

 

“Principal Financial Center” means, in the case of any Currency, the principal
financial center where such Currency is cleared and settled, as determined by
the Administrative Agent.

 

“Prohibited Assignees and Participants Side Letter” means that certain Side
Letter, dated as of the date hereof, between the Borrower and the Administrative
Agent.

 

“Public Lender” means Lenders that do not wish to receive Non-Public Information
with respect to the Borrower or any of its Subsidiaries or their Securities.

 

“Quarterly Date” means the last Business Day of March, June, September and
December in each year, commencing on September 30, 2020.

 

“Quoted Investments” means a Portfolio Investment with a value assigned by the
Borrower pursuant to Section 5.12(b)(ii)(A).

 

“Register” has the meaning set forth in Section 9.04.

 

20

 

 

“Registration Statement” means the Registration Statement on Form N-2 filed by
the Borrower with the Securities and Exchange Commission on April 29, 2019, as
amended by Pre-Effective Amendment No. 1 filed by the Borrower with the
Securities and Exchange Commission on June 20, 2019.

 

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

 

“Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective partners, directors, officers, employees, agents
and advisors of such Person and such Person’s Affiliates.

 

“Required Lenders” means, at any time, Lenders having Revolving Credit Exposures
and unused Commitments representing more than 50% of the sum of the total
Revolving Credit Exposures and unused Commitments at such time; provided that
the Revolving Credit Exposures and unused Commitments of any Defaulting Lender
shall be disregarded in the determination of Required Lenders.

 

“Resolution Authority” means an EEA Resolution Authority or, with respect to any
UK Financial Institution, a UK Resolution Authority.

 

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any shares of any class of capital
stock of the Borrower or any of its Subsidiaries, or any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such shares of capital stock of the Borrower
or any option, warrant or other right to acquire any such shares of capital
stock of the Borrower (it being understood that none of: (w) the conversion
features under convertible notes; (x) the triggering and/or settlement thereof
or in respect of the repurchase of such notes at the option of the holder; or
(y) any cash payment made by the Borrower in respect thereof, shall constitute a
Restricted Payment hereunder).

 

“Revolving Credit Exposure” means, with respect to any Lender at any time, the
sum of the outstanding principal amount of such Lender’s Syndicated Loans, its
LC Exposure, its Swingline Exposure, and its Multicurrency Loan Exposure.

 

“Revolving Multicurrency Credit Exposure” means, with respect to any
Multicurrency Lender at any time, the sum of its Multicurrency Loan Exposure and
its Multicurrency LC Exposure.

 

“Revolving Percentage” means, as of any date of determination, the result,
expressed as a percentage, of the Revolving Credit Exposure on such date divided
by the aggregate outstanding Covered Debt Amount on such date.

 

“RIC” means a “regulated investment company” as defined in section 851 of the
Code.

 

“S&P” means S&P Global Ratings (formerly Standard & Poor’s Ratings Services, a
division of The McGraw Hill Companies, Inc.) or any successor to the rating
agency thereof.

 

“Sanctioned Country” means a country, region or territory which is itself the
subject or target of any Sanctions Laws and Regulations.

 

“Sanctions Laws and Regulations” means any economic or financial sanctions or
trade embargoes, imposed, administered, or enforced from time to time by the
U.S. government (including those administered by OFAC), the European Union, Her
Majesty’s Treasury, the Government of Canada, the United Nations Security
Council or other relevant sanctions authority of a jurisdiction in which
Borrower or any of its Subsidiaries conduct their businesses and to which any
such Persons are lawfully subject.

 

21

 

 

“SBA” means the United States Small Business Administration.

 

“SBA Debentures” means (a) existing SBA promissory notes and debentures issued
by Stellus Capital SBIC, LP and Stellus Capital SBIC II, LP, in each case,
outstanding on the Effective Date so long as such notes and debentures are not
secured by any assets of any Obligor, and (b) from time to time after the
Effective Date, any SBA promissory notes and debentures issued by any SBIC
Subsidiary, so long as such notes and debentures are not secured by any assets
of any Obligor.

 

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

 

“SBIC Subsidiary” means any direct or indirect Subsidiary (including such
Subsidiary’s general partner or managing entity to the extent that the only
material asset of such general partner or managing entity is its Equity Interest
in the SBIC Subsidiary) of the Borrower licensed as a small business investment
company under the Small Business Investment Act of 1958, as amended, and which
is designated by the Borrower (as provided below) as an SBIC Subsidiary, so long
as (a) no portion of the Indebtedness or any other obligations (contingent or
otherwise) of such Subsidiary: (i) is Guaranteed by any Obligor (other than a
Permitted SBIC Guarantee), (ii) is recourse to or obligates any Obligor in any
way (other than in respect of any SBIC Equity Commitment or Permitted SBIC
Guarantee), or (iii) subjects any property of any Obligor, directly or
indirectly, contingently or otherwise, to the satisfaction thereof, and (b) no
Obligor has any obligation to maintain or preserve such Subsidiary’s financial
condition or cause such entity to achieve certain levels of operating results.
Any such designation by the Borrower shall be effected pursuant to a certificate
of a Financial Officer delivered to the Administrative Agent, which certificate
shall include a statement to the effect that, to the best of such officer’s
knowledge, such designation complied with the foregoing conditions.

 

“Scheduled Payment Date” means the 15th day of each calendar month beginning
October 15, 2024, and continuing on the 15th day of each calendar month
thereafter through and including the Final Maturity Date.

 

“Screen Rate” means the LIBO Screen Rate and the CAD Screen Rate collectively
and individually as the context may require.

 

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

 

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

 

22

 

 

“SPE Subsidiary” means a direct or indirect Subsidiary of the Borrower to which
any Obligor sells, conveys or otherwise transfers (whether directly or
indirectly) Investments, which engages in no material activities other than in
connection with the purchase or financing of such assets and which is designated
by the Borrower (as provided below) as an SPE Subsidiary:

 

(a)                no portion of the Indebtedness or any other obligations
(contingent or otherwise) of which (i) is Guaranteed by any Obligor (other than
Guarantees in respect of Standard Securitization Undertakings), (ii) is recourse
to or obligates any Obligor in any way other than pursuant to Standard
Securitization Undertakings or (iii) subjects any property of any Obligor,
directly or indirectly, contingently or otherwise, to the satisfaction thereof,
other than pursuant to Standard Securitization Undertakings or any Guarantee
thereof,

 

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

 

(c)                to which no Obligor has any obligation to maintain or
preserve such entity’s financial condition or cause such entity to achieve
certain levels of operating results.

 

Any such designation by the Borrower shall be effected pursuant to a certificate
of a Financial Officer delivered to the Administrative Agent, which certificate
shall include a statement to the effect that such designation complies with the
foregoing conditions. Each Subsidiary of an SPE Subsidiary shall be deemed to be
an SPE Subsidiary and shall comply with the foregoing requirements of this
definition.

 

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

 

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

 

“Statutory Reserve Rate” means, for the Interest Period for any Eurocurrency
Borrowing, a fraction (expressed as a decimal), the numerator of which is the
number one and the denominator of which is the number one minus the arithmetic
mean, taken over each day in such Interest Period, of the aggregate of the
maximum reserve percentages (including any marginal, special, emergency or
supplemental reserves) expressed as a decimal established by the Board to which
the Administrative Agent is subject for eurocurrency funding (currently referred
to as “Eurocurrency liabilities” in Regulation D). Such reserve percentages
shall include those imposed pursuant to Regulation D. Eurocurrency Loans shall
be deemed to constitute eurocurrency funding and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Lender under Regulation D or any
comparable regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.

 

23

 

 

“Subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the parent in the
parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent. Anything herein to the
contrary notwithstanding, the term “Subsidiary” shall not include any Person
that constitutes an Investment held by the Borrower (i) (x) in the ordinary
course of business or (y) that is listed on the Borrower’s consolidated Schedule
of Investments included in any filing with the Securities and Exchange
Commission (or, for investments made during a given quarter and before a
consolidated Schedule of Investments is filed with respect to the end of such
quarter, will be listed on the Borrower’s consolidated Schedule of Investments
to be filed with the Securities and Exchange Commission with respect to the end
of such quarter during which the Investment is made), including, without
limitation, any such Schedule of Investments filed (or to be filed) with any of
the Borrower’s annual reports on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, registration statements, or prospectuses, and (ii)
that is not, under GAAP, consolidated on the financial statements of the
Borrower and its Subsidiaries. Unless otherwise specified, “Subsidiary” means a
Subsidiary of the Borrower.

 

“Subsidiary Guarantor” means any Subsidiary that is a Guarantor under the
Guarantee and Security Agreement. It is understood and agreed that no Financing
Subsidiary, Immaterial Subsidiary or Foreign Subsidiary shall be a Subsidiary
Guarantor, provided that, such Subsidiaries do not own any Portfolio Investments
included in the Borrowing Base.

 

“Swingline Exposure” means, at any time, the aggregate principal amount of all
Swingline Loans outstanding at such time. The Swingline Exposure of any Lender
at any time shall be its Applicable Dollar Percentage of the total Swingline
Exposure.

 

“Swingline Lender” means Amegy Bank, in its capacity as lender of Swingline
Loans hereunder, and its successors in such capacity as provided in
Section 2.04(d).

 

“Swingline Loan” means a Loan made pursuant to Section 2.04.

 

“Syndicated”, when used in reference to any Loan or Borrowing, refers to whether
such Loan or the Loans constituting such Borrowing are made pursuant to
Section 2.01(a).

 

“Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or 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 earliest to occur of (i) the Final Maturity Date,
(ii) the date of the termination of the Commitments in full pursuant to
Section 2.08(c), or (iii) the date on which the Commitments are terminated
pursuant to Article VII.

 

“Testing Period” has the meaning assigned to such term in
Section 5.12(b)(ii)(E)(x).

 

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“Transactions” means the execution, delivery and performance by the Borrower of
this Agreement and the other Loan Documents, the borrowing of Loans, the use of
the proceeds thereof and the issuance of Letters of Credit hereunder.

 

“Treasury Credit Facility” means any limited recourse debt facility of the
Borrower used by the Borrower to purchase U.S. Government Securities maturing
within ninety (90) days from the date of acquisition and secured solely by Cash
and U.S. Government Securities (and not secured by any Investments, Cash or
other property, in each case that constitute Collateral hereunder or are
included in the Borrowing Base hereunder).

 

“Type”, when used in reference to any Loan or Borrowing, refers to whether the
rate of interest on such Loan, or on the Loans constituting such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

 

“UK Financial Institution” means any BRRD Undertaking (as such term is defined
under the PRA Rulebook (as amended from time to time) promulgated by the United
Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6
of the FCA Handbook (as amended from time to time) promulgated by the United
Kingdom Financial Conduct Authority, which includes certain credit institutions
and investment firms, and certain affiliates of such credit institutions or
investment firms.

 

“UK Resolution Authority” means the Bank of England or any other public
administrative authority having responsibility for the resolution of any UK
Financial Institution.

 

“Undisclosed Administration” means, in relation to a Lender, the appointment of
an administrator, provisional liquidator, conservator, receiver, trustee,
custodian or other similar official by a supervisory authority or regulator
under or based on the law in the country where such Lender is subject to home
jurisdiction supervision if applicable law requires that such appointment is not
to be publicly disclosed.

 

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

 

“Unquoted Investments” means a Portfolio Investment with a value assigned by the
Borrower pursuant to Section 5.12(b)(ii)(B) and confirmed by the report of the
Approved Third-Party Appraiser.

 

“Unsecured Longer-Term Indebtedness” means any Indebtedness for borrowed money
(other than the Unsecured Notes Due 2022 or a Permitted Refinancing thereof) of
an Obligor (which may be Guaranteed by Subsidiary Guarantors) that (a) has no
amortization prior to, and a final maturity date not earlier than, six months
after the Final Maturity Date after giving effect to any extension of the Final
Maturity Date at the time of incurrence but not after, (b) is incurred pursuant
to documentation that is substantially comparable to market terms for
substantially similar debt of other similarly situated borrowers as determined
by the Borrower in its reasonable judgment, and (c) is not secured by any assets
of any Obligor. It is understood and agreed that (i) conversion features and
conversion rights under convertible notes, (ii) the triggering and/or settlement
of conversion rights upon the exercise thereof or the repurchase of convertible
notes by such Obligor at the option of the holder, or (iii) any cash payment
made in respect of a triggering or settlement of conversion rights upon the
exercise thereof, shall not constitute “amortization” for purposes of this
clause (a).

 

25

 

 

“Unsecured Notes Due 2022” means the Borrower’s 5.75% Notes due September 15,
2022, issued pursuant to that certain Indenture dated May 5, 2014 between the
Borrower and U.S. Bank National Association, as supplemented.

 

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

 

“U.S. Person” means any Person that is a “United States Person” as defined in
Section 7701(a)(30) of the Code.

 

“Value” has the meaning assigned to such term in Section 5.13.

 

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

 

“Write-Down and Conversion Powers” means (a) with respect to any EEA Resolution
Authority, the write-down and conversion powers of such EEA Resolution Authority
from time to time under the Bail-In Legislation for the applicable EEA Member
Country, which write-down and conversion powers are described in the EU Bail-In
Legislation Schedule, and (b) with respect to the United Kingdom, any powers of
the applicable UK Resolution Authority under the Bail-In Legislation to cancel,
reduce, modify or change the form of a liability of any UK Financial Institution
or any contract or instrument under which that liability arises, to convert all
or part of that liability into shares, securities or obligations of that person
or any other person, to provide that any such contract or instrument is to have
effect as if a right had been exercised under it or to suspend any obligation in
respect of that liability or any of the powers under that Bail-In Legislation
that are related to or ancillary to any of those powers.

 

Section 1.02            Classification of Loans and Borrowings. For purposes of
this Agreement, Loans may be classified and referred to by Class (e.g., a
“Syndicated Dollar Loan”), by Type (e.g., an “ABR Loan”) or by Class and Type
(e.g., a “Syndicated Dollar LIBOR Loan”). Borrowings also may be classified and
referred to by Class (e.g., a “Dollar Borrowing”, or “Syndicated Borrowing”), by
Type (e.g., an “ABR Borrowing”) or by Class and Type (e.g., a “Syndicated ABR
Borrowing” or “Syndicated Dollar LIBOR Borrowing”). Loans and Borrowings may
also be identified by Currency.

 

Section 1.03            Terms Generally. 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 (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person’s successors and
assigns, (c) the words “herein”, “hereof’ and “hereunder”, and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) 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.

 

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Section 1.04            Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith. The Borrower
covenants and agrees with the Lenders that whether or not the Borrower may at
any time adopt Financial Accounting Standard No. 159 (or successor standard
solely as it relates to fair valuing liabilities) or accounts for liabilities
acquired in an acquisition on a fair value basis pursuant to Financial
Accounting Standard No. 141(R) (or successor standard solely as it relates to
fair valuing liabilities), all determinations of compliance with the terms and
conditions of this Agreement shall be made on the basis that the Borrower has
not adopted Financial Accounting Standard No. 159 (or such successor standard
solely as it relates to fair valuing liabilities) or, in the case of liabilities
acquired in an acquisition, Financial Accounting Standard No. 141(R) (or such
successor standard solely as it relates to fair valuing liabilities).

 

Section 1.05            Currencies; Currency Equivalents.

 

(a)                Currencies Generally. At any time, any reference in the
definition of the term “Agreed Foreign Currency” or in any other provision of
this Agreement to the Currency of any particular nation means the lawful
currency of such nation at such time whether or not the name of such Currency is
the same as it was on the date hereof. Except as provided in Section 2.10(b) and
the last sentence of Section 2.17(a), for purposes of determining (i) whether
the amount of any Multicurrency Loans to be borrowed or any Multicurrency Letter
of Credit to be issued, together with all other Multicurrency Loans and
Multicurrency Letters of Credit then outstanding at the same time, would exceed
the aggregate amount of the Multicurrency Sublimit or the Applicable
Multicurrency Percentage, (ii) the aggregate unutilized amount of the
Multicurrency Sublimit, (iii) the Revolving Credit Exposure, (iv) the
Multicurrency LC Exposure, (v) the Covered Debt Amount and (vi) the Borrowing
Base or the Value or the fair market value of any Portfolio Investment, the
outstanding principal amount of any Borrowing or Letter of Credit that is
denominated in any Foreign Currency or the Value or the fair market value of any
Portfolio Investment that is denominated in any Foreign Currency shall be deemed
to be the Dollar Equivalent of the amount of the Foreign Currency of such
Borrowing, Letter of Credit or Portfolio Investment, as the case may be,
determined as of the date of such Borrowing or Letter of Credit (determined in
accordance with the last sentence of the definition of the term “Interest
Period”) or the date of valuation of such Portfolio Investment, as the case may
be. Wherever in this Agreement in connection with a Borrowing or Loan an amount,
such as a required minimum or multiple amount, is expressed in Dollars, but such
Borrowing or Loan is denominated in a Foreign Currency, such amount shall be the
relevant Foreign Currency Equivalent of such Dollar amount (rounded to the
nearest 1,000 units of such Foreign Currency).

 

Article II
THE CREDITS

 

Section 2.01            The Commitments.

 

(a)                Syndicated Loans. Subject to the terms and conditions set
forth herein, each Dollar Lender severally agrees to make Syndicated Loans in
Dollars to the Borrower from time to time during the Availability Period in an
aggregate principal amount that will not result in (i) such Lender’s Revolving
Credit Exposure exceeding such Lender’s Commitment, (ii) the aggregate Revolving
Credit Exposure of all of the Dollar Lenders exceeding the aggregate
Commitments, or (iii) the total Covered Debt Amount exceeding the Borrowing Base
then in effect. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrower may borrow, prepay and reborrow
Syndicated Loans.

 

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(b)                Multicurrency Loans. Subject to the terms and conditions set
forth herein, each Multicurrency Lender severally agrees to make Loans in the
Agreed Foreign Currency to the Borrower from time to time during the
Availability Period in an aggregate principal amount that will not result in (i)
the aggregate Revolving Multicurrency Credit Exposure exceeding the
Multicurrency Sublimit, (ii) such Multicurrency Lender exceeding its Applicable
Multicurrency Percentage, (iii) the Revolving Credit Exposure of such Lender
exceeding its Commitment, (iv) the aggregate Revolving Credit Exposure of all of
the Dollar Lenders exceeding the aggregate Commitments, or (v) the total Covered
Debt Amount exceeding the Borrowing Base then in effect. Within the foregoing
limits and subject to the terms and conditions set forth herein, the Borrower
may borrow, prepay and reborrow Multicurrency Loans.

 

(c)                Participations by Lenders in Multicurrency Loans. Each
Multicurrency Lender may by written notice given to the Administrative Agent not
later than 10:00 a.m., Houston, Texas time on any Business Day, require the
Lenders to acquire participations on such Business Day in all or a portion of
its Multicurrency Loans outstanding. Such notice to the Administrative Agent
shall specify the aggregate amount of Multicurrency Loans in which the Lenders
will participate. Promptly upon receipt of such notice, the Administrative Agent
will give notice thereof to each Lender, specifying in such notice such Lender’s
Applicable Dollar Percentage of such Multicurrency Loan or Loans. Each Lender
hereby absolutely and unconditionally agrees, upon receipt of notice as provided
above in this paragraph, to pay to the Administrative Agent, for account of such
Multicurrency Lender, such Lender’s Applicable Dollar Percentage of such
Multicurrency Loan or Loans; provided that no Lender shall be required to
purchase a participation in a Multicurrency Loan pursuant to this
Section 2.01(c) if (x) the conditions set forth in Section 4.02 would not be
satisfied in respect of a Borrowing at the time such Multicurrency Loan was made
and (y) the Required Lenders shall have so notified such Multicurrency Lender in
writing and shall not have subsequently determined that the circumstances giving
rise to such conditions not being satisfied no longer exist.

 

Subject to the foregoing, each Lender acknowledges and agrees that its
obligation to acquire participations in Multicurrency Loans pursuant to this
paragraph (c) is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or an Event of Default or reduction or termination of the Commitments, and that
each such payment shall be made without any offset, abatement, withholding or
reduction whatsoever. Each Lender shall comply with its obligation under this
paragraph by wire transfer of immediately available funds, in the same manner as
provided in Section 2.06 with respect to Loans made by such Lender (and
Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the
Lenders), and the Administrative Agent shall promptly pay to the Multicurrency
Lender the amounts so received by it from the Lenders. The Administrative Agent
shall notify the Borrower of any participations in any Multicurrency Loan
acquired pursuant to this paragraph, and thereafter payments in respect of such
Multicurrency Loan shall be made to the Administrative Agent and not to the
Multicurrency Lender. Any amounts received by the Multicurrency Lender from the
Borrower (or other party on behalf of the Borrower) in respect of a
Multicurrency Loan after receipt by the Multicurrency Lender of the proceeds of
a sale of participations therein shall be promptly remitted to the
Administrative Agent; any such amounts received by the Administrative Agent
shall be promptly remitted by the Administrative Agent to the Lenders that shall
have made their payments pursuant to this paragraph and to the Multicurrency
Lender, as their interests may appear. The purchase of participations in a
Multicurrency Loan pursuant to this paragraph shall not relieve the Borrower of
any default in the payment thereof.

 

28

 

 

(d)                The Borrower acknowledges and agrees that an aggregate
principal amount of “Loans” under and as defined in the 2017 Credit Agreement
(the “Existing Loans”) equal to $182,000,000, remains outstanding and shall be
continued as Loans hereunder as follows. Subject to the terms and conditions set
forth herein, each Lender, severally and not jointly, agrees that the Existing
Loans made by such Lender under the 2017 Credit Agreement and outstanding on the
Effective Date immediately prior to giving effect to this Agreement shall remain
outstanding on and after the Effective Date and shall be continued as Loans in
an equal principal amount deemed made pursuant to this Agreement on the
Effective Date. The continuation of all or a portion of a Lender’s Existing
Loans shall be deemed to satisfy, dollar for dollar, such Lender’s obligation to
make Loans on the Effective Date. Such Existing Loans of each Lender shall
hereafter be referred to as “Loans,” and on and after the Effective Date shall
have all of the rights and benefits of Loans as set forth in this Agreement and
the other Loan Documents.

 

Section 2.02            Loans and Borrowings.

 

(a)                Obligations of Lenders. Each Syndicated Loan shall be made as
part of a Borrowing consisting of Loans of the same Class, Currency and Type
made by the applicable Lenders ratably in accordance with their respective
Commitments of the applicable Class. The failure of any Lender to make any Loan
required to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Commitments of the Lenders are several and no
Lender shall be responsible for any other Lender’s failure to make Loans as
required.

 

(b)                Type of Loans. Subject to Section 2.13, each Syndicated
Borrowing shall be constituted entirely of ABR Loans or of Eurocurrency Loans of
such Class denominated in a single Currency as the Borrower may request in
accordance herewith. Each ABR Loan shall be denominated in Dollars. Each Lender
at its option may make any Eurocurrency Loan by causing any domestic or foreign
branch or Affiliate of such Lender to make such Loan; provided that any exercise
of such option shall not affect the obligation of the Borrower to repay such
Loan in accordance with the terms of this Agreement.

 

(c)                Minimum Amounts. Each Eurocurrency Borrowing shall be in an
aggregate amount of $1,000,000 or a larger multiple of $250,000, and each ABR
Borrowing (whether Syndicated or Swingline) shall be in an aggregate amount of
$1,000,000 or a larger multiple of $250,000; provided that a Syndicated ABR
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the total Commitments or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.05(f).
Borrowings of more than one Class, Currency and Type may be outstanding at the
same time.

 

(d)                Limitations on Interest Periods. Notwithstanding any other
provision of this Agreement, the Borrower shall not be entitled to request (or
to elect to convert to or continue as a Eurocurrency Borrowing) any Borrowing if
the Interest Period requested therefor would end after the Final Maturity Date.

 

(e)                Treatment of Classes. Notwithstanding anything to the
contrary contained herein, with respect to each Syndicated Loan, Swingline Loan
or Letter of Credit designated in Dollars, the Administrative Agent shall deem
the Borrower to have requested that such Syndicated Loan, Swingline Loan or
Letter of Credit be applied ratably to the Commitments.

 

Section 2.03            Requests for Syndicated Borrowings and Multicurrency
Loans.

 

(a)                Notice by the Borrower. To request a Syndicated Borrowing or
Multicurrency Loan, the Borrower shall notify the Administrative Agent of such
request by telephone (i) in the case of a Eurocurrency Borrowing denominated in
Dollars, not later than 10:00 a.m., Houston, Texas time, two Business Days
before the date of the proposed Borrowing, (ii) in the case of a Eurocurrency
Borrowing denominated in a Foreign Currency, not later than 10:00 a.m., Houston,
Texas time, three Business Days before the date of the proposed Borrowing or
(iii) in the case of a Syndicated ABR Borrowing, not later than 10:00 a.m.,
Houston, Texas time, one Business Day before the date of the proposed Borrowing.
Each such telephonic Borrowing Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of a
written Borrowing Request in a form approved by the Administrative Agent and
signed by the Borrower.

 

29

 

 

(b)                Content of Borrowing Requests. Each telephonic and written
Borrowing Request shall specify the following information in compliance with
Section 2.02:

 

(i)                 whether such Borrowing is to be made under the Multicurrency
Sublimit;

 

(ii)               the aggregate amount and Currency of the requested Borrowing;

 

(iii)             the date of such Borrowing, which shall be a Business Day;

 

(iv)              in the case of a Syndicated Borrowing denominated in Dollars,
whether such Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing;

 

(v)                in the case of a Eurocurrency Borrowing, the Interest Period
therefor, which shall be a period contemplated by the definition of the term
“Interest Period” and permitted under Section 2.02(d); and

 

(vi)              the location and number of the Borrower’s account to which
funds are to be disbursed.

 

(c)                Notice by the Administrative Agent to the Lenders. Promptly
following receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each applicable Lender of the details thereof
and of the amounts of such Lender’s Loan to be made as part of the requested
Borrowing.

 

(d)                Failure to Elect. If no election as to the Class of a
Borrowing is specified, then the requested Borrowing shall be deemed to be a
Borrowing of Dollar Loans. If no election as to the Currency of a Borrowing is
specified, then the requested Borrowing shall be denominated in Dollars. If no
election as to the Type of a Borrowing is specified, then the requested
Borrowing shall be a Eurocurrency Borrowing having an Interest Period of one
month and, if an Agreed Foreign Currency has been specified, the requested
Borrowing shall be a Eurocurrency Borrowing denominated in such Agreed Foreign
Currency and having an Interest Period of one month. If a Eurocurrency Borrowing
is requested but no Interest Period is specified, (i) if the Currency specified
for such Borrowing is Dollars (or if no Currency has been so specified), the
requested Borrowing shall be a Eurocurrency Borrowing denominated in Dollars
having an Interest Period of one month’s duration, and (ii) if the Currency
specified for such Borrowing is an Agreed Foreign Currency, the Borrower shall
be deemed to have selected an Interest Period of one month’s duration.

 

Section 2.04            Swingline Loans.

 

(a)                Agreement to Make Swingline Loans. Subject to the terms and
conditions set forth herein, the Swingline Lender agrees to make Swingline Loans
under the Commitments to the Borrower from time to time during the Availability
Period in Dollars, in an aggregate principal amount at any time outstanding that
will not result in (i) the aggregate principal amount of outstanding Swingline
Loans exceeding $20,000,000, (ii) the total Revolving Credit Exposures exceeding
the aggregate Commitments, or (iii) the total Covered Debt Amount exceeding the
Borrowing Base then in effect; provided that the Swingline Lender shall not be
required to make a Swingline Loan to refinance an outstanding Swingline Loan.
Within the foregoing limits and subject to the terms and conditions set forth
herein, the Borrower may borrow, prepay and reborrow Swingline Loans.

 

30

 

 

(b)                Notice of Swingline Loans by the Borrower. To request a
Swingline Loan, the Borrower shall notify the Administrative Agent of such
request by telephone (confirmed by telecopy) not later than 10:00 a.m., Houston,
Texas time, on the day of such proposed Swingline Loan. Each such notice shall
be irrevocable and shall specify the requested date (which shall be a Business
Day), the amount of the requested Swingline Loan. The Administrative Agent will
promptly advise the Swingline Lender of any such notice received from the
Borrower. The Swingline Lender shall make each Swingline Loan available to the
Borrower by means of a credit to the general deposit account of the Borrower
with the Swingline Lender (or, in the case of a Swingline Loan made to finance
the reimbursement of an LC Disbursement as provided in Section 2.05(f), by
remittance to the Issuing Bank) by 3:00 p.m., Houston, Texas time, on the
requested date of such Swingline Loan.

 

(c)                Participations by Lenders in Swingline Loans. The Swingline
Lender may by written notice given to the Administrative Agent not later than
10:00 a.m., Houston, Texas time on any Business Day, require the Lenders to
acquire participations on such Business Day in all or a portion of the Swingline
Loans outstanding. Such notice to the Administrative Agent shall specify the
aggregate amount of Swingline Loans in which the Lenders will participate.
Promptly upon receipt of such notice, the Administrative Agent will give notice
thereof to each Lender, specifying in such notice such Lender’s Applicable
Dollar Percentage of such Swingline Loan or Loans. Each Lender hereby absolutely
and unconditionally agrees, upon receipt of notice as provided above in this
paragraph, to pay to the Administrative Agent, for account of the Swingline
Lender, such Lender’s Applicable Dollar Percentage of such Swingline Loan or
Loans; provided that no Lender shall be required to purchase a participation in
a Swingline Loan pursuant to this Section 2.04(c) if (x) the conditions set
forth in Section 4.02 would not be satisfied in respect of a Borrowing at the
time such Swingline Loan was made and (y) the Required Lenders shall have so
notified the Swingline Lender in writing and shall not have subsequently
determined that the circumstances giving rise to such conditions not being
satisfied no longer exist.

 

Subject to the foregoing, each Lender acknowledges and agrees that its
obligation to acquire participations in Swingline Loans pursuant to this
paragraph (c) is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or an Event of Default or reduction or termination of the Commitments, and that
each such payment shall be made without any offset, abatement, withholding or
reduction whatsoever. Each Lender shall comply with its obligation under this
paragraph by wire transfer of immediately available funds, in the same manner as
provided in Section 2.06 with respect to Loans made by such Lender (and
Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the
Lenders), and the Administrative Agent shall promptly pay to the Swingline
Lender the amounts so received by it from the Lenders. The Administrative Agent
shall notify the Borrower of any participations in any Swingline Loan acquired
pursuant to this paragraph, and thereafter payments in respect of such Swingline
Loan shall be made to the Administrative Agent and not to the Swingline Lender.
Any amounts received by the Swingline Lender from the Borrower (or other party
on behalf of the Borrower) in respect of a Swingline Loan after receipt by the
Swingline Lender of the proceeds of a sale of participations therein shall be
promptly remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the Lenders that shall have made their payments pursuant to this paragraph and
to the Swingline Lender, as their interests may appear. The purchase of
participations in a Swingline Loan pursuant to this paragraph shall not relieve
the Borrower of any default in the payment thereof.

 

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(d)                Resignation and Replacement of Swingline Lender. The
Swingline Lender may resign and be replaced at any time by written agreement
among the Borrower, the Administrative Agent, the resigning Swingline Lender and
the successor Swingline Lender. The Administrative Agent shall notify the
Lenders of any such resignation and replacement of the Swingline Lender. In
addition to the foregoing, if a Lender becomes, and during the period it
remains, a Defaulting Lender, and if any Default has arisen from a failure of
the Borrower to comply with Section 2.19(a), then the Swingline Lender may, upon
prior written notice to the Borrower and the Administrative Agent, resign as
Swingline Lender, effective at the close of business Houston, Texas time on a
date specified in such notice (which date may not be less than five (5) Business
Days after the date of such notice). On or after the effective date of any such
resignation, the Borrower and the Administrative Agent may, by written
agreement, appoint a successor Swingline Lender. The Administrative Agent shall
notify the Lenders of any such appointment of a successor Swingline Lender. Upon
the effectiveness of any resignation of the Swingline Lender, the Borrower shall
repay in full all outstanding Swingline Loans together with all accrued interest
thereon. From and after the effective date of the appointment of a successor
Swingline Lender, (i) the successor Swingline Lender shall have all the rights
and obligations of the replaced Swingline Lender under this Agreement with
respect to Swingline Loans to be made thereafter and (ii) references herein to
the term “Swingline Lender” shall be deemed to refer to such successor or to any
previous Swingline Lender, or to such successor and all previous Swingline
Lenders, as the context shall require. After the replacement of the Swingline
Lender hereunder, the replaced Swingline Lender shall have no obligation to make
additional Swingline Loans.

