Exhibit 10.1

 

Execution Version

 

 

 

AMENDMENT NO. 1 TO SENIOR
SECURED REVOLVING CREDIT AGREEMENT

This AMENDMENT NO. 1 (this “Amendment) with respect to the Senior Secured
Revolving Credit Agreement, dated as of August 30, 2016 (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
is made as of November 16, 2017, among CAPITAL SOUTHWEST CORPORATION, a Texas
corporation (the “Borrower”), the several banks and other financial institutions
or entities from time to time party to the Credit Agreement as lenders (the
“Lenders”), ING CAPITAL LLC, as administrative agent for the Lenders under the
Credit Agreement (in such capacity, together with its successors in such
capacity, the “Administrative Agent”), and, solely for purposes of Section 2.8,
CAPITAL SOUTHWEST EQUITY INVESTMENTS, INC., a Delaware corporation (“CSWE”), and
CAPITAL SOUTHWEST MANAGEMENT CORPORATION, a Nevada corporation (“CSWM” and
together with CSWE, the “Subsidiary Guarantors”). Capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the Credit
Agreement.

W I T N E S S E T H:

WHEREAS, pursuant to the Credit Agreement, the Lenders have made certain loans
and other extensions of credit to the Borrower;

WHEREAS, the Borrower has requested that the Lenders and the Administrative
Agent amend certain provisions of the Credit Agreement and the Lenders signatory
hereto and the Administrative Agent have agreed to do so on the terms and
subject to the conditions contained in this Amendment; and

WHEREAS, each person identified as an “Increasing Lender” on the signature pages
hereto (each an “Increasing Lender”) wishes to increase the aggregate amount of
their commitments under the Credit Agreement, and each person identified as a
“New Lender” on the signature pages hereto (each a “New Lender”) wishes to
become a Lender under the Credit Agreement.

NOW THEREFORE, in consideration of the promises and the mutual agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

SECTION I AMENDMENT TO CREDIT AGREEMENT

Effective as of the Amendment No. 1 Effective Date (as defined below), and
subject to the terms and conditions set forth below, the Credit Agreement is
hereby amended as follows:

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(a) The Credit Agreement and Schedules 1.01(b) and 1.01(d) thereto are hereby
amended as described in the marked version attached hereto as Exhibit A.

(b) The Schedules to the Credit Agreement are hereby amended by deleting
Schedules 3.08, 3.11(a), 3.11(b), 3.12(a), 3.12(b) and 6.08 and replacing them
with Schedules 1.01(b), 1.01(d), 3.08, 3.11(a), 3.11(b), 3.12(a), 3.12(b) and
6.08 attached hereto as Exhibit B.

SECTION II MISCELLANEOUS

2.1. Conditions to Effectiveness of Amendment.  This Amendment shall become
effective as of the date (the “Amendment No. 1 Effective Date”) on which each of
the following conditions precedent have been satisfied (unless a condition shall
have been waived in accordance with Section 9.02 of the Credit Agreement):

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

(1) Executed Counterparts.  From each of the Lenders, the Administrative Agent
and the Obligors, either (1) a counterpart of this Amendment signed on behalf of
such party or (2) written evidence satisfactory to the Administrative Agent
(which may include telecopy transmission or electronic mail of a signed
signature page to this Amendment) that such party has signed a counterpart of
this Amendment.

(2) Opinion of Counsel to the Borrower.  A favorable written opinion (addressed
to the Administrative Agent and the Lenders and dated the Amendment No. 1
Effective Date) of Thompson & Knight LLP, counsel for the Obligors, and of
Robison Belaustegui Sharp & Low, Nevada counsel for the Obligors, in each case
in form and substance reasonably satisfactory to the Administrative Agent and
covering this Amendment and other such matters as the Administrative Agent may
reasonably request (and the Borrower hereby instructs such counsel to deliver
such opinion to the Lenders and the Administrative Agent).

(3) Corporate Documents. (1) True and complete copies of the organizational
documents of each Obligor certified as of a recent date by the appropriate
governmental official, (2) signature and incumbency certificates of the officers
of such Person executing this Amendment and the other Loan Documents to which it
is a party, (3) true and complete resolutions of the Board of Directors of each
Obligor approving and authorizing the execution, delivery and performance of
this Amendment and the other Loan Documents to which it is a party or by which
it or its assets may be bound and, in the case of the Borrower, authorizing the
borrowings hereunder, and that such resolutions are in full force and effect
without modification or amendment, and (4) a good standing certificate from the
applicable Governmental Authority of each Obligor’s jurisdiction of
incorporation, organization or formation and in each jurisdiction in which it is
qualified as a foreign corporation or other entity to do business, each dated a
recent date prior to the Amendment No. 1 Effective Date, all in form and
substance reasonably satisfactory to the Administrative Agent and its counsel.

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(4) Officer’s Certificate.  A certificate, dated the Amendment No. 1 Effective
Date and signed by a Financial Officer of the Borrower, confirming compliance
with the conditions set forth in Sections 4.02(a), (b), (c) and (d) of the
Credit Agreement and Section 2.1(d) of this Amendment.

(b) Liens.  The Administrative Agent shall have received results of a recent
lien search in each relevant jurisdiction with respect to the Obligors,
confirming the priority of the Liens in favor of the Collateral Agent created
pursuant to the Security Documents and revealing no liens on any of the assets
of the Borrower or its Subsidiaries except for Liens permitted under Section
6.02 of the Credit Agreement or Liens to be discharged on or prior to the
Amendment No. 1 Effective Date pursuant to documentation satisfactory to the
Administrative Agent.  All UCC financing statements, control agreements, stock
certificates and other documents or instruments required to be filed or executed
and delivered in order to create in favor of the Collateral Agent, for the
benefit of the Administrative Agent and the Lenders, a first-priority perfected
(subject to Eligible Liens) security interest in the Collateral (to the extent
that such a security interest may be perfected by filing, possession or control
under the Uniform Commercial Code) shall have been properly filed (or provided
to the Administrative Agent) or executed and delivered in each jurisdiction
required.

(c) Consents.  The Borrower shall have obtained and delivered to the
Administrative Agent certified copies of all consents, approvals,
authorizations, registrations, or filings (other than any filing required under
the Exchange Act or the rules or regulations promulgated thereunder, including
any filing required on Form 8-K) required to be made or obtained by the Borrower
and all guarantors in connection with this Amendment and any other evidence
reasonably requested by, and reasonably satisfactory to, the Administrative
Agent as to compliance with all material legal and regulatory requirements
applicable to the Obligors, 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 this Amendment or any transaction being
financed with the proceeds of the Loans shall be ongoing.

(d) No Litigation.  There shall not exist any action, suit, investigation,
litigation or proceeding or other legal or regulatory developments pending or,
to the knowledge of the Borrower, threatened in any court or before any
arbitrator or Governmental Authority that relates to this Amendment or that
could reasonably be expected to have a Material Adverse Effect.

(e) Solvency Certificate.  On the Amendment No. 1 Effective Date, the
Administrative Agent shall have received a solvency certificate of a Financial
Officer of the Borrower dated as of the Amendment No. 1 Effective Date and
addressed to the Administrative Agent and the Lenders, and in form, scope and
substance reasonably satisfactory to the Administrative Agent, with appropriate
attachments and demonstrating that both before and after giving effect to this
Amendment, (a) the Borrower will be Solvent on an unconsolidated basis and (b)
each Obligor will be Solvent on a consolidated basis with the other Obligors.

(f) Due Diligence.  All customary confirmatory due diligence on the Borrower and
its Subsidiaries shall have been completed by the Administrative Agent and the
Lenders and the results of such due diligence shall be satisfactory to the
Administrative Agent and the Lenders. 

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No information shall have become available which the Administrative Agent
reasonably believes has had, or could reasonably be expected to have, a Material
Adverse Effect.

(g) Default. No Default or Event of Default shall have occurred and be
continuing under the Credit Agreement, immediately before and after giving
effect to this Amendment, any incurrence of Indebtedness under the Credit
Agreement and the use of the proceeds thereof.

(h) USA PATRIOT Act.  The Administrative Agent shall have received 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, as reasonably requested by the
Administrative Agent.

(i) Borrowing Base Certificate.  The Administrative Agent shall have received a
Borrowing Base Certificate dated as of the Amendment No. 1 Effective Date,
showing a calculation of the Borrowing Base as of October 31, 2017, in form and
substance reasonably satisfactory to the Administrative Agent.

(j) Insurance Certificates and Endorsements.  The Administrative Agent shall
have received certificates from the Borrower’s insurance broker or other
evidence satisfactory to it that all insurance required to be maintained
pursuant to the Loan Documents is in full force and effect, and confirmation
that the insurance endorsements delivered in connection with the Closing with
respect to all insurance required to be maintained pursuant to the Loan
Documents are in full force and effect.

(k) Fees and Expenses.  The Borrower shall have paid in full, to the extent not
paid pursuant to Section 2.09 of the Credit Agreement, to the Administrative
Agent and the Lenders all fees and expenses (including reasonable legal fees to
the extent invoiced) related to this Agreement owing on or prior to the
Amendment No. 1 Effective Date, including any up-front fee due to any Lender on
or prior to the Amendment No. 1 Effective Date (including pursuant to the Fee
Letter, dated as of the Amendment No. 1 Effective Date, by and between the
Administrative Agent and the Borrower).

2.2. Representations and Warranties.  To induce the other parties hereto to
enter into this Amendment, the Borrower represents and warrants to the
Administrative Agent and each of the Lenders that, as of the Amendment No. 1
Effective Date and after giving effect to this Amendment:

(a) This Amendment has been duly authorized, executed and delivered by the
Borrower and the Subsidiary Guarantors, and constitutes a legal, valid and
binding obligation of the Borrower and the Subsidiary Guarantors 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).  The Credit
Agreement, as amended by this Amendment, constitutes the legal, valid and
binding obligation of the Borrower enforceable in accordance with its respective
terms, except as such enforceability may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or similar laws of

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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).

(b) The representations and warranties set forth in Article 3 of the Credit
Agreement and the representations and warranties in each other Loan Document are
true and correct in all material respects (other than any representation or
warranty already qualified by materiality or Material Adverse Effect, which
shall be true and correct in all respects) on and as of the Amendment No. 1
Effective Date, or, as to any such representations and warranties that refer to
a specific date, as of such specific date. 

(c) No Default or Event of Default has occurred that is continuing under the
Credit Agreement.

2.3. Counterparts.  This Amendment 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 Amendment constitutes the entire contract between and
among the parties relating to the subject matter hereof and supersedes any and
all previous agreements and understandings, oral or written, relating to the
subject matter hereof.  Delivery of an executed counterpart of this Amendment by
telecopy or electronic mail shall be effective as delivery of a manually
executed counterpart of this Amendment.

2.4. Payment of Expenses.  The Borrower agrees to pay and reimburse the
Administrative Agent for all of its reasonable and documented out-of-pocket
costs and expenses incurred in connection with this Amendment, including,
without limitation, the reasonable fees, charges and disbursements of legal
counsel to the Administrative Agent (but excluding, for the avoidance of doubt,
the allocated costs of internal counsel), in each case solely to the extent the
Borrower is otherwise required to do so pursuant to Section 9.03 of the Credit
Agreement.

2.5. GOVERNING LAW.  THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAW OF THE STATE OF NEW YORK.

2.6. Incorporation of Certain Provisions.  The provisions of Sections 9.01,
9.07, 9.09, 9.10 and 9.12 of the Credit Agreement are hereby incorporated by
reference mutatis mutandis as if fully set forth herein.

2.7. Effect of Amendment.  Except as expressly set forth herein, this Amendment
shall not by implication or otherwise limit, impair, constitute a waiver of, or
otherwise affect the rights and remedies of the Lenders, the Administrative
Agent, the Collateral Agent, the Borrower or the Subsidiary Guarantors under the
Credit Agreement or any other Loan Document, and, except as expressly set forth
herein, shall not alter, modify, amend or in any way affect any of the other
terms, conditions, obligations, covenants or agreements contained in the Credit
Agreement or any other Loan Document, all of which are ratified and affirmed in
all respects and shall continue in full force and effect.  Nothing herein shall
be deemed to entitle any Person to a consent to, or a waiver, amendment,
modification or other change of, any of the terms, conditions, obligations,
covenants or agreements contained in the Credit Agreement or any other Loan
Document in similar or different circumstances.  This Amendment shall apply and
be effective only with respect to the provisions amended herein of the Credit
Agreement.  Upon the

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effectiveness of this Amendment, each reference in the Credit Agreement to “this
Agreement,” “hereunder,” “hereof,” “herein” or words of similar import shall
mean and be a reference to the Credit Agreement as amended by this Amendment and
each reference in any other Loan Document shall mean the Credit Agreement as
amended hereby.  This Amendment shall constitute a Loan Document.

2.8. Consent and Affirmation.  Without limiting the generality of the foregoing,
by its execution hereof, each of the Borrower and the Subsidiary Guarantors
hereby, to the extent applicable, as of the Amendment No. 1 Effective Date (i)
consents to this Amendment and the transactions contemplated hereby (including
the New Lenders becoming Lenders under the Credit Agreement as described in
Section 2.10), (ii) agrees that the Guarantee and Security Agreement and each of
the other Security Documents is in full force and effect, (iii) confirms its
guarantee (solely in the case of Subsidiary Guarantors) and affirms its
obligations under the Guarantee and Security Agreement and confirms its grant of
a security interest in its assets as Collateral for the Secured Obligations (as
defined in the Guarantee and Security Agreement), and (iv) acknowledges and
affirms that such guarantee and/or grant, as applicable, is in full force and
effect in respect of, and to secure, the Secured Obligations (as defined in the
Guarantee and Security Agreement).

2.9. Reallocation of Loans.  On the Amendment No. 1 Effective Date, the Borrower
shall (A) prepay the Loans (if any) that are outstanding immediately prior to
the Amendment No. 1 Effective Date in full and (B) simultaneously borrow new
Loans under the Credit Agreement in an amount equal to such prepayment; provided
that with respect to subclauses (A) and (B), (x) the prepayment to, and
borrowing from, any Lender may, at the discretion of the Administrative Agent,
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
Lenders shall make and receive payments among themselves, as administered by and
in a manner acceptable to the Administrative Agent, so that, after giving effect
thereto, the Loans are held ratably by the Lenders in accordance with the
respective Commitments of such Lenders (as set forth in Schedule 1.01(b) of the
Credit Agreement).  Each of the Lenders agrees to waive repayment of the
amounts, if any, payable under Section 2.13 of the Credit Agreement as a result
of, and solely in connection with, any such prepayment.