 

Section 2.05            Letters of Credit.

 

(a)                General. Subject to the terms and conditions set forth
herein, in addition to the Loans provided for in Section 2.01, the Borrower may
request the Issuing Bank to issue, at any time and from time to time during the
Availability Period, Letters of Credit denominated in Dollars or in any Agreed
Foreign Currency for its own account in such form as is acceptable to the
Issuing Bank in its reasonable determination. Letters of Credit issued hereunder
shall constitute utilization of the Commitment of each Lender and as applicable,
the Multicurrency Sublimit, by an amount equal to such Lender’s Applicable
Dollar Percentage of the aggregate amount available to be drawn under such
Letter of Credit.

 

(b)                Notice of Issuance, Amendment, Renewal or Extension. To
request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the Borrower shall hand deliver
or telecopy (or transmit by electronic communication, if arrangements for doing
so have been approved by the Issuing Bank) to the Issuing Bank and the
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter of
Credit, or identifying the Letter of Credit to be amended, renewed or extended,
and specifying the date of issuance, amendment, renewal or extension (which
shall be a Business Day), the date on which such Letter of Credit is to expire
(which shall comply with paragraph (d) of this Section), the amount and Currency
of such Letter of Credit, the name and address of the beneficiary thereof and
such other information as shall be necessary to prepare, amend, renew or extend
such Letter of Credit. If requested by the Issuing Bank, the Borrower also shall
submit a letter of credit application on the Issuing Bank’s standard form in
connection with any request for a Letter of Credit. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, the Issuing
Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.

 

(c)                Limitations on Amounts. A Letter of Credit shall be issued,
amended, renewed or extended only if (and upon issuance, amendment, renewal or
extension of each Letter of Credit the Borrower shall be deemed to represent and
warrant that), after giving effect to such issuance, amendment, renewal or
extension (i) the aggregate LC Exposure of the Issuing Bank (determined for
these purposes without giving effect to the participations therein of the
Lenders pursuant to paragraph (e) of this Section) shall not exceed $5,000,000,
(ii) the total Revolving Credit Exposures shall not exceed the aggregate
Commitments, (iii) the total Revolving Multicurrency Credit Exposures shall not
exceed the Multicurrency Sublimit and (iv) the total Covered Debt Amount shall
not exceed the Borrowing Base then in effect.

 

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(d)                Expiration Date. Each Letter of Credit shall expire at or
prior to the close of business on the date twelve months after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension
thereof, twelve months after the then-current expiration date of such Letter of
Credit, so long as such renewal or extension occurs within three months of such
then-current expiration date); provided that any Letter of Credit with a
one-year term may provide for the renewal thereof for additional one-year
periods. Notwithstanding the foregoing, no Letter of Credit which expires after
the Commitment Termination Date shall be renewed and no Letter of Credit shall
have an expiry date after the Final Maturity Date. If as of the Commitment
Termination Date, there are any Letters of Credit outstanding, the Borrower
shall Cash Collateralize the then outstanding Letters of Credit in accordance
with Section 2.10(d). If as of the Final Maturity Date, there are any Letters of
Credit outstanding which are not fully Cash Collateralized, the Borrower shall
cause such Letters of Credits to be fully Cash Collateralized on the Final
Maturity Date.

 

(e)                Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) by the Issuing
Bank, and without any further action on the part of the Issuing Bank or the
Lenders, the Issuing Bank hereby grants to each Lender, and each Lender hereby
acquires from the Issuing Bank, a participation in such Letter of Credit equal
to such Lender’s Applicable Dollar Percentage of the aggregate amount, or Dollar
Equivalent thereof, available to be drawn under such Letter of Credit. Each
Lender acknowledges and agrees that its obligation to acquire participations
pursuant to this paragraph in respect of Letters of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including any amendment, renewal or extension of any Letter of Credit or the
occurrence and continuance of a Default or reduction or termination of the
applicable Commitments; provided that no Lender shall be required to purchase a
participation in a Letter of Credit pursuant to this Section 2.05(e) if (x) the
conditions set forth in Section 4.02 would not be satisfied in respect of a
Borrowing at the time such Letter of Credit was issued and (y) the Required
Lenders shall have so notified the Issuing Bank in writing and shall not have
subsequently determined that the circumstances giving rise to such conditions
not being satisfied no longer exist.

 

In consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
account of the Issuing Bank, such Lender’s Applicable Dollar Percentage of each
LC Disbursement, or Dollar Equivalent thereof, made by the Issuing Bank in
respect of Letters of Credit promptly upon the request of the Issuing Bank at
any time from the time of such LC Disbursement until such LC Disbursement is
reimbursed by the Borrower or at any time after any reimbursement payment is
required to be refunded to the Borrower for any reason. Such payment shall be
made without any offset, abatement, withholding or reduction whatsoever. Each
such payment shall be made in the same manner as provided in Section 2.06 with
respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis
mutandis, to the payment obligations of the Lenders), and the Administrative
Agent shall promptly pay to the Issuing Bank the amounts so received by it from
the Lenders. Promptly following receipt by the Administrative Agent of any
payment from the Borrower pursuant to the next following paragraph, the
Administrative Agent shall distribute such payment to the Issuing Bank or, to
the extent that the Lenders have made payments pursuant to this paragraph to
reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as their
interests may appear. Any payment made by a Lender pursuant to this paragraph to
reimburse the Issuing Bank for any LC Disbursement shall not constitute a Loan
and shall not relieve the Borrower of its obligation to reimburse such LC
Disbursement.

 

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(f)                 Reimbursement. If the Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse the
Issuing Bank in respect of such LC Disbursement by paying to the Administrative
Agent an amount equal to such LC Disbursement not later than 11:00 a.m.,
Houston, Texas time, on (i) the Business Day that the Borrower receives notice
of such LC Disbursement, if such notice is received prior to 10:00 a.m.,
Houston, Texas time, or (ii) the Business Day immediately following the day that
the Borrower receives such notice, if such notice is not received prior to such
time; provided that, if such LC Disbursement is not less than $1,000,000 and is
denominated in Dollars, the Borrower may, subject to the conditions to borrowing
set forth herein, request in accordance with Section 2.03 or 2.04 that such
payment be financed with a Syndicated ABR Borrowing or a Swingline Loan in an
equivalent amount and, to the extent so financed, the Borrower’s obligation to
make such payment shall be discharged and replaced by the resulting Syndicated
ABR Borrowing or Swingline Loan.

 

If the Borrower fails to make such payment when due, the Administrative Agent
shall notify each Lender of the applicable LC Disbursement, or Dollar Equivalent
thereof, the payment then due from the Borrower in respect thereof and such
Lender’s Applicable Dollar Percentage thereof.

 

(g)                Obligations Absolute. The Borrower’s obligation to reimburse
LC Disbursements as provided in paragraph (f) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit, or any term or provision therein, (ii) any draft or other document
presented under a Letter of Credit proving to be forged, fraudulent or invalid
in any respect or any statement therein being untrue or inaccurate in any
respect, (iii) payment by the Issuing Bank under a Letter of Credit against
presentation of a draft or other document that does not comply strictly with the
terms of such Letter of Credit, and (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of the
Borrower’s obligations hereunder.

 

Neither the Administrative Agent, the Lenders nor the Issuing Bank, nor any of
their Related Parties, shall have any liability or responsibility by reason of
or in connection with the issuance or transfer of any Letter of Credit by the
Issuing Bank or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond the control of the Issuing Bank; provided that the foregoing shall
not be construed to excuse the Issuing Bank from liability to the Borrower to
the extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by the Issuing Bank’s
gross negligence or willful misconduct when determining whether drafts and other
documents presented under a Letter of Credit comply with the terms thereof. The
parties hereto expressly agree that:

 

(i)                 the Issuing Bank may accept documents that appear on their
face to be in substantial compliance with the terms of a Letter of Credit
without responsibility for further investigation, regardless of any notice or
information to the contrary, and may make payment upon presentation of documents
that appear on their face to be in substantial compliance with the terms of such
Letter of Credit;

 

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(ii)               the Issuing Bank shall have the right, in its sole
discretion, to decline to accept such documents and to make such payment if such
documents are not in strict compliance with the terms of such Letter of Credit;
and

 

(iii)             this sentence shall establish the standard of care to be
exercised by the Issuing Bank when determining whether drafts and other
documents presented under a Letter of Credit comply with the terms thereof (and
the parties hereto hereby waive, to the extent permitted by applicable law, any
standard of care inconsistent with the foregoing).

 

(h)                Disbursement Procedures. The Issuing Bank shall, within a
reasonable time following its receipt thereof, examine all documents purporting
to represent a demand for payment under a Letter of Credit. The Issuing Bank
shall promptly after such examination notify the Administrative Agent and the
Borrower by telephone (confirmed by telecopy) of such demand for payment and
whether the Issuing Bank has made or will make an LC Disbursement thereunder;
provided that any failure to give or delay in giving such notice shall not
relieve the Borrower of its obligation to reimburse the Issuing Bank and the
applicable Lenders with respect to any such LC Disbursement.

 

(i)                 Interim Interest. If the Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to Syndicated ABR Loans;
provided that, if the Borrower fails to reimburse such LC Disbursement within
two Business Days following the date when due pursuant to paragraph (f) of this
Section, then the provisions of Section 2.12(c) shall apply. Interest accrued
pursuant to this paragraph shall be for account of the Issuing Bank, except that
interest accrued on and after the date of payment by any Lender pursuant to
paragraph (f) of this Section to reimburse the Issuing Bank shall be for account
of such Lender to the extent of such payment.

 

(j)                 Resignation and/or Replacement of Issuing Bank. The Issuing
Bank may resign and be replaced at any time by written agreement among the
Borrower, the Administrative Agent, the resigning Issuing Bank and the successor
Issuing Bank. The Administrative Agent shall notify the Lenders of any such
resignation and replacement of the Issuing Bank. Upon the effectiveness of any
resignation of the Issuing Bank, the Borrower shall pay all unpaid fees accrued
for account of the resigning Issuing Bank pursuant to Section 2.11(b). From and
after the effective date of the appointment of a successor Issuing Bank, (i) the
successor Issuing Bank shall have all the rights and obligations of the replaced
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the
effective resignation of the Issuing Bank hereunder, the resigning Issuing Bank,
as the case may be, shall remain a party hereto and shall continue to have all
the rights and obligations of the Issuing Bank under this Agreement with respect
to Letters of Credit issued by it prior to such resignation, but shall not be
required to issue additional Letters of Credit.

 

(k)                Cash Collateralization. If the Borrower shall be required to
provide Cash Collateral for LC Exposure pursuant to Section 2.05(d),
Section 2.09(a), Section 2.10(b) or (c) or the last paragraph of Article VII,
the Borrower shall immediately deposit into a segregated collateral account or
accounts (herein, collectively, the “Letter of Credit Collateral Account”) in
the name and under the dominion and control of the Administrative Agent Cash
denominated in the Currency of the Letter of Credit under which such LC Exposure
arises in an amount equal to the amount required under Section 2.09(a),
Section 2.10(b) or (c) or the last paragraph of Article VII, as applicable. Such
deposit shall be held by the Administrative Agent as collateral in the first
instance for the LC Exposure under this Agreement and thereafter for the payment
of the “Secured Obligations” under and as defined in the Guarantee and Security
Agreement, and for these purposes the Borrower hereby grants a security interest
to the Administrative Agent for the benefit of the Lenders in the Letter of
Credit Collateral Account and in any financial assets (as defined in the Uniform
Commercial Code) or other property held therein.

 

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Section 2.06            Funding of Borrowings.

 

(a)                Funding by Lenders. Each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 1:00 p.m., Houston, Texas time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders; provided that Swingline Loans shall be made as provided
in Section 2.04. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower designated by the Borrower in the applicable Borrowing
Request; provided that Syndicated ABR Borrowings made to finance the
reimbursement of an LC Disbursement as provided in Section 2.05(f) shall be
remitted by the Administrative Agent to the Issuing Bank.

 

(b)                Presumption by the Administrative Agent. Unless the
Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender’s share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with paragraph (a) of this Section and may, in reliance upon such
assumption, make available to the Borrower a corresponding amount. In such
event, if a Lender has not in fact made its share of the applicable Borrowing
available to the Administrative Agent, then the applicable Lender and the
Borrower severally agree to pay to the Administrative Agent forthwith on demand
such corresponding amount with interest thereon, for each day from and including
the date such amount is made available to the Borrower to but excluding the date
of payment to the Administrative Agent, at (i) in the case of such Lender, the
Federal Funds Effective Rate or (ii) in the case of the Borrower, the interest
rate applicable to ABR Loans. If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Lender’s Loan
included in such Borrowing.

 

Section 2.07            Interest Elections.

 

(a)                Elections by the Borrower for Syndicated Borrowings. Subject
to Section 2.03(d), the Loans constituting each Syndicated Borrowing initially
shall be of the Type specified in the applicable Borrowing Request and, in the
case of a Eurocurrency Borrowing, shall have the Interest Period specified in
such Borrowing Request. Thereafter, the Borrower may elect to convert such
Borrowing to a Borrowing of a different Type or to continue such Borrowing as a
Borrowing of the same Type and, in the case of a Eurocurrency Borrowing, may
elect the Interest Period therefor, all as provided in this Section; provided,
however, that (i) a Syndicated Borrowing may only be continued or converted into
a Syndicated Borrowing, (ii) a Borrowing denominated in one Currency may not be
continued as, or converted to, a Borrowing in a different Currency, (iii) no
Eurocurrency Borrowing denominated in a Foreign Currency may be continued if,
after giving effect thereto, the aggregate Revolving Multicurrency Credit
Exposures would exceed the aggregate Multicurrency Sublimit, and (iv) a
Eurocurrency Borrowing denominated in a Foreign Currency may not be converted to
a Borrowing of a different Type. The Borrower may elect different options with
respect to different portions of the affected Borrowing, in which case each such
portion shall be allocated ratably among the Lenders holding the Loans
constituting such Borrowing, and the Loans constituting each such portion shall
be considered a separate Borrowing. This Section shall not apply to Swingline
Borrowings, which may not be converted or continued.

 

36

 

 

(b)                Notice of Elections. To make an election pursuant to this
Section, the Borrower shall notify the Administrative Agent of such election by
telephone by the time that a Borrowing Request would be required under
Section 2.03 if the Borrower were requesting a Syndicated Borrowing of the Type
resulting from such election to be made on the effective date of such election.
Each such telephonic Interest Election Request shall be irrevocable and shall be
confirmed promptly (but no later than the close of business on the date of such
request) by hand delivery or telecopy to the Administrative Agent of a written
Interest Election Request in a form approved by the Administrative Agent and
signed by the Borrower.

 

(c)                Content of Interest Election Requests. Each telephonic and
written Interest Election Request shall specify the following information in
compliance with Section 2.02:

 

(i)                 the Borrowing (including the Class) to which such Interest
Election Request applies and, if different options are being elected with
respect to different portions thereof, the portions thereof to be allocated to
each resulting Borrowing (in which case the information to be specified pursuant
to clauses (iii) and (iv) of this paragraph shall be specified for each
resulting Borrowing);

 

(ii)               the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;

 

(iii)             whether, in the case of a Borrowing denominated in Dollars,
the resulting Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing;
and

 

(iv)              if the resulting Borrowing is a Eurocurrency Borrowing, the
Interest Period therefor after giving effect to such election, which shall be a
period contemplated by the definition of the term “Interest Period” and
permitted under Section 2.02(d).

 

(d)                Notice by the Administrative Agent to the Lenders. Promptly
following receipt of an Interest Election Request, the Administrative Agent
shall advise each applicable Lender of the details thereof and of such Lender’s
portion of each resulting Borrowing.

 

(e)                Failure to Elect; Events of Default. If the Borrower fails to
deliver a timely and complete Interest Election Request with respect to a
Eurocurrency Borrowing prior to the end of the Interest Period therefor, then,
unless such Borrowing is repaid as provided herein, (i) if such Borrowing is
denominated in Dollars, at the end of such Interest Period such Borrowing shall
be converted to a Syndicated Eurocurrency Borrowing of the same Class having an
Interest Period of one month, and (ii) if such Borrowing is denominated in a
Foreign Currency, the Borrower shall be deemed to have selected an Interest
Period of one month’s duration. Notwithstanding any contrary provision hereof,
if an Event of Default has occurred and is continuing, (i) any Eurocurrency
Borrowing denominated in Dollars shall, at the end of the applicable Interest
Period for such Eurocurrency Borrowing, be automatically converted to an ABR
Borrowing and (ii) any Eurocurrency Borrowing denominated in a Foreign Currency
shall not have an Interest Period of more than one month’s duration.

 

Section 2.08            Termination, Reduction or Increase of the Commitments.

 

(a)                Scheduled Termination. Unless previously terminated, the
Commitments of each Class shall terminate on the Commitment Termination Date.

 

(b)                Voluntary Termination or Reduction. The Borrower may at any
time terminate, or from time to time reduce, the Commitments of either Class;
provided that (i) each reduction of the Commitments shall be in an amount that
is $5,000,000 (or, if less, the entire amount of the Commitments of such Class)
or a larger multiple of $1,000,000 in excess thereof and (ii) the Borrower shall
not terminate or reduce the Commitments of either Class if, after giving effect
to any concurrent prepayment of the Syndicated Loans of such Class in accordance
with Section 2.10, the total Revolving Credit Exposures of such Class would
exceed the total Commitments of such Class. Any such reduction of the
Commitments below the principal amount of the Swingline Loans permitted under
Section 2.04(a)(i) and the Letters of Credit permitted under Section 2.05(c)(i)
shall result in a dollar-for-dollar reduction of such amounts as applicable.

 

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(c)                Notice of Voluntary Termination or Reduction. The Borrower
shall notify the Administrative Agent of any election to terminate or reduce the
Commitments under paragraph (b) of this Section at least three Business Days
prior to the effective date of such termination or reduction, specifying such
election and the effective date thereof. Promptly following receipt of any
notice, the Administrative Agent shall advise the applicable Lenders of the
contents thereof. Each notice delivered by the Borrower pursuant to this Section
shall be irrevocable; provided that a notice of termination of the Commitments
delivered by the Borrower may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such notice may be
revoked by the Borrower (by notice to the Administrative Agent on or prior to
the specified effective date) if such condition is not satisfied.

 

(d)                Effect of Termination or Reduction. Any termination or
reduction of the Commitments shall be permanent. Each reduction of the
Commitments shall be made ratably among the Lenders of such Class in accordance
with their respective Commitments.

 

(e)                Increase of the Commitments.

 

(i)                 Requests for Increase by Borrower. The Borrower may, at any
time, request that the Commitments hereunder be increased (each such proposed
increase being a “Commitment Increase”), upon notice to the Administrative Agent
(who shall promptly notify the Lenders), which notice shall specify each
existing Lender (each an “Increasing Lender”) and/or each additional lender
(each an “Assuming Lender”) that shall have agreed to an additional Commitment
and the date on which such increase is to be effective (the “Commitment Increase
Date”), which shall be a Business Day at least three Business Days (or such
lesser period as the Administrative Agent may reasonably agree) after delivery
of such notice and 30 days prior to the Commitment Termination Date; provided
that:

 

(A)              the minimum amount of the Commitment of any Assuming Lender,
and the minimum amount of the increase of the Commitment of any Increasing
Lender, as part of such Commitment Increase shall be $10,000,000 or a larger
multiple of $5,000,000 in excess thereof (or such lesser amount as the
Administrative Agent may reasonably agree);

 

(B)              immediately after giving effect to such Commitment Increase,
the total Commitments of all of the Lenders hereunder shall not exceed
$280,000,000;

 

(C)              each Assuming Lender shall be consented to by the
Administrative Agent and the Issuing Bank (such consent not to be unreasonably
withheld);

 

(D)              no Default or Event of Default shall have occurred and be
continuing on such Commitment Increase Date or shall result from the proposed
Commitment Increase; and

 

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(E)               the representations and warranties contained in this Agreement
shall be true and correct in all material respects (or, in the case of any
portion of the representations and warranties already subject to a materiality
qualifier, true and correct in all respects) on and as of the Commitment
Increase Date as if made on and as of such date (or, if any such representation
or warranty is expressly stated to have been made as of a specific date, as of
such specific date).

 

(ii)               Effectiveness of Commitment Increase by Borrower. An Assuming
Lender, if any, shall become a Lender hereunder as of such Commitment Increase
Date and the Commitment of any Increasing Lender and such Assuming Lender shall
be increased as of such Commitment Increase Date; provided that:

 

(x)       the Administrative Agent shall have received on or prior to 10:00
a.m., Houston, Texas time, on such Commitment Increase Date (or on or prior to a
time on an earlier date specified by the Administrative Agent) a certificate of
a duly authorized officer of the Borrower stating that each of the applicable
conditions to such Commitment Increase set forth in the foregoing paragraph (i)
has been satisfied; and

 

(y)       each Assuming Lender or Increasing Lender shall have delivered to the
Administrative Agent, on or prior to 10:00 a.m., Houston, Texas time on such
Commitment Increase Date (or on or prior to a time on an earlier date specified
by the Administrative Agent), an agreement, in form and substance satisfactory
to the Borrower and the Administrative Agent, pursuant to which such Lender
shall, effective as of such Commitment Increase Date, undertake a Commitment or
an increase of Commitment, duly executed by such Assuming Lender or Increasing
Lender, as applicable, and the Borrower and acknowledged by the Administrative
Agent.

 

Promptly following satisfaction of such conditions, the Administrative Agent
shall notify the Lenders of such Class (including any Assuming Lenders) thereof
and of the occurrence of the Commitment Increase Date by facsimile transmission
or electronic messaging system.

 

(iii)             Recordation into Register. Upon its receipt of an agreement
referred to in clause (ii)(y) above executed by an Assuming Lender or any
Increasing Lender, together with the certificate referred to in clause (ii)(x)
above, the Administrative Agent shall, if such agreement has been completed, (x)
accept such agreement, (y) record the information contained therein in the
Register and (z) give prompt notice thereof to the Borrower.

 

(iv)              Adjustments of Borrowings upon Effectiveness of Increase. On
the Commitment Increase Date, the Borrower shall (A) prepay the outstanding
Loans (if any) of the affected Class in full, (B) simultaneously borrow new
Loans of such Class hereunder in an amount equal to such prepayment; provided
that with respect to subclauses (A) and (B), (x) the prepayment to, and
borrowing from, any existing Lender shall be effected by book entry to the
extent that any portion of the amount prepaid to such Lender will be
subsequently borrowed from such Lender and (y) the existing Lenders, the
Increasing Lenders and the Assuming Lenders shall make and receive payments
among themselves, in a manner acceptable to the Administrative Agent, so that,
after giving effect thereto, the Loans of such Class are held ratably by the
Lenders of such Class in accordance with the respective Commitments of such
Class of such Lenders (after giving effect to such Commitment Increase) and (C)
pay to the Lenders of such Class the amounts, if any, payable under Section 2.15
as a result of any such prepayment. Concurrently therewith, the Lenders of such
Class shall be deemed to have adjusted their participation interests in any
outstanding Letters of Credit of such Class so that such interests are held
ratably in accordance with their commitments of such Class as so increased.

 

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Section 2.09            Repayment of Loans; Evidence of Debt.

 

(a)                Repayment. The Borrower hereby unconditionally promises to
pay the Loans of each Class as follows:

 

(i)                 to the Administrative Agent for the account of the Lenders
of such Class the outstanding principal amount of the Syndicated Loans of such
Class on the Final Maturity Date; and

 

(ii)               to the Administrative Agent for the account of the Swingline
Lender the then unpaid principal amount of each Swingline Loan of such Class
denominated in Dollars, on the earlier of the Final Maturity Date and the fifth
Business Day after such Swingline Loan is made; provided that, on each date that
a Syndicated Borrowing of such Class is made, the Borrower shall repay all
Swingline Loans of such Class then outstanding and the proceeds of any such
Syndicated Borrowing shall be applied by the Administrative Agent to repay any
Swingline Loans of such Class outstanding.

 

In addition, when Cash Collateral is required under this Agreement, the Borrower
shall deposit Cash into the Letter of Credit Collateral Account (denominated in
the Currency of the Letter of Credit under which such LC Exposure arises) in an
amount equal to 100% of the LC Exposure (or such lesser portion thereof in the
case of Section 2.10(d) only), such deposit to be held by the Administrative
Agent as collateral security for the LC Exposure under this Agreement.

 

(b)                Manner of Payment. Prior to any repayment or prepayment of
any Borrowings of any Class hereunder, the Borrower shall select the Borrowing
or Borrowings of such Class to be paid and shall notify the Administrative Agent
by telephone (confirmed by telecopy) of such selection not later than the time
set forth in Section 2.10(e) prior to the scheduled date of such repayment;
provided that each repayment of Borrowings of a Class shall be applied to repay
any outstanding ABR Borrowings of such Class before any other Borrowings of such
Class. If the Borrower fails to make a timely selection of the Borrowing or
Borrowings to be repaid or prepaid, such payment shall be applied, first, to pay
any outstanding ABR Borrowings of the applicable Class and, second, to other
Borrowings of such Class in the order of the remaining duration of their
respective Interest Periods (the Borrowing with the shortest remaining Interest
Period to be repaid first). Each payment of a Syndicated Borrowing shall be
applied ratably to the Loans included in such Borrowing.

 

(c)                Maintenance of Records by Lenders. Each Lender shall maintain
in accordance with its usual practice records evidencing the indebtedness of the
Borrower to such Lender resulting from each Loan made by such Lender, including
the amounts and Currency of principal and interest payable and paid to such
Lender from time to time hereunder.

 

(d)                Maintenance of Records by the Administrative Agent. The
Administrative Agent shall maintain records in which it shall record (i) the
amount and Currency of each Loan made hereunder, the Class and Type thereof and
each Interest Period therefor, (ii) the amount and Currency of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender of such Class hereunder and (iii) the amount and Currency of any sum
received by the Administrative Agent hereunder for account of the Lenders and
each Lender’s share thereof.

 

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(e)                Effect of Entries. The entries made in the records maintained
pursuant to paragraph (c) or (d) of this Section shall be prima facie evidence,
absent obvious error, of the existence and amounts of the obligations recorded
therein; provided that the failure of any Lender or the Administrative Agent to
maintain such records or any error therein shall not in any manner affect the
obligation of the Borrower to repay the Loans in accordance with the terms of
this Agreement.

 

(f)                 Promissory Notes. Any Lender may request that Loans of any
Class made by it be evidenced by a Note; in such event, the Borrower shall
prepare, execute and deliver to such Lender a Note payable to such Lender (or,
if requested by such Lender, to such Lender and its registered assigns) and in a
form approved by the Administrative Agent. Thereafter, the Loans evidenced by
such Note and interest thereon shall at all times (including after assignment
pursuant to Section 9.04) be represented by one or more Notes in such form
payable to the payee named therein (or, if such Note is a registered note, to
such payee and its registered assigns).

 

Section 2.10            Prepayment of Loans.

 

(a)                Optional Prepayments. The Borrower shall have the right at
any time and from time to time to prepay any Borrowing in whole or in part,
without premium or penalty except for payments under Section 2.15, subject to
the requirements of this Section.

 

(b)                Mandatory Prepayments due to Changes in Exchange Rates.

 

(i)                 Determination of Amount Outstanding. On each Quarterly Date
and, in addition, promptly upon the receipt by the Administrative Agent of a
Currency Valuation Notice (as defined below), the Administrative Agent shall
determine the aggregate Revolving Multicurrency Credit Exposure. For the purpose
of this determination, the outstanding principal amount of any Loan that is
denominated in any Foreign Currency shall be deemed to be the Dollar Equivalent
of the amount in the Foreign Currency of such Loan, determined as of such
Quarterly Date or, in the case of a Currency Valuation Notice received by the
Administrative Agent prior to 10:00 a.m., Houston, Texas time, on a Business
Day, on such Business Day or, in the case of a Currency Valuation Notice
otherwise received, on the first Business Day after such Currency Valuation
Notice is received. Upon making such determination, the Administrative Agent
shall promptly notify the Multicurrency Lenders and the Borrower thereof.

 

(ii)               Prepayment. If on the date of such determination the
aggregate Revolving Multicurrency Credit Exposure minus the Multicurrency LC
Exposure fully Cash Collateralized on such date exceeds 105% of the aggregate
amount of the Multicurrency Sublimit as then in effect, the Borrower shall, if
requested by any Multicurrency Lender (through the Administrative Agent), prepay
the Multicurrency Loans (and/or provide Cash Collateral for Multicurrency LC
Exposure as specified in Section 2.05(k)) within 15 Business Days following the
Borrower’s receipt of such request in such amounts as shall be necessary so that
after giving effect thereto the aggregate Revolving Multicurrency Credit
Exposure does not exceed the Multicurrency Sublimit.

 

For purposes hereof “Currency Valuation Notice” means a notice given by any
Multicurrency Lender to the Administrative Agent stating that such notice is a
“Currency Valuation Notice” and requesting that the Administrative Agent
determine the aggregate Revolving Multicurrency Credit Exposure. The
Administrative Agent shall not be required to make more than one valuation
determination pursuant to Currency Valuation Notices within any rolling three
month period.

 

Any prepayment pursuant to this paragraph shall be applied, first to
Multicurrency Loans outstanding and second, as cover for Multicurrency LC
Exposure.

 

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(c)                Mandatory Prepayments due to Borrowing Base Deficiency. In
the event that at any time any Borrowing Base Deficiency shall exist, the
Borrower shall, within five Business Days after delivery of the applicable
Borrowing Base Certificate, prepay the Loans (or provide Cash Collateral for
Letters of Credit as contemplated by Section 2.05(k)) in such amounts as shall
be necessary so that such Borrowing Base Deficiency is cured, and (ii) if,
within five Business Days after delivery of a Borrowing Base Certificate
demonstrating such Borrowing Base Deficiency, the Borrower shall present the
Lenders with a reasonably feasible plan acceptable to the Required Lenders in
their sole discretion to enable such Borrowing Base Deficiency to be cured
within 30 Business Days (which 30-Business Day period shall include the five
Business Days permitted for delivery of such plan), then such prepayment or
reduction shall not be required to be effected immediately but may be effected
in accordance with such plan (with such modifications as the Borrower may
reasonably determine), so long as such Borrowing Base Deficiency is cured within
such 30-Business Day period.

 

(d)                Scheduled Payments. On each Scheduled Payment Date, the
Borrower shall repay the Loans in an aggregate amount equal to 1/12 of the
aggregate outstanding amount of Loans, and Cash Collateralize 1/12 of the LC
Exposure, for each Class and Currency of Loans and Letters of Credit
outstanding, based on the outstanding Loans and Letters of Credit as of the
Commitment Termination Date. Following the Commitment Termination Date, any
other optional or mandatory prepayment of Loans (or Cash Collateralization or
expiration of outstanding Letters of Credit) will reduce in direct order the
amount of any subsequent repayment of Loans or Cash Collateralization of Letters
of Credit required to be made pursuant to this clause (d).

 

(e)                Notices, Etc. The Borrower shall notify the Administrative
Agent (and, in the case of prepayment of a Swingline Loan, the Swingline Lender)
by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case
of prepayment of a Eurocurrency Borrowing denominated in Dollars (other than in
the case of a prepayment pursuant to Section  2.10(d)), not later than 10:00
a.m., Houston, Texas time, three Business Days before the date of prepayment,
(ii) in the case of prepayment of a Eurocurrency Borrowing denominated in a
Foreign Currency (other than in the case of a prepayment pursuant to
Section 2.10(d)), not later than 10:00 a.m., London time, four Business Days
before the date of prepayment, (iii) in the case of prepayment of a Syndicated
ABR Borrowing, not later than 11:00 a.m., Houston, Texas time, one Business Day
before the date of prepayment, or (iv) in the case of prepayment of a Swingline
Loan, not later than 10:00 a.m., Houston, Texas time, on the date of prepayment.
Each such notice shall be irrevocable and shall specify the prepayment date, the
principal amount of each Borrowing or portion thereof to be prepaid and, in the
case of a mandatory prepayment, a reasonably detailed calculation of the amount
of such prepayment; provided that, if a notice of prepayment is given in
connection with a conditional notice of termination of the Commitments as
contemplated by Section 2.08, then such notice of prepayment may be revoked if
such notice of termination is revoked in accordance with Section 2.08. Promptly
following receipt of any such notice relating to a Syndicated Borrowing, the
Administrative Agent shall advise the affected Lenders of the contents thereof.
Each partial prepayment of any Borrowing shall be in an amount that would be
permitted in the case of a Borrowing of the same Type as provided in
Section 2.02 or in the case of a Swingline Loan, as provided in Section 2.04,
except as necessary to apply fully the required amount of a mandatory
prepayment. Each prepayment of a Syndicated Borrowing shall be applied ratably
to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied
by accrued interest to the extent required by Section 2.12 and shall be made in
the manner specified in Section 2.09(b).

 

Section 2.11            Fees.

 

(a)                Commitment Fee. The Borrower agrees to pay to the
Administrative Agent for account of each Lender a commitment fee, which shall
accrue at a rate per annum equal to 0.50% on the average daily unused amount of
the Commitment of such Lender during the period from and including the
datehereof to but excluding the earlier of the date such commitment terminates
and the Commitment Termination Date. Accrued commitment fees shall be payable on
each Quarterly Date and on the earlier of the date the Commitments terminate and
the Commitment Termination Date, commencing on the first such date to occur
after the date hereof. All commitment fees shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). For purposes of computing
commitment fees, the Commitment of a Lender shall be deemed to be used to the
extent of the outstanding Syndicated Loans and LC Exposure of such Lender (and
the Swingline Exposure of such Lender shall be disregarded for such purpose).

 

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(b)                Letter of Credit Fees. The Borrower agrees to pay (i) to the
Administrative Agent for the account of each Lender a participation fee with
respect to its participations in Letters of Credit of each Class, which shall
accrue at a rate per annum equal to the Applicable Margin applicable to interest
on Eurocurrency Loans on the average daily amount of such Lender’s LC Exposure
of such Class (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the Effective Date to but
excluding the later of the date on which such Lender’s Commitment of such Class
terminates and the date on which such Lender ceases to have any LC Exposure of
such Class, and (ii) to the Issuing Bank a fronting fee, which shall accrue at
the rate of 0.25% per annum on the average daily amount of the LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the Effective Date to but excluding the
later of the date of termination of the Commitments and the date on which there
ceases to be any LC Exposure, as well as the Issuing Bank’s standard fees with
respect to the issuance, amendment, renewal or extension of any Letter of Credit
or processing of drawings thereunder. Participation fees and fronting fees
accrued through and including each Quarterly Date shall be payable on such
Quarterly Date, commencing on the first such date to occur after the Effective
Date; provided that all such fees with respect to the Letters of Credit shall be
payable on the Termination Date and the Borrower shall pay any such fees that
have accrued and that are unpaid on the Termination Date and, in the event any
Letters of Credit shall be outstanding that have expiration dates after the
Termination Date, the Borrower shall prepay on the Termination Date the full
amount of the participation and fronting fees that will accrue on such Letters
of Credit subsequent to the Termination Date through but not including the date
such outstanding Letters of Credit are scheduled to expire (and, in that
connection, the Lenders agree not later than the date two Business Days after
the date upon which the last such Letter of Credit shall expire or be terminated
to rebate to the Borrower the excess, if any, of the aggregate participation and
fronting fees that have been prepaid by the Borrower over the sum of the amount
of such fees that ultimately accrue through the date of such expiration or
termination and the aggregate amount of all other unpaid obligations hereunder
at such time). Any other fees payable to the Issuing Bank pursuant to this
paragraph shall be payable within 10 days after demand. All participation fees
and fronting fees shall be computed on the basis of a year of 360 days and shall
be payable for the actual number of days elapsed (including the first day but
excluding the last day).

 

(c)                Administrative Agent Fees. The Borrower agrees to pay to the
Administrative Agent, for its own account, fees payable in the amounts and at
the times separately agreed upon between the Borrower and the Administrative
Agent.

 

(d)                Payment of Fees. All fees payable hereunder shall be paid on
the dates due, in Dollars (or, at the election of the Borrower with respect to
any fees payable to the Issuing Bank on account of Letters of Credit issued in
any Foreign Currency, in such Foreign Currency) and immediately available funds,
to the Administrative Agent (or to the Issuing Bank, in the case of fees payable
to it) for distribution, in the case of commitment fees and participation fees,
to the Lenders entitled thereto. Fees paid shall not be refundable under any
circumstances absent obvious error.

 

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Section 2.12            Interest.

 

(a)                ABR Loans. The Loans constituting each ABR Borrowing
(including each Swingline Loan) shall bear interest at a rate per annum equal to
the Alternate Base Rate plus the Applicable Margin.

 

(b)                Eurocurrency Loans. The Loans constituting each Eurocurrency
Borrowing shall bear interest at a rate per annum equal to the Adjusted LIBO
Rate for the related Interest Period for such Borrowing plus the Applicable
Margin.

 

(c)                Default Interest. Notwithstanding the foregoing, if any Event
of Default has occurred and is continuing, the interest rates applicable to
Loans and any fee or other amount payable by the Borrower hereunder shall bear
interest, after as well as before judgment, at a rate per annum equal to (i) in
the case of principal of any Loan, 2% plus the rate otherwise applicable to such
Loan as provided above, (ii) in the case of any Letter of Credit, 2% plus the
fee otherwise applicable to such Letter of Credit as provided in
Section 2.11(b)(i), or (iii) in the case of any fee or other amount, 2% plus the
rate applicable to ABR Loans as provided in paragraph (a) of this Section.

 

(d)                Payment of Interest. Accrued interest on each Loan shall be
payable in arrears on each Interest Payment Date for such Loan in the Currency
in which such Loan is denominated and, in the case of Syndicated Loans, upon the
Termination Date; provided that (i) interest accrued pursuant to paragraph (c)
of this Section shall be payable on demand, (ii) in the event of any repayment
or prepayment of any Loan (other than a prepayment of a Syndicated ABR Loan
prior to the Final Maturity Date), accrued interest on the principal amount
repaid or prepaid shall be payable on the date of such repayment or prepayment
and (iii) in the event of any conversion of any Eurocurrency Borrowing
denominated in Dollars prior to the end of the Interest Period therefor, accrued
interest on such Borrowing shall be payable on the effective date of such
conversion.

 

(e)                Computation. All interest hereunder shall be computed on the
basis of a year of 360 days, except that interest computed (i) by reference to
the Alternate Base Rate at times when the Alternate Base Rate is based on the
Prime Rate and (ii) on Multicurrency Loans denominated in an Agreed Foreign
Currency shall be computed on the basis of a year of 365 days (or 366 days in a
leap year), and in each case shall be payable for the actual number of days
elapsed (including the first day but excluding the last day). The applicable
Alternate Base Rate or Adjusted LIBO Rate shall be determined by the
Administrative Agent and such determination shall be conclusive absent manifest
error.

 

Section 2.13            Alternate Rate of Interest. If prior to the commencement
of the Interest Period for any Eurocurrency Borrowing (the Currency of such
Borrowing herein called the “Affected Currency”):

 

(a)                the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable means do
not exist for ascertaining the Adjusted LIBO Rate for the Affected Currency for
such Interest Period; or

 

(b)                the Administrative Agent is advised by the Required Lenders
of such Class that the Adjusted LIBO Rate for the Affected Currency for such
Interest Period will not adequately and fairly reflect the cost to such Lenders
of making or maintaining their respective Loans included in such Borrowing for
such Interest Period;

 

then the Administrative Agent shall give notice thereof to the Borrower and the
affected Lenders by telephone or telecopy as promptly as practicable thereafter
and, until the Administrative Agent notifies the Borrower and such Lenders that
the circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Syndicated Borrowing to, or
the continuation of any Syndicated Borrowing as, a Eurocurrency Borrowing
denominated in the Affected Currency shall be ineffective and, if the Affected
Currency is Dollars, such Syndicated Borrowing (unless prepaid) shall be
continued as, or converted to, a Syndicated ABR Borrowing, (ii) if the Affected
Currency is Dollars and any Borrowing Request requests a Eurocurrency Borrowing
denominated in Dollars, such Borrowing shall be made as a Syndicated ABR
Borrowing and (iii) if the Affected Currency is CAD, any Borrowing Request that
requests a Eurocurrency Borrowing denominated in CAD, then the CDOR Rate for
such Borrowing in CAD shall be equal to the Canadian Prime Rate.

 

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Section 2.14            Increased Costs.

 

(a)                Increased Costs Generally. If any Change in Law shall:

 

(i)                 impose, modify or deem applicable any reserve, special
deposit, compulsory loan, insurance charge or similar requirement against assets
of, deposits with or for account of, or credit extended by, any Lender (except
any such reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing
Bank; or

 

(ii)               impose on any Lender or the Issuing Bank or the London
interbank market any other condition, cost or expense (other than Taxes)
affecting this Agreement or Eurocurrency Loans made by such Lender or any Letter
of Credit or participation therein;

 

and the result of any of the foregoing shall be to increase the cost to such
Lenders of making, converting to, continuing or maintaining any Eurocurrency
Loan (or of maintaining its obligation to make any such Loan) or to increase the
cost to such Lender or the Issuing Bank of participating in, issuing or
maintaining any Letter of Credit or to reduce the amount of any sum received or
receivable by such Lender or the Issuing Bank hereunder (whether of principal,
interest or otherwise), then the Borrower will pay to such Lender or the Issuing
Bank, as the case may be, in Dollars, such additional amount or amounts as will
compensate such Lender or the Issuing Bank, as the case may be, for such
additional costs incurred or reduction suffered.

 

(b)                Capital Requirements. If any Lender or the Issuing Bank
determines that any Change in Law regarding capital or liquidity requirements
has or would have the effect of reducing the rate of return on such Lender’s or
the Issuing Bank’s capital or on the capital of such Lender’s or the Issuing
Bank’s holding company, if any, as a consequence of this Agreement or the Loans
made by, or participations in Swingline Loans and Letters of Credit held by,
such Lender, or the Letters of Credit issued by the Issuing Bank, to a level
below that which such Lender or the Issuing Bank or such Lender’s or the Issuing
Bank’s holding company could have achieved but for such Change in Law (taking
into consideration such Lender’s or the Issuing Bank’s policies and the policies
of such Lender’s or the Issuing Bank’s holding company with respect to capital
adequacy), by an amount deemed to be material by such Lender or Issuing Bank,
then from time to time the Borrower will pay to such Lender or the Issuing Bank,
as the case may be, in Dollars, such additional amount or amounts as will
compensate such Lender or the Issuing Bank or such Lender’s or the Issuing
Bank’s holding company for any such reduction suffered.

 

(c)                Certificates from Lenders. A certificate of a Lender or the
Issuing Bank setting forth the amount or amounts, in Dollars, necessary to
compensate such Lender or the Issuing Bank or its holding company, as the case
may be, as specified in paragraph (a) or (b) of this Section shall be promptly
delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay such Lender or the Issuing Bank, as the case may be, the
amount shown as due on any such certificate within 10 days after receipt
thereof.

 

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(d)                Delay in Requests. Failure or delay on the part of any Lender
or the Issuing Bank to demand compensation pursuant to this Section shall not
constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such
compensation; provided that the Borrower shall not be required to compensate a
Lender or the Issuing Bank pursuant to this Section for any increased costs or
reductions incurred more than six months prior to the date that such Lender or
the Issuing Bank, as the case may be, notifies the Borrower of the Change in Law
giving rise to such increased costs or reductions and of such Lender’s or the
Issuing Bank’s intention to claim compensation therefor; provided, further,
that, if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the six-month period referred to above shall be extended to
include the period of retroactive effect thereof.

 

Section 2.15            Break Funding Payments. In the event of (a) the payment
of any principal of any Eurocurrency Loan other than on the last day of an
Interest Period therefor (including as a result of the occurrence of any
Commitment Increase Date or an Event of Default), (b) the conversion of any
Eurocurrency Loan other than on the last day of an Interest Period therefor,
(c) the failure to borrow, convert, continue or prepay any Syndicated Loan on
the date specified in any notice delivered pursuant hereto (including, in
connection with any Commitment Increase Date, and regardless of whether such
notice is permitted to be revocable under Section 2.10(e) and is revoked in
accordance herewith), or (d) the assignment as a result of a request by the
Borrower pursuant to Section 2.18(b) of any Eurocurrency Loan other than on the
last day of an Interest Period therefor, then, in any such event, the Borrower
shall compensate each Lender for the loss, cost and expense attributable to such
event. In the case of a Eurocurrency Loan, the loss to any Lender attributable
to any such event shall be deemed to include an amount determined by such Lender
to be equal to the excess, if any, of

 

(i)       the amount of interest that such Lender would pay for a deposit equal
to the principal amount of such Loan denominated in the Currency of such Loan
for the period from the date of such payment, conversion, failure or assignment
to the last day of the then current Interest Period for such Loan (or, in the
case of a failure to borrow, convert or continue, the duration of the Interest
Period that would have resulted from such borrowing, conversion or continuation)
if the interest rate payable on such deposit were equal to the Adjusted LIBO
Rate for such Currency for such Interest Period, over

 

(ii)       the amount of interest that such Lender would earn on such principal
amount for such period if such Lender were to invest such principal amount for
such period at the interest rate that would be bid by such Lender (or an
affiliate of such Lender) for deposits denominated in such Currency from other
banks in the Eurocurrency market at the commencement of such period.

 

Payment under this Section shall be made upon request of a Lender delivered not
later than five Business Days following the payment, conversion, or failure to
borrow, convert, continue or prepay that gives rise to a claim under this
Section accompanied by a certificate of such Lender setting forth the amount or
amounts that such Lender is entitled to receive pursuant to this Section, which
certificate shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.

 

Section 2.16            Taxes.

 

(a)                Payments Free of Taxes. Any and all payments by or on account
of any obligation of the Borrower hereunder or under any other Loan Document
shall be made free and clear of and without deduction for any Taxes, except as
required by applicable law; provided that if the Borrower shall be required to
deduct any Taxes from such payments (as determined in its good faith
discretion), then (i) if such Taxes are Indemnified Taxes, the sum payable shall
be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent, Lender or Issuing Bank (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall
pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.

 

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(b)                Payment of Other Taxes by the Borrower. In addition, the
Borrower shall pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable law.

 

(c)                Indemnification by the Borrower. The Borrower shall indemnify
the Administrative Agent, each Lender and the Issuing Bank for and, within 10
Business Days after written demand therefor, pay the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender
or the Issuing Bank, as the case may be, and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority, except to the extent that any
such Indemnified Taxes or Other Taxes arise as the result of the gross
negligence or willful misconduct of the Administrative Agent, such Lender or the
Issuing Bank. A certificate as to the amount of such payment or liability
delivered to the Borrower by a Lender or the Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or the Issuing
Bank, accompanied by a written statement thereof setting forth in reasonable
detail the basis and calculation of such amounts, shall be conclusive absent
manifest error.

 

(d)                Indemnification by the Lenders. Each Lender shall severally
indemnify, within 10 Business Days after written demand therefor, (i) the
Administrative Agent for any Indemnified Taxes or Other Taxes attributable to
such Lender (but only to the extent that the Borrower has not already
indemnified the Administrative Agent for such Indemnified Taxes and without
limiting the obligation of the Borrower to do so), (ii) the Administrative Agent
or the Borrower for any Taxes attributable to such Lender’s failure to comply
with the provisions of Section 9.04(f) relating to the maintenance of a
Participant Register, and (iii) the Administrative Agent or the Borrower for any
Excluded Taxes attributable to such Lender, in each case, that are payable or
paid by the Administrative Agent or the Borrower, as applicable, in connection
with any Loan Document, and any reasonable expenses arising therefrom or with
respect thereto, whether or not such 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 any Lender by the Administrative Agent
shall be conclusive absent manifest error. Each Lender hereby authorizes the
Administrative Agent to set off and apply any and all amounts at any time owing
to such Lender under any Loan Document or otherwise payable by the
Administrative Agent to the Lender from any other source against any amount due
to the Administrative Agent under this paragraph (d).

 

(e)                Evidence of Payments. As soon as practicable after any
payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental
Authority, the Borrower shall deliver to the Administrative 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 the Administrative Agent.

 

(f)                 Tax Documentation. (i) Any Lender that is entitled to an
exemption from or reduction of withholding Tax with respect to payments under
any Loan Document shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or as
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate of withholding. In addition, any
Lender, if requested by the Borrower or the Administrative Agent, shall deliver
such other documentation prescribed by applicable law or reasonably requested by
the Borrower or the Administrative Agent as will enable the Borrower or the
Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements. Notwithstanding
anything to the contrary in the preceding two sentences, the completion,
execution and submission of such documentation (other than such documentation
set forth in Section 2.16(f)(ii)(A) and (B) below) shall not be required if in
the Lender’s reasonable judgment such completion, execution or submission would
subject such Lender to any material unreimbursed cost or expense or would
materially prejudice the legal or commercial position of such Lender.

 

47

 

 

(ii)               Without limiting the generality of the foregoing:

 

(A)              any Lender that is a “United States person” (as defined under
Section 7701(a)(30) of the Code) shall deliver to the Borrower and the
Administrative Agent (and such additional copies as shall be reasonably
requested by the recipient) on or prior to the date on which such Lender become
a Lender under this Agreement (and from time to time thereafter upon the
reasonable request of the Borrower or the Administrative Agent), duly completed
and executed copies of Internal Revenue Service Form W-9 or any successor form
certifying that such Lender is exempt from U.S. federal backup withholding Tax;
and

 

(B)              each Foreign Lender shall deliver to the Borrower and the
Administrative Agent (in such number of copies as shall be requested by the
recipient) on or prior to the date on which such Foreign Lender becomes a Lender
under this Agreement (and from time to time thereafter upon the reasonable
request of the Borrower or the Administrative Agent, but only if such Foreign
Lender is legally entitled to do so), whichever of the following is applicable:

 

(w)       duly completed and executed copies of Internal Revenue Service Form
W-8BEN or W-8BEN-E or any successor form claiming eligibility for benefits of an
income Tax treaty to which the United States is a party,

 

(x)       duly completed copies of Internal Revenue Service Form W-8ECI or any
successor form certifying that the income receivable pursuant to this Agreement
is effectively connected with the conduct of a trade or business in the United
States,

 

(y)       in the case of a Foreign Lender claiming the benefits of the exemption
for portfolio interest under Section 881(c) of the Code, (1) a certificate to
the effect that such Foreign Lender is not (1) a “bank” within the meaning of
Section 881(c)(3)(A) of the Code, (2) a “10 percent shareholder” of the Borrower
within the meaning of Section 881(c)(3)(B) of the Code, or (3) a “controlled
foreign corporation” described in Section 881(c)(3)(C) of the Code and (2) duly
completed and executed copies of Internal Revenue Service Form W-8BEN or
W-8BEN-E (or any successor form) certifying that the Foreign Lender is not a
United States Person, or

 

(z)       any other form including Internal Revenue Service Form W-8IMY as
applicable prescribed by applicable law as a basis for claiming exemption from
or a reduction in U.S. federal withholding Tax duly completed together with such
supplementary documentation as may be prescribed by applicable law to permit the
Borrower to determine the withholding or deduction required to be made.

 

48

 

 

In addition, each Lender shall deliver updated versions of such forms or
certifications promptly upon the obsolescence, expiration or invalidity of any
form or certification previously delivered by such Lender or to the extent such
form or certification it previously delivered becomes inaccurate in any respect;
provided it is legally able to do so at the time. Each Lender shall promptly
notify the Borrower and the Administrative Agent at any time such Lender no
longer satisfies the legal requirements to provide any previously delivered form
or certificate to the Borrower (or any other form of certification adopted by
any Government Authority for such purpose).

 

(g)                Documentation Required by FATCA. If a payment made to a
Lender under any Loan Document would be subject to U.S. federal withholding Tax
imposed by FATCA if such Lender were to fail to comply with the applicable
reporting requirements of FATCA (including those contained in Section 1471(b) or
1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower
and the Administrative Agent, at the time or times prescribed by law and at such
time or times reasonably requested by the Borrower or the Administrative Agent,
such document prescribed by applicable law (including as prescribed by
Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Borrower or the Administrative Agent as may be
necessary for the Borrower and the Administrative Agent to comply with their
respective obligations under FATCA and to determine that such Lender has
complied with such Lender’s obligations under FATCA or to determine the amount
to deduct and withhold from such payment. Solely for purposes of this
Section 2.16(g), “FATCA” shall include any amendments made to FATCA after the
date of this Agreement.

 

(h)                Treatment of Certain Refunds. Unless required by applicable
law, at no time shall the Administrative Agent have any obligation to file for
or otherwise pursue on behalf of a Lender, or have any obligation to pay to any
Lender, any refund of Taxes withheld or deducted from funds paid to or for the
account of a Lender. If the Administrative Agent, any Lender or an Issuing Bank
determines, in its sole discretion, that it has received a refund or credit (in
lieu of such refund) of any Taxes as to which it has been indemnified by the
Borrower or with respect to which the Borrower has paid additional amounts
pursuant to this Section, as soon as practicable after it is determined that
such refund pertains to Taxes as to which it has been indemnified by the
Borrower or with respect to which the Borrower has paid additional amounts
pursuant to this Section, it shall pay to the Borrower an amount equal to such
refund (but only to the extent of indemnity payments made, or additional amounts
paid, by the Borrower under this Section with respect to the Taxes giving rise
to such refund), net of all reasonable out-of-pocket expenses of the
Administrative Agent, any Lender or an Issuing Bank, as the case may be, and
without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); provided that the Borrower, upon the
request of the Administrative Agent, any Lender or an Issuing Bank, agrees to
repay the amount paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the
Administrative Agent, any Lender or an Issuing Bank in the event the
Administrative Agent, any Lender or an Issuing Bank is required to repay such
refund to such Governmental Authority. The Administrative Agent, the Lender or
the Issuing Bank, as applicable, upon the request of the Borrower, shall provide
the Borrower with a copy of any notice of assessment or other evidence of the
requirement to repay such refund received from the relevant Government Authority
(provided that the Administrative Agent, the Lender or the Issuing Bank, as
applicable, may delete any information therein that it deemed confidential).
Notwithstanding anything to the contrary in this clause (h), in no event will
the Administrative Agent, any Lender or an Issuing Bank be required to pay any
amount to Borrower pursuant to this clause (h), the payment of which would place
such Person in a less favorable net after-Tax position than such Person would
have been in if the indemnification payments or additional amounts giving rise
to such refund had never been paid. This subsection shall not be construed to
require the Administrative Agent, any Lender or an Issuing Bank to make
available its Tax returns or its books or records (or any other information
relating to its Taxes that it deems confidential) to the Borrower or any other
Person.

 

49

 

 

(i)       This Section 2.16 shall survive the termination of this Agreement and
the payment of the Loans and all other Secured Obligations under, and as defined
in the Guarantee and Security Agreement.

 

Section 2.17            Payments Generally; Pro Rata Treatment: Sharing of
Set-offs.

 

(a)                Payments by the Borrower. The Borrower shall make each
payment required to be made by it hereunder (whether of principal, interest,
fees or reimbursement of LC Disbursements, or under Section 2.14, 2.15 or 2.16,
or otherwise) or under any other Loan Document (except to the extent otherwise
provided therein) prior to 12:00 noon, Houston, Texas time, on the date when
due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at the Administrative Agent’s Account,
except as otherwise expressly provided in the relevant Loan Document and except
payments to be made directly to the Issuing Bank or the Swingline Lender as
expressly provided herein and payments pursuant to Sections 2.14, 2.15, 2.16 and
9.03, which shall be made directly to the Persons entitled thereto. The
Administrative Agent shall distribute any such payments received by it for
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment hereunder shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day and, in the case of any payment accruing interest, interest thereon
shall be payable for the period of such extension.

 

All amounts owing under this Agreement (including commitment fees, payments
required under Section 2.14, and payments required under Section 2.15 relating
to any Loan denominated in Dollars, but not including principal of and interest
on any Loan denominated in any Foreign Currency or payments relating to any such
Loan required under Section 2.15, which are payable in such Foreign Currency) or
under any other Loan Document (except to the extent otherwise provided therein)
are payable in Dollars. Notwithstanding the foregoing, if the Borrower shall
fail to pay any principal of any Loan when due (whether at stated maturity, by
acceleration, by mandatory prepayment or otherwise), the unpaid portion of such
Loan shall, if such Loan is not denominated in Dollars, automatically be
redenominated in Dollars on the due date thereof (or, if such due date is a day
other than the last day of the Interest Period therefor, on the last day of such
Interest Period) in an amount equal to the Dollar Equivalent thereof on the date
of such redenomination and such principal shall be payable on demand; and if the
Borrower shall fail to pay any interest on any Loan that is not denominated in
Dollars, such interest shall automatically be redenominated in Dollars on the
due date therefor (or, if such due date is a day other than the last day of the
Interest Period therefor, on the last day of such Interest Period) in an amount
equal to the Dollar Equivalent thereof on the date of such redenomination and
such interest shall be payable on demand.

 

Notwithstanding the foregoing provisions of this Section, if, after the making
of any Borrowing in any Foreign Currency, currency control or exchange
regulations are imposed in the country which issues such currency with the
result that the type of currency in which the Borrowing was made (the “Original
Currency”) no longer exists or the Borrower is not able to make payment to the
Administrative Agent for the account of the Lenders in such Original Currency,
then all payments to be made by the Borrower hereunder in such currency shall
instead be made when due in Dollars in an amount equal to the Dollar Equivalent
(as of the date of repayment) of such payment due, it being the intention of the
parties hereto that the Borrower takes all risks of the imposition of any such
currency control or exchange regulations.

 

(b)                Application of Insufficient Payments. If at any time
insufficient funds are received by and available to the Administrative Agent to
pay fully all amounts of principal, unreimbursed LC Disbursements, interest and
fees of a Class then due hereunder, such funds shall be applied (i) first, to
pay interest and fees of such Class then due hereunder, ratably among the
parties entitled thereto in accordance with the amounts of interest and fees of
such Class then due to such parties, and (ii) second, to pay principal and
unreimbursed LC Disbursements of such Class then due hereunder, ratably among
the parties entitled thereto in accordance with the amounts of principal and
unreimbursed LC Disbursements of such Class then due to such parties.

 

50

 

 

(c)                Pro Rata Treatment. Except to the extent otherwise provided
herein: (i) each Syndicated Borrowing shall be made from the Lenders, each
payment of commitment fee under Section 2.11 shall be made for account of the
Lenders, and each termination or reduction of the amount of the Commitments
under Section 2.08 shall be applied to the respective Commitments of the
Lenders, pro rata according to the amounts of their respective Commitments; (ii)
each Syndicated Borrowing shall be allocated pro rata among the Lenders
according to the amounts of their respective Commitments (in the case of the
making of Syndicated Loans) or their respective Loans that are to be included in
such Borrowing (in the case of conversions and continuations of Loans); (iii)
each payment or prepayment of principal of Syndicated Loans by the Borrower
shall be made for account of the Lenders pro rata in accordance with the
respective unpaid principal amounts of the Syndicated Loans held by them; and
(iv) each payment of interest on Syndicated Loans by the Borrower shall be made
for account of the Lenders pro rata in accordance with the amounts of interest
on such Loans then due and payable to the respective Lenders.

 

(d)                Sharing of Payments by Lenders. If any Lender of any Class
shall, by exercising any right of set-off or counterclaim or otherwise, obtain
payment in respect of any principal of or interest on any of its Syndicated
Loans, or participations in LC Disbursements or Swingline Loans, of such Class
resulting in such Lender receiving payment of a greater proportion of the
aggregate amount of its Syndicated Loans, and participations in LC Disbursements
and Swingline Loans, and accrued interest thereon of such Class then due than
the proportion received by any other Lender of such Class, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Syndicated Loans, and participations in LC Disbursements
and Swingline Loans, of other Lenders of such Class to the extent necessary so
that the benefit of all such payments shall be shared by the Lenders of such
Class ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Syndicated Loans, and participations in LC
Disbursements and Swingline Loans, of such Class; provided that (i) if any such
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by the Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to the Borrower
or any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). The Borrower consents to the foregoing and agrees, to
the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against the Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrower
in the amount of such participation.

 

(e)                Presumptions of Payment. Unless the Administrative Agent
shall have received notice from the Borrower prior to the date on which any
payment is due to the Administrative Agent for account of the Lenders or the
Issuing Bank hereunder that the Borrower will not make such payment, the
Administrative Agent may assume that the Borrower has made such payment on such
date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or the Issuing Bank, as the case may be, the amount
due. In such event, if the Borrower has not in fact made such payment, then each
of the Lenders or the Issuing Bank, as the case may be, severally agrees to
repay to the Administrative Agent forthwith on demand the amount so distributed
to such Lender or the Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent at the Federal Funds Effective Rate.

 

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(f)                 Certain Deductions by the Administrative Agent. If any
Lender shall fail to make any payment required to be made by it pursuant to
Section 2.04(c), 2.05(e), 2.06(a) or (b) or 2.17(e), then the Administrative
Agent may, in its discretion (notwithstanding any contrary provision hereof),
apply any amounts thereafter received by the Administrative Agent for account of
such Lender to satisfy such Lender’s obligations under such Sections until all
such unsatisfied obligations are fully paid.

 

Section 2.18            Mitigation Obligations; Replacement of Lenders.

 

(a)                Designation of a Different Lending Office. If any Lender
requests compensation under Section 2.14, or if the Borrower is required to pay
any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.16, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 2.14 or 2.16, as the case may be, in the future and
(ii) would not subject such Lender to any cost or expense not required to be
reimbursed by the Borrower and would not otherwise be materially disadvantageous
to such Lender. The Borrower hereby agrees to pay all reasonable costs and
expenses incurred by any Lender in connection with any such designation or
assignment.

 

(b)                Replacement of Lenders. If any Lender requests compensation
under Section 2.14, or if the Borrower is required to pay any additional amount
to any Lender or any Governmental Authority for account of any Lender pursuant
to Section 2.16, or if any Lender becomes a Defaulting Lender or is a
Non-Consenting Lender (as provided in Section 9.02(d)), then the Borrower may,
at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent (and,
if a Commitment is being assigned, the Issuing Bank and the Swingline Lender),
which consent shall not unreasonably be withheld, (ii) such Lender shall have
received payment of an amount equal to the outstanding principal of its Loans
and participations in LC Disbursements and Swingline Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts) and (iii) in the case
of any such assignment resulting from a claim for compensation under
Section 2.14 or payments required to be made pursuant to Section 2.16, such
assignment will result in a reduction in such compensation or payments
thereafter. A Lender shall not be required to make any such assignment and
delegation if prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require such assignment
and delegation cease to apply.

 

Section 2.19            Defaulting Lenders.