2.10. Increasing Lenders and New Lenders. 

(a) On the Amendment No. 1 Effective Date, substantially contemporaneously with
the reallocation described in Section 2.9, each Increasing Lender and each New
Lender shall make a payment to the Administrative Agent, for the account of the
other Lenders, in an amount calculated by the Administrative Agent in accordance
with such section, so that after giving effect to such payment and to the
distribution thereof to other Lenders, the Loans are held ratably by the Lenders
in accordance with Schedule 1.01(b) of the Credit Agreement. 

(b) As of the Amendment No. 1 Effective Date, each New Lender shall become a
Lender under the Credit Agreement and shall have all the rights and obligations
of a Lender under the Credit Agreement and any other documents or instruments
delivered pursuant thereto.

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(c) Each New Lender (a) represents and warrants that (i) from and after the
Amendment No. 1 Effective Date, it shall be bound by the provisions of the
Credit Agreement as a Lender thereunder and shall have the obligations of a
Lender thereunder, and (ii) it has received a copy of the Credit Agreement,
together with copies of the audited consolidated statements of assets and
liabilities and the related audited consolidated statements of operations,
audited consolidated statements of changes in net assets, audited consolidated
statements of cash flows and related audited consolidated schedule of
investments of the Borrower and its Subsidiaries on a consolidated basis as of
the end of and for the fiscal year ended March 31, 2017, delivered pursuant to
Section 5.01(a) thereof, and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Amendment and to make such Loans 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 (b) agrees that (i) it will, independently and
without reliance on the Administrative Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the 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.

 

 

[Signature pages follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the day and year first above written.

CAPITAL SOUTHWEST CORPORATION, as Borrower

 

 

By: /s/ Michael Sarner      

Name: Michael Sarner

Title: Chief Financial Officer

 

 

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CAPITAL SOUTHWEST EQUITY INVESTMENTS, INC., as Subsidiary Guarantor

 

 

By: /s/ Michael Sarner

Name: Michael Sarner

Title: President

 

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CAPITAL SOUTHWEST MANAGEMENT CORPORATION, as Subsidiary Guarantor

 

 

By: /s/ Michael Sarner

Name: Michael Sarner

Title: Chief Financial Officer

 

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ING CAPITAL LLC, as Administrative Agent and a Lender

 

 

By: /s/ Patrick Frisch, CFA

Name: Patrick Frisch, CFA

Title: Managing Director

 

 

By: /s/ Grace Fu

Name: Grace Fu

Title: Director

 

 

 

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EVERBANK COMMERCIAL FINANCE, INC., as a Lender

 

 

By: /s/ John Dale

Name: John Dale

Title: Managing Director

 

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LEGACYTEXAS BANK, as a Lender

 

 

By: /s/ Michael Ansolabehere

Name: Michael Ansolabehere

Title: Managing Director, Corporate Banking

 

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ALOSTAR BANK OF COMMERCE, as a Lender

 

 

By: /s/ Edward Carpenter

Name: Edward Carpenter

Title: Director

 

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TEXAS CAPITAL BANK, NATIONAL ASSOCIATION, as a Lender

 

 

By: /s/ Matt Love

Name: Matt Love

Title: Senior Vice President

 

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CUSTOMERS BANK, as a Lender

 

 

By: /s/ Lyle P. Cunningham

Name: Lyle P. Cunningham

Title: Senior Vice President

 

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DALLAS CAPITAL BANK, as a New Lender

 

 

By: /s/ Spencer L. Sockwell

Name: Spencer L. Sockwell

Title: Senior Vice President

 

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ZB, N.A. DBA AMEGY BANK, as a New Lender

 

 

By: /s/ Kathy Magee

Name: Kathy Magee

Title: Senior Vice President

 

 

 

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Exhibit A

[See Attached]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Execution Version

 

 

 

SENIOR SECURED
REVOLVING CREDIT AGREEMENT

dated as of

August 30, 2016

and

as amended by Amendment No. 1 to Senior Secured Revolving Credit Agreement dated
as of November 16, 2017

among

CAPITAL SOUTHWEST CORPORATION

as Borrower

The LENDERS Party Hereto

ING CAPITAL LLC
as Administrative Agent,

Arranger and Bookrunner

and

TEXAS CAPITAL BANK, N.A.

as Documentation Agent

 

 

 

 

 

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TABLE OF CONTENTS

 

 

 

 

 

Page

ARTICLE I
DEFINITIONS

 

 

 

 

SECTION 1.01.

Defined Terms

1

SECTION 1.02.

Classification of Loans and Borrowings

30

SECTION 1.03.

Terms Generally

30

SECTION 1.04.

Accounting Terms; GAAP

31

 

 

 

ARTICLE II
THE CREDITS

 

 

 

 

 

 

 

SECTION 2.01.

The Commitments

32

SECTION 2.02.

Loans and Borrowings

32

SECTION 2.03.

Requests for Borrowings

32

SECTION 2.04.

Funding of Borrowings

33

SECTION 2.05.

Interest Elections

34

SECTION 2.06.

Termination, Reduction or Increase of the Commitments

35

SECTION 2.07.

Repayment of Loans; Evidence of Debt

38

SECTION 2.08.

Prepayment of Loans

39

SECTION 2.09.

Fees

41 42

SECTION 2.10.

Interest

42

SECTION 2.11.

Eurocurrency Borrowing Provisions

43

SECTION 2.12.

Increased Costs

44

SECTION 2.13.

Break Funding Payments

45

SECTION 2.14.

Taxes

46

SECTION 2.15.

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

50 51

SECTION 2.16.

Defaulting Lenders

52

SECTION 2.17.

Mitigation Obligations; Replacement of Lenders

53

 

 

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES

 

 

 

 

 

 

 

SECTION 3.01.

Organization; Powers

54

SECTION 3.02.

Authorization; Enforceability

54

SECTION 3.03.

Governmental Approvals; No Conflicts

54 55

SECTION 3.04.

Financial Condition; No Material Adverse Effect

55

SECTION 3.05.

Litigation.

55

SECTION 3.06.

Compliance with Laws and Agreements.

55 56

SECTION 3.07.

Taxes.

56

SECTION 3.08.

ERISA.

56

SECTION 3.09.

Disclosure.

57 58

SECTION 3.10.

Investment Company Act; Margin Regulations.

58

SECTION 3.11.

Material Agreements and Liens

59

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SECTION 3.12.

Subsidiaries and Investments.

59

SECTION 3.13.

Properties

59 60

SECTION 3.14.

Solvency

60

SECTION 3.15.

No Default.

60

SECTION 3.16.

Use of Proceeds.

60

SECTION 3.17.

Security Documents.

60

SECTION 3.18.

Compliance with Sanctions.

60 61

SECTION 3.19.

Anti-Money Laundering Program

61

SECTION 3.20.

Foreign Corrupt Practices Act.

61

 

 

 

ARTICLE IV
CONDITIONS

 

 

 

 

 

 

 

SECTION 4.01.

Effective Date

61 62

SECTION 4.02.

Conditions to Each Credit Event

65

 

 

 

ARTICLE V
AFFIRMATIVE COVENANTS

 

 

 

 

 

 

 

SECTION 5.01.

Financial Statements and Other Information

66

SECTION 5.02.

Notices of Material Events

69

SECTION 5.03.

Existence; Conduct of Business

70

SECTION 5.04.

Payment of Obligations

70

SECTION 5.05.

Maintenance of Properties; Insurance

70

SECTION 5.06.

Books and Records; Inspection and Audit Rights

70 71

SECTION 5.07.

Compliance with Laws and Agreements

71

SECTION 5.08.

Certain Obligations Respecting Subsidiaries; Further Assurances

71 72

SECTION 5.09.

Use of Proceeds

74 75

SECTION 5.10.

Status of RIC and BDC

75

SECTION 5.11.

Investment Policies

75 76

SECTION 5.12.

Portfolio Valuation and Diversification Etc.

75 76

SECTION 5.13.

Calculation of Borrowing Base

81 82

SECTION 5.14.

Taxes

92 93

SECTION 5.15.

Anti-Hoarding of Assets at Non-Pledged SBIC Subsidiaries

92 94

SECTION 5.16.

Post-Closing Matters

92 94

 

 

 

 

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ARTICLE VI
NEGATIVE COVENANTS

 

 

 

 

 

 

 

SECTION 6.01.

Indebtedness

93 95

SECTION 6.02.

Liens

94 96

SECTION 6.03.

Fundamental Changes

95 97

SECTION 6.04.

Investments

97 99

SECTION 6.05.

Restricted Payments

98 100

SECTION 6.06.

Certain Restrictions on Subsidiaries

99 101

SECTION 6.07.

Certain Financial Covenants

100 102

SECTION 6.08.

Transactions with Affiliates

100 102

SECTION 6.09.

Lines of Business

101 103

SECTION 6.10.

No Further Negative Pledge

101 103

SECTION 6.11.

Modifications of Indebtedness

101 103

SECTION 6.12.

Payments of Longer-Term Indebtedness

102 104

SECTION 6.13.

Modification of Investment Policies

102 104

SECTION 6.14.

SBIC Guarantee.

102 104

SECTION 6.15.

Derivative Transactions

102 104

 

 

 

ARTICLE VII
EVENTS OF DEFAULT

 

 

 

 

ARTICLE VIII
THE ADMINISTRATIVE AGENT

 

 

 

 

 

 

 

SECTION 8.01.

Appointment

106 108

SECTION 8.02.

Capacity as Lender

106 108

SECTION 8.03.

Limitation of Duties; Exculpation

107 109

SECTION 8.04.

Reliance

107 109

SECTION 8.05.

Sub-Agents

108 110

SECTION 8.06.

Resignation; Successor Administrative Agent

108 110

SECTION 8.07.

Reliance by Lenders

108 110

SECTION 8.08.

Modifications to Loan Documents

108 110

 

 

 

ARTICLE IX
MISCELLANEOUS

 

 

 

 

 

 

 

SECTION 9.01.

Notices; Electronic Communications

109 111

SECTION 9.02.

Waivers; Amendments

111 113

SECTION 9.03.

Expenses; Indemnity; Damage Waiver

113 115

SECTION 9.04.

Successors and Assigns

115 117

SECTION 9.05.

Survival

120 122

SECTION 9.06.

Counterparts; Integration; Effectiveness; Electronic Execution

120 122

SECTION 9.07.

Severability

120 122

SECTION 9.08.

Right of Setoff

120 122

SECTION 9.09.

Governing Law; Jurisdiction; Etc

121 123

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SECTION 9.10.

WAIVER OF JURY TRIAL

121 123

SECTION 9.11.

Judgment Currency

122 124

SECTION 9.12.

Headings

122 124

SECTION 9.13.

Treatment of Certain Information; Confidentiality

122 124

SECTION 9.14.

USA PATRIOT Act

123 125

SECTION 9.15.

Termination

124 126

SECTION 9.16.

Acknowledgment and Consent to Bail-In of EEA Financial Institutions

124 126

SECTION 9.17.

Interest Rate Limitation

124 126

 

 

 

 

SCHEDULE 1.01(a)

-

Approved Dealers and Approved Pricing Services

SCHEDULE 1.01(b)

-

Commitments

SCHEDULE 1.01(c)

-

[Intentionally Omitted]

SCHEDULE 1.01(d)

-

Eligibility Criteria

SCHEDULE 1.01(e)

-

Industry Classification Groups

SCHEDULE 3.08

-

Unfunded Pension Liabilities

SCHEDULE 3.11(a)

-

Material Agreements

SCHEDULE 3.11(b)

-

Liens

SCHEDULE 3.12(a)

-

Subsidiaries

SCHEDULE 3.12(b)

-

Investments

SCHEDULE 6.08

-

Certain Affiliate Transactions

 

 

 

EXHIBIT A

-

Form of Assignment and Assumption

EXHIBIT B

-

Form of Borrowing Base Certificate

EXHIBIT C

-

Form of Promissory Note

EXHIBIT D

-

Form of Borrowing Request

 

 

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SENIOR SECURED REVOLVING CREDIT AGREEMENT dated as of August 30, 2016 (this
“Agreement”), among CAPITAL SOUTHWEST CORPORATION, a Texas corporation (the
“Borrower”), the LENDERS party hereto, and ING CAPITAL LLC, as Administrative
Agent, and TEXAS CAPITAL BANK, N.A., as documentation agent.

WHEREAS, the Borrower has requested that the Lenders (as defined herein) extend
credit to the Borrower from time to time pursuant to the commitments as set
forth herein and  the Lenders have agreed to extend such credit upon the terms
and conditions hereof.

NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto hereby agree as follows:

Article I

DEFINITIONS

Section 1.01. Defined Terms.  As used in this Agreement, the following terms
have the meanings specified below and the terms defined in Section 5.13 have the
meanings assigned thereto in such section:

 

“ABR”, 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 Alternate Base Rate.

“Adjusted Borrowing Base” means the Borrowing Base minus the aggregate amount of
Cash and Cash Equivalents included in the Borrowing Base.

“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 Borrowing Base.

“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 the greater of (i) (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate for such Interest Period and
(ii) zero.

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

“Administrative Agent’s Account” means an account 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.

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“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” of an Obligor shall
not include any Person that constitutes an Investment held by any Obligor in the
ordinary course of business.

“Affiliate Investment” means any Investment in a Person in which the Borrower or
any of its Subsidiaries owns or controls more than 25% of the Equity Interests.

“Agency Account” has the meaning assigned to such term in Section 5.08(c)(v).

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

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective
Rate for such day plus 1/2 of 1%, (c) the LIBO Rate for deposits in U.S.
dollarsDollars for a period of three (3) months plus 1% and (d) zero. Any change
in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds
Effective Rate or such LIBO Rate shall be effective from and including the
effective date of such change in the Prime Rate, the Federal Funds Effective
Rate, or such LIBO Rate, as the case may be.