 

(a)                Defaulting Lender Adjustments. Notwithstanding anything to
the contrary contained in this Agreement, if any Lender becomes a Defaulting
Lender, then, until such time as such Lender is no longer a Defaulting Lender,
to the extent permitted by applicable law:

 

52

 

 

(i)                 Defaulting Lender Waterfall. Any payment of principal,
interest, fees or other amounts received by Administrative Agent for the account
of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant
to Article VII or otherwise) or received by Administrative Agent from a
Defaulting Lender pursuant to Section 9.08 shall be applied at such time or
times as may be determined by Administrative Agent as follows: first, to the
payment of any amounts owing by such Defaulting Lender to Administrative Agent
hereunder; second, to the payment on a pro rata basis of any amounts owing by
such Defaulting Lender to Issuing Bank or Swingline Lender hereunder; third, to
Cash Collateralize Issuing Bank’s Fronting Exposure with respect to such
Defaulting Lender in the manner described in Section 2.09(a); fourth, as
Borrower may request (so long as no Default exists), to the funding of any Loan
in respect of which such Defaulting Lender has failed to fund its portion
thereof as required by this Agreement, as determined by Administrative Agent;
fifth, if so determined by Administrative Agent and Borrower, to be held in a
deposit account and released pro rata in order to (x) satisfy such Defaulting
Lender’s potential future funding obligations with respect to Loans under this
Agreement and (y) Cash Collateralize Issuing Bank’s future Fronting Exposure
with respect to such Defaulting Lender with respect to future Letters of Credit
issued under this Agreement, in the manner described in Section 2.09(a); sixth,
to the payment of any amounts owing to the Lenders, Issuing Bank or Swingline
Lender as a result of any judgment of a court of competent jurisdiction obtained
by any Lender, Issuing Bank or Swingline Lender against such Defaulting Lender
as a result of such Defaulting Lender’s breach of its obligations under this
Agreement; seventh, so long as no Default exists, to the payment of any amounts
owing to Borrower as a result of any judgment of a court of competent
jurisdiction obtained by Borrower against such Defaulting Lender as a result of
such Defaulting Lender’s breach of its obligations under this Agreement; and
eighth, to such Defaulting Lender or as otherwise directed by a court of
competent jurisdiction; provided that if (x) such payment is a payment of the
principal amount of any Loans or reimbursement obligations in respect of any LC
Disbursement for which such Defaulting Lender has not fully funded its
appropriate share, and (y) such Loans were made or the related Letters of Credit
were issued at a time when the conditions set forth in Section 4.02 were
satisfied and waived, such payment shall be applied solely to pay the Loans of,
and reimbursement obligations in respect of any LC Disbursement that is owed to,
all Non-Defaulting Lenders on a pro rata basis prior to being applied to the
payment of any Loans of, or reimbursement obligations in respect of any LC
Disbursement that is owed to, such Defaulting Lender until such time as all
Loans and funded and unfunded participations in Letters of Credit and Swingline
Loans are held by the Lenders pro rata in accordance with the applicable
Commitments without giving effect to Section 2.19(a)(iii). Any payments,
prepayments or other amounts paid or payable to a Defaulting Lender that are
applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash
Collateral pursuant to this Section 2.19(a)(i) shall be deemed paid to and
redirected by such Defaulting Lender, and each Lender irrevocably consents
hereto.

 

(ii)               Certain Fees.

 

(A)              No Defaulting Lender shall be entitled to receive any fee
pursuant to Sections 2.11(a) and (b) for any period during which that Lender is
a Defaulting Lender (and Borrower shall not be required to pay any such fee that
otherwise would have been required to have been paid to that Defaulting Lender);
provided that such Defaulting Lender shall be entitled to receive fees pursuant
to Section 2.11(b) for any period during which that Lender is a Defaulting
Lender only to extent allocable to its Applicable Percentage of the stated
amount of Letters of Credit for which it has provided Cash Collateral pursuant
to Section 2.19(d).

 

(B)              With respect to any Section 2.11(b) fees not required to be
paid to any Defaulting Lender pursuant to clause (A) above, Borrower shall (x)
pay to each Non- Defaulting Lender that portion of any such fee otherwise
payable to such Defaulting Lender with respect to such Defaulting Lender’s
participation in Letters of Credit or Swingline Loans that has been reallocated
to such Non-Defaulting Lender pursuant to clause (iii) below, (y) pay to Issuing
Bank the amount of any such fee otherwise payable to such Defaulting Lender to
the extent allocable to Issuing Bank’s Fronting Exposure to such Defaulting
Lender, and (z) not be required to pay the remaining amount of any such fee.

 

53

 

 

(iii)             Reallocation of Participations to Reduce Fronting Exposure.
All or any part of such Defaulting Lender’s participation in Letters of Credit
and Swingline Loans shall be reallocated (effective no later than one (1)
Business Day after the Administrative Agent has actual knowledge that such
Lender has become a Defaulting Lender) among the Non-Defaulting Lenders in
accordance with their respective Applicable Dollar Percentages (in each case
calculated without regard to such Defaulting Lender’s Commitment), but only to
the extent that (x) the conditions set forth in Section 4.02 are satisfied at
the time of such reallocation (and, unless Borrower shall have otherwise
notified Administrative Agent at such time, Borrower shall be deemed to have
represented and warranted that such conditions are satisfied at such time), and
(y) such reallocation does not cause the aggregate Revolving Credit Exposure of
any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Commitment. No
reallocation hereunder shall constitute a waiver or release of any claim of any
party hereunder against a Defaulting Lender arising from that Lender having
become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a
result of such Non-Defaulting Lender’s increased exposure following such
reallocation.

 

(iv)              Cash Collateral; Repayment of Swingline Loans. If the
reallocation described in clause (iii) above cannot, or can only partially, be
effected, the Borrower shall not later than two (2) Business Days after demand
by the Administrative Agent (at the direction of the Issuing Bank and/or the
Swingline Lender), without prejudice to any right or remedy available to it
hereunder or under law, (x) first, prepay Swingline Loans in an amount equal to
the Swingline Lender’s Swingline Exposure (which exposure shall be deemed equal
to the applicable Defaulting Lender’s Applicable Percentage of the total
outstanding Swingline Exposure (other than Swingline Exposure as to which such
Defaulting Lender’s participation obligation has been reallocated to other
Lenders or Cash Collateralized in accordance with the terms hereof)) and (y)
second, Cash Collateralize the Issuing Bank’s Fronting Exposure in accordance
with the procedures set forth in Section 2.19(d) or (z) make other arrangements
reasonably satisfactory to the Administrative Agent, the Issuing Bank and the
Swingline Lender in their sole discretion to protect them against the risk of
non-payment by such Defaulting Lender.

 

(b)                Defaulting Lender Cure. If the Borrower, the Administrative
Agent, the Swingline Lender and the Issuing Bank agree in writing that a Lender
is no longer a Defaulting Lender, Administrative Agent will so notify the
parties hereto, whereupon as of the effective date specified in such notice and
subject to any conditions set forth therein (which may include arrangements with
respect to any Cash Collateral), that such former Defaulting Lender will, to the
extent applicable, purchase at par that portion of outstanding Loans of the
other Lenders or take such other actions as Administrative Agent may determine
to be necessary to cause the Loans and funded and unfunded participations in
Letters of Credit and Swingline Loans to be held pro rata by the Lenders in
accordance with the applicable Commitments (without giving effect to
Section 2.19(a)(iii)), and if Cash Collateral has been posted with respect to
such Defaulting Lender, the Administrative Agent will promptly return or release
such Cash Collateral to the Borrower, whereupon such Lender will cease to be a
Defaulting Lender; provided that no adjustments will be made retroactively with
respect to fees accrued or payments made by or on behalf of Borrower while that
Lender was a Defaulting Lender; and provided, further, that except to the extent
otherwise expressly agreed by the affected parties, no change hereunder from
Defaulting Lender to Lender will constitute a waiver or release of any claim of
any party hereunder arising from that Lender having been a Defaulting Lender.

 

54

 

 

(c)                New Swingline Loans/Letters of Credit. So long as any Lender
is a Defaulting Lender, (i) the Swingline Lender shall not be required to fund
any Swingline Loans unless it is satisfied that the participations therein will
be fully allocated among Non-Defaulting Lenders in a manner consistent with
clause (a)(iii) above and the Defaulting Lender shall not participate therein
and (ii) the Issuing Bank shall not be required to issue, extend, renew or
increase any Letter of Credit unless it is satisfied that the participations in
any existing Letters of Credit as well as the new, extended, renewed or
increased Letter of Credit has been or will be fully allocated among the
Non-Defaulting Lenders in a manner consistent with clause (a)(iii) above and
such Defaulting Lender shall not participate therein except to the extent such
Defaulting Lender’s participation has been or will be fully Cash Collateralized
in accordance with Section 2.19(d).

 

(d)                Cash Collateral. At any time that there shall exist a
Defaulting Lender, promptly following the written request of Administrative
Agent or Issuing Bank (with a copy to Administrative Agent) Borrower shall Cash
Collateralize Issuing Bank’s Fronting Exposure with respect to such Defaulting
Lender (determined after giving effect to Section 2.19(a)(iii) and any Cash
Collateral provided by such Defaulting Lender) in an amount not less than the
Minimum Collateral Amount.

 

(i)                 Grant of Security Interest. Borrower, and to the extent
provided by any Defaulting Lender, such Defaulting Lender, hereby grants to (and
subjects to the control of) Administrative Agent, for the benefit of Issuing
Bank, and agrees to maintain, a first priority security interest in all such
Cash Collateral as security for the Defaulting Lenders’ obligation to fund
participations in respect of Letters of Credit, to be applied pursuant to
clause (ii) below. If at any time Administrative Agent determines that Cash
Collateral is subject to any right or claim of any Person other than
Administrative Agent and Issuing Bank as herein provided, or that the total
amount of such Cash Collateral is less than the Minimum Collateral Amount,
Borrower will, promptly upon demand by Administrative Agent, pay or provide to
Administrative Agent additional Cash Collateral in an amount sufficient to
eliminate such deficiency (after giving effect to any Cash Collateral provided
by the Defaulting Lender). All Cash Collateral (other than credit support not
constituting funds subject to deposit) shall be maintained in blocked,
non-interest bearing deposit accounts at Amegy Bank. Borrower shall pay on
demand therefor from time to time all reasonable and customary account opening,
activity and other administrative fees and charges in connection with the
maintenance and disbursement of Cash Collateral.

 

(ii)               Application. Notwithstanding anything to the contrary
contained in this Agreement, Cash Collateral provided under this Section 2.19 in
respect of Letters of Credit shall be applied to the satisfaction of the
Defaulting Lender’s obligation to fund participations in respect of Letters of
Credit (including, as to Cash Collateral provided by a Defaulting Lender, any
interest accrued on such obligation) for which the Cash Collateral was so
provided, prior to any other application of such property as may otherwise be
provided for herein.

 

(iii)             Termination of Requirement. Cash Collateral (or the
appropriate portion thereof) provided to reduce Issuing Bank’s Fronting Exposure
shall no longer be required to be held as Cash Collateral pursuant to this
Section 2.19 following (i) the elimination of the applicable Fronting Exposure
(including by the termination of Defaulting Lender status of the applicable
Lender) or (ii) the determination by Administrative Agent and Issuing Bank that
there exists excess Cash Collateral; provided that, subject to the other
provisions of this Section 2.19, the Person providing Cash Collateral and
Issuing Bank may agree that Cash Collateral shall be held to support future
anticipated Fronting Exposure; provided, further, that to the extent that such
Cash Collateral was provided by Borrower, such Cash Collateral shall remain
subject to the security interest granted pursuant to the Loan Documents.

 

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Section 2.20            Acknowledgement and Consent to Bail-In of Affected
Financial Institutions. Notwithstanding anything to the contrary in any Loan
Document or in any other agreement, arrangement or understanding among any such
parties, each party hereto acknowledges that any liability of an Affected
Financial Institution arising under any Loan Document, to the extent such
liability is unsecured, may be subject to the Write-Down and Conversion powers
of the applicable Resolution Authority and agrees and consents to, and
acknowledges and agrees to be bound by:

 

(a)                the application of any Write-Down and Conversion Powers by
the applicable Resolution Authority to any such liabilities arising hereunder
which may be payable to it by any party hereto that is an Affected Financial
Institution; and

 

(b)                the effects of any Bail-in Action on any such liability,
including, if applicable:

 

(i)                 a reduction in full or in part or cancellation of any such
liability;

 

(ii)               a conversion of all, or a portion of, such liability into
shares or other instruments of ownership in such Affected Financial Institution,
its parent undertaking, or a bridge institution that may be issued to it or
otherwise conferred on it, and that such shares or other instruments of
ownership will be accepted by it in lieu of any rights with respect to any such
liability under this Agreement or any other Loan Document; or 

 

(iii)             the variation of the terms of such liability in connection
with the exercise of the Write-Down and Conversion powers of the applicable
Resolution Authority.

 

Section 2.21            LIBOR Replacement.

 

(a)                Benchmark Replacement. Notwithstanding anything to the
contrary in this Agreement or in any other Loan Document, upon the occurrence of
a Benchmark Transition Event or an Early Opt-in Election, as applicable, the
Administrative Agent and the Borrower may amend this Agreement to replace the
LIBO Rate with a Benchmark Replacement. Any such amendment with respect to a
Benchmark Transition Event will become effective at 5:00 p.m. (New York City
time) on the fifth (5th) Business Day after the Administrative Agent has posted
such proposed amendment to all Lenders and the Borrower, so long as the
Administrative Agent has not received, by such time, written notice of objection
to such Benchmark Replacement from Lenders comprising the Required Lenders;
provided that, with respect to any such proposed amendment containing any
SOFR-Based Rate, the Lenders shall be entitled to object only to the Benchmark
Replacement Adjustment contain therein. Any such amendment with respect to an
Early Opt-in Election will become effective on the date that Lenders comprising
Required Lenders of each Class have delivered to the Administrative Agent
written notice that such Required Lenders accept such amendment. No replacement
of a LIBO Rate with a Benchmark Replacement will occur prior to the applicable
Benchmark Transition Start Date.

 

(b)                Benchmark Replacement Conforming Changes. In connection with
the implementation of a Benchmark Replacement, the Administrative Agent will
have the right to make Benchmark Replacement Conforming Changes from time to
time and, notwithstanding anything to the contrary herein or in any other Loan
Document, any amendments implementing such Benchmark Replacement Conforming
Changes will become effective without any further action or consent of any other
party to this Agreement or any other Loan Document.

 

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(c)                Notices; Standards for Decisions and Determinations. The
Administrative Agent will promptly notify the Borrower and the Lenders of (i)
any occurrence of a Benchmark Transition Event or an Early Opt-in Election, as
applicable, and its related Benchmark Replacement Date, (ii) the implementation
of any Benchmark Replacement, (iii) the effectiveness of any Benchmark
Replacement Conforming Changes, and (iv) the commencement or conclusion of any
Benchmark Unavailability Period. Any determination, decision or election that
may be made by the Administrative Agent or, if applicable, any Lender (or group
of Lenders) pursuant to this Section 2.21, including any determination with
respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of
an event, circumstance or date and any decision to take or refrain from taking
any action, will be conclusive and binding absent manifest error and may be made
in its or their sole discretion and without consent from any other party to this
Agreement or any other Loan Document, except, in each case, as expressly
required pursuant to this Section 2.21.

 

(d)                Benchmark Unavailability Period. Upon the Borrower’s receipt
of notice of the commencement of a Benchmark Unavailability Period, the Borrower
may revoke any request for a LIBOR Borrowing of, conversion to or continuation
of LIBOR Loans to be made, converted or continued during any Benchmark
Unavailability Period and, failing that, the Borrower will be deemed to have
converted any such request into a request for a Borrowing of or conversion of
LIBOR Loans to ABR Loans (and any request for a Borrowing of or conversion of
CAD Loans to Canadian Prime Rate Loans, if applicable). During any Benchmark
Unavailability Period, the component of the Alternate Base Rate based upon the
LIBO Rate will not be used in any determination of the Alternate Base Rate.

 

(e)                Certain Defined Terms. As used in this Section 2.21:

 

Benchmark Replacement means the sum of: (a) the alternate benchmark rate (which
may be a SOFR-Based Rate) that has been selected by the Administrative Agent and
the Borrower giving due consideration to (i) any selection or recommendation of
a replacement benchmark rate or the mechanism for determining such a rate by the
Relevant Governmental Body or (ii) any evolving or then-prevailing market
convention for determining a benchmark rate as a replacement for the LIBO Rate
for U.S. dollar-denominated syndicated credit facilities, and (b) the Benchmark
Replacement Adjustment; provided that, if the Benchmark Replacement as so
determined would be less than zero, the Benchmark Replacement will be deemed to
be zero for the purposes of this Agreement; provided further that any such
Benchmark Replacement shall be administratively feasible as determined by the
Administrative Agent in its sole discretion.

 

Benchmark Replacement Adjustment means with respect to any replacement of the
LIBO Screen Rate with an Unadjusted Benchmark Replacement for the applicable
Corresponding Tenor, the spread adjustment or method for calculating or
determining such spread adjustment, (which may be a positive or negative value
or zero) that has been selected by the Administrative Agent and the Borrower
giving due consideration to (i) any selection or recommendation of a spread
adjustment, or method for calculating or determining such spread adjustment, for
the replacement of the LIBO Screen Rate with the applicable Unadjusted Benchmark
Replacement by the Relevant Governmental Body or (ii) any evolving or
then-prevailing market convention for determining a spread adjustment, or method
for calculating or determining such spread adjustment, for the replacement of
the LIBO Screen Rate with the applicable Unadjusted Benchmark Replacement for
U.S. dollar-denominated syndicated credit facilities at such time.

 

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Benchmark Replacement Conforming Changes means, with respect to any Benchmark
Replacement, any technical, administrative or operational changes (including
changes to the definition of “ABR,” the definition of “Business Day,” the
definition of “Interest Period,” timing and frequency of determining rates and
making payments of interest, and other administrative or operational matters)
that the Administrative Agent decides in its reasonable discretion may be
appropriate to reflect the adoption and implementation of such Benchmark
Replacement and to permit the administration thereof by the Administrative Agent
in a manner substantially consistent with market practice (or, if the
Administrative Agent decides that adoption of any portion of such market
practice is not administratively feasible or if the Administrative Agent
determines that no market practice for the administration of such Benchmark
Replacement exists, in such other manner of administration as the Administrative
Agent decides is reasonably necessary in connection with the administration of
this Agreement and the other Loan Documents).

 

Benchmark Replacement Date means the earliest to occur of the following events
with respect to the LIBO Rate:

 

(1)       in the case of clause (1) or (2) of the definition of “Benchmark
Transition Event,” the later of (a) the date of the public statement or
publication of information referenced therein and (b) the date on which the
administrator of the LIBO Screen Rate permanently or indefinitely ceases to
provide the LIBO Screen Rate; or

 

(2)       in the case of clause (3) of the definition of “Benchmark Transition
Event,” the date of the public statement or publication of information
referenced therein.

 

Benchmark Transition Event means the occurrence of one or more of the following
events with respect to the LIBO Screen Rate:

 

(1)                a public statement or publication of information by or on
behalf of the administrator of the LIBO Screen Rate (or the published component
used in the calculation thereof) announcing that such administrator has ceased
or will cease to provide the LIBO Screen Rate, permanently or indefinitely,
provided that, at the time of such statement or publication, there is no
successor administrator that will continue to provide the LIBO Screen Rate;

 

(2)                a public statement or publication of information by the
regulatory supervisor for the administrator of the LIBO Screen Rate, the Board
of Governors of the Federal Reserve System, the Federal Reserve Bank of New
York, an insolvency official with jurisdiction over the administrator for the
LIBO Screen Rate, a resolution authority with jurisdiction over the
administrator for the LIBO Screen Rate or a court or an entity with similar
insolvency or resolution authority over the administrator for the LIBO Screen
Rate, which states that the administrator of such LIBO Screen Rate has ceased or
will cease to provide the LIBO Screen Rate permanently or indefinitely, provided
that, at the time of such statement or publication, there is no successor
administrator that will continue to provide the LIBO Screen Rate; or

 

(3)                a public statement or publication of information by the
regulatory supervisor for the administrator of the LIBO Screen Rate announcing
that such LIBO Screen Rate is no longer representative.

 

Benchmark Transition Start Date means (a) in the case of a Benchmark Transition
Event, the earlier of (i) the applicable Benchmark Replacement Date and (ii) if
such Benchmark Transition Event is a public statement or publication of
information of a prospective event, the 90th day prior to the expected date of
such event as of such public statement or publication of information (or if the
expected date of such prospective event is fewer than 90 days after such
statement or publication, the date of such statement or publication) and (b) in
the case of an Early Opt-in Election, the date specified by the Administrative
Agent or the Required Lenders, as applicable, by notice to the Borrower, the
Administrative Agent (in the case of such notice by the Required Lenders) and
the Lenders.

 

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Benchmark Unavailability Period means the period (if any) (a) beginning at the
time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that
definition has occurred if, at such time, no Benchmark Replacement has replaced
the LIBO Screen Rate for all purposes hereunder and under any Loan Document in
accordance with this Section 2.21 and (b) ending at the time that a Benchmark
Replacement has replaced the LIBO Screen Rate for all purposes hereunder and
under any Loan Document in accordance with this Section 2.21.

 

Corresponding Tenor with respect to a Benchmark Replacement means a tenor
(including overnight) having approximately the same length (disregarding
business day adjustment) as the applicable tenor for the applicable Interest
Period with respect to the LIBO Screen Rate.

 

Early Opt-in Election means the occurrence of:

 

(1)                (i) a determination by the Administrative Agent or (ii) a
notification by the Required Lenders to the Administrative Agent (with a copy to
the Borrower) that the Required Lenders have determined that U.S.
dollar-denominated syndicated credit facilities being executed at such time, or
that include language similar to that contained in Section 2.21, are being
executed or amended, as applicable, to incorporate or adopt a new benchmark
interest rate to replace the LIBO Screen Rate, and

 

(2)                (i) the election by the Administrative Agent or (ii) the
election by the Required Lenders, to declare that an Early Opt-In Election has
occurred and the provision, as applicable, by the Administrative Agent of
written notice of such election to the Borrower and the Lenders or by the
Required Lenders of written notice of such election to the Administrative Agent
(with a copy to the Borrower).

 

Relevant Governmental Body means the Board of Governors of the Federal Reserve
System or the Federal Reserve Bank of New York, or a committee officially
endorsed or convened by the Board of Governors of the Federal Reserve System or
the Federal Reserve Bank of New York, or any successor thereto.

 

SOFR means, with respect to any day, a rate per annum equal to the secured
overnight financing rate for such day published by the SOFR Administrator on the
SOFR Administrator’s Website on the immediately succeeding Business Day.

 

SOFR-Based Rate means SOFR or Term SOFR.

 

SOFR Administrator means the Federal Reserve Bank of New York (or a successor
administrator of the secured overnight financing rate).

 

SOFR Administrator’s Website means the website of the Federal Reserve Bank of
New York, currently at http://www.newyorkfed.org, or any successor source for
the secured overnight financing rate identified as such by the SOFR
Administrator from time to time.

 

Term SOFR means the forward-looking term rate based on SOFR that has been
selected or recommended by the Relevant Governmental Body.

 

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Unadjusted Benchmark Replacement means the Benchmark Replacement excluding the
related Benchmark Replacement Adjustment; provided that, if the Unadjusted
Benchmark Replacement as so determined would be less than zero, the Unadjusted
Benchmark Replacement will be deemed to be zero for the purposes of this
Agreement.

 

Article III
REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants to the Lenders that:

 

Section 3.01            Organization; Powers. Each of the Borrower and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required of the Borrower or such Subsidiary, as applicable.

 

Section 3.02            Authorization; Enforceability. The Transactions are
within the Borrower’s corporate powers and have been duly authorized by all
necessary corporate and, if required, by all necessary shareholder action. This
Agreement has been duly executed and delivered by the Borrower and constitutes,
and each of the other Loan Documents when executed and delivered by each Obligor
party thereto will constitute, a legal, valid and binding obligation of such
Obligor, enforceable in accordance with its terms, except as such enforceability
may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or
similar laws of general applicability affecting the enforcement of creditors’
rights and (b) the application of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

 

Section 3.03            Governmental Approvals; No Conflicts. The Transactions
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except for (i) such as have
been or will be obtained or made and are in full force and effect and (ii)
filings and recordings in respect of the Liens created pursuant to this
Agreement or the Security Documents, (b) will not violate any applicable law or
regulation or the charter, by-laws or other organizational documents of the
Borrower or any of its Subsidiaries or any order of any Governmental Authority,
(c) will not violate or result in a default in any material respect under any
indenture, agreement or other instrument binding upon the Borrower or any of its
Subsidiaries or assets, or give rise to a right thereunder to require any
payment to be made by any such Person, and (d) except for the Liens created
pursuant to this Agreement or the Security Documents, will not result in the
creation or imposition of any Lien on any asset of the Borrower or any of its
Subsidiaries.

 

Section 3.04            No Material Adverse Effect. Since the date of the most
recent Applicable Financial Statements, there has not been any event,
development or circumstance that has had or could reasonably be expected to have
a Material Adverse Effect.

 

Section 3.05            Litigation. There are no actions, suits, investigations
or proceedings by or before any arbitrator or Governmental Authority now pending
against or, to the knowledge of the Borrower, threatened against or affecting
the Borrower or any of its Subsidiaries (i) as to which there is a reasonable
possibility of an adverse determination and that, if adversely determined, could
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect or (ii) that involve this Agreement or the Transactions.

 

60

 

 

Section 3.06            Compliance with Laws and Agreements. Each of the
Borrower and its Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. Neither the
Borrower nor any of its Subsidiaries is subject to any contract or other
arrangement, the performance of which by the Borrower or its Subsidiaries could
reasonably be expected to result in a Material Adverse Effect.

 

Section 3.07            Taxes. Each of the Borrower and its Subsidiaries has
timely filed or caused to be filed all material Tax returns and reports required
to have been filed and has paid or caused to be paid all material Taxes required
to have been paid by it, except (a) Taxes that are being contested in good faith
by appropriate proceedings and for which such Person has set aside on its books
adequate reserves or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.

 

Section 3.08            ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect.

 

Section 3.09            Disclosure. The Borrower has disclosed to the Lenders
all agreements, instruments and corporate or other restrictions to which it or
any of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. None of the reports, financial statements, certificates
or other written information (other than projected financial information, other
forward looking information relating to third parties and information of a
general economic or general industry nature) furnished by or on behalf of the
Borrower to the Administrative Agent in connection with the negotiation of this
Agreement and the other Loan Documents or delivered hereunder or thereunder (as
modified or supplemented by other information so furnished) when taken as a
whole (and after giving effect to all updates, modifications and supplements)
contains any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that with respect to
projected financial information, the Borrower represents only that such
information was prepared in good faith based upon assumptions believed to be
reasonable at the time.

 

Section 3.10            Investment Company Act; Margin Regulations.

 

(a)                Status as Business Development Company. The Borrower has
elected to be regulated as a “business development company” within the meaning
of the Investment Company Act and has taken, and will continue to take, all
actions necessary to elect to be treated as a RIC beginning with its taxable
year ended December 31, 2012.

 

(b)                Compliance with Investment Company Act. The business and
other activities of the Borrower and its Subsidiaries, including the making of
the Loans hereunder, the application of the proceeds and repayment thereof by
the Borrower and the consummation of the Transactions contemplated by the Loan
Documents do not result in a violation or breach in any material respect of the
provisions of the Investment Company Act or any rules, regulations or orders
issued by the Securities and Exchange Commission thereunder, in each case that
are applicable to the Borrower and its Subsidiaries.

 

(c)                Investment Policies. The Borrower is in compliance in all
material respects with the Investment Policies (after giving effect to any
Permitted Policy Amendments).

 

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(d)                Use of Credit. Neither the Borrower nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose, whether immediate, incidental
or ultimate, of buying or carrying Margin Stock, and no part of the proceeds of
any extension of credit hereunder will be used to buy or carry any Margin Stock.

 

Section 3.11            Material Agreements and Liens.

 

(a)                Material Agreements. Part A of Schedule 3.11 is a complete
and correct list, as of the Effective Date, of each credit agreement, loan
agreement, indenture, purchase agreement, guarantee, letter of credit or other
arrangement providing for or otherwise relating to any Indebtedness or any
extension of credit (or commitment for any extension of credit) to, or guarantee
by, the Borrower or any of its Subsidiaries outstanding on the Effective Date,
and the aggregate principal or face amount outstanding or that is, or may
become, outstanding under each such arrangement is correctly described in Part A
of Schedule 3.11.

 

(b)                Liens. Part B of Schedule 3.11 is a complete and correct
list, as of the Effective Date, of each Lien securing Indebtedness of any Person
outstanding on the Effective Date covering any property of the Borrower or any
of the Subsidiary Guarantors, and the aggregate Indebtedness secured (or that
may be secured) by each such Lien and the property covered by each such Lien is
correctly described in Part B of Schedule 3.11.

 

Section 3.12            Subsidiaries and Investments.

 

(a)                Subsidiaries. Set forth on Schedule 3.12(a) is a list of the
Borrower’s Subsidiaries as of the Effective Date.

 

(b)                Investments. Set forth on Schedule 3.12(b) is a complete and
correct list, as of the Effective Date, of all Investments (other than
Investments of the types referred to in clauses (b), (c) and (d) of
Section 6.04) held by the Borrower or any of the Subsidiary Guarantors in any
Person on the Effective Date and, for each such Investment, (x) the identity of
the Person or Persons holding such Investment and (y) the nature of such
Investment. Except as disclosed in Schedule 3.12, each of the Borrower and any
of the Subsidiary Guarantors owns, free and clear of all Liens (other than Liens
created pursuant to this Agreement or the Security Documents and Permitted
Liens), all such Investments.

 

Section 3.13            Properties.

 

(a)                Title Generally. Each of the Borrower and the Subsidiary
Guarantors has good title to, or valid leasehold interests in, all its real and
personal property material to its business, except for minor defects in title
that do not interfere with its ability to conduct its business as currently
conducted or to utilize such properties for their intended purposes.

 

(b)                Intellectual Property. Each of the Borrower and its
Subsidiaries (other than any Financing Subsidiary) owns, or is licensed to use,
all trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by the Borrower and its
Subsidiaries (other than any Financing Subsidiary) does not infringe upon the
rights of any other Person, except for any such infringements that, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.

 

Section 3.14            Affiliate Agreements. As of the date hereof, the
Borrower has heretofore delivered to the Administrative Agent true and complete
copies of each of the Affiliate Agreements (including and schedules and exhibits
thereto, and any amendments, supplements or waivers executed and delivered
thereunder). As of the date of hereof, each of the Affiliate Agreements is in
full force and effect.

 

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Section 3.15            Sanctions Laws and Regulations. None of the Borrower or
its Subsidiaries, or to the best knowledge of the Borrower, any director,
officer, broker or other agent of the Borrower or any of its Subsidiaries, in
each case, acting or benefiting in any capacity in connection with this
Agreement, is a Designated Person.

 

Section 3.16            Patriot Act. Each of the Borrower and its Subsidiaries
is in compliance with (a) the Trading with the Enemy Act, as amended, and each
of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling
legislation or executive order relating thereto, and (b) the Uniting And
Strengthening America By Providing Appropriate Tools Required To Intercept And
Obstruct Terrorism (USA Patriot Act of 2001). No part of the proceeds of the
Loans will be used, directly or indirectly, for any payments to any governmental
official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.

 

Section 3.17            Collateral Documents. The provisions of the Security
Documents are effective to create in favor of the Collateral Agent a legal,
valid and enforceable first priority Lien (subject to Liens permitted by
Section 6.02) on all right, title and interest of the Borrower and each
Subsidiary Guarantor in the Collateral described therein. Except for filings
completed prior to the Effective Date and as contemplated hereby and by the
Security Documents, no filing or other action will be necessary to perfect such
Liens.