“Amendment No. 1 Effective Date” means November 16, 2017.

“Anti-Corruption Laws” has the meaning assigned to such term in Section 3.20.

“Applicable Margin”  means, (a) with respect to any ABR Loan, 2.25% per annum;
and (b) with respect to any Eurocurrency Loan, 3.25% per annum. a per annum rate
determined on a daily basis according to the following pricing grid:

 

Before Step-Down Condition

After Step-Down Condition

Eurocurrency Loans

3.00%

2.75%

ABR Loans

2.00%

1.75%

 

“Applicable Percentage” means, with respect to any Lender, the percentage of the
total Commitments represented by such Lender’s Commitments.  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
pursuant to Section 9.04(b).

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

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“Approved Pricing Service” means (a) a pricing or quotation service as set forth
in Schedule 1.01(a) or (b) any other pricing or quotation service (i) approved
by the Board of Directors of the Borrower, (ii) designated in writing by the
Borrower 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), and (iii)
acceptable to the Administrative Agent in its reasonable determination.

“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; provided that, if any proposed appraiser
requests or requires a non-reliance letter, confidentiality agreement or similar
agreement prior to allowing the Administrative Agent to review any written
valuation report, such Person shall only be deemed an Approved Third-Party
Appraiser if the Administrative Agent and such Approved Third-Party Appraiser
shall have entered into such a letter or agreement.  Subject to the foregoing,
it is understood and agreed that CTS Capital Advisors, LLC, Houlihan Lokey, Duff
& Phelps LLC, Murray, Devine and Company, Lincoln Partners Advisors, LLC, Stout
Risius Ross, LLC and Valuation Research Corporation are acceptable to the
Administrative Agent solely to the extent they are not serving as the
Independent Valuation Provider.

“Asset Coverage Ratio” means, on a consolidated basis for Borrower and its
Subsidiaries, the ratio which the value of total assets, less all liabilities
(including all Unfunded Pension Liabilities) and indebtedness not represented by
Senior Securities, bears to the aggregate amount of Senior Securities
representing indebtedness of the Borrower and its Subsidiaries (all as
determined pursuant to the Investment Company Act and any orders of the SEC
issued to the Borrower thereunder).  For clarity, the calculation of the Asset
Coverage Ratio shall be made in accordance with any exemptive order issued by
the Securities and Exchange CommissionSEC under Section 6(c) of the Investment
Company Act relating to the exclusion of any Indebtedness of any SBIC Subsidiary
from the definition of Senior Securities only so long as (a) such order is in
effect, (b) no obligations have become due and owing pursuant to the terms of
any Permitted SBIC Guarantee and (c) such Indebtedness is owed to the SBA.

“Asset Sale” means a sale, lease or sub leasesublease (as lessor or sublessor),
sale and leaseback, assignment, conveyance, transfer or other disposition to, or
any exchange of property with, any Person, in one transaction or a series of
transactions, of all or any part of any Obligor’s assets or properties of any
kind, whether real, personal, or mixed and whether tangible or intangible,
whether now owned or hereafter acquired; provided, however, the term “Asset
Sale” as used in this Agreement shall not include the disposition of Portfolio
Investments originated by an Obligor and immediately transferred to an SBIC
Subsidiary pursuant to the terms of Section 6.03(e) hereof.

“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

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9.04(b)), and accepted by the Administrative Agent as provided in Section 9.04,
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 2.06(f)(i).

“Availability Period” means the period from and including the Effective Date to
but excluding the earlier of the Revolver Termination Date and the date of
termination of the Commitments in accordance with this Agreement.

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

“Bail-In Legislation” means, 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 for such EEA Member Country from
time to time which is described in the EU Bail-In Legislation Schedule.

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

“Board of Directors” means, with respect to any person, (a) in the case of any
corporation, the board of directors of such person, (b) in the case of any
limited liability company, the board of managers of such person, or if there is
none, the Board of Directors of the managing member of such Person, (c) in the
case of any partnership, the Board of Directors of the general partner of such
person and (d) in any other case, the functional equivalent of the foregoing.

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

“Borrower External Unquoted Value” has the meaning assigned to such term in
Section 5.12(b)(ii)(B)(y).

“Borrower Tested Assets” has the meaning assigned to such term in Section
5.12(b)(ii)(B)(y).

“Borrowing” means Loans of the same Type made, converted or continued on the
same date and, in the case of Eurocurrency Loans, that have the same Interest
Period.

“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.

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“Borrowing Request” means a request by the Borrower for a Borrowing in
accordance with Section 2.03, substantially in the form of Exhibit D hereto or
such other form as is reasonably satisfactory to the Administrative Agent.

“Business Day” means any day (a) that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed and (b) if such day relates to a borrowing of, a payment or
prepayment of principal of or interest on, a continuation or conversion of or
into, or the Interest Period for, a Eurocurrency Borrowing, or to a notice by
the Borrower with respect to any such borrowing, payment, prepayment,
continuation, conversion, or Interest Period, that is also a day on which
dealings in deposits denominated in Dollars are carried out in the London
interbank market.

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

(a) Short-Term U.S. Government Securities (as defined in Section 5.13);

(b) investments in commercial paper maturing within 180 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; 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

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(e) investments in money market funds and mutual funds, which invest
substantially all of their assets in Cash or assets of the types described in
clauses (a) through (d) above;

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, certificates of
deposit or repurchase agreements) shall not include any such investment
representing more than 25% of total assets of the Obligors in any single issuer;
and (iv) in no event shall Cash Equivalents include any obligation that is not
denominated in Dollars.

“Change in Control” means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the SEC
thereunder as in effect on the date hereof) of shares representing more than 35%
of the aggregate ordinary voting power represented by the issued and outstanding
capital stock of the Borrower, (b) occupation of a majority of the seats (other
than vacant seats) on the Board of Directors of the Borrower by Persons who were
neither (A) members of the Board of Directors of the Borrower as of the
corresponding date of the previous year, (B) selected or nominated to become
members of the Board of Directors of the Borrower by the Board of Directors of
the Borrower of which a majority consisted of individuals described in clause
(A), or (C) selected or nominated to become members of the Board of Directors of
the Borrower by the Board of Directors of the Borrower of which a majority
consisted of individuals described in clause (A) and individuals described in
clause (B), or (c) any two of (i) Bowen Diehl, (ii) Michael Sarner or (iii)
Douglas Kelley (except if any such individuals are replaced with individuals
reasonably satisfactory to the Administrative Agent and Required Lenders after
the death, disability, resignation or termination of the same) are no longer
actively engaged in the day-to-day management of the Borrower.

“Change in Law” means (a) the adoption of any law, rule or regulation or treaty
after the Effective Date, (b) any change in any law, rule or regulation or
treaty or in the interpretation, implementation or application thereof by any
Governmental Authority after the Effective Date or (c) compliance by any Lender
(or, for purposes of Section 2.12(b) or Section 2.17(a), by such Lender’s
holding company, if any, or by any lending office of such Lender) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the Effective Date; provided that,
notwithstanding anything herein to the contrary, (I) the Dodd-Frank Wall Street
Reform and Consumer Protection Act and all requests, rules, guidelines or
directives in connection therewith and (II) all requests, rules, guidelines or
directives promulgated by the Bank For International Settlements, the Basel
Committee on Banking Supervision (or any successor or similar authority) or the
United States or foreign regulatory authorities, in each case pursuant to Basel
III, shall in each case be deemed to be a “Change in Law” regardless of the date
enacted, adopted, issued, promulgated or implemented.

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“Class Action Judgment” means the Order Awarding Plaintiffs’ Counsel Attorneys’
Fees and Expenses, filed as ECF No. 115, in Rines v. Heelys, Inc., Case No.
3:07-cv-01468-K (Consolidated) (N.D. Tex. Nov. 17, 2009).

“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.

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

“Commitment” means, with respect to each Lender, the commitment of such Lender
to make Loans, as such commitment may be (a) reduced or increased from time to
time pursuant to Sections 2.06 and 2.08(c) and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to Section
9.04.  The aggregate amount of each Lender’s Commitment as of the Amendment No.
1 Effective Date 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 the Lenders’ Commitments as of the
Effective Date is $100,000,000. The aggregate amount of the Lenders’ Commitments
as of the Amendment No. 1 Effective Date is $180,000,000.

“Commitment Increase” has the meaning assigned to such term in Section
2.06(f)(i).

“Commitment Increase Date” has the meaning assigned to such term in Section
2.06(f)(i).

“Consolidated Adjusted Interest Expense” means, for any period with respect to
the Borrower and its Subsidiaries on a consolidated basis, the sum of (x) cash
interest paid in respect of the stated rate of interest (including any default
rate of interest, if applicable) applicable to any Indebtedness plus (y) the net
amount paid in cash (or minus the net amount received in cash) under Hedging
Agreements permitted under Section 6.04 relating to interest during such period
and to the extent not already taken into account under clause (x).

“Consolidated EBIT” means, for any period with respect to the Borrower and its
Subsidiaries on a consolidated basis, income after deduction of all expenses and
other proper charges other than Taxes, Consolidated Interest Expense and
non-cash employee stock options expense and excluding (a) net realized gains or
losses, (b) net change in unrealized appreciation or depreciation, (c) gains on
re-purchases of Indebtedness, (d) the amount of interest paid-in-kind to the
Borrower or any of its Subsidiaries (“PIK”) to the extent such amount exceeds
the sum of (i) PIK interest collected in cash (including any amortization
payments on such applicable debt instrument up to the amount of PIK interest
previously capitalized thereon) and (ii) realized gains collected in cash (net
of realized losses); provided that the amount determined pursuant to this clause
(d)(ii) shall not be less than zero, all as determined in accordance with GAAP,
and (e)  other non-cash charges and gains to the extent included to calculate
income.

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“Consolidated Interest Coverage Ratio” means the ratio as of the last day of any
fiscal quarter of the Borrower of (a) Consolidated EBIT for the four fiscal
quarter period then ending, taken as a single accounting period, to (b)
Consolidated Adjusted Interest Expense for such four fiscal quarter period.

“Consolidated Interest Expense” means, with respect to a Person and for any
period, the sum of (x) the total consolidated interest expense (including
capitalized interest expense and interest expense attributable to Capital Lease
Obligations) of such Person and in any event shall include all interest expense
with respect to any Indebtedness in respect of which such Person is wholly or
partially liable plus (y) the net amount payable (or minus the net amount
receivable) under Hedging Agreements permitted under Section 6.04 relating to
interest during such period (whether or not actually paid or received during
such period) and to the extent not already taken into account under clause (x).

“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.

“Control Account” has the meaning assigned to such term in Section 5.08(c)(ii).

“Control Agreement” means a control agreement entered into by and among the
Borrower, the Collateral Agent and the Custodian, in form and substance
reasonably satisfactory to the Collateral Agent, the Custodian and the Borrower.

“Covered Debt Amount” means, on any date, the sum of (x) all of the Revolving
Credit Exposures of all Lenders on such date, plus (y) the aggregate amount
(including any increase in the aggregate principal amount resulting from
payable-in-kind interest) of Other Covered Indebtedness outstanding on such
date.

“Covered Taxes” means (i) 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 (ii) to the extent not otherwise described in clause
(i), Other Taxes.

“Custodian” means U.S. Bank National Association, or any other financial
institution mutually agreeable to the Collateral Agent and the Borrower, as
custodian holding accounts of the Borrower holding Portfolio Investments, on
behalf of the Borrower and, pursuant to the Control Agreement, the Collateral
Agent.  The term “Custodian” includes any agent or sub-custodian acting on
behalf of the Custodian pursuant to the terms of the Custody Agreement.

“Custodian Account” means an account subject to a Custody Agreement.

“Custody Agreement” means a custody agreement entered into by and between the
Borrower and the Custodian, in form and substance reasonably satisfactory to the
Custodian and the Borrower.

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“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 any Lender that has, as reasonably determined by the
Administrative Agent, (a) failed to fund any portion of its Loans within two (2)
Business Days of the date required to be funded by it hereunder, unless, in the
case of any Loans, such Lender notifies the Administrative Agent that such
Lender’s failure is based on such Lender’s reasonable determination that the
conditions precedent to funding such Loan under this Agreement have not been
met, such conditions have not otherwise been waived in accordance with the terms
of this Agreement and such Lender has advised the Administrative Agent in
writing (with reasonable detail of those conditions that have not been
satisfied) prior to the time at which such funding was to have been made, (b)
notified the Borrower, the Administrative Agent, or any other Lender in writing
that it does not intend to comply with any of its funding obligations under this
Agreement or has made a public statement that it does not intend to comply with
its funding obligations under this Agreement (unless such writing or public
statement states that such position is based on such Lender’s determination that
one or more conditions precedent to funding (which conditions precedent,
together with the applicable default, if any, shall be specifically identified
in such writing) cannot be satisfied), (c) failed, within three (3) Business
Days after request by the Administrative Agent or the Borrower to confirm in
writing to the Administrative Agent and the Borrower that it will comply with
the terms of this Agreement relating to its obligations to fund prospective
Loans (provided that such Lender shall cease to be a Defaulting Lender pursuant
to this clause (c) upon receipt of such written confirmation by the
Administrative Agent and the Borrower), (d) otherwise failed to pay over to the
Administrative Agent or any other Lender any other amount (other than a de
minimis amount) required to be paid by it hereunder within two (2) Business Days
of the date when due, unless the subject of a good faith dispute, or (e) other
than via an Undisclosed Administration, either (i) has been adjudicated as, or
determined by any Governmental Authority having regulatory authority over such
Person or its assets to be, insolvent or has a parent company that has been
adjudicated as, or determined by any Governmental Authority having regulatory
authority over such Person or its assets to be, insolvent, (ii) become the
subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee, administrator, assignee for the benefit of creditors or
similar Person charged with reorganization or liquidation of its business or
custodian, appointed for it, or has a parent company that has become the subject
of a bankruptcy or insolvency proceeding, or has had a receiver, conservator,
trustee, administrator, assignee for the benefit of creditors or similar Person
charged with reorganization or liquidation of its business or custodian
appointed for it (unless in the case of any Lender referred to in this clause
(e), the Borrower and the Administrative Agent shall be satisfied in the
exercise of their respective reasonable discretion that such Lender intends, and
has all approvals required to enable it, to continue to perform its obligations
as a Lender hereunder) or (iii) become the subject of a Bail-In Action; provided
that a Lender shall not qualify as a Defaulting Lender solely as a result of the
acquisition or maintenance of an ownership interest in such Lender or its parent
company, or of the exercise of control over such Lender or any Person
controlling such Lender, by a Governmental Authority or instrumentality thereof,
or solely as a result of an Undisclosed Administration, so long as such
ownership interest or Undisclosed Administration 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

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such Lender (or such Governmental Authority) to reject, repudiate, disavow or
disaffirm any contracts or agreements made with such Lender.

“Disqualified Equity Interests” means Equity Interests of the Borrower that
after issuance are subject to any agreement between the holder of such Equity
Interests and the Borrower whereby the Borrower is required to purchase, redeem,
retire, acquire, cancel or terminate such Equity Interests, other than (x) as a
result of a change of control, or (y) in connection with any purchase,
redemption, retirement, acquisition, cancellation or termination with, or in
exchange for, shares of Equity Interests that are not Disqualified Equity
Interests.

“Document Custodian” means U.S. Bank National Association, or any other
financial institution mutually agreeable to the Collateral Agent and the
Borrower, as document custodian holding documentation for Portfolio Investments,
on behalf of the Borrower and, pursuant to the Document Custody Agreement, the
Collateral Agent.  The term “Document Custodian” includes any agent or
sub-custodian acting on behalf of the Document Custodian.

“Document Custody Agreement” means a document custody agreement entered into by
and among the Borrower, the Collateral Agent and the Document Custodian, in form
and substance reasonably satisfactory to the Collateral Agent, the Document
Custodian and the Borrower.

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

“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).August 30, 2016.

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“Eligible Liens” means, any right of offset, banker’s lien, security interest or
other like right against the Portfolio Investments held by the Custodian
pursuant to or in connection with its rights and obligations relating to the
Custodian Account, provided that such rights are subordinated, pursuant to the
terms of the Control Agreement, to the first priority perfected security
interest in the Collateral created in favor of the Collateral Agent, except to
the extent expressly provided therein.

“Eligible Portfolio Investment” means any Portfolio Investment held by any
Obligor (and solely for purposes of determining the Borrowing Base, Cash and
Cash Equivalents held by any Obligor) that, in each case, meets all of the
criteria set forth on Schedule 1.01(d) hereto; provided, that no Portfolio
Investment, Cash or Cash Equivalent shall constitute an Eligible Portfolio
Investment or be included in the Borrowing Base if the Collateral Agent does not
at all times maintain a first priority, perfected Lien (subject to no other
Liens other than Eligible Liens) on such Portfolio Investment, Cash or Cash
Equivalent or if such Portfolio Investment, Cash or Cash Equivalent has not been
or does not at all times continue to be Delivered (as defined in the Guarantee
and Security Agreement).  Without limiting the generality of the foregoing, it
is understood and agreed that (i) any Portfolio Investments that have been
contributed or sold, purported to be contributed or sold or otherwise
transferred to any SBIC Subsidiary, or held by any SBIC Subsidiary, or which
secure obligations of any SBIC Subsidiary and (ii) Special Equity Interests
shall not be treated as Eligible Portfolio Investments until distributed, sold
or otherwise transferred to the Borrower free and clear of all Liens (other than
Eligible Liens).  Notwithstanding the foregoing, nothing herein shall limit the
provisions of Section 5.12(b)(i), which provide that, for purposes of this
Agreement, all determinations of whether an Investment is to be included as an
Eligible Portfolio Investment shall be determined on a settlement-date basis
(meaning that any Investment that has been purchased will not be treated as an
Eligible Portfolio Investment until such purchase has settled, and any Eligible
Portfolio Investment which has been sold will not be excluded as an Eligible
Portfolio Investment until such sale has settled), provided that no such
Investment shall be included as an Eligible Portfolio Investment to the extent
it has not been paid for in full. 

“Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
equity interest. As used in this Agreement, “Equity Interests” shall not include
convertible debt unless and until such debt has been converted to capital stock.

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

“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(m) or
(o) 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 Pension Plan (other
than an event for which the 30-day notice period is waived); (b) with respect to
any Plan that is intended to qualify

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under Section 401(a) of the Code, the notification by the Internal Revenue
Service of its intent to disqualify the Plan; (c) the failure to make a required
contribution to any Pension Plan that would result in the imposition of a lien
or other encumbrance or the provision of security under Section 412 or 430 of
the Code or Section 302 or 4068 of ERISA, or the arising of such a lien or
encumbrance; there being or arising any “unpaid minimum required contribution”
or “accumulated funding deficiency” (as defined in or otherwise set forth in
Section 4971 of the Code or Part 3 of Subtitle B of Title 1 of ERISA), whether
or not waived; 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 Pension Plan; or the determination that any Pension Plan is,
or is expected to be, in “at-risk” status under Title IV of ERISA; (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 Pension Plan (other
than a standard termination under and in accordance with Section 4041(b) of
ERISA or premiums due and not delinquent under Section 4007 of ERISA); (e) the
receipt by the Borrower or any of its ERISA Affiliates from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Pension
Plan or Pension Plans or to appoint a trustee to administer any Pension Plan;
(f) the incurrence by the Borrower or any of its ERISA Affiliates of any
Withdrawal Liability; (g) the occurrence of any nonexempt prohibited transaction
within the meaning of Section 4975 of the Code or Section 406 of ERISA with
respect to any Pension Plan; (h) the failure to make any required contribution
to a Multiemployer Plan or failure to make by its due date any required
contribution to any Pension Plan; or (i) the receipt by the Borrower or any of
its ERISA Affiliates of any notice, or the receipt by any Multiemployer Plan
from the Borrower or any of its ERISA Affiliates of any notice, concerning the
imposition of Withdrawal Liability or a determination that a Multiemployer Plan
is, or is expected to be, in “critical” or “endangered” status, as determined
under Section 432 of the Code or Section 305 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.  For
clarity, a Loan or Borrowing bearing interest by reference to clause (c) of the
definition of the Alternate Base Rate shall not be a Eurocurrency Loan or
Eurocurrency Borrowing.

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

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to
the Administrative Agent or any Lender or required to be withheld or deducted
from a payment to the Administrative Agent or any Lender, (a) Taxes imposed on
(or measured by) its net income or franchise Taxes, in each case, imposed (i) 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, or
(ii) as a result of a

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present or former connection between such recipient and the jurisdiction
imposing such Tax (other than connections solely arising from such recipient
having executed, delivered, become a party to, performed its obligations under,
received payments under, received or perfected a security interest under,
engaged in any other transaction pursuant to or enforced any Loan Documents, or
sold or assigned an interest in any Loan or Loan Document), (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 (other than an assignee pursuant to a request by the Borrower under
Section 2.17(b)), any U.S. federal withholding Tax that is imposed on amounts
payable to such Lender at the time such Lender becomes a party to this Agreement
(or designates a new lending office), except to the extent that such Lender (or
its assignor, if any) was entitled, at the time of designation of a new lending
office (or assignment), to receive additional amounts from the Borrower with
respect to such withholding Tax pursuant to Section 2.14(a), (d) Taxes
attributable to such recipient’s failure to comply with Section 2.14(f), and (e)
any U.S. federal withholding Taxes imposed under FATCA.

“Existing Affiliate Investments” means the Portfolio Investments held and owned
by any Obligor on the Effective Date in (i) Deepwater Corrosion Services, Inc.,
(ii) MRI, and (iii) Titanliner, Inc. and, subject to Section 6.08(b) and
paragraph 21 of Schedule 1.01(d), any follow-on Investments by any Obligor in
the same Portfolio Companies.

 

“External Quoted Value” has the meaning set forth in Section 5.12(b)(ii)(A).

 

“External Unquoted Value” means (i) with respect to Borrower Tested Assets, the
Borrower External Unquoted Value and (ii) with respect to IVP Tested Assets, the
IVP External Unquoted Value.

 

“Extraordinary Receipts” means an amount equal to (a) any cash received by or
paid to any Obligor on account of any foreign, United States, state or local tax
refunds, pension plan reversions, judgments, proceeds of settlements or other
consideration of any kind in connection with any cause of action, condemnation
awards (and payments in lieu thereof), indemnity payments received not in the
ordinary course of business and any purchase price adjustment received not in
the ordinary course of business in connection with any purchase agreement and
proceeds of insurance (excluding, however, for the avoidance of doubt, proceeds
of any issuance of Equity Interests by the Borrower and issuances of
Indebtedness by any Obligor), minus (b) any costs, fees, commissions, premiums
and expenses incurred by any Obligor directly incidental to such cash receipts,
including reasonable legal fees and expenses; minus (c) amounts estimated in
good faith by the Borrower to be necessary for the Borrower to make
distributions sufficient in amount to achieve the objectives set forth in
clauses (i), (ii) and (iii) of Section 6.05(b) hereof, solely to the extent that
the Required Payment Amount in or with respect to any taxable year (or any
calendar year, as relevant) is increased as a result of such Extraordinary
Receipt; provided,  however,  that Extraordinary Receipts shall not include any
(i) amounts that the Borrower receives from the Administrative Agent or any
Lender pursuant to Section 2.14(h), (ii) cash

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receipts to the extent received from proceeds of insurance, condemnation awards
(or payments in lieu thereof), indemnity payments or payments in respect of
judgments or settlements of claims, litigation or proceedings to the extent that
such proceeds, awards or payments are received by any Person in respect of any
unaffiliated third party claim against or loss by such Person and promptly
applied to pay (or to reimburse such Person for its prior payment of) such claim
or loss and the costs and expenses of such Person with respect thereto, (iii)
proceeds of business interruption insurance to the extent such proceeds
constitute compensation for lost earnings, or (iv) indemnity payments or
payments in respect of judgments or settlements of claims, litigation or
proceedings to the extent that such payments are received by any Person in
respect of any unaffiliated third party claim against or loss by such Person and
promptly applied to pay (or to reimburse such Person for its prior payment of)
such claim or loss and the costs and expenses of such Person with respect
thereto.

“FATCA” means Sections 1471 through 1474 of the Code, as of the Effective Date
(or any amended or successor version that is substantively comparable and not
materially more onerous to comply with), 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 the implementation of such Sections of the Code, and any fiscal
or regulatory legislation, rules, or official practices adopted pursuant to any
published intergovernmental agreement entered into in connection with the
implementation of such Sections of the Code.

“FCPA” has the meaning assigned to such term in Section 3.20.

“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, 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.

“Financial Officer” means the chief executive officer, president, chief
operating officer, chief financial officer, treasurer, controller or chief
compliance officer of the Borrower, in each case, whom has been authorized by
the Board of Directors of the Borrower to execute the applicable document or
certificate.

“Foreign Lender” means any Lender that is not a U.S. Person.

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

“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

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government (including any supra-national body exercising such powers or
functions, such as the European Union or the European Central Bank).

“Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term “Guarantee” shall not include endorsements
for collection or deposit in the ordinary course of business or customary
indemnification agreements entered into in the ordinary course of business in
connection with obligations that do not constitute Indebtedness. The amount of
any Guarantee at any time shall be deemed to be an amount equal to the maximum
stated or determinable amount of the primary obligation in respect of which such
Guarantee is incurred, unless the terms of such Guarantee expressly provide that
the maximum amount for which such Person may be liable thereunder is a lesser
amount (in which case the amount of such Guarantee shall be deemed to be an
amount equal to such lesser amount).

“Guarantee and Security Agreement” means that certain Guarantee, Pledge and
Security Agreement, dated as of the Effective Date, among the Borrower, the
Subsidiary Guarantors, the Administrative Agent, each holder (or a
representative, agent or trustee therefor) from time to time of any Secured
Longer-Term Indebtedness, and the Collateral Agent, as the same shall be
amended, restated, modified and supplemented 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
among 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
entered into in the ordinary course of business and not for speculative
purposes.  For the avoidance of doubt, in no event shall a Hedging Agreement
include a total return swap.

“Hedging Agreement Obligations” has the meaning specified in the Guarantee and
Security Agreement as in effect on the Effective Date.

“I-45” means I-45 SLF, LLC, a Delaware limited liability company.

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“I-45 Entities” means, collectively, (i) I-45, (ii) any direct or indirect
parent of I-45 (other than the Borrower) and (iii) in each case of clause (i) or
(ii), any of their respective Subsidiaries.

“Increasing Lender” has the meaning assigned to such term in Section 2.06(f)(i).

“Indebtedness” of any Person means, without duplication, (a) all obligations of
such Person for borrowed money or with respect to deposits, loans or advances of
any kind, (b) all obligations of such Person evidenced by bonds, debentures,
notes or similar debt 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 (other than trade accounts
payable and accrued expenses in the ordinary course of business not past due for
more than 90 days after the date on which such trade account payable was due),
(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, (i) the net amount such Person would be obligated for under any
Hedging Agreement if such Hedging Agreement was terminated at the time of
determination, (j) all obligations, contingent or otherwise, with respect to
Disqualified Equity Interests, and (k) 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 (or such Person is
not otherwise liable for such Indebtedness). 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, (y) a commitment arising in the ordinary course of business
to make a future Portfolio Investment or fund the delayed draw or unfunded
portion of any Portfolio Investment or (z) indebtedness of the Borrower on
account of the sale by the Borrower of the first out tranche of any First Lien
Bank Loan that arises solely as an accounting matter under ASC 860, provided
that such indebtedness (i) is non-recourse to the Borrower and its Subsidiaries
and (ii) would not represent a claim against the Borrower or any of its
Subsidiaries in a bankruptcy, insolvency or liquidation proceeding of the
Borrower or its Subsidiaries, in each case in excess of the amount sold or
purportedly sold. 

“Independent” when used with respect to any specified Person means the more
restrictive of the following: (a) that such Person (i) 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 adviser or
any Affiliate thereof) other than ownership of publicly traded stock of the
Borrower or any such Subsidiary or Affiliate with a market value not to exceed
$1,000,000 and (ii) is not an officer, employee, promoter, underwriter, trustee,
partner, director or a Person performing similar functions of the Borrower or of
its Subsidiaries or Affiliates (including its investment advisor or any
Affiliate thereof), (b) the definition of “disinterested” as defined in

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the Investment Company Act, (c) that such Person is not an “interested person”
as defined in Section 2(a)(19) of the Investment Company Act or (d) the
definition of “independent” as defined in the Exchange Act.