 

Article IV
CONDITIONS

 

Section 4.01            Effective Date. The effectiveness of this Agreement and
of the obligations of the Lenders to make Loans and of the Issuing Bank to issue
Letters of Credit hereunder shall not become effective until completion of each
of the following conditions precedent (unless a condition shall have been waived
in accordance with Section 9.02):

 

(a)                Documents. Administrative Agent shall have received each of
the following documents, each of which shall be satisfactory to the
Administrative Agent (and to the extent specified below to each Lender) in form
and substance:

 

(i)                 Executed Counterparts. From each party hereto either (i) a
counterpart of this Agreement signed on behalf of such party or (ii) written
evidence satisfactory to the Administrative Agent (which may include telecopy
transmission of a signed signature page to this Agreement) that such party has
signed a counterpart of this Agreement.

 

(ii)               Opinion of Counsel to the Borrower. A favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated the
Effective Date) of Eversheds Sutherland (US) LLP, New York and Maryland counsel
for the Borrower and the Subsidiary Guarantors, in form and substance reasonably
acceptable to the Administrative Agent (and the Borrower hereby instructs such
counsel to deliver such opinion to the Lenders and the Administrative Agent).

 

(iii)             Corporate Documents. Such documents and certificates as the
Administrative Agent or its counsel may reasonably request relating to the
organization, existence and good standing of the Borrower, the authorization of
the Transactions and any other legal matters relating to the Borrower, this
Agreement or the Transactions, all in form and substance satisfactory to the
Administrative Agent and its counsel.

 

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(iv)              Officer’s Certificate. A certificate, dated the Effective Date
and signed by the President, the Chief Executive Officer, a Vice President or a
Financial Officer of the Borrower, confirming compliance with the conditions set
forth in the lettered clauses of the first sentence of Section 4.02.

 

(v)                Guarantee and Security Agreement. The Guarantee and Security
Agreement, duly executed and delivered by each of the parties to the Guarantee
and Security Agreement.

 

(vi)              Borrowing Base Certificate. A Borrowing Base Certificate
showing a calculation of the Borrowing Base as of July 31, 2020.

 

(b)                Liens. The Administrative Agent shall have received results
of a recent lien search in each relevant jurisdiction with respect to the
Borrower and the Subsidiary Guarantors, confirming that each financing statement
in respect of the Liens in favor of the Collateral Agent created pursuant to the
Security Documents is otherwise prior to all other financing statements or other
interests reflected therein (other than any financing statement or interest in
respect of liens permitted under Section 6.02 or liens to be discharged on or
prior to the Effective Date pursuant to documentation satisfactory to the
Administrative Agent) and revealing no liens on any of the assets of the
Borrower or the Subsidiary Guarantors (except for liens permitted under
Section 6.02 or liens to be discharged on or prior to the Effective Date
pursuant to documentation satisfactory to the Administrative Agent). All UCC
financing statements and similar documents required to be filed in order to
create in favor of the Collateral Agent, for the benefit of the Lenders, a first
priority perfected security interest in the Collateral (to the extent that such
a security interest may be perfected by a filing under the Uniform Commercial
Code) shall have been properly filed in each jurisdiction required (or
arrangements for such filings acceptable to the Collateral Agent shall have been
made).

 

(c)                Consents. The Borrower shall have obtained and delivered to
the Administrative Agent copies of all consents, approvals, authorizations,
registrations, or filings required to be made or obtained by the Borrower and
all Subsidiary Guarantors in connection with the Transactions and any
transaction being financed with the proceeds of the Loans, and such consents,
approvals, authorizations, registrations, filings and orders shall be in full
force and effect and all applicable waiting periods shall have expired and no
investigation or inquiry by any Governmental Authority regarding the
Transactions or any transaction being financed with the proceeds of the Loans
shall be ongoing.

 

(d)                Fees and Expenses. The Borrower shall have paid in full to
the Administrative Agent all fees and expenses related to this Agreement owing
on the Effective Date, including the fees specified in the Fee Letter that are
due and payable on the Effective Date.

 

(e)                Patriot Act. The Administrative Agent and the Lenders shall
have received, sufficiently in advance of the Effective Date, all documentation
and other information required by bank regulatory authorities under applicable
“know your customer” and anti-money laundering rules and regulations, including
the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)).

 

(f)                 Other Documents. The Administrative Agent shall have
received such other documents as the Administrative Agent or any Lender may
reasonably request in form and substance satisfactory to the Administrative
Agent.

 

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Section 4.02            Each Credit Event. The obligation of each Lender to make
any Loan, and of the Issuing Bank to issue, amend, renew or extend any Letter of
Credit, is additionally subject to the satisfaction of the following conditions:

 

(a)                the representations and warranties of the Borrower set forth
in this Agreement and in the other Loan Documents shall be true and correct in
all material respects (or, in the case of any portion of any representations and
warranties already subject to a materiality qualifier, true and correct in all
respects) on and as of the date of such Loan or the date of issuance, amendment,
renewal or extension of such Letter of Credit, as applicable, or, as to any such
representation or warranty that refers to a specific date, as of such specific
date;

 

(b)                at the time of and immediately after giving effect to such
Loan or the issuance, amendment, renewal or extension of such Letter of Credit,
as applicable, no Default shall have occurred and be continuing; and

 

(c)                either (i) the aggregate Covered Debt Amount (after giving
effect to such extension of credit) shall not exceed the Borrowing Base
reflected on the Borrowing Base Certificate most recently delivered to the
Administrative Agent or (ii) the Borrower shall have delivered an updated
Borrowing Base Certificate demonstrating that the Covered Debt Amount (after
giving effect to such extension of credit) shall not exceed the Borrowing Base
after giving effect to such extension of credit as well as any concurrent
acquisitions of Investments or payment of outstanding Loans.

 

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in the preceding
sentence.

 

Article V
AFFIRMATIVE COVENANTS

 

Until the Commitments have expired or been terminated and the principal of and
interest on each Loan and all fees payable hereunder shall have been paid in
full and all Letters of Credit shall have expired, been terminated, Cash
Collateralized or backstopped and all LC Disbursements shall have been
reimbursed, the Borrower covenants and agrees with the Lenders that:

 

Section 5.01            Financial Statements and Other Information. The Borrower
will furnish to the Administrative Agent and each Lender:

 

(a)                within 90 days after the end of each fiscal year of the
Borrower, the audited consolidated balance sheet, income statement and statement
of cash flows of the Borrower and its Subsidiaries as of the end of and for such
year, setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on by Grant Thornton LLP or other independent
public accountants of recognized national standing to the effect that such
consolidated financial statements present fairly in all material respects the
financial condition and results of operations of the Borrower and its
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied; provided that the requirements set forth in this clause (a) may be
fulfilled by providing to the Administrative Agent and the Lenders the report of
the Borrower to the SEC on Form 10-K for the applicable fiscal year;

 

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

 

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(c)                concurrently with any delivery of financial statements under
clause (a) or (b) of this Section, a certificate of a Financial Officer of the
Borrower (i) certifying that such statements are consistent with the financial
statements filed by the Borrower with the Securities and Exchange Commission,
(ii) certifying as to whether the Borrower has knowledge that a Default has
occurred during the applicable period and, if a Default or 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 Sections 6.01, 6.02, 6.04 and 6.07
(with respect to such financial covenants under Section 6.07, unless otherwise
required by Administrative Agent with respect to Sections 6.07(b) and (c), each
of the financial covenants set forth in Section 6.07 shall be calculated and
tested as of the last day of each March, June, September, and December,
commencing with the first such date to occur after the Effective Date), (iv)
setting forth the Borrower’s Good Faith Tax Estimate for the current taxable
year as of the last day of the most recent fiscal quarter, and (v) stating
whether any change in GAAP as applied by (or in the application of GAAP by) the
Borrower has occurred since the Effective Date and, if any such change has
occurred, specifying the effect of such change on the financial statements
accompanying such certificate; furthermore, the Borrower shall also furnish a
copy of the report of the Approved Third-Party Appraiser regarding Unquoted
Investments within 45 days after the end of each fiscal quarter of the Borrower;

 

(d)                as soon as available and in any event not later than 20 days
after the end of each monthly accounting period (ending on the last day of each
calendar month) of the Borrower and its Subsidiaries, a Borrowing Base
Certificate as at the last day of such accounting period;

 

(e)                promptly but no later than five Business Days after the
Borrower shall at any time have knowledge that there is a Borrowing Base
Deficiency, a Borrowing Base Certificate as at the date the Borrower has
knowledge of such Borrowing Base Deficiency indicating the amount of the
Borrowing Base Deficiency as at the date the Borrower obtained knowledge of such
deficiency and the amount of the Borrowing Base Deficiency as of the date not
earlier than one Business Day prior to the date the Borrowing Base Certificate
is delivered pursuant to this paragraph;

 

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

 

(g)                promptly after the same become publicly available, copies of
all periodic and other reports, proxy statements and other materials filed by
the Borrower or any of its Subsidiaries with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of the
functions of said Commission, or with any national securities exchange, as the
case may be; and

 

(h)                promptly following any request therefor, such other
information regarding the operations, business affairs and financial condition
of the Borrower or any of its Subsidiaries, or compliance with the terms of this
Agreement and the other Loan Documents, as the Administrative Agent or any
Lender may reasonably request.

 

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Borrower and each Lender acknowledge that certain of the Lenders may be Public
Lenders and, if documents or notices required to be delivered pursuant to this
Section 5.01 or otherwise are being distributed through DebtX,
IntraLinks/IntraAgency, SyndTrak or another relevant website or other
information platform (the “Platform”), any document or notice that Borrower has
indicated contains Non-Public Information shall not be posted by Administrative
Agent on that portion of the Platform designated for such Public Lenders.
Borrower agrees to clearly designate all information provided to Administrative
Agent by or on behalf of Borrower or any of its Subsidiaries which is suitable
to make available to Public Lenders. If Borrower has not indicated whether a
document or notice delivered pursuant to this Section 5.01 contains Non-Public
Information, the Administrative Agent reserves the right to post such document
or notice solely on that portion of the Platform designated for Lenders who wish
to receive material Non-Public Information with respect to Borrower, its
Subsidiaries and their Securities (as such term is defined in Section 5.13 of
this Agreement).

 

Section 5.02            Notices of Material Events. The Borrower will furnish to
the Administrative Agent and each Lender prompt written notice of the following:

 

(a)                the occurrence of any Default or Event of Default;

 

(b)                the filing or commencement of any action, suit or proceeding
by or before any arbitrator or Governmental Authority against or affecting the
Borrower or any of its Affiliates that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;

 

(c)                the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Borrower and its Subsidiaries in an aggregate amount
exceeding $1,000,000; and

 

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

 

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

 

Section 5.03            Existence: Conduct of Business. The Borrower will, and
will cause each of its Subsidiaries (other than Immaterial Subsidiaries) to, do
or cause to be done all things necessary to preserve, renew and keep in full
force and effect its legal existence and the rights, licenses, permits,
privileges and franchises material to the conduct of its business; provided that
the foregoing shall not prohibit (a) any merger, consolidation, liquidation or
dissolution permitted under Section 6.03 or (b) the dissolution of any Financing
Subsidiary.

 

Section 5.04            Payment of Obligations. The Borrower will, and will
cause each of its Subsidiaries to, pay its obligations, including income Tax and
other material Tax liabilities and material contractual obligations, that, if
not paid, could reasonably be expected to result in a Material Adverse Effect
before the same shall become delinquent or in default, except where (a) the
validity or amount thereof is being contested in good faith by appropriate
proceedings, (b) the Borrower or such Subsidiary has set aside on its books
adequate reserves with respect thereto in accordance with GAAP and (c) the
failure to make payment pending such contest could not reasonably be expected to
result in a Material Adverse Effect.

 

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Section 5.05            Maintenance of Properties; Insurance1.; Primary
Depositary Bank. The Borrower will, and will cause each of its Subsidiaries
(other than Immaterial Subsidiaries) to, (a) keep and maintain all property
material to the conduct of its business in good working order and condition,
ordinary wear and tear excepted, and (b) maintain, with financially sound and
reputable insurance companies in the Borrower’s reasonable judgment, insurance
in such amounts and against such risks as are customarily maintained by
companies engaged in the same or similar businesses operating in the same or
similar locations. Borrower shall establish and maintain its primary banking
depository and disbursement relationships with Amegy Bank and shall maintain all
Cash Collateral (other than credit support not constituting funds subject to
deposit) in blocked, non-interest bearing deposit accounts at Amegy Bank.

 

Section 5.06            Books and Records; Inspection and Audit Rights. The
Borrower will, and will cause each of its Subsidiaries to, keep books of record
and account in accordance with GAAP. The Borrower will, and will cause each
other Obligor to, permit any representatives designated by the Administrative
Agent or any Lender, upon reasonable prior notice, to visit and inspect its
properties during business hours, to examine and make extracts from its books
and records, and to discuss its affairs, finances and condition with its
officers and independent accountants, all at such reasonable times and as often
as reasonably requested, in each case, to the extent such inspection or requests
for such information are reasonable and such information can be provided or
discussed without violation of law, rule, regulation, order of any Governmental
Authority or contract; provided that, the Borrower or such Obligor shall be
entitled to have its representatives and advisors present during any inspection
of its books and records.

 

Section 5.07            Compliance with Laws. The Borrower will, and will cause
each of its Subsidiaries to, comply with all laws, rules, regulations, including
the Investment Company Act, and orders of any Governmental Authority applicable
to it or its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. Without limiting the generality of the foregoing, the Borrower will, and
will cause its Subsidiaries to, conduct its business and other activities in
compliance in all material respects with the provisions of the Investment
Company Act and any applicable rules, regulations or orders issued by the
Securities and Exchange Commission thereunder.

 

Section 5.08            Certain Obligations Respecting Subsidiaries; Further
Assurances.

 

(a)                Subsidiary Guarantors. In the event that the Borrower or any
of the Subsidiary Guarantors shall form or acquire any new Subsidiary (other
than a Financing Subsidiary, a Foreign Subsidiary, an Immaterial Subsidiary or a
Subsidiary of a Foreign Subsidiary), the Borrower will cause such new Subsidiary
to become a “Subsidiary Guarantor” (and, thereby, an “Obligor”) under the
Guarantee and Security Agreement pursuant to a Guarantee Assumption Agreement
and to deliver such proof of corporate or other action, incumbency of officers,
opinions of counsel and other documents as is consistent with those delivered by
the Borrower pursuant to Section 4.01 upon the Effective Date or as the
Administrative Agent shall have requested.

 

(b)                Ownership of Subsidiaries. The Borrower will, and will cause
each of its Subsidiaries to, take such action from time to time as shall be
necessary to ensure that each of its Subsidiaries is a wholly owned Subsidiary.

 

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(c)                Further Assurances. The Borrower will, and will cause each of
the Subsidiary Guarantors to, take such action from time to time as shall
reasonably be requested by the Administrative Agent to effectuate the purposes
and objectives of this Agreement. Without limiting the generality of the
foregoing, the Borrower will, and will cause each of the Subsidiary Guarantors
to, take such action from time to time (including filing appropriate Uniform
Commercial Code financing statements and executing and delivering such
assignments, security agreements and other instruments) as shall be reasonably
requested by the Administrative Agent: (i) to create, in favor of the Collateral
Agent for the benefit of the Lenders (and any affiliate thereof that is a party
to any Hedging Agreement entered into with the Borrower) perfected security
interests and Liens in the Collateral; provided that any such security interest
or Lien shall be subject to the relevant requirements of the Security Documents,
(ii) to cause any bank or securities intermediary (within the meaning of the
Uniform Commercial Code) to enter into such arrangements with the Collateral
Agent as shall be appropriate in order that the Collateral Agent has “control”
(within the meaning of the Uniform Commercial Code) over each bank account or
securities account of the Obligors, and in that connection, the Borrower agrees
to cause all cash and other proceeds of Investments received by any Obligor to
be promptly deposited into such an account (or otherwise delivered to, or
registered in the name of, the Collateral Agent), (iii) in the case of any
Investment consisting of a Bank Loan (as defined in Section 5.13) that does not
constitute all of the credit extended to the underlying borrower under the
relevant underlying loan documents and a Financing Subsidiary holds any interest
in the loans or other extensions of credit under such loan documents, (x) to
cause such Financing Subsidiary to be party to such underlying loan documents as
a “lender” having a direct interest in such underlying loan documents and the
extensions of credit thereunder and (y) to ensure that all amounts owing to such
Obligor (including any amounts owing to such Obligor in its capacity as the
administrative agent) or Financing Subsidiary by the underlying borrower or
other obligated party are remitted by such borrower or obligated party directly
to separate accounts of such Obligor and such Financing Subsidiary, as
applicable, (iv) in the event that any Obligor is acting as an agent or
administrative agent under any loan documents with respect to any Bank Loan that
does not constitute all of the credit extended to the underlying borrower under
the relevant underlying loan documents, to ensure that all funds held by such
Obligor in such capacity as agent or administrative agent is segregated from all
other funds of such Obligor and clearly identified as being held in an agency
capacity and (v) to cause the closing sets and all executed amendments,
consents, forbearances and other modifications and assignment agreements
relating to any Investment and any other documents relating to any Investment
requested by the Collateral Agent, in each case, to be held by the Collateral
Agent or a custodian pursuant to the terms of a custodian agreement reasonably
satisfactory to the Collateral Agent.

 

Section 5.09            Use of Proceeds. The Borrower will use the proceeds of
the Loans only for general corporate purposes of the Borrower in the ordinary
course of business, including the acquisition and funding (either directly or
through one or more wholly-owned Subsidiaries) of leveraged loans, mezzanine
loans, high-yield securities, convertible securities, preferred stock, common
stock and other Investments; provided that, neither the Administrative Agent nor
any Lender shall have any responsibility as to the use of any of such proceeds.
No part of the proceeds of any Loan will be used in violation of applicable law
or, directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of buying or carrying any Margin Stock. Margin Stock shall be
purchased by the Obligors only with the proceeds of Indebtedness not directly or
indirectly secured by Margin Stock, or with the proceeds of equity capital of
the Borrower.

 

Section 5.10            Status of RIC and BDC. The Borrower shall (a) take all
actions necessary to qualify as a RIC and to thereafter maintain its
qualification as a RIC, and (b) at all times maintain its status as a “business
development company” under the Investment Company Act.

 

Section 5.11            Investment Policies. The Borrower shall at all times be
in compliance in all material respects with its Investment Policies (after
giving effect to any Permitted Policy Amendments).

 

Section 5.12            Portfolio Valuation and Diversification Etc.

 

(a)                Industry Classification Groups. For purposes of this
Agreement, the Borrower shall assign each Portfolio Investment to an Industry
Classification Group. To the extent that any Portfolio Investment is not
correlated with the risks of other Portfolio Investments in an Industry
Classification Group, such Portfolio Investment may be assigned by the Borrower
to an Industry Classification Group that is more closely correlated to such
Portfolio Investment. In the absence of any correlation, the Borrower shall be
permitted, upon prior notice to the Administrative Agent and each Lender, to
create up to three additional industry classification groups for purposes of
this Agreement after the Effective Date.

 

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(b)                Portfolio Valuation Etc.

 

(i)                 Settlement Date Basis. For purposes of this Agreement, all
determinations of whether an investment is to be included as a Portfolio
Investment shall be determined on a settlement-date basis (meaning that any
investment that has been purchased will not be treated as a Portfolio Investment
until such purchase has settled, and any Portfolio Investment which has been
sold will not be excluded as a Portfolio Investment until such sale has
settled); provided that no such investment shall be included as a Portfolio
Investment to the extent it has not been paid for in full.

 

(ii)               Determination of Values. The Borrower will conduct reviews of
the value to be assigned to each of its Portfolio Investments as follows:

 

(A)              Quoted Investments – External Review. With respect to Portfolio
Investments (including Cash Equivalents) for which market quotations are readily
available, the Borrower shall, not less frequently than once each calendar
month, determine the market value of such Portfolio Investments which shall, in
each case, be determined in accordance with one of the following methodologies
(as selected by the Borrower):

 

(w)       in the case of public and 144A securities, the average of the bid
prices as determined by two Approved Dealers selected by the Borrower,

 

(x)       in the case of bank loans, the bid price as determined by one Approved
Dealer selected by the Borrower,

 

(y)       in the case of any Portfolio Investment traded on an exchange, the
closing price for such Portfolio Investment most recently posted on such
exchange, and

 

(z)       in the case of any other Portfolio Investment, the fair market value
thereof as determined by an Approved Pricing Service.

 

(B)              Unquoted Investments – External Review. With respect to each
Portfolio Investment for which market quotations are not readily available, the
Borrower shall select an Approved Third-Party Appraiser to determine whether the
fair market value of each such Portfolio Investment calculated by the Borrower
is within a reasonable range (on a positive assurance basis). Within 45 days
after the end of each fiscal quarter, the Borrower shall provide to the
Administrative Agent a copy of a report of such Approved Third-Party Appraiser
as at the last day of such fiscal quarter.  Each such report shall address the
valuation of each such Portfolio Investment to which the Borrower has assigned,
in accordance with the Borrower’s Investment Policies in effect on the Closing
Date, an investment category of 3, 4 or 5 (as such investment categories are
defined in the Borrower’s filings with the Securities and Exchange Commission),
and such report for two fiscal quarters each year shall also address the
valuation of all other Portfolio Investments for which market quotations are not
readily available. Furthermore, the Value of any such Portfolio Investment
(i.e., a Portfolio Investment for which market quotations are not readily
available) acquired shall be deemed to be equal to the cost of such Portfolio
Investment until such time as the fair market value of such Portfolio Investment
is determined in accordance with the provisions of this sub-clause (B).

 

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(C)              Internal Review. The Borrower shall conduct internal reviews of
all Portfolio Investments at least once each calendar month which shall take
into account any events of which the Borrower has actual knowledge that
adversely affect the value of the Portfolio Investments. If the value of any
Portfolio Investment as most recently determined by the Borrower pursuant to
this Section 5.12(b)(ii)(C) is lower than the value of such Portfolio Investment
as most recently determined pursuant to Section 5.12(b)(ii)(A) and (B), such
lower value shall be deemed to be the “Value” of such Portfolio Investment for
purposes hereof; provided that the Value of any Portfolio Investment of the
Borrower and its Subsidiaries shall be increased by the net unrealized gain as
at the date such Value is determined of any Hedging Agreement entered into to
hedge risks associated with such Portfolio Investment and reduced by the net
unrealized loss as at such date of any such Hedging Agreement (such net
unrealized gain or net unrealized loss, on any date, to be equal to the
aggregate amount receivable or payable under the related Hedging Agreement if
the same were terminated on such date).

 

(D)              Failure to Determine Values. If the Borrower shall fail to
determine the value of any Portfolio Investment as at any date pursuant to the
requirements of the foregoing sub-clauses (A), (B) or (C), then the “Value” of
such Portfolio Investment as at such date shall be deemed to be zero.

 

(E)               Testing of Values.

 

(x)       For the second calendar month immediately following the end of each
fiscal quarter (the last such fiscal quarter is referred to herein as, the
“Testing Period”), the Administrative Agent shall have the right to cause an
Approved Third-Party Appraiser selected by the Administrative Agent to value (on
a positive assurance basis) such number of Unquoted Investments (selected by the
Administrative Agent) that collectively have an aggregate Value approximately
equal to the Calculation Amount. If there is a difference between the Borrower’s
valuation and the Approved Third-Party Appraiser’s valuation of any Unquoted
Investment, the Value of such Unquoted Investment for Borrowing Base purposes
shall be established as set forth in sub-clause (F) below.

 

(y)       For the avoidance of doubt, the valuation of any Approved Third-Party
Appraiser selected by the Administrative Agent would not be as of, or delivered
at, the end of any fiscal quarter. Any such valuation would be as of the end of
the second month immediately following any fiscal quarter and would be reflected
in the Borrowing Base Certificate for such month (provided that such Approved
Third-Party Appraiser delivers such valuation at least seven (7) Business Days
before the 20th day after the end of the applicable monthly accounting period
and, if such valuation is delivered after such time, it shall be included in the
Borrowing Base Certificate for the following monthly period and applied to the
then applicable balance of the related Portfolio Investment). For illustrative
purposes, if the given fiscal quarter is the fourth quarter ending on

 

December 31, 2020, then (A) the Administrative Agent would initiate the testing
of Values (using the December 31, 2020 Calculation Amount for purposes of
determining the scope of the testing under clauses (E)(x)) during the month of
February with the anticipation of receiving the valuations from the applicable
Approved Third-Party Appraiser(s) on or after February 28, 2021 and (B)(xx) if
such valuations were received before the 7th Business Day before March 20, 2021,
such valuations would be included in the March 20, 2021 Borrowing Base
Certificate covering the month of February, or (yy) if such valuations were
received after such time, they would be included in the April 20, 2021 Borrowing
Base Certificate for the month of March.

 

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For the avoidance of doubt, all calculations of value pursuant to this
Section 5.12(b)(ii)(E) shall be determined without application of the Advance
Rates.

 

(F)               Valuation Dispute Resolution. Notwithstanding the foregoing,
the Administrative Agent shall at any time have the right to request any
Unquoted Investment be independently valued (on a positive assurance basis) by
an Approved Third-Party Appraiser selected by the Administrative Agent. There
shall be no limit on the number of such appraisals requested by the
Administrative Agent and the costs of any such valuation shall be at the expense
of the Borrower. If the difference between the Borrower’s valuation pursuant to
Section 5.12(b)(ii)(B) and the valuation of any Approved Third-Party Appraiser
selected by the Administrative Agent pursuant to Section 5.12(b)(ii)(E) or (F)
is (1) less than 5% of the value thereof, then the Borrower’s valuation shall be
used, (2) between 5% and 20% of the value thereof, then the valuation of such
Portfolio Investment shall be the average of the value determined by the
Borrower and the value determined by the Approved Third-Party Appraiser retained
by the Administrative Agent and (3) greater than 20% of the value thereof, then
the Borrower and the Administrative Agent shall select an additional Approved
Third-Party Appraiser and the valuation of such Portfolio Investment shall be
the average of the three valuations (with the Administrative Agent’s Approved
Third-Party Appraiser’s valuation to be used until the third valuation is
obtained).

 

(c)          RIC Diversification Requirements. The Borrower will at all times,
subject to applicable grace periods set forth in the Code, comply with the
portfolio diversification requirements set forth in Section 851(b)(3) of the
Code.

 

Section 5.13         Calculation of Borrowing Base. For purposes of this
Agreement, the “Borrowing Base” shall be determined, as at any date of
determination, as the sum of the Advance Rates of the Value of each Portfolio
Investment (excluding any Cash Collateral held by the Administrative Agent
pursuant to Section 2.05(k) or the last paragraph of Section 2.09(a)); provided
that:

 

(a)          the Advance Rate applicable to that portion of the aggregate Value
of the Portfolio Investments of all issuers in a consolidated group of
corporations or other entities (collectively, a “Consolidated Group”) exceeding
20% of Shareholders’ Equity of the Borrower (which, for purposes of this
calculation shall exclude the aggregate amount of investments in, and advances
to, Financing Subsidiaries) shall be 0%;

 

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(b)          the Advance Rate applicable to that portion of the aggregate Value
of the Portfolio Investments in any single Industry Classification Group that
exceeds 25% of Shareholders’ Equity of the Borrower (which for purposes of this
calculation shall exclude the aggregate amount of investments in, and advances
to, Financing Subsidiaries) shall be 0%; provided that, with respect to the
Portfolio Investments in a single Industry Classification Group from time to
time designated by the Borrower to the Administrative Agent, such 25% figure
shall be increased to 30% and, accordingly, only to the extent that the Value
for such single Industry Classification Group exceeds 30% of the Shareholders’
Equity shall the Advance Rate applicable to such excess Value be 0%;

 

(c)          no Portfolio Investment may be included in the Borrowing Base
unless the Collateral Agent maintains a first-priority, perfected Lien (subject
to Permitted Liens) on such Portfolio Investment and such Portfolio Investment
has been Delivered (as defined in the Guarantee and Security Agreement) to the
Collateral Agent, and then only for so long as such Portfolio Investment
continues to be Delivered as contemplated therein;

 

(d)          no portion of any Portfolio Investment (whether quoted or unquoted)
for which the applicable Advance Rate specified below is 0% shall be included in
the Borrowing Base at any time;

 

(e)          the portion of the Borrowing Base attributable to Portfolio
Investments invested outside the United States and Canada shall not exceed 5%
without the consent of the Administrative Agent; and

 

(f)           from and after the Effective Date and prior to April 1, 2021,
while any Portfolio Investment is subject to a Covid-19 Grace Period in
accordance with the definition of “Performing”, such Portfolio Investment may be
included in the Borrowing Base during the same period in which the Covid-19
Grace Period is in effect for such Portfolio Investment, so long as (i) such
Portfolio Investment would otherwise be included in the Borrowing Base under
this Section 5.13, and (ii) the portion of the Borrowing Base attributable to
all Portfolio Investments which are subject to a Covid-19 Grace Period at the
time of determination of the Borrowing Base shall not exceed 10%.

 

As used herein, the following terms have the following meanings:

 

“Advance Rate” means, as to any Portfolio Investment and subject to adjustment
as provided in Section 5.13(a), (b) and (c), the following percentages with
respect to such Portfolio Investment:

 

Portfolio Investment  Quoted  Unquoted Cash, Cash Equivalents and Short-Term
U.S. Government Securities  100%  0% Long-Term U.S.  Government Securities  95% 
0% Performing First Lien Bank Loans  75%  65% Performing Unitranche Loans  65% 
55% Performing Second Lien Bank Loans  60%  50% Performing Cash Pay Secured High
Yield Securities  60%  50% Performing Cash Pay Unsecured High Yield Securities 
50%  40% Performing Cash Pay Mezzanine Investments  45%  35% Non-Performing
First Lien Bank Loans  0%  0% Non-Performing Unitranche Loans  0%  0%
Non-Performing Second Lien Bank Loans  0%  0% Performing Non-Cash Pay Mezzanine
Investments  0%  0% Performing Non-Cash Pay Secured High Yield Securities  0% 
0% Performing Non-Cash Pay Unsecured High Yield Securities  0%  0% Performing
Common Equity (and zero cost or penny warrants with performing debt)  0%  0%
Non-Performing Mezzanine Investments  0%  0% Non-Performing High Yield
Securities  0%  0% Non-Performing Common Equity  0%  0% Structured Finance
Obligations and Finance Leases  0%  0%

 

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“Bank Loans” means debt obligations (including term loans, revolving loans,
debtor-in-possession financings, the funded and unfunded portion of revolving
credit lines and letter of credit facilities and other similar loans and
investments including interim loans and senior subordinated loans) which are
generally under a loan or credit facility (whether or not syndicated).

 

“Capital Stock” of any Person means any and all shares of corporate stock
(however designated) of and any and all other Equity Interests and
participations representing ownership interests (including membership interests
and limited liability company interests) in, such Person.

 

“Covid-19 Grace Period” means, with respect of any Portfolio Investment that is
debt or Preferred Stock, a one-time grace period of three consecutive months,
during which the issuer’s payment obligations of principal or interest in
respect of such debt or Preferred Stock is deferred following its applicable due
date, as a result of the impact of COVID-19 on the business and performance of
such issuer.  The Covid-19 Grace Period may only be applied one-time to each
Portfolio Investment in the calculation of the Advance Rates.

 

“Finance Lease” means any transaction representing the obligation of a lessee to
pay rent or other amounts under a lease which is required to be classified and
accounted for as a capital lease on the balance sheet of such lessee under GAAP.

 

“First Lien Bank Loan” means a Bank Loan that is entitled to the benefit of a
first lien and first priority perfected security interest (subject to Liens for
“ABL” revolvers and customary encumbrances) on a substantial portion of the
assets of the respective borrower and guarantors obligated in respect thereof.

 

“High Yield Securities” means debt Securities and Preferred Stock, in each case
(a) issued by public or private issuers, (b) issued pursuant to an effective
registration statement or pursuant to Rule 144A under the Securities Act (or any
successor provision thereunder) or other exemption to the Securities Act and (c)
that are not Cash Equivalents, Mezzanine Investments or Bank Loans.

 

“Long-Term U.S. Government Securities” means U.S. Government Securities maturing
more than one month from the applicable date of determination.