“Independent Valuation Provider” means any of Duff & Phelps LLC, Murray, Devine
and Company, Lincoln Advisors, Houlihan Lokey, Stout Risius Ross, Inc.,
Valuation Research Corporation and Alvarez & Marsal, or any other Independent
nationally recognized third-party appraisal firm selected by the Administrative
Agent in its reasonable discretion.

“Industry Classification Group” means any of the classification groups set forth
on Schedule 1.01(e) on the Effective Date.

“ING” means ING Capital LLC.

“Interest Election Request” means a request by the Borrower to convert or
continue a Borrowing in accordance with Section 2.05.

“Interest Payment Date” means (a) with respect to any ABR Loan, each Quarterly
Date and (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 that occurs at three-month intervals after the
first day of such Interest Period.

“Interest Period” means, for any Eurocurrency Loan or Borrowing, 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 (a) 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 (b) any Interest Period 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
Borrowing comprising Loans that have been converted or continued shall be the
effective date of the most recent conversion or continuation of such Loans.

“Internal Value” has the meaning set forth in Section 5.12(b)(ii)(C).

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

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

“Investment Policies” means the Borrower’s investment objectives, policies,
restrictions and limitations as in existence on the Effective Date.

“IRS” means the U.S. Internal Revenue Service.

“IVP External Unquoted Value” has the meaning assigned to such term in Section
5.12(b)(ii)(B)(x).

“IVP Tested Assets” has the meaning assigned to such term in Section
5.12(b)(ii)(B)(x).  

“Joint Venture” means any joint venture or other Person that primarily owns or
makes investments in unaffiliated financial assets (including debt or equity
investments in unaffiliated Persons).

“Lenders” means the Persons listed on Schedule 1.01(b) (as amended from time to
time pursuant to Section 2.06) 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.

“LIBO Rate” means, for any Interest Period, (i) the Intercontinental Exchange
Benchmark Administration Ltd. LIBO Rate (or the successor thereto if the
Intercontinental Exchange Benchmark Administration Ltd. is no longer making such
rates available) per annum for deposits in U.S. dollarsDollars for a period
equal to the Interest Period appearing on the display designated as Reuters
Screen LIBO01 Page (or such other page on that service or such other service
designated by the Intercontinental Exchange Benchmark Administration Ltd. LIBO
Rate (or the successor thereto if the Intercontinental Exchange Benchmark
Administration Ltd. is no longer making such rates available) for the display of
such Administration’s Interest Settlement Rates for deposits in U.S.
dollarsDollars) as of 11:00 a.m., London time on the day that is two Business
Days prior to the first day of the Interest Period (or if such Reuters Screen
LIBO01 Page is unavailable for any reason at such time, the rate which appears
on the Reuters Screen ISDA Page as of such date and such time);  provided,
 that(ii) if the Administrative Agent determines that the relevant foregoing
sources set forth in clause (i) are unavailable for the relevant Interest
Period, LIBO Rate for purposes of this definition shall mean the rate of
interest determined by the Administrative Agent to be the average (rounded
upward, if necessary, to the nearest 1/100th of 1%) of the rates per annum at
which deposits in U.S. dollarsDollars are offered to the Administrative Agent
two (2) business days preceding the first day of such Interest Period by leading
banks in the London interbank market as of 11:00 a.m. for delivery on the first
day of such Interest Period, for the number of days comprised therein and in an
amount comparable to the amount of the Administrative Agent’s portion of the
relevant Eurocurrency Borrowing, or (iii) subject to Section 2.11, if the
Administrative Agent determines that the sources set forth in clause (i) are
permanently unavailable for the relevant Interest Period, LIBO Rate for purposes
of this definition shall mean a comparable or successor rate, which rate is

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reasonably approved by the Administrative Agent in consultation with the
Borrower and which rate is consistent with the then prevailing market convention
for determining a rate of interest for syndicated loans in the United States at
such time; provided,  further, that if the LIBO Rate is less than zero for the
relevant Interest Period, such rate shall be deemed to be zero for such Interest
Period.  To the extent a comparable or successor rate is approved by the
Administrative Agent in consultation with the Borrower in accordance with clause
(iii) above, the approved rate shall be applied in a manner consistent with
market practice; provided, that to the extent such market practice is not
administratively feasible for the Administrative Agent, such approved rate shall
be applied in a manner as otherwise reasonably determined by the Administrative
Agent.

“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 Portfolio Investments that are equity
securities, excluding customary drag-along, tag-along, right of first refusal
and other similar rights in favor of other equity holders of the same issuer). 

“Loan Documents” means, collectively, this Agreement, any promissory notes
delivered pursuant to Section 2.07(f) and the Security Documents.

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

“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,
Portfolio Investments of the Obligors (taken as a whole) and other assets,
liabilities (actual or contingent), operations or condition (financial or
otherwise) of the Borrower and its Subsidiaries (other than the SBIC
Subsidiaries), taken as a whole, 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 or the ability of the Obligors to perform their respective
obligations thereunder.

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

“Maturity Date” means the date that is the one year anniversary of the Revolver
Termination Date.

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

“MRI” means Media Recovery, Inc., a Nevada corporation.

“Multiemployer Plan” means a multiemployer plan as defined in Section 3(37) or
4001(a)(3) of ERISA that is contributed to by (or to which there is an
obligation to contribute of) the Borrower or any of its ERISA Affiliates, and
each such plan for the five-year period immediately following the latest date on
which the Borrower or any of its ERISA Affiliates contributed to or had an
obligation to contribute to such plan.

“Net Asset Sale Proceeds” means, with respect to any Asset Sale, an amount equal
to (a) the sum of Cash payments and Cash Equivalents received by the Obligors
from such Asset Sale (including any Cash or Cash Equivalents received by way of
deferred payment pursuant to, or by monetization of, a note receivable or
otherwise, but only as and when so received), minus (b) any costs, fees,
commissions, premiums and expenses actually incurred by any Obligor directly
incidental to such Asset Sale and paid in cash to a Person that is not an
Affiliate of any Obligor (or if paid in cash to an Affiliate, only to the extent
such expenses are reasonable and customary), including reasonable legal fees and
expenses, minus (c) all taxes paid or reasonably estimated to be payable by any
Obligor as a result of such Asset Sale (after taking into account any applicable
tax credits or deductions that are reasonably expected to be available), minus
(d) amounts estimated in good faith by the Borrower to be necessary for the
Borrower to make distributions sufficient in amount to achieve the objectives
set forth in clauses (i), (ii) and (iii) of Section 6.05(b) hereof, solely to
the extent that the Required Payment Amount in or with respect to any taxable
year (or any calendar year, as relevant) is increased as a result of such Asset
Sale, minus (e) reserves for indemnification, purchase price adjustments or
analogous arrangements reasonably estimated by the Borrower or the relevant
Subsidiary in connection with such Asset Sale; provided that (i) such reserved
amount shall not be included in the Borrowing Base and (ii) if the amount of any
estimated reserves pursuant to this clause (e) exceeds the amount actually
required to be paid in cash in respect of indemnification, purchase price
adjustments or analogous arrangements for such Asset Sale, the aggregate amount
of such excess shall constitute Net Asset Sale Proceeds.

“No External Review Assets” has the meaning assigned to such term in Section
5.12(b)(ii)(B)(y).

“Non-Consenting Lender” has the meaning assigned to such term in Section
9.02(d).

“Non-Pledged SBIC Subsidiary” means, with respect to any SBIC Subsidiary, the
Equity Interest of such SBIC Subsidiary is not subject to a first-priority
perfected security interest in favor of the Collateral Agent securing the
Secured Obligations under and as defined in the Guarantee and Security
Agreement.

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

“Obligors’ Net Worth” means, at any date, Stockholders’ Equity at such date,
minus (x) the net asset value held by any Obligor in any non-Obligor Subsidiary
and (y) the net asset value held by any Obligor in any Special Equity Interest.

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“OFAC” has the meaning assigned to such term in Section 3.18.

“Organization Documents” means, for any Person, its constituent or
organizational documents, including: (a) in the case of any limited partnership,
the certificate of limited partnership and limited partnership agreement for
such Person; (b) in the case of any limited liability company, the articles of
formation and operating agreement for such Person; and (c) in the case of a
corporation, the certificate of articles of incorporation and the bylaws or
memorandum and articles of association for such Person.

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

“Other Permitted Indebtedness” means (a) accrued expenses and current trade
accounts payable incurred in the ordinary course of any Obligor’s business that
are overdue for a period of more than 90 days and which are being contested in
good faith by appropriate proceedings, (b) 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 (k) of Article VII, (c) Indebtedness incurred in the
ordinary course of business to finance equipment and fixtures; provided that
such Indebtedness does not exceed $1,000,000 in the aggregate at any time
outstanding; and (d) other Indebtedness not to exceed $2,500,000 in the
aggregate.

“Other Taxes” means any and all present or future stamp, court, documentary,
intangible, recording or filing Taxes or any other excise or property Taxes,
charges or similar levies arising from any payment made under any Loan Document
or from the execution, delivery, performance, enforcement or registration of,
from the receipt or perfection of a security interest under, or otherwise with
respect to, any Loan Document, except any such Taxes that are imposed with
respect to an assignment (other than an assignment made pursuant to Section
2.17(b)) and as a result of a present or former connection between such Lender
and the jurisdiction imposing such Tax (other than connections solely arising
from such Lender having executed, delivered, become a party to, performed is
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to or enforced any
Loan Documents, or sold or assigned an interest in any Loan or Loan Document).

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

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

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

“Pension Plan” means any employee benefit plan within the meaning of Section
3(3) of ERISA (other than a Multiemployer Plan) that is subject to the
provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of
ERISA, in respect of which Borrower or any of its ERISA Affiliates is (or would
under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section
3(5) of ERISA.

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“Permitted Equity Interests” means common stock of the Borrower that after its
issuance is not subject to any agreement between the holder of such common stock
and the Borrower where the Borrower is required to purchase, redeem, retire,
acquire, cancel or terminate any such common stock at any time prior to the
first anniversary of the later of the Maturity Date (as in effect from time to
time) and the Termination Date.

“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, landlord, 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; (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, in the case of each of clauses (i)
through (iii) above, securing payment of fees, indemnities, charges for
returning items 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; (i)
zoning restrictions, easements, licenses, or other restrictions on the use of
any real estate (including leasehold title), in each case which do not interfere
with or affect in any material respect the ordinary course conduct of the
business of the Borrower and its Subsidiaries; (j) purchase money Liens on
specific equipment and fixtures, provided that (i) such Liens only attach to
such equipment and fixtures, (ii) the Indebtedness secured thereby is incurred
pursuant to clause (c) of the definition of “Other Permitted Indebtedness” and
(iii) the Indebtedness secured thereby does not exceed the lesser of the cost
and the fair market value of such equipment and fixtures at the time of the
acquisition thereof; (k) deposits of money securing leases to which Borrower is
a party as lessee made in the ordinary course of business; (l) Eligible Liens;
and (m) Liens in favor of any escrow agent solely on and in respect of any cash
earnest money deposits made by any Obligor in

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connection with any letter of intent or purchase agreement (to the extent that
the acquisition or disposition with respect thereto is otherwise permitted
hereunder).

“Permitted Policy Amendment” is an amendment, modification, termination or
restatement of the Investment Policies, that either is (a)  approved in writing
by the Administrative Agent (with the consent of the Required Lenders),
(b)  required by applicable law or Governmental Authority, or (c) not material.

“Permitted SBIC Guarantee” means a guarantee by the Borrower of SBA Indebtedness
of an SBIC Subsidiary on SBA’s then applicable form; provided that the recourse
to the Obligors 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
(q) of Article VII, it shall be an Event of Default hereunder if any such event
or condition giving rise to such recourse occurs).

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

“Plan” means any employee benefit plan within the meaning of Section 3(3) of
ERISA (other than a Multiemployer Plan) in respect of which the Borrower is (or
would under Section 4069 of ERISA be deemed to be) an “employer” as defined in
Section 3(5) of ERISA.

“Portfolio Company” means the issuer or obligor under any Portfolio Investment
held by any Obligor.

“Portfolio Investment” means any Investment held by the Borrower and its
Subsidiaries in their asset portfolio.

“Prime Rate” means the rate of interest quoted in The Wall Street Journal, Money
Rates Section, as the “U.S. Prime Rate” (or its successor), as in effect from
time to time.  The Prime Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any customer.  The
Administrative Agent or any Lender may make commercial loans or other loans at
rates of interest at, above, or below the Prime Rate.

“Quarterly Dates” means the last Business Day of March, June, September and
December in each year, commencing on September 30, 2016. 

“Quoted Investments” has the meaning set forth in Section 5.12(b)(ii)(A).

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

“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 directors, partners, officers, employees, agents
and advisors of such Person and such Person’s Affiliates.

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“Required Lenders” means, at any time, subject to Section 2.16(b), 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, (a) if there are only three (3) Lenders at such time,
“Required Lenders” shall mean Lenders having Revolving Credit Exposures and
unused Commitments representing more than 67% of the sum of the total Revolving
Credit Exposures and unused Commitments at such time and (b) if there are only
two (2) Lenders at such time, “Required Lenders” shall mean all Lenders. 

“Required Payment Amount” has the meaning set forth in Section 6.05(b).

“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 (other than any equity awards granted to employees,
officers, directors and consultants of the Borrower and its Affiliates);
provided, for clarity, neither the conversion of convertible debt into Permitted
Equity Interests nor the purchase, redemption, retirement, acquisition,
cancellation or termination of convertible debt made solely with Permitted
Equity Interests (other than interest or expenses, which may be payable in cash)
shall be a Restricted Payment hereunder.