 

“Mezzanine Investments” means debt Securities (including convertible debt
Securities (other than the “in-the-money” equity component thereof)) and
Preferred Stock in each case (a) issued by public or private issuers, (b) issued
without registration under the Securities Act, (c) not issued pursuant to Rule
144A under the Securities Act (or any successor provision thereunder), (d) that
are not Cash Equivalents and (e) contractually subordinated in right of payment
to other debt of the same issuer.

 

“Non-Performing Common Equity” means Capital Stock (other than Preferred Stock)
and warrants of an issuer having any debt outstanding that is not Performing.

 

“Non-Performing First Lien Bank Loans” means First Lien Bank Loans other than
Performing First Lien Bank Loans.

 

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“Non-Performing High Yield Securities” means High Yield Securities other than
Performing High Yield Securities.

 

“Non-Performing Mezzanine Investments” means Mezzanine Investments other than
Performing Mezzanine Investments.

 

“Non-Performing Portfolio Investment” means Portfolio Investments for which the
issuer is in default of any payment obligations of principal or interest in
respect thereof after the expiration of any applicable grace period.

 

“Non-Performing Second Lien Bank Loans” means Second Lien Bank Loans other than
Performing Second Lien Bank Loans.

 

“Non-Performing Unitranche Loan” means Unitranche Loans other than Performing
Unitranche Loans.

 

“Performing” means (a) with respect to any Portfolio Investment that is debt,
the issuer of such Portfolio Investment is not in default of any payment
obligations of principal or interest in respect thereof after giving effect to a
Covid-19 Grace Period or any other applicable grace period, (b) with respect to
any Portfolio Investment that is Preferred Stock, the issuer of such Portfolio
Investment has not failed to meet any scheduled redemption obligations or to pay
its latest declared cash dividend, after giving effect to a Covid-19 Grace
Period or any other applicable grace period, and (c) with respect to any
Portfolio Investment that is debt or Preferred Stock, (i) Borrower has not
received notice of any material impairment of the financial condition of the
issuer of such debt or Preferred Stock, and (ii) the issuer of such debt or
Preferred Stock is not the subject of a bankruptcy, insolvency, reorganization,
liquidation or similar proceeding; provided that, with respect to any Portfolio
Investment that is debt or Preferred Stock and that the Borrower has assigned,
in each case, in accordance with the Borrower’s Investment Policies in effect on
the Closing Date, to an investment category of 4 or 5 (as such investment
categories are defined in the Borrower’s filings with the Securities and
Exchange Commission), such Portfolio Investment shall automatically be deemed as
non-Performing, unless Administrative Agent in its reasonable discretion has
deemed such Portfolio Investment as Performing.

 

“Performing Cash Pay High Yield Securities” means High Yield Securities (a) as
to which, at the time of determination, not less than 2/3rds of the interest
(including accretions and “pay-in-kind” interest) for the current monthly,
quarterly, semiannual or annual period (as applicable) is payable in cash and
(b) which are Performing.

 

“Performing Cash Pay Mezzanine Investments” means Mezzanine Investments (a) as
to which, at the time of determination, not less than 2/3rds of the interest
(including accretions and “pay-in-kind” interest) for the current monthly,
quarterly, semi-annual or annual period (as applicable) is payable in cash and
(b) which are Performing.

 

“Performing Common Equity” means Capital Stock (other than Preferred Stock) and
warrants of an issuer all of whose outstanding debt is Performing.

 

“Performing First Lien Bank Loans” means First Lien Bank Loans which are
Performing.

 

“Performing Non-Cash Pay High Yield Securities” means Performing High Yield
Securities other than Performing Cash Pay High Yield Securities.

 

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“Performing Non-Cash Pay Mezzanine Investments” means Performing Mezzanine
Investments other than Performing Cash Pay Mezzanine Investments.

 

“Performing Second Lien Bank Loans” means Second Lien Bank Loans which are
Performing.

 

“Preferred Stock,” as applied to the Capital Stock of any Person, means Capital
Stock of such Person of any class or classes (however designated) that ranks
prior, as to the payment of dividends or as to the distribution of assets upon
any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to any shares (or other interests) of other Capital Stock of such
Person, and shall include, without limitation, cumulative preferred,
noncumulative preferred, participating preferred and convertible preferred
Capital Stock.

 

“Second Lien Bank Loan” means a Bank Loan that is entitled to the benefit of a
second lien and second-priority perfected security interest (subject to
customary encumbrances) on specified assets of the respective borrower and
guarantors obligated in respect thereof.

 

“Securities” means common and preferred stock, units and participations, member
interests in limited liability companies, partnership interests in partnerships,
notes, bonds, debentures, trust receipts and other obligations, instruments or
evidences of indebtedness, including debt instruments of public and private
issuers and tax-exempt securities (including warrants, rights, put and call
options and other options relating thereto, representing rights, or any
combination thereof) and other property or interests commonly regarded as
securities or any form of interest or participation therein, but not including
Bank Loans.

 

“Securities Act” means the United States Securities Act of 1933, as amended.

 

“Short-Term U.S. Government Securities” means U.S. Government Securities
maturing within one month of the applicable date of determination.

 

“Structured Finance Obligation” means any obligation issued by a special purpose
vehicle and secured directly by, referenced to, or representing ownership of, a
pool of receivables or other financial assets of any obligor, including
collateralized debt obligations and mortgaged-backed securities. For the
avoidance of doubt, if an obligation satisfies the definition of “Structured
Finance Obligation”, such obligation shall not (a) qualify as any other category
of Portfolio Investment and (b) be included in the Borrowing Base.

 

“Unitranche Loan” means a Bank Loan that is a First Lien Bank Loan, a portion of
which is, in effect, subject to superpriority rights of other lenders following
an event of default (such portion, a “second out” portion); provided, however,
that such second out portion shall not be treated as a Unitranche Loan (and
instead shall be treated as a Second Lien Bank Loan) at such times as the
aggregate drawn principal amount of such second out portion constitutes less
than 75% of the combined aggregate drawn principal amount of (i) such second out
portion and (ii) the portion of such Bank Loan in which such other lenders hold
such superpriority rights. As and at the times provided in the foregoing
sentence, the Borrower’s investment in the second out portion shall be treated
as a Unitranche Loan or Second Lien Bank Loan, as applicable, for purposes of
determining the applicable Advance Rate for such Portfolio Investment.

 

“Value” means, with respect to any Portfolio Investment, the lower of:

 

(i)            the most recent internal market value as determined pursuant to
Section 5.12(b)(ii)(C) and

 

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(ii)           the most recent external market value as determined pursuant to
Section 5.12(b)(ii)(A) and (B).

 

Section 5.14          Refinancing of Unsecured Notes Due 2022. By no later than
March 15, 2022, the Borrower shall cause at least the entire outstanding
principal balance of the Unsecured Notes Due 2022 to be extended and refinanced
under the terms of a Permitted Refinancing that complies with this Agreement
(including, but not limited to, Section 6.01(b)).

 

Article VI
NEGATIVE COVENANTS

 

Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full and
all Letters of Credit have expired, been terminated, Cash Collateralized or
backstopped and all LC Disbursements shall have been reimbursed, the Borrower
covenants and agrees with the Lenders that:

 

Section 6.01          Indebtedness. The Borrower will not, nor will it permit
any of the Subsidiary Guarantors to, create, incur, assume or permit to exist
any Indebtedness, except:

 

(a)          Indebtedness created hereunder;

 

(b)          any Unsecured Longer-Term Indebtedness and the Unsecured Notes Due
2022 (and a Permitted Refinancing thereof) so long as in each case (i) no
Default or Event of Default exists at the time of the incurrence of such
Unsecured Longer-Term Indebtedness or at the time of such Permitted Refinancing
of the Unsecured Notes Due 2022, and (ii) both before and after giving pro forma
effect to the incurrence of such Unsecured Longer-Term Indebtedness or such
Permitted Refinancing of the Unsecured Notes Due 2022, the Borrower is in
compliance with the Asset Coverage Ratio set forth in Section 6.07(b);

 

(c)          Other Permitted Indebtedness;

 

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

 

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

 

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

 

(g)          Permitted SBIC Guarantees;

 

(h)          Indebtedness under any Treasury Credit Facility not to exceed
$100,000,000 in the aggregate;

 

(i)           other Indebtedness not to exceed $3,000,000 at any time; and

 

(j)           Indebtedness of any Subsidiary Guarantor owed to the Borrower.

 

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Section 6.02          Liens. The Borrower will not, nor will it permit any of
the Subsidiary Guarantors to, create, incur, assume or permit to exist any Lien
on any property or asset now owned or hereafter acquired by it, or assign or
sell any income or revenues (including accounts receivable) or rights in respect
of any thereof except:

 

(a)          any Lien on any property or asset of the Borrower or any of the
Subsidiary Guarantors existing as of the Effective Date and set forth in Part B
of Schedule 3.11; provided that (i) no such Lien shall extend to any other
property or asset of the Borrower or any of the Subsidiary Guarantors, and
(ii) any such Lien shall secure only those obligations which it secures on the
date hereof and extensions, renewals and replacements thereof that do not
increase the outstanding principal amount thereof;

 

(b)          Liens created pursuant to this Agreement (including Section 2.19)
or any of the Security Documents;

 

(c)          Liens on Special Equity Interests included in the Investments of
the Borrower but only to the extent securing obligations in the manner provided
in the definition of “Special Equity Interests” in Section 1.01;

 

(d)          Permitted Liens;

 

(e)          Liens on Equity Interests in any SBIC Subsidiary created in favor
of the SBA;

 

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

 

(g)          Liens created pursuant to any Treasury Credit Facility; provided
that such Liens (i) only constitute Liens on (A) Cash not exceeding $2,000,000
at any one time outstanding and (B) U.S. Government Securities and (ii) do not
constitute Liens on any Investments, Cash or other property, in each case that
constitute Collateral hereunder or are included in the Borrowing Base hereunder;
and

 

(h)          Liens securing Indebtedness or other obligations in an aggregate
principal amount not exceeding $2,000,000 at any one time outstanding.

 

Section 6.03          Fundamental Changes. The Borrower will not, nor will it
permit any of the Subsidiary Guarantors to, enter into any transaction of merger
or consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution). The Borrower will not, nor will it
permit any of the Subsidiary Guarantors to, acquire any business or property
from, or capital stock of, or be a party to any acquisition of, any Person,
except for purchases or acquisitions of Investments and other assets in the
normal course of the day-to-day business activities of the Borrower and its
Subsidiaries and not in violation of the terms and conditions of this Agreement
or any other Loan Document. The Borrower will not, nor will it permit any of the
Subsidiary Guarantors to, convey, sell, lease, transfer or otherwise dispose of,
in one transaction or a series of transactions, any part of its assets, whether
now owned or hereafter acquired, but excluding (x) assets (other than
Investments) sold or disposed of in the ordinary course of business (including
to make expenditures of cash in the normal course of the day-to-day business
activities of the Borrower and its Subsidiaries) and (y) subject to the
provisions of clauses (d) and (e) below, Investments.

 

Notwithstanding the foregoing provisions of this Section:

 

(a)          any Subsidiary Guarantor of the Borrower may be merged or
consolidated with or into the Borrower or any other Subsidiary Guarantor;
provided that if any such transaction shall be between a Subsidiary Guarantor
and a wholly owned Subsidiary Guarantor, the wholly owned Subsidiary Guarantor
shall be the continuing or surviving corporation;

 

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

 

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

 

(d)          the Obligors may sell, transfer or otherwise dispose of Investments
(other than to a Financing Subsidiary) so long as after giving effect to such
sale, transfer or other disposition (and any concurrent acquisitions of
Investments or payment of outstanding Loans) the Covered Debt Amount does not
exceed the Borrowing Base;

 

(e)          the Obligors may sell, transfer or otherwise dispose of Investments
to a Financing Subsidiary so long as (i) after giving effect to such sale,
transfer or other disposition (and any concurrent acquisitions of Investments or
payment of outstanding Loans) the Covered Debt Amount does not exceed the
Borrowing Base and the Borrower delivers to the Administrative Agent a
certificate of a Financial Officer to such effect and (ii) either (x) the amount
by which the Borrowing Base exceeds the Covered Debt Amount immediately prior to
such release is not diminished as a result of such release or (y) the Borrowing
Base immediately after giving effect to such release is at least 110% of the
Covered Debt Amount;

 

(f)           the Borrower may merge or consolidate with any other Person so
long as (i) the Borrower is the continuing or surviving entity in such
transaction and (ii) at the time thereof and after giving effect thereto, no
Default shall have occurred or be continuing; and

 

(g)          the Borrower and each of the Subsidiary Guarantors may sell, lease,
transfer or otherwise dispose of equipment or other property or assets that do
not consist of Investments so long as the aggregate amount of all such sales,
leases, transfer and dispositions does not exceed $5,000,000 in any fiscal year.

 

Section 6.04          Investments. The Borrower will not, nor will it permit any
of the Subsidiary Guarantors to, acquire, make or enter into, or hold, any
Investments except:

 

(a)          operating deposit accounts with banks;

 

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

 

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

 

(d)          Investments by the Borrower and its Subsidiaries to the extent such
Investments are permitted under the Investment Company Act and the Borrower’s
Investment Policies as in effect as of the date such Investments are acquired;

 

(e)          Investments in Financing Subsidiaries so long as, (i) after giving
effect to such Investment, the Covered Debt Amount does not exceed the Borrowing
Base and (ii) the sum of (x) all Investments under this clause (e) that occur
after the Commitment Termination Date and (y) all Investments under clause (f)
below that occur after the Commitment Termination Date, shall not exceed
$5,000,000 in the aggregate;

 

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(f)           additional Investments up to but not exceeding $15,000,000 in the
aggregate; provided that the sum of (x) all Investments under this clause (f)
that occur after the Commitment Termination Date and (y) all Investments under
clause (e) above that occur after the Commitment Termination Date, shall not
exceed $5,000,000 in the aggregate;

 

(g)          Investments in Cash and Cash Equivalents; and

 

(h)          Investments described on Schedule 3.12(b).

 

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

 

Section 6.05          Restricted Payments. The Borrower will not, nor will it
permit any of the Subsidiary Guarantors to, declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payment, except that the Borrower
may declare and pay:

 

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

 

(b)          dividends and distributions in either case in cash or other
property (excluding for this purpose the Borrower’s common stock) in any taxable
year of the Borrower in amounts not to exceed the amount that is determined in
good faith by the Borrower to be required to (i) qualify and maintain the status
of the Borrower as a RIC, and (ii) avoid federal excise Taxes for such taxable
year imposed by Section 4982 of the Code (the “Good Faith Tax Estimate”);

 

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

 

(i)            no Default or Event of Default shall have occurred and be
continuing or would result therefrom; and

 

(ii)           the aggregate amount of Restricted Payments made during any
taxable year of the Borrower after the date hereof under this clause (c) shall
not exceed the difference of (x) an amount equal to 10% of the estimated taxable
income of the Borrower for such taxable year determined under section 852(b)(2)
of the Code in good faith by the Borrower on the date such Restricted Payment is
declared, but without regard to subparagraphs (A), (B) or (D) thereof, minus (y)
the amount, if any, by which dividends and distributions made during such
taxable year pursuant to the foregoing clause (b) (whether in respect of such
taxable year or the previous taxable year) exceeds the most recent Good Faith
Tax Estimate provided by the Borrower to the Administrative Agent pursuant to
Section 5.01(c)(iv); and

 

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(d)          other Restricted Payments so long as (i) on the date of such other
Restricted Payment and after giving effect thereto (x) the Covered Debt Amount
does not exceed 90% of the Borrowing Base and (y) no Default shall have occurred
and be continuing or would result therefrom and (ii) on the date of such other
Restricted Payment the Borrower delivers to the Administrative Agent and each
Lender a Borrowing Base Certificate as at such date demonstrating compliance
with subclause (x) after giving effect to such Restricted Payment; provided that
the aggregate amount of Restricted Payments made during any taxable year of the
Borrower after the date hereof in accordance with clause (c)  above and
this clause (d) shall not exceed the difference of (A) an amount equal to 20% of
the estimated taxable income of the Borrower for such taxable year determined
under section 852(b)(2) of the Code in good faith by the Borrower on the date
such Restricted Payment is declared, but without regard to subparagraphs
(A), (B) or (D) thereof, minus (B) the amount, if any, by which dividends and
distributions made during such taxable year pursuant to clause (b) above
(whether in respect of such taxable year or the previous taxable year) exceeds
the most recent Good Faith Tax Estimate provided by the Borrower to the
Administrative Agent pursuant to Section 5.01(c)(iv).

 

For purposes of preparing any Borrowing Base Certificate pursuant to this
Section, (A) the fair market value of Portfolio Investments for which market
quotations are readily available shall be the most recent quotation available
for such Portfolio Investment and (B) the fair market value of Portfolio
Investments for which market quotations are not readily available shall be the
Value set forth in the Borrowing Base Certificate most recently delivered by the
Borrower to the Administrative Agent and the Lenders pursuant to
Section 5.01(d); provided that, the Borrower shall reduce the Value of any
Portfolio Investment referred to in this sub-clause (B) to the extent necessary
to take into account any events of which the Borrower has knowledge that
adversely affect the value of such Portfolio Investment.

 

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

 

Section 6.06          Certain Restrictions on Subsidiaries. The Borrower will
not permit any of its Subsidiaries (other than Financing Subsidiaries) to enter
into or suffer to exist any indenture, agreement, instrument or other
arrangement (other than the Loan Documents) that prohibits or restrains, in each
case in any material respect, or imposes materially adverse conditions upon, the
incurrence or payment of Indebtedness, the declaration or payment of dividends,
the making of loans, advances, guarantees or Investments or the sale,
assignment, transfer or other disposition of property to the Borrower by any
Subsidiary; provided that the foregoing shall not apply to (i) indentures,
agreements, instruments or other arrangements pertaining to other Indebtedness
permitted hereby (provided that such restrictions would not adversely affect the
exercise of rights or remedies of the Administrative Agent or the Lenders
hereunder or under the Security Documents or restrict any Subsidiary in any
manner from performing its obligations under the Loan Documents) and (ii)
indentures, agreements, instruments or other arrangements pertaining to any
lease, sale or other disposition of any asset permitted by this Agreement or any
Lien permitted by this Agreement on such asset so long as the applicable
restrictions only apply to the assets subject to such lease, sale, other
disposition or Lien.

 

Section 6.07          Certain Financial Covenants.

 

(a)          Minimum Shareholders’ Equity. The Borrower will not permit
Shareholders’ Equity at the last day of any fiscal quarter of the Borrower to be
less than $150,000,000 plus 25% of the net proceeds of the sale of Equity
Interests by the Borrower and its Subsidiaries after the Effective Date (other
than proceeds of sales of Equity Interests by and among the Borrower and its
Subsidiaries).

 

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(b)          Asset Coverage Ratio. The Borrower will not permit the Asset
Coverage Ratio to be less than 1.67 : 1.00 as of the last day of Borrower’s
fiscal quarter ending September 30, 2020, and the last day of each fiscal
quarter thereafter.

 

(c)          Liquidity Test. The Borrower will not at any time permit the sum of
(i) the aggregate Value of the Portfolio Investments that are Cash (excluding
Cash Collateral for outstanding Letters of Credit) or that can be converted to
Cash in fewer than 10 Business Days without more than a 5% change in price, plus
(ii) the total amount available to be borrowed by Borrower under Section
2.01(a), to be less than $10,000,000.

 

(d)          Interest Coverage Ratio. The Borrower will not permit the Interest
Coverage Ratio to be less than 2.00 : 1.00 as of the last day of Borrower’s
fiscal quarter ending September 30, 2020, and the last day of each fiscal
quarter thereafter.

 

Section 6.08          Transactions with Affiliates. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into any transactions with any
of its Affiliates, even if otherwise permitted under this Agreement, except (a)
transactions in the ordinary course of business at prices and on terms and
conditions not less favorable to the Borrower or such Subsidiary (other than a
SBIC Subsidiary) than could be obtained on an arm’s-length basis from unrelated
third parties, (b) transactions between or among the Borrower and its
Subsidiaries not involving any other Affiliate, (c) Restricted Payments
permitted by Section 6.05, (d) the transactions provided in the Affiliate
Agreements, (e) transactions described on Schedule 6.08, (f) any Investment
otherwise permitted under this Agreement that results in the creation of an
Affiliate or (g) transactions between or among the Obligors and any SBIC
Subsidiary or any “downstream affiliate” (as such term is used under the rules
promulgated under the Investment Company Act) company of an Obligor at prices
and on terms and conditions not less favorable to the Obligors than could be
obtained at the time on an arm’s-length basis from unrelated third parties.

 

Section 6.09          Lines of Business. The Borrower will not, nor will it
permit any of its Subsidiaries (other than Immaterial Subsidiaries) to, engage
to any material extent in any business other than in accordance with its
Investment Policies. The Borrower will not, nor will it permit any of its
Subsidiaries to amend or modify the Investment Policies (other than a Permitted
Policy Amendment).

 

Section 6.10          No Further Negative Pledge. The Borrower will not, and
will not permit any of the Subsidiary Guarantors to, enter into any agreement,
instrument, deed or lease which prohibits or limits the ability of any Obligor
to create, incur, assume or suffer to exist any Lien upon any of its properties,
assets or revenues, whether now owned or hereafter acquired, or which requires
the grant of any security for an obligation if security is granted for another
obligation, except the following: (a) this Agreement, the other Loan Documents
and documents with respect to Indebtedness permitted under Section 6.01(b);
(b) covenants in documents creating Liens permitted by Section 6.02 prohibiting
further Liens on the assets encumbered thereby; (c) customary restrictions
contained in leases not subject to a waiver; (d) any such agreement that imposes
restrictions on investments or other interests in Financing Subsidiaries (but no
other assets of any Obligor); and (e) any other agreement that does not restrict
in any manner (directly or indirectly) Liens created pursuant to the Loan
Documents on any Collateral securing the “Secured Obligations” under and as
defined in the Guarantee and Security Agreement and does not require the direct
or indirect granting of any Lien securing any Indebtedness or other obligation
by virtue of the granting of Liens on or pledge of property of any Obligor to
secure the Loans or any Hedging Agreement.

 

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Section 6.11          Modifications of Unsecured Notes Due 2022 and Unsecured
Longer-Term Indebtedness Documents. The Borrower will not consent to any
modification, supplement or waiver of:

 

(a)          any of the provisions of any agreement, instrument or other
document evidencing or relating to the Unsecured Notes Due 2022 (or a Permitted
Refinancing thereof), which would cause a Default or Event of Default after
giving effect to such modification, supplement or waiver;

 

(b)          any of the provisions of any agreement, instrument or other
document evidencing or relating to any Unsecured Longer-Term Indebtedness, which
would cause a Default or Event of Default after giving effect to such
modification, supplement or waiver; or

 

(c)          any of the Affiliate Agreements, unless such modification,
supplement or waiver is not materially less favorable to the Borrower than could
be obtained on an arm’s-length basis from unrelated third parties, in each case,
without the prior consent of the Administrative Agent (with the approval of the
Required Lenders).

 

Section 6.12          Payments of Unsecured Notes Due 2022, SBA Debentures, and
Unsecured Longer-Term Indebtedness. The Borrower will not, nor will it permit
any of the Subsidiary Guarantors to, purchase, redeem, retire or otherwise
acquire for value, or set apart any money for a sinking, defeasance or other
analogous fund for the purchase, redemption, retirement or other acquisition of
or make any voluntary payment or prepayment of the principal of or interest on,
or any other amount owing in respect of, the Unsecured Notes Due 2022, SBA
Debentures or any Unsecured Longer Term Indebtedness (other than the refinancing
of Unsecured Longer Term Indebtedness with Indebtedness permitted under Section
6.01), except for (a) regularly scheduled payments, prepayments or redemptions
of principal and interest in respect thereof required pursuant to the
instruments evidencing such Indebtedness (it being understood that any cash
payment made in respect of the repurchase of convertible notes at the option of
the holder or the settlement in Cash or stock or a combination thereof upon
conversion of such notes shall constitute a “regularly scheduled payment,
prepayment or redemption of principal and interest” within the meaning of this
clause (a)); (b) the consummation of a Permitted Refinancing of the Unsecured
Notes Due 2022 that is in compliance with this Agreement; and (c) so long as no
Default or Event of Default shall exist or be continuing, any payment that, if
treated as a Restricted Payment for purposes of Section 6.05(d), would be
permitted to be made pursuant to the provisions set forth in Section 6.05(d).

 

Section 6.13          Accounting Changes. The Borrower will not, nor will it
permit any of its Subsidiaries to, make any change in (a) accounting policies or
reporting practices, except as permitted under GAAP or required by law or rule
or regulation of any Governmental Authority, or (b) its fiscal year.

 

Section 6.14          SBIC Guarantee. The Borrower will not, nor will it permit
any of its Subsidiaries to, cause or permit the occurrence of any event or
condition that would result in any recourse to any Obligor under any Permitted
SBIC Guarantee.

 

Section 6.15          Sanctions Laws and Regulations. The Borrower shall not,
directly or indirectly, use the proceeds of the Loans, or lend, contribute or
otherwise make available such proceeds to any Subsidiary, joint venture partner
or other person or entity (a) to fund any activities or business of or with any
Designated Person, or in any Sanctioned Country that would result in a violation
of any Sanctions Laws and Regulations by any party to this Agreement or (b) in
any other manner that would result in a violation of any Sanctions Laws and
Regulations by any party to this Agreement. None of the funds or assets of the
Borrower that are used to pay any amount due pursuant to this Agreement shall
constitute funds obtained from transactions with or relating to Designated
Persons or Sanctioned Countries in violation of any Sanctions Laws and
Regulations.

 

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Article VII

EVENTS OF DEFAULT

 

If any of the following events (“Events of Default”) shall occur and be
continuing:

 

(a)          the Borrower shall (i) fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise (including, for the avoidance of doubt, any
failure to pay any monthly installment of principal payable on any Scheduled
Payment Date and any failure to pay all principal on the Loans in full on the
Final Maturity Date) or (ii) fail to deposit any amount into the Letter of
Credit Collateral Account as or when required under this Agreement;

 

(b)          the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement or under any other Loan Document, when and
as the same shall become due and payable, and such failure shall continue
unremedied for a period of five or more Business Days;

 

(c)          any representation or warranty made or deemed made by or on behalf
of the Borrower or any of its Subsidiaries in or in connection with this
Agreement or any other Loan Document or any amendment or modification hereof or
thereof, or in any report, certificate, financial statement or other document
furnished pursuant to or in connection with this Agreement or any other Loan
Document or any amendment or modification hereof or thereof, shall prove to have
been incorrect when made or deemed made in any material respect;

 

(d)          the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in (i) Section 5.03 (with respect to the
Borrower’s existence) or Sections 5.08(a) and (b) or in Article VI or any
Obligor shall default in the performance of any of its obligations contained in
Sections 3 and 7 of the Guarantee and Security Agreement or (ii) Sections
5.01(e) and (f) or 5.02 and such failure in the case of this clause (ii) shall
continue unremedied for a period of five or more days after notice thereof by
the Administrative Agent (given at the request of any Lender) to the Borrower;

 

(e)          a Borrowing Base Deficiency shall occur and continue unremedied for
a period of five or more Business Days after delivery of a Borrowing Base
Certificate demonstrating such Borrowing Base Deficiency pursuant to
Section 5.01(e); provided that it shall not be an Event of Default hereunder if
the Borrower shall present the Administrative Agent with a reasonably feasible
plan acceptable to the Required Lenders in their sole discretion to enable such
Borrowing Base Deficiency to be cured within 30 Business Days (which 30-Business
Day period shall include the five Business Days permitted for delivery of such
plan), so long as such Borrowing Base Deficiency is cured within such
30-Business Day period;

 

(f)           the Borrower or any Obligor, as applicable, shall fail to observe
or perform any covenant, condition or agreement contained in this Agreement
(other than those specified in clause (a), (b), (d), (e) or (s) of this Article)
or any other Loan Document and such failure shall continue unremedied for a
period of 30 or more days after notice thereof from the Administrative Agent
(given at the request of any Lender) to the Borrower;

 

(g)          the Borrower or any of its Subsidiaries shall fail to make any
payment (whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness, when and as the same shall become due and payable,
taking into account any applicable grace period;

 

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(h)          any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or shall continue
unremedied for any applicable period of time sufficient to enable or permit the
holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity, unless such event or condition is no longer continuing or has been
waived in accordance with the terms of such Material Indebtedness such that the
holder or holders thereof or any trustee or agent on its or their behalf may no
longer cause such Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; provided that this clause (h) shall not apply to (1) secured
Indebtedness that becomes due as a result of the voluntary sale or transfer of
the property or assets securing such Indebtedness; or (2) convertible debt that
becomes due as a result of a conversion or redemption event, other than as a
result of an “event of default” (as defined in the documents governing such
convertible Material Indebtedness);

 

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

 

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

 

(k)          the Borrower or any of its Subsidiaries (other than Immaterial
Subsidiaries) shall become unable, admit in writing its inability or fail
generally to pay its debts as they become due;

 

(l)           one or more judgments for the payment of money in an aggregate
amount in excess of $5,000,000 shall be rendered against the Borrower or any of
its Subsidiaries (other than Immaterial Subsidiaries) or any combination thereof
and the same shall remain undischarged for a period of 30 consecutive days
during which execution shall not be effectively stayed, or any action shall be
legally taken by a judgment creditor to attach or levy upon any assets of the
Borrower or any of its Subsidiaries (other than Immaterial Subsidiaries) to
enforce any such judgment;

 

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

 

(n)          a Change in Control shall occur;

 

(o)          the Borrower shall cease to be managed by the External Manager or
an Affiliate thereof;

 

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(p)          if, prior to the Final Maturity Date, any two principals of the
External Manager (who initially will be Robert Ladd, Dean D’Angelo and Joshua
Davis), or any of their successors who have been approved by the Administrative
Agent in its reasonable discretion within ninety days, cease to be employed by
the External Manager;

 

(q)          the Liens created by the Security Documents shall, at any time with
respect to Portfolio Investments having an aggregate Value in excess of 5% of
the aggregate Value of all Portfolio Investments, not be valid and perfected (to
the extent perfection by filing, registration, recordation, possession or
control is required herein or therein) in favor of the Administrative Agent,
free and clear of all other Liens (other than Liens permitted under Section 6.02
or under the respective Security Documents) except to the extent that any such
loss of perfection results from the failure of the Collateral Agent to maintain
possession of the certificates representing the securities pledged under the
Loan Documents;

 

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

 

(s)          the Obligors shall at any time, without the consent of the Required
Lenders fail to comply with the covenant contained in Section 5.11, and such
failure shall continue unremedied for a period of 30 or more days after the
earlier of notice thereof by the Administrative Agent (given at the request of
any Lender) to the Borrower or knowledge thereof by a Financial Officer; or

 

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

 

then, and in every such event (other than an event with respect to the Borrower
described in clause (i) or (j) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder and under the other
Loan Documents, shall become due and payable immediately, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower; and in case of any event with respect to the Borrower described in
clause (i) or (j) of this Article, the Commitments shall automatically terminate
and the principal of the Loans then outstanding, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder and
under the other Loan Documents, shall automatically become due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower.

 

In the event that the Loans shall be declared, or shall become, due and payable
pursuant to the immediately preceding paragraph then, upon notice from the
Administrative Agent or Lenders with LC Exposure representing more than 50% of
the total LC Exposure demanding the deposit of Cash Collateral pursuant to this
paragraph, the Borrower shall immediately deposit into the Letter of Credit
Collateral Account cash in an amount equal to the LC Exposure as of such date
plus any accrued and unpaid interest thereon; provided that the obligation to
deposit such cash shall become effective immediately, and such deposit shall
become immediately due and payable, without demand or other notice of any kind,
upon the occurrence of any Event of Default with respect to the Borrower
described in clause (i) or (j) of this Article.

 

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Notwithstanding anything to the contrary contained herein, on the CAM Exchange
Date, to the extent not otherwise prohibited by law, (a) the Lenders shall
automatically and without further act be deemed to have exchanged interests in
the Designated Obligations such that, in lieu of the interests of each Lender in
the Designated Obligations under each Loan in which it shall participate as of
such date, such Lender shall own an interest equal to such Lender’s CAM
Percentage in the Designated Obligations under each of the Loans and (b)
simultaneously with the deemed exchange of interests pursuant to clause (a)
above, the interests in the Designated Obligations to be received in such deemed
exchange shall, automatically and with no further action required, be converted
into the Dollar Equivalent of such amount (as of the Business Day immediately
prior to the CAM Exchange Date) and on and after such date all amounts accruing
and owed to the Lenders in respect of such Designated Obligations shall accrue
and be payable in Dollars at the rate otherwise applicable hereunder. Each
Lender, each Person acquiring a participation from any Lender as contemplated by
Section 9.04 and the Borrower hereby consents and agrees to the CAM Exchange.
The Borrower and the Lenders agree from time to time to execute and deliver to
the Administrative Agent all such promissory notes and other instruments and
documents as the Administrative Agent shall reasonably request to evidence and
confirm the respective interests and obligations of the Lenders after giving
effect to the CAM Exchange, and each Lender agrees to surrender any promissory
notes originally received by it in connection with its Loans hereunder to the
Administrative Agent against delivery of any promissory notes so executed and
delivered; provided that the failure of the Borrower to execute or deliver or of
any Lender to accept any such promissory note, instrument or document shall not
affect the validity or effectiveness of the CAM Exchange. As a result of the CAM
Exchange, on and after the CAM Exchange Date, each payment received by the
Administrative Agent pursuant to any Loan Document in respect of the Designated
Obligations shall be distributed to the Lenders pro rata in accordance with
their respective CAM Percentages (to be redetermined as of each such date of
payment).

 

Article VIII
THE ADMINISTRATIVE AGENT

 

Section 8.01          Appointment of the Administrative Agent. Each of the
Lenders and the Issuing Bank hereby irrevocably appoints the Administrative
Agent as its agent hereunder and under the other Loan Documents and authorizes
the Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental
thereto. Each of the Lenders and the Issuing Bank hereby irrevocably appoints
the Collateral Agent as its agent hereunder and under the other Loan Documents
and authorizes the Collateral Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Collateral Agent by the terms
hereof or thereof, together with such actions and powers as are reasonably
incidental thereto.

 

Section 8.02          Capacity as Lender. The Person serving as the
Administrative Agent hereunder shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not the Administrative Agent, and such Person and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Borrower or any Subsidiary or other Affiliate thereof as if it were not the
Administrative Agent hereunder.

 

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Section 8.03          Limitation of Duties; Exculpation. The Administrative
Agent shall not have any duties or obligations except those expressly set forth
herein and in the other Loan Documents. Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is
continuing, (b) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby or by the other Loan Documents
that the Administrative Agent is required to exercise in writing by the Required
Lenders, and (c) except as expressly set forth herein and in the other Loan
Documents, the Administrative Agent shall not have any duty to disclose, and
shall not be liable for the failure to disclose, any information relating to the
Borrower or any of its Subsidiaries that is communicated to or obtained by the
bank serving as Administrative Agent or any of its Affiliates in any capacity.
The Administrative Agent shall not be liable for any action taken or not taken
by it with the consent or at the request of the Required Lenders or in the
absence of its own gross negligence or willful misconduct. The Administrative
Agent shall be deemed not to have knowledge of any Default unless and until
written notice thereof is given to the Administrative Agent by the Borrower or a
Lender, and the Administrative Agent shall not be responsible for or have any
duty to ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with this Agreement or any other Loan Document, (ii)
the contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement, any other Loan Document or any other agreement,
instrument or document, or (v) the satisfaction of any condition set forth in
Article IV or elsewhere herein or therein, other than to confirm receipt of
items expressly required to be delivered to the Administrative Agent.

 

Section 8.04          Reliance. The Administrative Agent shall be entitled to
rely upon, and shall not incur any liability for relying upon, any notice,
request, certificate, consent, statement, instrument, document or other writing
(including any electronic message, Internet or intranet website posting or other
distribution) believed by it to be genuine and to have been signed or sent by
the proper Person. The Administrative Agent also may rely upon any statement
made to it orally or by telephone and believed by it to be made by the proper
Person, and shall not incur any liability for relying thereon. The
Administrative Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.

 

Section 8.05          Sub-Agents. The Administrative Agent may perform any and
all its duties and exercise its rights and powers by or through any one or more
sub-agents appointed by the Administrative Agent. The Administrative Agent and
any such sub-agent may perform any and all its duties and exercise its rights
and powers through their respective Related Parties. The exculpatory provisions
of the preceding paragraphs shall apply to any such subagent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
The Administrative Agent shall not be responsible for the negligence or
misconduct of any sub-agents except to the extent that a count of competent
jurisdiction determines in a final and non-appealable judgment that the
Administrative Agent acted with gross negligence or willful misconduct in the
selection of such sub-agents.

 

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Section 8.06          Resignation; Successor Administrative Agent. The
Administrative Agent may resign at any time by notifying the Lenders, the
Issuing Bank and the Borrower. Upon any such resignation, the Required Lenders
shall have the right, with the consent of the Borrower not to be unreasonably
withheld (or, if an Event of Default has occurred and is continuing in
consultation with the Borrower), to appoint a successor. If no successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent’s resignation shall
nonetheless become effective and (1) the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder and (2) the Required
Lenders shall perform the duties of the Administrative Agent (and all payments
and communications provided to be made by, to or through the Administrative
Agent shall instead be made by or to each Lender directly) until such time as
the Required Lenders appoint a successor agent as provided for above in this
paragraph. Upon the acceptance of its appointment as Administrative Agent
hereunder by a successor, such successor shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring (or retired)
Administrative Agent and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder (if not already discharged therefrom
as provided above in this paragraph). The fees payable by the Borrower to a
successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such successor.
After the Administrative Agent’s resignation hereunder, the provisions of this
Article and Section 9.03 shall continue in effect for its benefit in respect of
any actions taken or omitted to be taken by it while it was acting as
Administrative Agent.

 

Any resignation by Amegy Bank as Administrative Agent pursuant to this Section
shall also constitute its resignation as Issuing Bank and Swingline Lender. Upon
the acceptance of a successor’s appointment as Administrative Agent hereunder,
(a) such successor shall succeed to and become vested with all of the rights,
powers, privileges and duties of the retiring Issuing Bank and Swingline Lender,
(b) the retiring Issuing Bank and Swingline Lender shall be discharged from all
of their respective duties and obligations hereunder or under the other Loan
Documents, and (c) the successor Issuing Bank shall issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of such
succession or make other arrangements satisfactory to the retiring Issuing Bank
to effectively assume the obligations of the retiring Issuing Bank with respect
to such Letters of Credit.

 

Section 8.07          Reliance by Lenders. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Lender and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement. Each
Lender also acknowledges that it will, independently and without reliance upon
the Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or any related agreement or any document furnished
hereunder or thereunder. The Administrative Agent shall have no duty or
responsibility, either initially or on a continuing basis, to make any such
investigation or any such appraisal on behalf of Lenders or to provide any
Lender with any credit or other information with respect thereto, whether coming
into its possession before the making of the Loans or at any time or times
thereafter, and the Administrative Agent shall have no responsibility with
respect to the accuracy of or the completeness of any information provided to
Lenders.

 

Each Lender, by delivering its signature page to this Agreement or any
Assignment and Assumption and funding any Loan shall be deemed to have
acknowledged receipt of, and consented to and approved, each Loan Document and
each other document required to be approved by the Administrative Agent,
Required Lenders or Lenders.

 

Section 8.08          Modifications to Loan Documents. Except as otherwise
provided in Section 9.02(b) or (c) of this Agreement or the Security Documents
with respect to this Agreement, the Administrative Agent may, with the prior
consent of the Required Lenders (but not otherwise), consent to any
modification, supplement or waiver under any of the Loan Documents; provided
that, without the prior consent of each Lender, the Administrative Agent shall
not (except as provided herein or in the Security Documents) release all or
substantially all of the Collateral or otherwise terminate all or substantially
all of the Liens under any Security Document providing for collateral security,
or alter the relative priorities of the obligations entitled to the benefits of
the Liens created under the Security Documents with respect to all or
substantially all of the Collateral, except that no such consent shall be
required, and the Administrative Agent is hereby authorized, to release any Lien
covering property that is the subject of either a disposition of property
permitted hereunder or a disposition to which the Required Lenders have
consented.

 

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Article IX
MISCELLANEOUS

 

Section 9.01          Notices; Electronic Communications.

 

(a)          Notices Generally. Except in the case of notices and other
communications expressly permitted to be given by telephone, 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 telecopy or electronic mail, as follows:

 

(i)           if to the Borrower, to it at:

 

Stellus Capital Investment Corporation
4400 Post Oak Parkway, Suite 2200
Houston, Texas 77027
Attention: W. Todd Huskinson
E-mail:  Thuskinson@stelluscapital.com

Vgarcia@stelluscapital.com

Telephone Number: (713) 292-5454

Telecopy Number: (713) 292-5414

 

(ii)          if to the Administrative Agent, Swingline Lender, or Issuing Bank
to it at:

 

Amegy Bank

1717 West Loop South, 23rd Floor

Houston, Texas 77027

Attention: Lauren Page

E-mail: lauren.page@amegybank.com

Telephone Number: (713) 232-2217

 

with a copy to:

Porter Hedges LLP

1000 Main Street, Floor 36

Houston, Texas 77002

Attention: Joyce Soliman

E-mail: jsoliman@porterhedges.com

Telephone Number: (713) 226-6685

Telecopy Number: (713) 226-6285

 

(iii)         if to any other Lender, to it at its address (or telecopy number
or e-mail address) set forth in its Administrative Questionnaire.

 

Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
Notices delivered through electronic communications to the extent provided in
paragraph (b) below, shall be effective as provided in said paragraph (b).

 

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(b)         Electronic Communications. Notices and other communications to the
Lenders and the Issuing Bank hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites)
pursuant to procedures approved by the Administrative Agent; provided that the
foregoing shall not apply to notices to any Lender or the Issuing Bank pursuant
to Section 2.06 if such Lender or the Issuing Bank, as applicable, has notified
the Administrative Agent that it is incapable of receiving notices under such
Article by electronic communication. The Administrative Agent or the Borrower
may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it;
provided that approval of such procedures may be limited to particular notices
or communications.

 

(i)            Notices and other communications 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
such notice 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 for the recipient, and (ii)
notices or communications posted to an Internet or intranet website shall be
deemed received upon the deemed receipt by the intended recipient at its e-mail
address as described in the foregoing clause (i) of notification that such
notice or communication is available and identifying the website address
therefor.

 

Each party hereto understands that the distribution of material through an
electronic medium is not necessarily secure and that there are confidentiality
and other risks associated with such distribution and agrees and assumes the
risks associated with such electronic distribution, except to the extent caused
by the willful misconduct or gross negligence of Administrative Agent, any
Lender or their respective Related Parties, as determined by a final,
non-appealable judgment of a court of competent jurisdiction. The Platform and
any electronic communications media approved by the Administrative Agent as
provided herein are provided “as is” and “as available”. None of the
Administrative Agent or its Related Parties warrant the accuracy, adequacy, or
completeness of the such media or the Platform and each expressly disclaims
liability for errors or omissions in the Platform and such media. No warranty of
any kind, express, implied or statutory, including any warranty of
merchantability, fitness for a particular purpose, non-infringement of third
party rights or freedom from viruses or other code defects is made by the
Administrative Agent and any of its Related Parties in connection with the
Platform or the electronic communications media approved by the Administrative
Agent as provided for herein.

 

(c)          Private Side Information Contacts. Each Public Lender agrees to
cause at least one individual at or on behalf of such Public Lender to at all
times have selected the “Private Side Information” or similar designation on the
content declaration screen of the Platform in order to enable such Public Lender
or its delegate, in accordance with such Public Lender’s compliance procedures
and applicable law, including United States federal and state securities laws,
to make reference to information that is not made available through the “Public
Side Information” portion of the Platform and that may contain Non-Public
Information with respect to the Borrower, its Subsidiaries or their Securities
for purposes of United States federal or state securities laws. In the event
that any Public Lender has determined for itself to not access any information
disclosed through the Platform or otherwise, such Public Lender acknowledges
that (i) other Lenders may have availed themselves of such information and (ii)
neither Borrower nor Administrative Agent has any responsibility for such Public
Lender’s decision to limit the scope of the information it has obtained in
connection with this Agreement and the other Loan Documents.

 

(d)          Documents to be Delivered under Sections 5.01 and 5.12(a). For so
long as an DebtX, IntralinksTM or equivalent website is available to each of the
Lenders hereunder, the Borrower may satisfy its obligation to deliver documents
to the Administrative Agent or the Lenders under Sections 5.01 and 5.12(a) by
delivering one hard copy thereof to the Administrative Agent and either an
electronic copy or a notice identifying the website where such information is
located for posting by the Administrative Agent on DebtX, IntralinksTM, or such
equivalent website; provided that the Administrative Agent shall have no
responsibility to maintain access to DebtX, IntralinksTM, or an equivalent
website.

 

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Section 9.02            Waivers; Amendments.

 

(a)                No Deemed Waivers Remedies Cumulative. No failure or delay by
the Administrative Agent the Issuing Bank, the Swingline Lender or any Lender in
exercising any right or power hereunder shall operate as a waiver thereof nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent, the Issuing
Bank, the Swingline Lender and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan,
Swingline Loan or issuance of a Letter of Credit shall not be construed as a
waiver of any Default, regardless of whether the Administrative Agent, the
Swingline Lender, any Lender or the Issuing Bank may have had notice or
knowledge of such Default at the time.

 

(b)                Amendments to this Agreement. Neither this Agreement nor any
provision hereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the Borrower and the Required
Lenders or by the Borrower and the Administrative Agent with the consent of the
Required Lenders; provided that no such agreement shall:

 

(i)                 increase the Commitment of any Lender without the written
consent of such Lender,

 

(ii)               reduce the principal amount of any Loan or LC Disbursement or
reduce the rate of interest thereon, or reduce any fees payable hereunder,
without the written consent of each Lender affected thereby (provided that (x)
any waiver of the applicability of default rate interest under Section 2.2(c)
and (y) any change to the financial covenants, the financial covenant levels in
the Applicable Margin, or the defined terms used in the financial covenants, in
each case, shall not constitute a reduction of the payment of principal or
interest (or the rate of interest) for purposes of this clause (ii)),

 

(iii)             postpone the scheduled date of payment of the principal amount
of any Loan or LC Disbursement, or any interest thereon, or any fees payable
hereunder, or reduce the amount of waive or excuse any such payment, or postpone
the scheduled date of expiration of any Commitment, without the written consent
of each Lender affected thereby,

 

(iv)              change Section 2.17(b), (c) or (d) in a manner that would
alter the pro rata sharing of payments required thereby without the written
consent of each Lender affected thereby, or

 

(v)                change any of the provisions of this Section or the
definition of the term “Required Lenders” or any other provisions in the Loan
Documents specifying the number or percentage of Lenders required to waive,
amend or modify any rights in the Loan Documents or make any determination or
grant any consent hereunder, without the written consent of each Lender affected
thereby;

 

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provided further that (x) no such agreement shall amend, modify or otherwise
affect the rights or duties of the Administrative Agent, the Issuing Bank the
Swingline Lender, or any Multicurrency Lender hereunder without the prior
written consent of the Administrative Agent, the Issuing Bank, the Swingline
Lender, or any Multicurrency Lender, as the case may be, (y) the consent of
Lenders holding not less than two-thirds of the Revolving Credit Exposure and
unused Commitments will be required (A) for any adverse change affecting the
provisions of this Agreement relating to the determination of the Borrowing Base
(excluding changes to the provisions of Section 5.12(b)(ii)(E) and (F), but
including changes to the provisions of Section 5.12(c)(ii) and the definitions
set forth in Section 5.13), and (B) for any release of any material portion of
the Collateral other than for fair value or as otherwise permitted hereunder or
under the other Loan Documents, and (z) the Fee Letter may be amended, or rights
or privileges thereunder waived, in a written agreement executed only by the
parties thereto.

 

Anything in this Agreement to the contrary notwithstanding, no waiver or
modification of any provision of this Agreement or any other Loan Document that
could reasonably be expected to adversely affect the Lenders of any Class in a
manner that does not affect all Classes equally shall be effective against the
Lenders of such Class unless the Required Lenders of such Class shall have
concurred with such waiver or modification. Notwithstanding the foregoing,
amendments or modifications to this Agreement to implement the Benchmark
Replacement may be approved and executed in accordance with Section 2.21 hereof.

 

(c)                Amendments to Security Documents. No Security Document nor
any provision thereof may be waived, amended or modified, nor may the Liens
thereof be spread to secure any additional obligations (including any increase
in Loans hereunder, but excluding any such increase pursuant to a Commitment
Increase under Section 2.08(e)) except pursuant to an agreement or agreements in
writing entered into by the Borrower, and by the Collateral Agent with the
consent of the Required Lenders; provided that, (i) without the written consent
of each Lender, no such agreement shall release all or substantially all of the
Obligors from their respective obligations under the Security Documents and (ii)
without the written consent of each Lender, no such agreement shall release all
or substantially all of the collateral security or otherwise terminate all or
substantially all of the Liens under the Security Documents, alter the relative
priorities of the obligations entitled to the Liens created under the Security
Documents (except in connection with securing additional obligations equally and
ratably with the Loans and other obligations hereunder) with respect to all or
substantially all of the collateral security provided thereby, or release all or
substantially all of the guarantors under the Guarantee and Security Agreement
from their guarantee obligations thereunder, except that no such consent shall
be required, and the Administrative Agent is hereby authorized (and so agrees
with the Borrower) to direct the Collateral Agent under the Guarantee and
Security Agreement, to release any Lien covering property (and to release any
such guarantor) that is the subject of either a disposition of property
permitted hereunder or a disposition to which the Required Lenders have
consented.

 

(d)                Replacement of Non-Consenting Lender. If, in connection with
any proposed change, waiver, discharge or termination to any of the provisions
of this Agreement as contemplated by this Section 9.02, the consent of the
Required Lenders shall have been obtained but the consent of one or more Lenders
(each a “Non-Consenting Lender”) whose consent is required for such proposed
change, waiver, discharge or termination is not obtained, then (so long as no
Event of Default has occurred and is continuing) the Borrower shall have the
right, at its sole cost and expense, to replace each such Non-Consenting Lender
or Lenders with one or more replacement Lenders pursuant to Section 2.18(b) so
long as at the time of such replacement, each such replacement Lender consents
to the proposed change, waiver, discharge or termination.

 

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(e)                Amendment and Restatement. It is the intention and agreement
of the parties hereto that this Agreement amends and restates, supersedes and
replaces the 2017 Credit Agreement in its entirety, effective on the date
hereof. This Agreement shall not constitute a novation or a refinancing of the
2017 Credit Agreement, but shall constitute an amendment and restatement of the
2017 Credit Agreement.

 

Section 9.03            Expenses; Indemnity; Damage Waiver.

 

(a)                Costs and Expenses. The Borrower shall pay (i) all reasonable
out-of-pocket costs and expenses incurred by the Administrative Agent, the
Collateral Agent and their Affiliates, including the reasonable fees, charges
and disbursements of counsel for the Administrative Agent and the Collateral
Agent, in connection with the syndication of the credit facilities provided for
herein, the preparation and administration of this Agreement and the other Loan
Documents and any amendments, modifications or waivers of the provisions hereof
or thereof (whether or not the transactions contemplated hereby or thereby shall
be consummated), (ii) all reasonable out-of-pocket expenses incurred by the
Issuing Bank in connection with the issuance, amendment, renewal or extension of
any Letter of Credit or any demand for payment thereunder, (iii) all documented
out-of-pocket expenses incurred by the Administrative Agent, the Issuing Bank,
the Swingline Lender or any Lender, including the reasonable fees, charges and
disbursements of one outside counsel and one local counsel in each applicable
jurisdiction for the Administrative Agent, the Issuing Bank and the Swingline
Lender as well as one outside counsel for the Lenders and additional counsel
should any conflict of interest arise, in connection with the enforcement or
protection of its rights in connection with this Agreement and the other Loan
Documents, including its rights under this Section, or in connection with the
Loans made or Letters of Credit issued hereunder, including all such documented
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect thereof, and (iv) and all documented costs, expenses,
assessments and other charges incurred in connection with any filing,
registration, recording or perfection of any security interest contemplated by
any Security Document or any other document referred to therein. For the
avoidance of doubt, this Section 9.03(a) shall not apply to Taxes, the payment
of which is governed by Section 2.16.

 

(b)                Indemnification by the Borrower. The Borrower shall indemnify
the Administrative Agent, the Issuing Bank, the Swingline Lender and each
Lender, and each Related Party of any of the foregoing Persons (each such Person
being called an “Indemnitee”) against, and hold each Indemnitee harmless from,
any and all reasonable losses, claims, damages, liabilities, actions, judgments,
suits, costs, expenses and disbursements of any kind or nature whatsoever
(including the reasonable out-of-pocket fees and disbursements of one outside
counsel for all Indemnitees (and, if reasonably necessary, of one local counsel
in any relevant jurisdiction for all Indemnitees) unless, in the reasonable
opinion of an Indemnitee, representation of all Indemnitees by such counsel
would be inappropriate due to the existence of an actual or potential conflict
of interest) in connection with any investigative, administrative or judicial
proceeding or hearing commenced or threatened by any Person, whether or not any
such Indemnitee shall be designated as a party or a potential party thereto, and
any fees or expenses incurred by Indemnitees in enforcing this indemnity),
whether based on any federal, state or foreign laws, statutes, rules or
regulations (including securities and commercial laws, statutes, rules or
regulations and laws, statutes, rules or regulations relating to environmental,
occupational safety and health or land use matters), on common law or equitable
cause or on contract or otherwise and related expenses or disbursements of any
kind (other than Taxes which shall only be indemnified by the Borrower to the
extent provided in Section 2.16), including the fees, charges and disbursements
of any counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement or any agreement or instrument
contemplated hereby, the performance by the parties hereto of their respective
obligations hereunder or the consummation of the Transactions or any other
transactions contemplated hereby, (ii) any Loan, Swingline Loan or Letter of
Credit or the use of the proceeds therefrom (including any refusal by the
Issuing Bank to honor a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not strictly comply with
the terms of such Letter of Credit) or (iii) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and whether brought by the
Borrower or a third party and regardless of whether any Indemnitee is a party
thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the fraud, willful misconduct
or gross negligence of such Indemnitee. For the avoidance of doubt, this Section
9.03(b) shall not apply to Taxes, the payment of which is governed by
Section 2.16.

 

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The Borrower shall not be liable to any Indemnitee for any special, indirect,
consequential or punitive damages arising out of, in connection with, or as a
result of the Transactions asserted by an Indemnitee against the Borrower or any
other Obligor; provided that the foregoing limitation shall not be deemed to
impair or affect the Obligations of the Borrower under the preceding provisions
of this subsection.

 

(c)                Reimbursement by Lenders. To the extent that the Borrower
fails to pay any amount required to be paid by it to the Administrative Agent,
the Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Administrative Agent, the
Issuing Bank or the Swingline Lender, as the case may be, such Lender’s
Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent, the Issuing Bank or the Swingline Lender in
its capacity as such.

 

(d)                Waiver of Consequential Damages, Etc. To the extent permitted
by applicable law, the Borrower shall not assert, and hereby waives, 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 or any
agreement or instrument contemplated hereby, the Transactions, any Loan or
Letter of Credit or the use of the proceeds thereof. No Indemnitee 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 the other Loan Documents or the transactions contemplated hereby or
thereby, except to the extent caused by the fraud, willful misconduct or gross
negligence of such Indemnitee, as determined by a final, non-appealable judgment
of a court of competent jurisdiction.

 

(e)                Payments. All amounts due under this Section shall be payable
promptly after written demand therefor.

 

Section 9.04            Successors and Assigns.

 

(a)                Assignments Generally. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit), except that (i) the Borrower
may not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by the Borrower without such consent shall be null and void) and
(ii) no Lender may assign or otherwise transfer its rights or obligations
hereunder except in accordance with this Section. Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby
(including any Affiliate of the Issuing Bank that issues any Letter of Credit)
and, to the extent expressly contemplated hereby, the Related Parties of each of
the Administrative Agent, the Issuing Bank and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.

 

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(b)                Assignments by Lenders.

 

(i)                 Assignments Generally. Subject to the conditions set forth
in clause (ii) below, any Lender may assign to one or more assignees (other than
natural persons, any Defaulting Lender or any Person listed in the Prohibited
Assignees and Participants Side Letter) all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitments
and the Loans and LC Exposure at the time owing to it) with the prior written
consent (such consent not to be unreasonably withheld or delayed) of:

 

(A)              the Borrower; provided that no consent of the Borrower shall be
required for an assignment to a Lender, an Affiliate of a Lender, or, if an
Event of Default has occurred and is continuing, any other assignee; provided,
further, that the Borrower shall be deemed to have consented to any such
assignment unless it shall have objected thereto by written notice to the
Administrative Agent within five Business Days after having received notice
thereof; and

 

(B)              the Administrative Agent and the Issuing Bank.

 

(ii)               Certain Conditions to Assignments. Assignments shall be
subject to the following additional conditions:

 

(A)              except in the case of an Assignment to a Lender or an Affiliate
of a Lender or an assignment of the entire remaining amount of the assigning
Lender’s Commitment or Loans and LC Exposure, the amount of the Commitment or
Loans and LC Exposure of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Assumption with respect to such
Assignment is delivered to the Administrative Agent) shall not be less than U.S.
$5,000,000 unless each of the Borrower and the Administrative Agent otherwise
consent; provided that no such consent of the Borrower shall be required if an
Event of Default has occurred and is continuing;

 

(B)              each partial assignment of any Class of Commitments or Loans
and LC Exposure shall be made as an assignment of a proportionate part of all
the assigning Lender’s rights and obligations under this Agreement in respect of
such Class of Commitments, Loans and LC Exposure;

 

(C)              the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption in substantially the form of
Exhibit A hereto, together with a processing and recordation fee of U.S. $3,500
(which fee shall not be payable in connection with an assignment to a Lender or
to an Affiliate of a Lender and for which the Borrower and the Subsidiary
Guarantors shall not be obligated to pay); and

 

(D)              the assignee, if it shall not already be a Lender of the
applicable Class, shall deliver to the Administrative Agent an Administrative
Questionnaire.

 

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(iii)             Effectiveness of Assignments. Subject to acceptance and
recording thereof pursuant to paragraph (c) of this Section, from and after the
effective date specified in each Assignment and Assumption the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.14, 2.15, 2.16 and 9.03 with
respect to facts and circumstances occurring prior to the effective date of such
assignment). Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this Section 9.04 shall be
treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (e) of
this Section. Notwithstanding anything to the contrary herein, in connection
with any assignment of rights and obligations of any Defaulting Lender
hereunder, no such assignment shall be effective unless and until, in addition
to the other conditions set forth in Section 9.04(b)(ii) or otherwise, the
parties to the assignment shall make such additional payments to Administrative
Agent in an aggregate amount sufficient, upon distribution thereof as
appropriate (which may be outright payment, purchases by the assignee of
participations or subparticipations, or other compensating actions, including
funding, with the consent of Borrower and Administrative Agent, the Applicable
Percentage of Loans previously requested but not funded by the Defaulting
Lender, to each of which the applicable assignee and assignor hereby irrevocably
consent), to (x) pay and satisfy in full all payment liabilities then owed by
such Defaulting Lender to Administrative Agent, Issuing Bank, Swingline Lender
and each Lender hereunder (and interest accrued thereon), and (y) acquire (and
fund as appropriate) its full Applicable Percentage of all Loans and
participations in Letters of Credit and Swingline Loans. Notwithstanding the
foregoing, in the event that any assignment of rights and obligations of any
Defaulting Lender hereunder shall become effective under applicable law without
compliance with the provisions of this paragraph, then the assignee of such
interest shall be deemed to be a Defaulting Lender for all purposes of this
Agreement until such compliance occurs.

 

(c)                Maintenance of Registers by Administrative Agent. The
Administrative Agent, acting for this purpose as an agent of the Borrower, shall
maintain at one of its offices in New York City a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitments of, and principal amount (and
stated interest) of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the “Registers” and each
individually, a “Register”). The entries in the Registers shall be conclusive
absent manifest error, and the Borrower, the Administrative Agent, the Issuing
Bank and the Lenders may treat each Person whose name is recorded in the
Registers pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. The Registers shall be
available for inspection by the Borrower, the Issuing Bank and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.

 

(d)                Acceptance of Assignments by Administrative Agent. Upon its
receipt of a duly completed Assignment and Assumption executed by an assigning
Lender and an assignee, the assignee’s completed Administrative Questionnaire
(unless the assignee shall already be a Lender hereunder), the processing and
recordation fee referred to in paragraph (b) of this Section and any written
consent to such assignment required by paragraph (b) of this Section, the
Administrative Agent shall accept such Assignment and Assumption and record the
information contained therein in the Register. No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.

 

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(e)                Special Purposes Vehicles. Notwithstanding anything to the
contrary contained herein, any Lender (a “Granting Lender”) may grant to a
special purpose funding vehicle (an “SPC”) owned or administered by such
Granting Lender, identified as such in writing from time to time by the Granting
Lender to the Administrative Agent and the Borrower, the option to provide all
or any part of any Loan that such Granting Lender would otherwise be obligated
to make; provided that (i) nothing herein shall constitute a commitment to make
any Loan by any SPC, (ii) if an SPC elects not to exercise such option or
otherwise fails to provide all or any part of such Loan, the Granting Lender
shall, subject to the terms of this Agreement, make such Loan pursuant to the
terms hereof, (iii) the rights of any such SPC shall be derivative of the rights
of the Granting Lender, and such SPC shall be subject to all of the restrictions
upon the Granting Lender herein contained, and (iv) no SPC shall be entitled to
the benefits of Sections 2.14 (or any other increased costs protection
provision), 2.15 or 2.16. Each SPC shall be conclusively presumed to have made
arrangements with its Granting Lender for the exercise of voting and other
rights hereunder in a manner which is acceptable to the SPC, the Administrative
Agent, the Lenders and the Borrower, and each of the Administrative Agent, the
Lenders and the Obligors shall be entitled to rely upon and deal solely with the
Granting Lender with respect to Loans made by or through its SPC. The making of
a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender
to the same extent, and as if, such Loan were made by the Granting Lender.

 

Each party hereto hereby agrees (which agreement shall survive the termination
of this Agreement) that, prior to the date that is one year and one day after
the payment in full of all outstanding senior indebtedness of any SPC, it will
not institute against, or join any other person in instituting against, such
SPC, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or similar proceedings under the laws of the United States or any
State thereof, in respect of claims arising out of this Agreement; provided that
the Granting Lender for each SPC hereby agrees to indemnify, save and hold
harmless each other party hereto for any loss, cost, damage and expense arising
out of their inability to institute any such proceeding against its SPC. In
addition, notwithstanding anything to the contrary contained in this Section,
any SPC may (i) without the prior written consent of the Borrower and the
Administrative Agent and without paying any processing fee therefor, assign all
or a portion of its interests in any Loans to its Granting Lender or to any
financial institutions providing liquidity and/or credit facilities to or for
the account of such SPC to fund the Loans made by such SPC or to support the
securities (if any) issued by such SPC to fund such Loans (but nothing contained
herein shall be construed in derogation of the obligation of the Granting Lender
to make Loans hereunder); provided that neither the consent of the SPC or of any
such assignee shall be required for amendments or waivers hereunder except for
those amendments or waivers for which the consent of participants is required
under paragraph (1) below, and (ii) disclose on a confidential basis (in the
same manner described in Section 9.13(b)) any non-public information relating to
its Loans to any rating agency, commercial paper dealer or provider of a surety,
guarantee or credit or liquidity enhancement to such SPC.