“Return of Capital” means an amount equal to (i) (a) any cash amount (and net
cash proceeds of any noncash amount) received by any Obligor at any time in
respect of the outstanding principal of any Portfolio Investment (whether at
stated maturity, by acceleration or otherwise), (b) without duplication of
amounts received under clause (a), any net cash proceeds (including net cash
proceeds of any noncash consideration) received by any Obligor at any time from
the sale of any property or assets pledged as collateral in respect of any
Portfolio Investment to the extent such net cash proceeds are less than or equal
to the outstanding principal balance of such Portfolio Investment, (c) any cash
amount (and net cash proceeds of any noncash amount) received by any Obligor at
any time in respect of any Portfolio Investment that is an Equity Interest (x)
upon the liquidation or dissolution of the issuer of such Portfolio Investment,
(y) as a distribution of capital made on or in respect of such Portfolio
Investment, or (z) pursuant to the recapitalization or reclassification of the
capital of the issuer of such Portfolio Investment or pursuant to the
reorganization of such issuer or (d) any similar return of capital received by
any Obligor in cash (and net cash proceeds of any noncash amount) in respect of
any Portfolio Investment minus (ii) (x) any costs, fees, commissions, premiums
and expenses incurred by any Obligor directly incidental to such Cash receipts,
including reasonable legal fees and expenses and (y) amounts estimated in good
faith by the Borrower to be necessary for the Borrower to make distributions
sufficient in amount to achieve the objectives set forth in clauses (i), (ii)
and (iii) of Section 6.05(b) hereof, solely to the extent that the Required
Payment Amount in or with respect to any taxable year (or any calendar year, as
relevant) is increased as a result of such Return of Capital.

“Revalue Right” has the meaning assigned to such term in Section
5.12(b)(ii)(B)(z).

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“Revolver Termination Date” means the date that is the three (3) year
anniversary of the Amendment No. 1 Effective Date, unless extended with the
consent of each Lender in its sole and absolute discretion.

 “Revolving Credit Exposure” means, with respect to any Lender at any time, the
sum of the outstanding principal amount of such Lender’s Loans at such time.

“RIC” means a Person qualifying for treatment as a “regulated investment
company” under Subchapter M of the Code.

“S&P” means S&P Global Ratings, a division of S&P Global Inc., a New York
corporation, or any successor thereto.

“Sanctioned Country” means, at any time, a country, territory or region that is,
or whose government is, the subject or target of any Sanctions.

“Sanctions” has the meaning assigned to such term in Section 3.18.

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

“SBIC Subsidiary” means any Subsidiary of the Borrower (or such Subsidiary’s
general partner or manager entity) that is (x)  either (i) a “small business
investment company” licensed by the SBA (or that has applied for such a license
and is actively pursuing the granting thereof by appropriate proceedings
promptly instituted and diligently conducted) under the Small Business
Investment Act of 1958, as amended, or (ii) any wholly-owned, direct or
indirect, Subsidiary of an entity referred to in clause (x)(i) of this
definition, and (y) designated in writing by the Borrower (as provided below) as
an SBIC Subsidiary, so long as:

(a)other than pursuant to a Permitted SBIC Guarantee or the requirement by the
SBA that the Borrower make an equity or capital contribution to the SBIC
Subsidiary in connection with its incurrence of SBA Indebtedness (provided that
such contribution is permitted by Section 6.03(e) and is made substantially
contemporaneously with such incurrence), no portion of the Indebtedness or any
other obligations (contingent or otherwise) of such Person (i) is Guaranteed by
the Borrower or any of its Subsidiaries (other than any SBIC Subsidiary), (ii)
is recourse to or obligates the Borrower or any of its Subsidiaries (other than
any SBIC Subsidiary) in any way, or (iii) subjects any property of the Borrower
or any of its Subsidiaries (other than any SBIC Subsidiary) to the satisfaction
thereof;

(b)other than pursuant to a Permitted SBIC Guarantee, neither the Borrower nor
any of its Subsidiaries has any material contract, agreement, arrangement or
understanding with such Person other than on terms no less favorable to the
Borrower or such Subsidiary than those that might be obtained at the time from
Persons that are not Affiliates of the Borrower or such Subsidiary;

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(c)neither the Borrower nor any of its Subsidiaries (other than any SBIC
Subsidiary) has any obligation to such Person to maintain or preserve its
financial condition or cause it to achieve certain levels of operating results;
and

(d)such Person has not Guaranteed or become a co-borrower under, and has not
granted a security interest in any of its properties to secure, and the Equity
Interests it has issued are not pledged to secure, in each case, any
indebtedness, liabilities or obligations of any one or more of the Obligors.

Any designation by the Borrower under clause (y) above 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 Financial Officer’s  knowledge, such designation complied with the
foregoing conditions.

“SEC” means the United States Securities and Exchange Commission or any
Governmental Authority succeeding to any or all of the functions thereof.

“Secured Longer-Term Indebtedness” means, as at any date, Indebtedness for
borrowed money (other than Indebtedness hereunder) of the Borrower (which may be
Guaranteed by Subsidiary Guarantors) that (a) has no amortization or mandatory
redemption, repurchase or prepayment prior to, and a final maturity date not
earlier than, six months after the Maturity Date (it being understood that (i)
the conversion features into Permitted Equity Interests under convertible notes
(as well as the triggering of such conversion and/or settlement thereof solely
with Permitted Equity Interests, except in the case of interest or expenses,
which may be payable in cash) shall not constitute “amortization”, “redemption”,
“repurchase” or “prepayment” for the purposes of this definition) and (ii) that
any mandatory amortization, redemption, repurchase or prepayment obligation or
put right that is contingent upon the happening of a Change in Control that is
not certain to occur shall not in and of itself be deemed to disqualify such
Indebtedness under this clause (a) (notwithstanding the foregoing, in this
clause (ii), the Borrower acknowledges that any payment prior to the Termination
Date in respect of any such obligation or right shall only be made to the extent
permitted by Section 6.12)); (b) is incurred pursuant to documentation
containing (i) financial covenants, covenants governing the borrowing base, if
any, covenants regarding portfolio valuations, and events of default that are no
more restrictive in any respect than those set forth in this Agreement (other
than, if such Indebtedness is governed by a customary indenture, events of
default that are customary in indentures or similar instruments and that have no
analogous provisions in this Agreement or credit agreements generally) (it being
understood that put rights or repurchase or redemption obligations (x) in the
case of convertible securities, in connection with the suspension or delisting
of the Equity Interests of the Borrower or the failure of the Borrower to
satisfy a continued listing rule with respect to its Equity Interests or (y)
arising out of circumstances that would constitute a “fundamental change” (as
such term is customarily defined in convertible note offerings) shall not be
deemed to be more restrictive for purposes of this definition) and (ii) other
terms (other than interest and any commitment or related fees) that are no more
restrictive in any material respect than those set forth in this Agreement; and
(c) ranks pari passu with the obligations under this Agreement and is not
secured by any assets of any Person other than any assets of any Obligor
pursuant to the Security Documents and the holders of which, or the agent,
trustee or representative of such holders on behalf of and for the benefit of
such holders, have agreed to be bound by the provisions of the Security
Documents in a manner

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reasonably satisfactory to the Administrative Agent and the Collateral
Agent.  For the avoidance of doubt, (a) Secured Longer-Term Indebtedness shall
also include any refinancing, refunding, renewal or extension of any Secured
Longer-Term Indebtedness so long as such refinanced, refunded, renewed or
extended Indebtedness continues to satisfy the requirements of this definition
and (b) any payment on account of Secured Longer-Term Indebtedness shall be
subject to Section 6.12.

“Security Documents” means, collectively, the Guarantee and Security Agreement,
the Custody Agreement, the Document Custody Agreement, the Control 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 at
any time 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.

“Senior Securities” means senior securities (as such term is defined and
determined pursuant to the Investment Company Act and any orders of the SEC
issued to the Borrower thereunder).

“Significant Unsecured Indebtedness Event” means that the aggregate principal
amount of Unsecured Longer-Term Indebtedness plus the aggregate principal amount
of Unsecured Shorter-Term Indebtedness plus the aggregate amount of Other
Permitted Indebtedness exceeds, at any time of determination, the sum of (A) the
excess of the Borrowing Base over the Covered Debt Amount plus (B) 30% of the
excess of Stockholders’ Equity over Obligors’ Net Worth.

“Solvent” means, with respect to any Obligor, that as of the date of
determination, both (a) (i) the sum of such Obligor’s debt and liabilities
(including contingent liabilities) does not exceed the present fair saleable
value of such Person’s present assets, (ii) such Obligor’s capital is not
unreasonably small in relation to its business as contemplated on the Effective
Date and reflected in any projections delivered to the Lenders or with respect
to any transaction contemplated or undertaken after the Effective Date, and
(iii) such Obligor has not incurred and does not intend to incur, or believe
(nor should it reasonably believe) that it will incur, debts beyond its ability
to pay such debts as they become due (whether at maturity or otherwise); and (b)
such Obligor is “solvent” within the meaning given to such term and similar
terms under applicable laws relating to fraudulent transfers and
conveyances.  For purposes of this definition, the amount of any contingent
liability at any time shall be computed as the amount that, in light of all of
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability
(irrespective of whether such contingent liabilities meet the criteria for
accrual under Statement of Financial Accounting Standard No. 5).

“Special Equity Interest” means any Equity Interest that is subject to a Lien in
favor of creditors of the issuer or the issuer’s Affiliates of such Equity
Interest, provided that (a) such Lien was created to secure Indebtedness owing
by such issuer or such issuer’s Affiliates 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

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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.

“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.

“Step-Down Condition” means any day on which the Obligors’ Net Worth exceeds
$325,000,000.

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

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

“Subsidiary Guarantor” means any Subsidiary that is or is required to be a
Guarantor under the Guarantee and Security Agreement.  It is understood and
agreed that, subject to Section 5.08(a), no SBIC Subsidiary shall be required to
be a Subsidiary Guarantor as long as it remains an SBIC Subsidiary.

“Tax Damages” has the meaning assigned to such term in Section 2.14(d).

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

“Termination Date” means the date on which the Commitments have expired or been
terminated and the principal of and accrued interest on each Loan and all fees
and other amounts payable hereunder shall have been paid in full (excluding, for
the avoidance of doubt, any amount in connection with any contingent, unasserted
indemnification obligations).

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

“Two Largest Industry Classification Groups” means, as of any date of
determination, each of the two Industry Classification Groups that a greater
portion of the Borrowing Base has been assigned to each such Industry
Classification Group pursuant to Section 5.12(a) than any other single Industry
Classification Group.

“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.

“Undisclosed Administration” means, in relation to a Lender or its direct or
indirect parent company, 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 or its direct or indirect parent company is subject to home
jurisdiction supervision if applicable law requires that such appointment is not
to be publicly disclosed and such appointment has not been publicly disclosed
(including, without limitation, under the Dutch Financial Supervision Act 2007
(as amended from time to time and including any successor legislation)).

“Unfunded Pension Liability” of any Pension Plan shall mean the excess of a
Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA over the
current value of such Pension Plan’s assets, determined in accordance with the
assumptions used for funding the Pension Plan pursuant to Section 412 of the
Code for the applicable plan year.

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

“Unquoted Investments” has the meaning set forth in Section 5.12(b)(ii)(B).

“Unsecured Longer-Term Indebtedness” means any Indebtedness for borrowed money
of an Obligor that (a) has no amortization, or mandatory redemption, repurchase
or prepayment prior to, and a final maturity date not earlier than, six months
after the Maturity Date (it being understood that (i) the conversion features
into Permitted Equity Interests under convertible notes (as well as the
triggering of such conversion and/or settlement thereof solely with Permitted
Equity Interests, except in the case of interest or expenses, which may be
payable

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in cash) shall not constitute “amortization”, “redemption”, “repurchase” or
“prepayment” for the purposes of this definition) and (ii) that any mandatory
amortization, redemption, repurchase or prepayment obligation or put right that
is contingent upon the happening of a Change in Control that is not certain to
occur shall not in and of itself be deemed to disqualify such Indebtedness under
this clause (a) (notwithstanding the foregoing, in this clause (ii), the
Borrower acknowledges that any payment prior to the Termination Date in respect
of any such obligation or right shall only be made to the extent permitted by
Section 6.12)), (b) is incurred pursuant to documentation containing (i)
financial covenants, covenants governing the borrowing base, if any, covenants
regarding portfolio valuation, and events of default that are no more
restrictive in any respect than those set forth in this Agreement (other than,
if such Indebtedness is governed by a customary indenture, events of default
that are customary in indentures or similar instruments and that have no
analogous provisions in this Agreement or credit agreements generally) (it being
understood that customary put rights or repurchase or redemption obligations (x)
in the case of convertible securities, in connection with the suspension or
delisting of the Equity Interests of the Borrower or the failure of the Borrower
to satisfy a continued listing rule with respect to its Equity Interests or (y)
arising out of circumstances that would constitute a “fundamental change” (as
such term is customarily defined in convertible note offerings) shall not be
deemed to be more restrictive for purposes of this definition) and (ii) other
terms that are substantially comparable to market terms for substantially
similar debt, and (c) is not secured by any assets of any Person.  For the
avoidance of doubt, (a) Unsecured Longer-Term Indebtedness shall also include
any refinancing, refunding, renewal or extension of any Unsecured Longer-Term
Indebtedness so long as such refinanced, refunded, renewed or extended
Indebtedness continues to satisfy the requirements of this definition and (b)
any payment on account of Unsecured Longer-Term Indebtedness shall be subject to
Section 6.12.

“Unsecured Shorter-Term Indebtedness” means, collectively, (a) any Indebtedness
for borrowed money of the Borrower or any Subsidiary (other than an SBIC
Subsidiary) that is not secured by any assets of any Person and that does not
constitute Unsecured Longer-Term Indebtedness and (b) any Indebtedness for
borrowed money of the Borrower or any Subsidiary (other than an SBIC Subsidiary)
that is designated as “Unsecured Shorter-Term Indebtedness” pursuant to Section
6.11.  For the avoidance of doubt, Unsecured Shorter-Term Indebtedness shall
also include any refinancing, refunding, renewal or extension of any Unsecured
Shorter-Term Indebtedness so long as such refinanced, refunded, renewed or
extended Indebtedness continues to satisfy the requirements of this definition.

“USA PATRIOT Act” has the meaning assigned to such term in Section 3.19.

“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.

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“Valuation Testing Date” has the meaning assigned to such term in Section
5.12(b)(ii)(B)(x).

“wholly owned Subsidiary” of any person shall mean a Subsidiary of such person,
all of the Equity Interests of which (other than directors’ qualifying shares or
nominee or other similar shares required pursuant to applicable law) are owned
by such person and/or one or more wholly owned Subsidiaries of such
person.  Unless the context otherwise requires, “wholly owned Subsidiary
Guarantor” shall mean a wholly owned Subsidiary that is a Subsidiary Guarantor.

“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, 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.

Section 1.02. Classification of Loans and Borrowings.  For purposes of this
Agreement, Loans may be classified and referred to by Type (e.g., an “ABR
Loan”).  Borrowings also may be classified and referred to by Type (e.g., an
“ABR Borrowing”).

 

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 (subject to any restrictions on such successors
and assigns set forth herein), (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.

 

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 Amendment No. 1 Effective Date in GAAP or in the application
or interpretation thereof on the operation of such provision (or if the
Administrative Agent notifies the Borrower that the Required Lenders request an
amendment to

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any provision hereof for such purpose), then Borrower, Administrative Agent and
the Lenders agree to enter into negotiations in good faith in order to amend
such provisions of the Agreement so as to equitably reflect such change to
comply with GAAP with the desired result that the criteria for evaluating the
Borrower's financial condition shall be the same after such change to comply
with GAAP as if such change had not been made; provided,  however,  until such
amendments to equitably reflect such changes are effective and agreed to by
Borrower, Administrative Agent and the Required Lenders, the Borrower’s
compliance with such financial covenants shall be determined on the basis of
GAAP as in effect and applied immediately before such change in GAAP becomes
effective.  Notwithstanding the foregoing or anything herein to the contrary,
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
Accounting Standard Codification 825, all determinations relating to fair value
accounting for liabilities or 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 Accounting Standard Codification 825.  In
addition, notwithstanding Accounting Standards Update 2015-03, GAAP or any other
matter, for purposes of calculating any financial or other covenants hereunder,
debt issuance costs shall not be deducted from the related debt
obligation.  Notwithstanding any other provision contained herein, solely with
respect to any change in GAAP after the Amendment No. 1 Effective Date with
respect to the accounting for leases as either operating leases or capital
leases, any lease that is not (or would not be) a capital lease under GAAP as in
effect on the Amendment No. 1 Effective Date shall not be treated as a capital
lease, and any lease that would be treated as a capital lease under GAAP as in
effect on the Amendment No. 1 Effective Date shall continue to be treated as a
capital lease, hereunder and under the other Loan Documents, notwithstanding
such change in GAAP after the Amendment No. 1 Effective Date, and all
determinations of Capital Lease Obligations shall be made consistently therewith
(i.e., ignoring any such changes in GAAP after the Amendment No. 1 Effective
Date).

 

Article II

THE CREDITS

Section 2.01. The Commitments.  Subject to the terms and conditions set forth
herein, each Lender agrees to make Loans to the Borrower from time to time
during the Availability Period in an aggregate principal amount that will not
result in (a) such Lender’s Revolving Credit Exposure exceeding such Lender’s
Commitment, (b) the aggregate Revolving Credit Exposure of all of the Lenders
exceeding the aggregate Commitments or (c) 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 Loans.

 

Section 2.02. Loans and Borrowings.

 

(a) Obligations of Lenders.  Each Loan shall be made as part of a Borrowing
consisting of Loans of the same Type made by the Lenders ratably in accordance
with their respective Commitments.  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

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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 2.11, each Borrowing shall be constituted
entirely of ABR Loans or of Eurocurrency Loans as the Borrower may request in
accordance herewith.  Each 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 Borrowing shall be in an aggregate amount of
$1,000,000 or a larger multiple of $100,000 in excess thereof; provided that an
ABR Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the total Commitments.  Borrowings of more than one 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 any Eurocurrency
Borrowing (or to elect to convert to or continue as a Eurocurrency Borrowing) if
the Interest Period requested therefor would end after the Maturity Date.

Section 2.03. Requests for Borrowings.

 

(a) Notice by the Borrower.  To request a Borrowing, the Borrower shall notify
the Administrative Agent of such request by delivery of a signed Borrowing
Request or by telephone or e-mail (in each case, followed promptly by delivery
of a signed Borrowing Request) (i) in the case of a Eurocurrency Borrowing, not
later than 12:00 p.m., New York City time, three (3) Business Days before the
date of the proposed Borrowing or (ii) in the case of an ABR Borrowing, not
later than 12:00 p.m., New York City time, one Business Day before the date of
the proposed Borrowing.  Each such request for a Borrowing 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.

(b) Content of Borrowing Requests.  Each request for a Borrowing (whether a
written Borrowing Request, a telephonic request or e-mail request) shall specify
the following information in compliance with Section 2.02:

(i) the aggregate amount of the requested Borrowing;

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

(iii) whether such Borrowing is to be an ABR Borrowing or a Eurocurrency
Borrowing;

(iv) 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

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(v) the location and number of the Borrower’s account to which funds are to be
disbursed, which shall comply with the requirements of Section 2.04.

(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 Type of a Borrowing is specified
in a Borrowing Request, then the requested Borrowing shall be a Eurocurrency
Borrowing having an Interest Period of one (1) month.  If a Eurocurrency
Borrowing is requested but no Interest Period is specified, the Borrower shall
be deemed to have selected an Interest Period of one (1) month.

Section 2.04. 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., New York City time, to the account of the Administrative
Agent most recently designated by it for such purpose by notice to the
Lenders.  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.

(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, in reliance upon such assumption, the
Administrative Agent may (in its sole discretion and without any obligation to
do so) 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 and (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.  Nothing in this paragraph shall relieve any Lender of its obligation
to fulfill its commitments hereunder, and shall be without prejudice to any
claim the Borrower may have against a Lender that shall have failed to make such
payment to the Administrative Agent.

Section 2.05. Interest Elections.

 

(a) Elections by the Borrower for Borrowings.  Subject to Section 2.03(d), the
Loans constituting each 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,
subject to Section 2.05(e), the Borrower may

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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.  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 (except as provided under Section
2.11(b)), and the Loans constituting each such portion shall be considered a
separate Borrowing.

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

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

(i) the Borrowing 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 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); provided that there shall be no more than ten (10) separate
Borrowings outstanding at any one time.

(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, at the end of such Interest Period such
Borrowing shall be converted to a Eurocurrency Borrowing having an Interest
Period of one (1) month.  Notwithstanding any contrary provision hereof, if an
Event of Default has occurred and is continuing and the Administrative Agent, at
the request of the Required Lenders, so notifies the Borrower, (i) any
Eurocurrency Borrowing shall, at the end of the applicable Interest Period for
such Eurocurrency Borrowing, be automatically converted to an

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ABR Borrowing and (ii) the Borrower shall not be entitled to elect to convert or
continue any Borrowing into or as a Eurocurrency Borrowing.

Section 2.06. Termination, Reduction or Increase of the Commitments.

 

(a) Scheduled Termination.  Unless previously terminated in accordance with the
terms of this Agreement, on the Revolver Termination Date the Commitments shall
automatically be reduced to an amount equal to the aggregate principal amount of
the Loans of all Lenders outstanding on the Revolver Termination Date and
thereafter to an amount equal to the aggregate principal amount of the Loans
outstanding after giving effect to each payment of principal hereunder; provided
that, for clarity, no Lender shall have any obligation to make new Loans on or
after the Revolver Termination Date, and any outstanding amounts shall be due
and payable on the Maturity Date in accordance with Section 2.07.

(b) Voluntary Termination or Reduction.  The Borrower may at any time terminate,
or from time to time reduce, the Commitments; provided that (i) each reduction
of the Commitments pursuant to this Section 2.06(b) shall be in an amount that
is $5,000,000 or a larger multiple of $100,000 in excess thereof (or an amount
less than $5,000,000 if the Commitments are being reduced to zero) and (ii) the
Borrower shall not terminate or reduce the Commitments if, after giving effect
to any concurrent prepayment of the Loans in accordance with Section 2.08, the
total Revolving Credit Exposures would exceed the total Commitments. 

(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 (3) 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 in accordance with their respective Commitments.

(e) [Intentionally Omitted].

(f) Increase of the Commitments.

(i) Requests for Increase by Borrower.  The Borrower may, at any time prior to
the Revolver Termination Date, propose that the Commitments hereunder be
increased (each such proposed increase being a “Commitment Increase”) by notice
to the Administrative Agent specifying 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

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“Commitment Increase Date”), which date 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 at least thirty (30) days prior to the
Revolver Termination Date; provided that each Lender may determine in its sole
discretion whether or not it chooses to participate in a Commitment Increase;
provided,  further that, subject to the foregoing, each Commitment Increase
shall become effective only upon satisfaction of the following conditions:

(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 $5,000,000 or a larger multiple of $1,000,000
in excess thereof (or, in each case, in such other amounts as agreed by the
Administrative Agent),

(B)immediately after giving effect to such Commitment Increase, the total
Commitments of all of the Lenders hereunder shall not exceed the lesser of (x)
$150,000,000250,000,000 and (y) 100% of the Obligors’ Net Worth at such time; 

(C)each Assuming Lender and the Commitment Increase shall be consented to by the
Administrative Agent (which consent shall not 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

(E)the representations and warranties contained in this Agreement and the other
Loan Documents shall be true and correct in all material respects (other than
any representation or warranty already qualified by materiality or Material
Adverse Effect, which shall be 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.  On the Commitment
Increase Date for any Commitment Increase, each Assuming Lender part of such
Commitment Increase, if any, shall become a Lender hereunder as of such
Commitment Increase Date with a Commitment in the amount set forth in the
agreement referred to in Section 2.06(f)(ii)(y) and the Commitment of any
Increasing Lender part of such Commitment Increase shall be increased as of such
Commitment Increase Date to the amount set forth in the agreement referred to in
Section 2.06(f)(ii)(y);  provided that:

(x)the Administrative Agent shall have received on or prior to 12:00 p.m., New
York City 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

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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 12:00 p.m., New York City 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, as applicable, 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 (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 each
Commitment Increase Date, the Borrower shall (A) prepay the outstanding Loans
(if any) in full, (B) simultaneously borrow new Loans 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 are held ratably by the Lenders
in accordance with the respective Commitments of such Lenders (after giving
effect to such Commitment Increase) and (C) pay to the Lenders the amounts, if
any, payable under Section 2.13 as a result of any such prepayment.  The
Administrative Agent shall amend Schedule 1.01(b) to reflect the aggregate
amount of each Lender’s Commitments (including Increasing Lenders and Assuming
Lenders). Each reference to Schedule 1.01(b) in this Agreement shall be to
Schedule 1.01(b) as amended pursuant to this Section.

(v) Terms of Loans issued on the Commitment Increase Date.  For the avoidance of
doubt, the terms and provisions of any new Loans issued by any Assuming Lender
or Increasing Lender, and the Commitment Increase of any Assuming Lender or
Increasing Lender, shall be identical to the Loans issued by, and the
Commitments of, the Lenders immediately prior to the applicable Commitment
Increase Date.

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Section 2.07. Repayment of Loans; Evidence of Debt.

 

(a) Repayment.  Subject to, and in accordance with, the terms of this Agreement,
the Borrower hereby unconditionally promises to pay to the Administrative Agent
for the account of the Lenders the outstanding principal amount of the Loans and
all other amounts due and owing hereunder and under the other Loan Documents on
the Maturity Date.

(b) Manner of Payment.  Prior to any repayment or prepayment of any Borrowings
hereunder, the Borrower shall select the Borrowing or Borrowings to be paid and
shall notify the Administrative Agent by telephone (confirmed by telecopy or
e-mail) of such selection not later than the time set forth in Section 2.08(e)
prior to the scheduled date of such repayment; provided that each repayment of
Borrowings shall be applied to repay any outstanding ABR Borrowings before any
other Borrowings.  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 and, second, to otherany remaining
Borrowings 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 Borrowing shall be applied ratably to the Loans
included in such Borrowing (except as otherwise provided in Section 2.11(b)).

(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
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 of each
Loan made hereunder, the Type thereof and each Interest Period therefor, (ii)
the amount of any principal or interest due and payable or to become due and
payable from the Borrower to each Lender hereunder and (iii) the amount of any
sum received by the Administrative Agent hereunder for account of the Lenders
and each Lender’s share thereof.

(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
manifest 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.  In the event of any conflict between the accounts and records
maintained by any Lender and the accounts and records of the Administrative
Agent in respect of such matters, the accounts and records of the Administrative
Agent shall control in the absence of manifest error.

(f) Promissory Notes.  Any Lender may request that Loans made by it be evidenced
by a promissory note.  In such event, the Borrower shall prepare, execute and
deliver to such Lender a promissory note payable to such Lender (or, if
requested by such Lender, to such Lender and its permitted registered assigns)
and in a form attached hereto as Exhibit C.  Thereafter, the Loans evidenced by
such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form

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payable to the payee named therein (or, if such promissory note is a registered
note, to such payee and its permitted registered assigns).

Section 2.08. Prepayment of Loans.

 

(a) Optional Prepayments.  The Borrower shall have the right at any time and
from time to time (but subject to Section 2.08(e)) to prepay any Borrowing in
whole or in part, without premium or fee (but subject to Section 2.13), subject
to the requirements of this Section. Each prepayment in part under this Section
2.08(a) shall be in a minimum amount of $1,000,000 or a larger multiple of
$100,000.