 

98

 

 

(f)                 Participations. Any Lender may, with the consent of the
Borrower (such consent not to be unreasonably withheld or delayed), sell
participations to one or more banks or other entities (a “Participant”) in all
or a portion of such Lender’s rights and obligations under this Agreement and
the other Loan Documents (including all or a portion of its Commitments and the
Loans and LC Disbursements owing to it); provided that (i) the consent of the
Borrower shall not be required if such Participant does not have the right to
receive any non-public information that may be provided pursuant to this
Agreement (and the Lender selling such participation agrees with the Borrower at
the time of the sale of such participation that it will not deliver such
non-public information to the Participant), (ii) such Lender’s obligations under
this Agreement and the other Loan Documents shall remain unchanged, (iii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iv) the Borrower, the Administrative Agent,
the Issuing Bank and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement and the other Loan Documents and (v) no Person
listed in the Prohibited Assignees and Participants Side Letter may be a
Participant. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and the other Loan Documents and to approve any
amendment, modification or waiver of any provision of this Agreement or any
other Loan Document; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to
Section 9.02(b) that affects such Participant. Subject to paragraph (g) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 2.14, 2.15 and 2.16 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section; provided that such Participant shall not be entitled to receive
any greater payment under Sections 2.14, 2.15 or 2.16, with respect to any
participation, than its participating Lenders would have been entitled to
receive, except to the extent such entitlement to receive a greater payment
results from a Change in Law that occurs after the Participant acquired the
applicable participation; provided, further, that no Participant shall be
entitled to the benefits of Section 2.16 unless the Borrower is notified of the
participation granted to such Participant and such Participant shall have
complied with the requirements of Section 2.16 as if such Participant is a
Lender. To the extent permitted by law, each Participant also shall be entitled
to the benefits of Section 9.08 as though it were a Lender; provided such
Participant agrees to be subject to Section 2.17(d) as though it were a Lender
hereunder. Each Lender that sells a participation shall, acting solely for this
purpose as a non-fiduciary agent of the Borrower, maintain a register on which
it enters the name and address of each participant and the principal amounts
(and stated interest of each Participant’s interest in the loans or other
obligations under the Loan Documents (the “Participant Register”); provided that
no Lender shall have any obligation to disclose all or any portion of the
Participant Register (including the identity of any Participant or any other
information relating to a Participant’s interest in any commitments, loans,
letters of credit or is other obligations under any Loan Document) to any person
except to the extent that such disclosures are necessary to establish that such
commitment, loan, letter of credit or other obligation is in registered form
under applicable United States Treasury Regulations. The entries in the
Participant Register shall be conclusive absent manifest error, and such Lender
shall treat each Person whose name is recorded in the Participant Register as
the owner of such participation for all purposes of this Agreement
notwithstanding any notice to the contrary. For the avoidance of doubt, the
Administrative Agent (in its capacity as Administrative Agent) shall have no
responsibility for maintaining a Participant Register.

 

(g)                Limitations on Rights of Participants. A Participant shall
not be entitled to receive any greater payment under Section 2.14, 2.15 or 2.16
than the applicable Lender would have been entitled to receive with respect to
the participation sold to such Participant, unless the sale of the participation
to such Participant is made with the Borrower’s prior written consent. A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 2.16 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with paragraphs (e) and (f) of Section 2.16
as though it were a Lender and in the case of a Participant claiming exemption
for portfolio interest under Section 871(h) or 881(c) of the Code, the
applicable Lender shall provide the Borrower with satisfactory evidence that the
participation is in registered form and shall permit the Borrower to review such
register as reasonably needed for the Borrower to comply with its obligations
under applicable laws and regulations.

 

(h)                Certain Pledges. Any Lender may at any time pledge or assign
a security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including any such pledge or assignment to a
Federal Reserve Bank or any other central bank having jurisdiction over such
Lender, and this Section shall not apply to any such pledge or assignment of a
security interest; provided that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such assignee for such Lender as a party hereto.

 

99

 

 

(i)                 No Assignments to the Borrower or Affiliates. Anything in
this Section to the contrary notwithstanding, no Lender may assign or
participate any interest in any Loan or LC Exposure held by it hereunder to the
Borrower or any of its Affiliates or Subsidiaries without the prior consent of
each Lender.

 

Section 9.05            Survival. All covenants, agreements, representations and
warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of Sections 2.14, 2.15, 2.16 and 9.03 and
Article VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination, Cash Collateralization or backstop of the
Letters of Credit and the Commitments or the termination of this Agreement or
any provision hereof.

 

Section 9.06            Counterparts; Integration; Effectiveness; Electronic
Execution.

 

(a)                Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and any
separate letter agreements with respect to fees payable to the Administrative
Agent constitute the entire contract between and among the parties relating to
the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
to this Agreement by telecopy electronically (e.g. pdf) shall be effective as
delivery of a manually executed counterpart of this Agreement.

 

(b)                Electronic Execution of Assignments. The words “execution,”
“signed,” “signature,” and words of like import in any Assignment and Assumption
shall be deemed to include electronic signatures or the keeping of records in
electronic form, each of which shall be of the same legal effect validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions
Act.

 

Section 9.07            Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

 

Section 9.08            Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of the
Borrower against any of and all the obligations of the Borrower now or hereafter
existing under this Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured; provided that in the event that any
Defaulting Lender shall exercise any such right of setoff, (x) all amounts so
set off shall be paid over immediately to Administrative Agent for further
application in accordance with the provisions of Sections 2.17(d) and, pending
such payment, shall be segregated by such Defaulting Lender from its other funds
and deemed held in trust for the benefit of Administrative Agent, the Issuing
Bank, and the Lenders, and (y) the Defaulting Lender shall provide promptly to
Administrative Agent a statement describing in reasonable detail the amounts
owing to such Defaulting Lender hereunder as to which it exercised such right of
setoff. The rights of each Lender under this Section are in addition to other
rights and remedies (including other rights of setoff) which such Lender may
have. Each Lender agrees to notify the Borrower and the Administrative Agent
promptly after any such setoff and application; provided that the failure to
give such notice shall not affect the validity of such setoff and application.

 

100

 

 

Section 9.09            Governing Law; Jurisdiction; Etc.

 

(a)                Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of New York.

 

(b)                Submission to Jurisdiction. The Borrower hereby irrevocably
and unconditionally submits, for itself and its property, to the exclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement and any Loan Document, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Administrative Agent, the Issuing Bank or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement
against the Borrower or its properties in the courts of any jurisdiction.

 

(c)                Waiver of Venue. The Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any court referred to in paragraph (b) of this Section. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.

 

(d)                Service of Process. Each party to this Agreement (i)
irrevocably consents to service of process in the manner provided for notices in
Section 9.01 and (ii) agrees that service as provided in the manner provided for
notices in Section 9.01 is sufficient to confer personal jurisdiction over such
party in any proceeding in any court and otherwise constitutes effective and
binding service in every respect. Nothing in this Agreement will affect the
right of any party to this Agreement to serve process in any other manner
permitted by law.

 

101

 

 

Section 9.10            WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.

 

Section 9.11            Judgment Currency. This is an international loan
transaction in which the specification of Dollars or any Foreign Currency, as
the case may be (the “Specified Currency”), and payment in New York City or the
country of the Specified Currency, as the case may be (the “Specified Place”),
is of the essence, and the Specified Currency shall be the currency of account
in all events relating to Loans denominated in the Specified Currency. The
payment obligations of the Borrower under this Agreement shall not be discharged
or satisfied by an amount paid in another currency or in another place, whether
pursuant to a judgment or otherwise, to the extent that the amount so paid on
conversion to the Specified Currency and transfer to the Specified Place under
normal banking procedures does not yield the amount of the Specified Currency at
the Specified Place due hereunder. If for the purpose of obtaining judgment in
any court it is necessary to convert a sum due hereunder in the Specified
Currency into another currency (the “Second Currency”), the rate of exchange
that shall be applied shall be the rate at which in accordance with normal
banking procedures the Administrative Agent could purchase the Specified
Currency with the Second Currency on the Business Day next preceding the day on
which such judgment is rendered. The obligation of the Borrower in respect of
any such sum due from it to the Administrative Agent or any Lender hereunder or
under any other Loan Document (in this Section called an “Entitled Person”)
shall, notwithstanding the rate of exchange actually applied in rendering such
judgment be discharged only to the extent that on the Business Day following
receipt by such Entitled Person of any sum adjudged to be due hereunder in the
Second Currency such Entitled Person may in accordance with normal banking
procedures purchase and transfer to the Specified Place the Specified Currency
with the amount of the Second Currency so adjudged to be due; and the Borrower
hereby, as a separate obligation and notwithstanding any such judgment, agrees
to indemnify such Entitled Person against, and to pay such Entitled Person on
demand, in the Specified Currency. The amount (if any) by which the sum
originally due to such Entitled Person in the Specified Currency hereunder
exceeds the amount of the Specified Currency so purchased and transferred.

 

Section 9.12            Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

 

Section 9.13            Treatment of Certain Information; No Fiduciary Duty;
Confidentiality.

 

102

 

 

(a)                Treatment of Certain Information. The Borrower acknowledges
that from time to time financial advisory, investment banking and other services
may be offered or provided to the Borrower or one or more of its Subsidiaries
(in connection with this Agreement or otherwise) by any Lender or by one or more
subsidiaries or affiliates of such Lender and the Borrower hereby authorizes
each Lender to share any information delivered to such Lender by the Borrower
and its Subsidiaries pursuant to this Agreement, or in connection with the
decision of such Lender to enter into this Agreement, to any such subsidiary or
affiliate, it being understood that any such subsidiary or affiliate receiving
such information shall be bound by the provisions of paragraph (b) of this
Section as if it were a Lender hereunder. Such authorization shall survive the
repayment of the Loans, the expiration or termination of the Letters of Credit
and the Commitments or the termination of this Agreement or any provision
hereof. Each Lender shall use all information delivered to such Lender by the
Borrower and its Subsidiaries pursuant to this Agreement, or in connection with
the decision of such Lender to enter into this Agreement, in connection with
providing services to the Borrower. The Administrative Agent, each Lender and
their Affiliates (collectively, solely for purposes of this paragraph, the
“Lenders”), may have economic interests that conflict with those of the Borrower
or any of its Subsidiaries, their stockholders and/or their affiliates. The
Borrower, on behalf of itself and each of its Subsidiaries, agrees that nothing
in the Loan Documents or otherwise will be deemed to create an advisory,
fiduciary or agency relationship or fiduciary or other implied duty between any
Lender, on the one hand, and the Borrower or any of its Subsidiaries, its
stockholders or its affiliates, on the other. The Borrower and each of its
Subsidiaries each acknowledge and agree that (i) the transactions contemplated
by the Loan Documents (including the exercise of rights and remedies hereunder
and thereunder) are arm’s-length commercial transactions between the Lenders, on
the one hand, and the Borrower and its Subsidiaries, on the other, and (ii) in
connection therewith and with the process leading thereto, (x) no Lender has
assumed an advisory or fiduciary responsibility in favor of the Borrower or any
of its Subsidiaries, any of their stockholders or affiliates with respect to the
transactions contemplated hereby (or the exercise of rights or remedies with
respect thereto) or the process leading thereto (irrespective of whether any
Lender has advised, is currently advising or will advise the Borrower or any of
its Subsidiaries, their stockholders or their affiliates on other matters) or
any other obligation to the Borrower or any of its Subsidiaries except the
obligations expressly set forth in the Loan Documents and (y) each Lender is
acting solely as principal and not as the agent or fiduciary of the Borrower or
any of its Subsidiaries, their management, stockholders, creditors or any other
Person. The Borrower and each of its Subsidiaries each acknowledge and agree
that it has consulted its own legal and financial advisors to the extent it
deemed appropriate and that it is responsible for making its own independent
judgment with respect to such transactions and the process leading thereto. The
Borrower and each of its Subsidiaries each agree that it will not claim that any
Lender has rendered advisory services of any nature or respect, or owes a
fiduciary or similar duty to the Borrower or any of its Subsidiaries, in
connection with such transaction or the process leading thereto.

 

(b)                Confidentiality. Each of the Administrative Agent, the
Lenders, the Swingline Lender and the Issuing Bank agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (i) to its Affiliates and to its and its Affiliates’ respective
partners, directors, officers, employees, agents, advisors and other
representatives (it being understood that the Persons to whom such disclosure is
made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (ii) to the extent requested
by any regulatory authority purporting to have jurisdiction over it (including
any self-regulatory authority), (iii) to the extent required by applicable laws
or regulations or by any subpoena or similar legal process, (iv) to any other
party hereto, (v) in connection with the exercise of any remedies hereunder or
under any other Loan Document or any action or proceeding relating to this
Agreement or any other Loan Document or the enforcement of rights hereunder or
thereunder, (vi) subject to an agreement containing provisions substantially the
same as those of this Section, to (x) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (y) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the Borrower and its
obligations, (vii) with the consent of the Borrower, (viii) to the extent such
Information (x) becomes publicly available other than as a result of a breach of
this Section or (y) becomes available to the Administrative Agent, any Lender,
the Issuing Bank or any of their respective Affiliates on a nonconfidential
basis from a source other than the Borrower or (ix) on a confidential basis to
(x) any rating agency in connection with rating the Borrower or its Subsidiaries
or the credit facilities provided hereunder or (y) the CUSIP Service Bureau or
any similar agency in connection with the issuance and monitoring of CUSIP
numbers with respect to the credit facilities provided hereunder.

 

103

 

 

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

 

Section 9.14            USA PATRIOT Act. Each Lender hereby notifies the
Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)), it is required to obtain,
verify and record information that identifies the Borrower and each other
Obligor, which information includes the name and address of the Borrower and
each other Obligor and other information that will allow such Lender to identify
the Borrower and each other Obligor in accordance with said Act.

 

[Signatures appear on following pages.]

 

104

 

 

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:         STELLUS CAPITAL INVESTMENT CORPORATION         By: /s/ W.
Todd Huskinson     W. Todd Huskinson     Chief Financial Officer, Chief
Compliance Officer, Treasurer, and Secretary

 

Signature Page to Amended and Restated Senior Secured Revolving Credit Agreement

 

   

 

 

  ADMINISTRATIVE AGENT:        

ZIONS BANCORPORATION, N.A. dba Amegy Bank,

as Administrative Agent

      By: /s/ Lauren Page     Lauren Page     Vice President

 

Signature Page to Amended and Restated Senior Secured Revolving Credit Agreement

 

   

 

 

  LENDERS:        

ZIONS BANCORPORATION, N.A. dba Amegy Bank,

as a Lender, as Swingline Lender, and as LC Issuer

      By: /s/ Lauren Page     Lauren Page     Vice President

 

Signature Page to Amended and Restated Senior Secured Revolving Credit Agreement

 

   

 

 

 

FROST BANK,

as a Lender

      By: /s/ Jake Fitzpatrick   Name: Jake Fitzpatrick   Title: Vice President

 

Signature Page to Amended and Restated Senior Secured Revolving Credit Agreement
FROST BANK, as a Lender By: Name: Title:

 

   

 

 

 

CADENCE BANK, N.A.,

as a Lender

      By: /s/ Tim Ashe   Name: Tim Ashe   Title: Vice President

 

Signature Page to Amended and Restated Senior Secured Revolving Credit Agreement

 

   

 

 

 

HANCOCK WHITNEY BANK,

as a Lender

      By: /s/ Eric Luttrell   Name: Eric Luttrell   Title: SVP

 

Signature Page to Amended and Restated Senior Secured Revolving Credit Agreement

 

   

 

 

 

CITY NATIONAL BANK, a national banking association,

as a Lender

      By: /s/ Marc D. Galindo   Name: Marc D. Galindo   Title: Senior Vice
President

 

Signature Page to Amended and Restated Senior Secured Revolving Credit Agreement

 

   

 

 

 

COMMUNITYBANK OF TEXAS, N.A.,

as a Lender

      By: /s/ Stephen L. Jukes                          Name: Stephen L. Jukes  
Title: EVP

 

Signature Page to Amended and Restated Senior Secured Revolving Credit Agreement

 

   

 

 

 

WOODFOREST NATIONAL BANK,

as a Lender

      By: /s/ Andy Gaines   Name: Andy Gaines   Title: Senior Vice President

 

Signature Page to Amended and Restated Senior Secured Revolving Credit Agreement

 

   

 

 

 

BANCORPSOUTH BANK,

as a Lender

      By: /s/ Jacob McGee                       Name: Jacob McGee   Title:
Director

 

Signature Page to Amended and Restated Senior Secured Revolving Credit Agreement

 

   

 

 

 

TEXAS CAPITAL BANK,

as a Lender

      By: /s/ Eva Pawelek   Name: Eva Pawelek   Title: Senior Vice President

 

Signature Page to Amended and Restated Senior Secured Revolving Credit Agreement

 

   

 

 

 

BOKF, NA dba BANK OF TEXAS,

as a Lender

      By: /s/ Fernando Sanchez   Name: Fernando Sanchez   Title: Assistant Vice
President

 

Signature Page to Amended and Restated Senior Secured Revolving Credit Agreement

 

   

 

 

SCHEDULE

 

   

 

 

 

SCHEDULE 1.01(a)

 

Approved Dealers and Approved Pricing Services

 

Approved Dealers

 

None

 

Approved Pricing Services

 

Barclays Capital Indices
J.P. Morgan Credit Indices
Bloomberg

Markit

 

Schedules to Amended and Restated Senior Secured Revolving Credit Agreement

 

 

 

 

SCHEDULE 1.01(b)

 

Commitments

 

 

Lender Commitment ($) Applicable Percentage Zions Bancorporation, N.A. dba Amegy
Bank 35,000,000.00 15.2173913043% Frost Bank 35,000,000.00 15.2173913043%
Cadence Bank, N.A 30,000,000.00 13.0434782609% Hancock Whitney Bank
30,000,000.00 13.0434782609% City National Bank 25,000,000.00 10.8695652174%
CommunityBank of Texas, N.A. 20,000,000.00 8.6956521739% Woodforest National
Bank 20,000,000.00 8.6956521739% BancorpSouth Bank 15,000,000.00 6.5217391304%
Texas Capital Bank, National Association 10,000,000.00 4.3478260870% BOKF, NA
dba Bank of Texas 10,000,000.00 4.3478260870% Total: $230,000,000.00
100.0000000000%

 

Schedules to Amended and Restated Senior Secured Revolving Credit Agreement

 

 

 

 

SCHEDULE 1.01(c)

 

Industry Classification Group List

 

Aerospace & Defense

Automotive

Banking

Beverage, Food, & Tobacco

Capital Equipment

Chemicals, Plastics, & Rubber

Construction & Building

Consumer goods: durable

Consumer goods: non-durable

Containers, Packaging, & Glass

Education

Energy: Electricity

Energy: Oil & Gas

Environmental Industries

FIRE: Finance

FIRE: Insurance

FIRE: Real Estate

Forest Products & Paper

Healthcare & Pharmaceuticals

High Tech Industries

Hotel, Gaming, & Leisure

Media: Advertising, Printing & Publishing

Media: Broadcasting & Subscription

Media: Diversified & Production

Metals & Mining

Retail

Services: Business

Services: Consumer

Services: Government

Software

Sovereign & Public Finance

Telecommunications

Transportation: Cargo

Transportation: Consumer

Transportation & Logistics

Utilities: Electric

Utilities: Oil & Gas

Utilities: Water

Wholesale

 

Schedules to Amended and Restated Senior Secured Revolving Credit Agreement

 

 

 

 

SCHEDULE 3.11

 

Material Agreements and Liens

 

A.Material Agreements

 

1.Indenture between the Borrower and U.S. Bank National Association, dated May
5, 2014.

 

2.First Supplemental Indenture between the Borrower and U.S. Bank National
Association, dated May 5, 2014, and the global notes issued thereunder.
Indebtedness outstanding: None.

 

3.Second Supplemental Indenture between the Borrower and U.S. Bank National
Association, dated August 21, 2017, and the global notes issued thereunder.
Indebtedness outstanding: $48,875,000 in aggregate principal amount of the
Borrower’s 5.75% Notes due 2022.

 

4.As applicable, the agreements listed on Schedule 6.08.

 

5.SBA debentures issued by Stellus Capital SBIC, LP of which $150 million in
aggregate principal amount is outstanding.

 

6.SBA debentures issued by Stellus Capital SBIC II, LP of which $11 million in
aggregate principal amount is outstanding.

 

7.Promissory note issued by SCIC – Consolidated Blocker, Inc. to the Borrower on
July 1, 2019 providing for loans and advances up to $2,650,000 in aggregate
principal amount. Indebtedness outstanding: $2,650,000.

 

8.Promissory note issued by SCIC – Consolidated Blocker, Inc. to the Borrower on
December 23, 2019 providing for loans and advances up to $2,000,000 in aggregate
principal amount. Indebtedness outstanding: $2,000,000.

 

9.Promissory note issued by SCIC – Consolidated Blocker, Inc. to the Borrower on
December 26, 2019 providing for loans and advances up to $2,000,000 in aggregate
principal amount. Indebtedness outstanding: $2,000,000.

 

10.Custody Agreement between the Borrower and Zions Bancorporation N.A. dba
Amegy Bank, dated as of November 1, 2017.

 

11.This Agreement and the other Loan Documents.

 

 

 

B.Liens

 

 

1.Liens under any of the agreements listed in Part A to this Schedule 3.11.

 

Schedules to Amended and Restated Senior Secured Revolving Credit Agreement

 

 

 

 

SCHEDULE 3.12(a)

 

Subsidiaries

 

1.SCIC - APE Blocker 1, Inc. 2.SCIC - CC Blocker 1, Inc. 3.SCIC - Consolidated
Blocker, Inc. 4.SCIC - ERC Blocker 1, Inc. 5.SCIC - FBO Blocker 1, Inc. 6.SCIC -
Hollander Blocker 1, Inc. 7.SCIC - ICD Blocker 1, Inc. 8.SCIC - Invincible
Blocker 1, Inc. 9.SCIC - SKP Blocker 1, Inc. 10.SCIC - Venbrook Blocker, Inc.
11.Stellus Capital SBIC, LP 12.Stellus Capital SBIC II, LP 13.Stellus Capital
SBIC GP, LLC 14.Stellus Capital SBIC II GP, LLC

 

Schedules to Amended and Restated Senior Secured Revolving Credit Agreement

 

 

 

 

SCHEDULE 3.12(b)

 

Investments

 

1.The Borrower’s accounts with Zions Bancorporation N.A. dba Amegy Bank.

 

2.The Borrower’s equity and debt Investments in Stellus Capital SBIC, LP,
Stellus Capital SBIC GP, LLC, Stellus Capital SBIC II, LP, and Stellus Capital
SBIC II GP, LLC.

 

3.Promissory note issued by SCIC – Consolidated Blocker, Inc. to the Borrower on
July 1, 2019 providing for loans and advances up to $2,650,000 in aggregate
principal amount. Indebtedness outstanding: $2,650,000.

 

4.Promissory note issued by SCIC – Consolidated Blocker, Inc. to the Borrower on
December 23, 2019 providing for loans and advances up to $2,000,000 in aggregate
principal amount. Indebtedness outstanding: $2,000,000.

 

5.Promissory note issued by SCIC – Consolidated Blocker, Inc. to the Borrower on
December 26, 2019 providing for loans and advances up to $2,000,000 in aggregate
principal amount. Indebtedness outstanding: $2,000,000.

 

Schedules to Amended and Restated Senior Secured Revolving Credit Agreement

 

 

 

 

SCHEDULE 6.08

 

Transactions with Affiliates

 

1.Investment Advisory Agreement between the Borrower and Stellus Capital
Management, L.L.C.

 

2.License Agreement between the Borrower and Stellus Capital Management, L.L.C.

 

3.Administration Agreement between the Borrower and Stellus Capital Management,
L.L.C.

 

Schedules to Amended and Restated Senior Secured Revolving Credit Agreement

 

 

 

 

EXHIBIT A

 

[Form of Assignment and Assumption]

 

ASSIGNMENT AND ASSUMPTION

 

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee.
The Standard Terms and Conditions set forth in Annex I attached hereto are
hereby agreed to and incorporated herein by reference and made a part of this
Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below: (i) all of the Assignor’s rights and
obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the
amount and percentage interest identified below of all of such outstanding
rights and obligations of the Assignor under the respective facilities
identified below (including any letters of credit, guarantees, and swingline
loans included in such facilities) and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any other
right of the Assignor (in its capacity as a Lender) against any Person, whether
known or unknown, arising under or in connection with the Credit Agreement, any
other documents or instruments delivered pursuant thereto or the loan
transactions governed thereby or in any way based on or related to any of the
foregoing, including contract claims, tort claims, malpractice claims, statutory
claims and all claims at law or in equity related to the rights and obligations
sold and assigned pursuant to clause (i) above (the rights and obligations sold
and assigned pursuant to clauses (i) and (ii) above being referred to herein
collectively as the “Assigned Interest”). Such sale and assignment is without
recourse to the Assignor and, except as expressly provided in this Assignment
and Assumption, without representation or warranty by the Assignor.

 

1. Assignor:     2. Assignee:       [and is an Affiliate of [Identify Lender]1  
3. Borrower: Stellus Capital Investment Corporation   4. Administrative Agent:
Zions Bancorporation, N.A. dba Amegy Bank, as the administrative agent under the
Credit Agreement.   5. Credit Agreement: Amended and Restated Senior Secured
Revolving Credit Agreement dated as of September 18, 2020, among the Borrower,
the Lenders parties thereto, and the Administrative Agent.   6. Assigned
Interest:  

 

 

1 Select as applicable.

 

A-1

 

 

Class Assigned2 Aggregate Amount of
Commitment/Loans
for all Lenders Amount of
Commitment/Loans
Assigned

Percentage Assigned

of

Commitment/Loans3

 

  $ $ %   $ $ %   $ $ %

 

 

Effective Date: ________________, 202__ [TO BE INSERTED BY ADMINISTRATIVE AGENT
AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]

 

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

  ASSIGNOR       [NAME OF ASSIGNOR]       By:     Name:     Title:        
ASSIGNEE       [NAME OF ASSIGNEE]       By:     Name:     Title:  

 

 

2 Fill in the appropriate terminology for the types of facilities under the
Credit Agreement that are being assigned under this Assignment (e.g. “Dollar
Commitment”, “Multicurrency Commitment”, etc.). 

3 Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder. 

 

A-2

 

 

[Consented to and]4 Accepted:       ZIONS BANCORPORATION, N.A. dba AMEGY BANK,
as Administrative Agent       By:     Name:     Title:         ZIONS
BANCORPORATION, N.A. dba AMEGY BANK,
as Issuing Bank       By:     Name:     Title:         [Consented to:]5      
STELLUS CAPITAL INVESTMENT CORPORATION       By:     Name:     Title:
                                   

 

 

4 To be added only if the consent of the Administrative Agent is required by the
terms of the Credit Agreement.

5 To be added only when the consent of the Borrower is required by the terms of
the Credit Agreement.

 

A-3

 

 

ANNEX 1

 

STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION

 

1.       Representative and Warranties.

 

1.1       Assignor. The Assignor (a) represents and warrants that (i) it is the
legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest
is free and clear of any lien, encumbrance or other adverse claim and (iii) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any collateral thereunder, (iii) the financial condition of the
Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in
respect of any Loan Document or (iv) the performance or observance by the
Borrower, any of its Subsidiaries or Affiliates or any other Person of any of
their respective obligations under any Loan Document.

 

1.2       Assignee. The Assignee (a) represents and warrants that (i) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
satisfies the requirements, if any, specified in the Credit Agreement that are
required to be satisfied by it in order to acquire the Assigned Interest and
become a Lender, (iii) from and after the Effective Date, it shall be bound by
the provisions of the Credit Agreement as a Lender thereunder and, to the extent
of the Assigned Interest, shall have the obligations of a Lender thereunder,
(iv) it has received a copy of the Credit Agreement, together with copies of the
most recent financial statements delivered pursuant to Section 5.01 thereof, as
applicable, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Assumption and to purchase the Assigned Interest on the basis of
which it has made such analysis and decision independently and without reliance
on the Administrative Agent or any other Lender, and (v) if it is a Foreign
Lender, attached to the Assignment and Assumption is any documentation required
to be delivered by it pursuant to the terms of the Credit Agreement, duly
completed and executed by the Assignee; and (b) agrees that (i) it will,
independently and without reliance on the Administrative Agent, the Assignor 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 Loan Documents, and (ii) 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.

 

2.       Payments. From and after the Effective Date, the Administrative Agent
shall make all payments in respect of the Assigned Interest (including payments
of principal, interest, fees and other amounts) to the Assignor for amounts
which have accrued up to but excluding the Effective Date and to the Assignee
for amounts which have accrued from and after the Effective Date.

 

3.       General Provisions. This Assignment and Assumption shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns. This Assignment and Assumption may be executed in any
number of counterparts, which together shall constitute one instrument. Delivery
of an executed counterpart of a signature page of this Assignment and Assumption
by telecopy, email or other electronic method of transmission shall be effective
as deliver of a manually executed counterpart of this Assignment and Assumption.
This Assignment and Assumption shall be governed by, and construed in accordance
with, the law of the State of New York.

 

A-4

 

 

EXHIBIT B

 

[Form of Borrowing Base Certificate]

 

BORROWING BASE CERTIFICATE

 

Monthly accounting period ended ___________, 202__

 

Reference is made to that certain Amended and Restated Senior Secured Revolving
Credit Agreement, dated as of September 18, 2020 (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
by and among Stellus Capital Investment Corporation, a Maryland corporation (the
“Borrower”), the financial institutions party thereto as Lenders, and Zions
Bancorporation, N.A. dba Amegy Bank, as the Administrative Agent. Capitalized
terms used herein without definition are so used as defined in the Credit
Agreement.

 

Pursuant to Section 5.01(d) of the Credit Agreement, the undersigned, the
________ of the Borrower, and as such a Financial Officer of the Borrower,
hereby certifies, represents and warrants on behalf of the Borrower that (a)
attached hereto as Annex 1 is (i) a complete and correct list as of the end of
the monthly accounting period ended ____________, 202__ of all Portfolio
Investments included in the Collateral and (ii) a true and correct calculation
of the Borrowing Base as of the end of such monthly accounting period determined
in accordance with the requirements of the Credit Agreement, and (b) without
limiting the generality of the foregoing, all Portfolio Investments included in
the calculation of the Borrowing Base herein have been Delivered (as defined in
the Guarantee and Security Agreement) to the Collateral Agent.

 

IN WITNESS WHEREOF, the undersigned has caused this certificate to be duly
executed as of the _____ day of _______________, 202__.

 

 

  STELLUS CAPITAL INVESTMENT CORPORATION       By:     Name:     Title:  

 

B-1

 

 

EXHIBIT C

 

[Form of Borrowing Request]

 

BORROWING REQUEST

 

Date: ________________, _____

 

To: Zions Bancorporation, N.A. dba Amegy Bank, as Administrative Agent

 

Ladies and Gentlemen:

 

Reference is made to that certain Amended and Restated Senior Secured Revolving
Credit Agreement, dated as of September 18, 2020 (as amended, restated,
extended, supplemented or otherwise modified in writing from time to time, the
“Credit Agreement”), among Stellus Capital Investment Corporation, a Maryland
corporation (the “Borrower”), the financial institutions party thereto as
Lenders, and Zions Bancorporation, N.A. dba Amegy Bank, as the Administrative
Agent. Capitalized terms used herein without definition are so used as defined
in the Credit Agreement.

 

The Borrower hereby requests a Borrowing of Loans:

 

1.       On ____ (a Business Day).

 

2.       In the amount of ___________.

 

3.Comprised of ____________________________________.
                                                   [Type of Borrowing requested]

 

4.       In the following currency: [USD] or [CAD].

 

5.       For Eurocurrency Borrowings: with an Interest Period of ____ months.

 

6.To Borrower’s account number _______________located at __________ __________.

 

 

  STELLUS CAPITAL INVESTMENT CORPORATION       By:     Name:     Title:
                         

 

C-1