(b) Mandatory Prepayments due to Borrowing Base Deficiency.  In the event that
the amount of total Revolving Credit Exposure exceeds the total Commitments, the
Borrower shall prepay Loans in such amounts as shall be necessary so that the
amount of total Revolving Credit Exposure does not exceed the total
Commitments.  In the event that at any time any Borrowing Base Deficiency shall
exist, promptly (but in no event later than 5 Business Days), the Borrower shall
either prepay (x) the Loans so that the Borrowing Base Deficiency is promptly
cured or (y) the Loans and the Other Covered Indebtedness in such amounts as
shall be necessary so that such Borrowing Base Deficiency is promptly cured
(and, as among the Loans and the Other Covered Indebtedness, at least ratably
(based on the outstanding principal amount of such Indebtedness) as to payments
of Loans in relation to Other Covered Indebtedness); provided, that if within
such 5 Business Day period, the Borrower shall present to the Administrative
Agent a reasonably feasible plan, which plan is reasonably satisfactory to the
Administrative Agent, that will enable any such Borrowing Base Deficiency to be
cured within 30 Business Days of the occurrence of such Borrowing Base
Deficiency (which 30-Business Day period shall include the 5 Business Days
permitted for delivery of such plan), then such prepayment or reduction shall be
effected in accordance with such plan (subject, for the avoidance of doubt, to
the limitations as to the allocation of such prepayments set forth above in this
Section 2.08(b)). Notwithstanding the foregoing, the Borrower shall pay interest
in accordance with Section 2.10(c) for so long as the Covered Debt Amount
exceeds the Borrowing Base during such 30-Business Day period. For clarity, in
the event that the Borrowing Base Deficiency is not cured prior to the end of
such 5-Business Day period (or, if applicable, such 30-Business Day period), it
shall constitute an Event of Default under clause (a) of Article VII.

(c) Mandatory Prepayments due to Certain Events Following Availability
Period.  Subject to Section 2.08(e):

(i) Asset Sales.  In the event that any Obligor shall receive any Net Asset Sale
Proceeds at any time after the Availability Period, the Borrower shall, no later
than the fifth (5th) Business Day following the receipt of such Net Asset Sale
Proceeds, prepay the Loans in an amount equal to such Net Asset Sale Proceeds
(and the Commitments shall be permanently reduced by such amount); provided,
that with respect to Asset Sales of assets that are not Portfolio Investments,
the Borrower shall not be required to prepay the Loans unless and until (and to
the extent that) the aggregate Net Asset Sale Proceeds relating to all such
Asset Sales are greater than $2,000,000.

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(ii) Extraordinary Receipts.  In the event (but only to the extent) that the
aggregate amount of all Extraordinary Receipts received by the Obligors at any
time after the Availability Period exceeds $2,000,000, the Borrower shall, no
later than the fifth (5th) Business Day following the receipt of such excess
Extraordinary Receipts, prepay the Loans in an amount equal to such excess
Extraordinary Receipts (and the Commitments shall be permanently reduced by such
amount).

(iii) Returns of Capital.  In the event that any Obligor shall receive any
Return of Capital at any time after the Availability Period, the Borrower shall,
no later than the fifth (5th) Business Day following the receipt of such Return
of Capital, prepay the Loans in an amount equal to 100% of such Return of
Capital (and the Commitments shall be permanently reduced by such amount). 

(iv) Equity Issuances.  In the event that the Borrower shall receive any Cash
proceeds from the issuance of Equity Interests of the Borrower at any time after
the Availability Period, the Borrower shall, no later than the fifth (5th)
Business Day following the receipt of such Cash proceeds, prepay the Loans in an
amount equal to 100% of such Cash proceeds, net of underwriting discounts and
commissions or other similar payments and other costs, fees, premiums and
expenses directly associated therewith, including reasonable legal fees and
expenses (and the Commitments shall be permanently reduced by such amount).

(v) Indebtedness.  In the event that any Obligor shall receive any Cash proceeds
from the issuance of Indebtedness at any time after the Availability Period,
such Obligor shall, no later than the fifth (5th) Business Day following the
receipt of such Cash proceeds, prepay the Loans in an amount equal to 100% of
such Cash proceeds, net of underwriting discounts and commissions or other
similar payments and other costs, fees, commissions, premiums and expenses
directly associated therewith, including reasonable legal fees and expenses (and
the Commitments shall be permanently reduced by such amount).

(d) Mandatory Prepayment of Eurocurrency Loans.  If the Loans to be prepaid
pursuant to Sections 2.08(c)(ii) and (iii) are Eurocurrency Loans, the Borrower
may defer such prepayment (and permanent Commitment reduction) until the last
day of the Interest Period applicable to such Loans, so long as the Borrower
deposits an amount equal to an amount required to be prepaid, no later than the
third Business Day following the receipt of such amount, into a segregated
collateral account in the name and under the control (within the meaning of
Section 9-104 of the Uniform Commercial Code) of the Administrative Agent
pending application of such amount to the prepayment of the Loans (and permanent
reduction of the Commitments) on the last day of such Interest Period.

(e) Notices, Etc.  The Borrower shall notify the Administrative Agent in writing
or by telephone (followed promptly by written confirmation) of any prepayment
hereunder (i) in the case of prepayment of a Eurocurrency Borrowing under
Section 2.08(a), not later than 11:00 a.m., New York City time, three (3)
Business Days before the date of prepayment or (ii) in the case of prepayment of
an ABR Borrowing under Section 2.08(a), or any prepayment under Section 2.08(b)
or (c), not later than 11:00 a.m., New York City time, one (1) Business Day
before the date of prepayment.  Each such notice shall be irrevocable and shall
specify the prepayment date, the

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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, (1) if a notice of prepayment is given in
connection with a conditional notice of termination of the Commitments as
contemplated by Section 2.06(c), then such notice of prepayment may be revoked
if such notice of termination is revoked in accordance with Section 2.06(c) and
(2) any such notices given in connection with any of the events specified in
Section 2.08(c) may be conditioned upon (x) the consummation of the issuance of
Equity Interests or Indebtedness (as applicable) or (y) the receipt of net cash
proceeds from Asset Sales, Extraordinary Receipts or Returns of
Capital.  Promptly following receipt of any such notice relating to a Borrowing,
the Administrative Agent shall advise the Lenders of the contents thereof.  Each
prepayment of a Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing.  In the event the Borrower is required to make any concurrent
prepayments under both paragraph (b) and also another paragraph of this Section
2.08, any such prepayments shall be applied toward a prepayment pursuant to
paragraph (b) before any prepayment pursuant to any other paragraph of this
Section 2.08.  Prepayments shall be accompanied by accrued interest to the
extent required by Section 2.10 and shall be made in the manner specified in
Section 2.07(b).

Section 2.09. Fees.

 

(a) Commitment Fee.  The Borrower agrees to pay to the Administrative Agent for
the account of each Lender a commitment fee, which shall accrue (i) for the
period beginning on the Effective Date to and including the earlier of the date
such Lender’s Commitment terminates and the date that is six months after the
Effective Date (the “Ramp-Up Period”), at a rate equal to 0.50% per annum on the
daily unused portion of the Commitment of such Lender as of the close of
business on such day and (ii) for the period beginning the day after the end of
the Ramp-Up Period to and including the earlier of the date such Lender’s
Commitment terminates and the Revolver Termination Date, at a rate equal to (x)
1.50 at a rate equal to (x) 1.00% per annum on the daily unused amount of the
Commitment of such Lender as of the close of business on such day if the daily
used amount as of the close of business on such day is less than or equal to
forty-five percent (45%) of such Lender’s Commitment, (y) 0.75% per annum on the
daily unused amount of the Commitment of such Lender as of the close of business
on such day if the daily used amount as of the close of business on such day is
greater than forty-five percent (45%) and less than or equal to sixty-five
percent (65%) of such Lender’s Commitment and (z) 0.50% per annum on the daily
unused amount of the Commitment of such Lender as of the close of business on
such day if the daily used amount as of the close of business on such day is
greater than sixty-five percent (65%).  Accrued commitment fees shall be payable
in arrears (x) within one Business Day after each Quarterly Date and (y) on the
earlier of the date the Commitments terminate and the Revolver Termination Date,
commencing on the first such date to occur after the Effective Date.  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
Commitments shall be deemed to be used to the extent of the outstanding Loans of
all Lenders.

(b) 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.

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(c) Payment of Fees.  All fees payable hereunder shall be paid on the dates due,
in Dollars and immediately available funds, to the Administrative Agent for
distribution, in the case of facility fees and participation fees, to the
Lenders entitled thereto.  Fees paid shall not be refundable under any
circumstances absent manifest error.  On the Effective Date, the Borrower shall
pay (i) all fees required to be paid on the “Revolving Closing Date” under that
certain fee letter, dated July 13, 2016, by and between the Borrower and ING and
(ii) all costs and expenses outstanding on such date and required to be paid
pursuant to Section 9.03(a)(i) (to the extent invoiced). On the Amendment No. 1
Effective Date, the Borrower shall pay (x) all fees required to be paid on the
Amendment No. 1 Effective Date under that certain fee letter, dated as of the
Amendment No. 1 Effective Date, by and between the Borrower and ING and (ii) all
costs and expenses outstanding on such date required to be paid pursuant to
Section 9.03(a)(i).

Section 2.10. Interest.

 

(a) ABR Loans.  The Loans constituting each ABR Borrowing 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
described in clause (a), (b), (d) (only with respect to Section 6.07), (h), (i),
(j) or (o) of Article VII has occurred and is continuing, or on the written
demand of the Administrative Agent or the Required Lenders if any other Event of
Default described in any other clause of Article VII has occurred and is
continuing, or if the Covered Debt Amount exceeds the Borrowing Base during the
5-Business Day period (or, if applicable, the 30-Business Day period) referred
to in Section 2.08(b), the interest applicable to the Loans shall accrue, 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, or (ii) 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 Dollars and upon
termination in full of the Commitments; 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
an ABR Loan prior to the 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 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 by reference to the Alternate
Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall
be computed on the basis of a year

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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 2.11. Eurocurrency Borrowing Provisions. 

 

(a) Alternate Rate of Interest.  If prior to the commencement of the Interest
Period for any Eurocurrency Borrowing:

(i) 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 such Interest Period; or

(ii) the Administrative Agent is advised by the Required Lenders that the
Adjusted LIBO Rate 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
Lenders by telephone, telecopy or e-mail as promptly as practicable thereafter
and, until the Administrative Agent notifies the Borrower and the Lenders that
the circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or the
continuation of any Borrowing as, a Eurocurrency Borrowing and such Borrowing
(unless prepaid) shall be continued as, or converted to, an ABR Borrowing and
(ii) if any Borrowing Request requests a Eurocurrency Borrowing, such Borrowing
shall be made as an ABR Borrowing.

(f) Illegality.  Without duplication of any other rights that any Lender
has  hereunder, if any Lender determines that any law has made it unlawful, or
that any Governmental Authority has asserted that it is unlawful for any Lender
to make, maintain or fund Loans whose interest is determined by reference to the
LIBO Rate, or to determine or charge interest rates based upon the LIBO Rate, or
any Governmental Authority has imposed material restrictions on the authority of
such Lender to purchase or sell, or to take deposits of, Dollars in the London
interbank market, then, on notice thereof by such Lender to the Borrower and the
Administrative Agent, (i) any obligation of such Lender to make or continue
Eurocurrency Borrowings or to convert ABR Borrowings to Eurocurrency Borrowings
shall be suspended, and (ii) if such notice asserts the illegality of such
Lender making or maintaining Eurocurrency Borrowings the interest rate on which
is determined by reference to the LIBO Rate component of the Alternate Base
Rate, the interest rate on which ABR Borrowings of such Lender shall, if
necessary to avoid such illegality, be determined by the Administrative Agent
without reference to the LIBO Rate component of the Alternate Base Rate, in each
case until such Lender notifies the Administrative Agent and the Borrower that
the circumstances giving rise to such determination no longer exist. Upon
receipt of such notice, (x) all Eurocurrency Borrowings of such Lender shall
automatically convert to ABR Borrowings (the interest rate on which ABR
Borrowings of such Lender shall, if necessary to avoid such illegality, be
determined by the Administrative Agent without reference to the LIBO Rate
component of the Alternate Base Rate), either on the last day of the Interest
Period therefor, if such Lender may lawfully continue to maintain such
Eurocurrency Borrowings to such day, or

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immediately, if such Lender may not lawfully continue to maintain such
Eurocurrency Borrowings (in which event Borrower shall not be required to pay
any yield maintenance, breakage or similar fees) and (y) if such notice asserts
the illegality of such Lender determining or charging interest rates based upon
the LIBO Rate, the Administrative Agent shall during the period of such
suspension compute the Alternate Base Rate applicable to such Lender without
reference to the LIBO Rate component thereof until the Administrative Agent is
advised in writing by such Lender that it is no longer illegal for such Lender
to determine or charge interest rates based upon the LIBO Rate. Upon any such
conversion, the Borrower shall also pay accrued interest on the amount so
converted.

Section 2.12. 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);

(ii) subject any Lender to any Taxes (other than Covered Taxes and Taxes
described in clauses (a)(ii), (c), (d) and (e) of the definition of “Excluded
Taxes”) on its loans, loan principal, letters of credit, commitments, or other
obligations, or its deposits, reserves, other liabilities or capital
attributable thereto; or

(iii) impose on any Lender 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 participation therein;

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

(b) Capital Requirements.  If any Lender 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 capital or on the capital of such
Lender’s holding company, if any, as a consequence of this Agreement or the
Loans made by such Lender, to a level below that which such Lender or such
Lender’s holding company could have achieved but for such Change in Law (taking
into consideration such Lender’s policies and the policies of such Lender’s
holding company with respect to capital adequacy or liquidity position), by an
amount deemed to be material by such Lender, then from time to time the Borrower
will pay to such Lender, in Dollars, such additional amount or amounts as will
compensate such Lender or such Lender’s holding company for any such reduction
suffered.

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(c) Certificates from Lenders.  A certificate of a Lender setting forth the
amount or amounts, in Dollars, necessary to compensate such Lender 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 the amount shown as
due on any such certificate within ten (10) days after receipt thereof.

(d) Delay in Requests.  Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender’s right to demand such compensation; provided that no Obligor shall be
required to compensate a Lender pursuant to the foregoing provisions of this
Section for any increased costs incurred or reductions suffered more than six
months prior to the date that such Lender notifies the Borrower in writing of
any such Change in Law giving rise to such increased costs or reductions.

Section 2.13. 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 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 Loan
on the date specified in any notice delivered pursuant hereto (regardless of
whether such notice is permitted to be revocable under Section 2.08(e) and is
revoked in accordance herewith), or (d) the assignment as a result of a request
by the Borrower pursuant to Section 2.17(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 referred to in clauses (a), (b), (c) or (d) of
this Section 2.13 denominated in Dollars 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 Dollars 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 Dollars from other banks in the
Eurocurrency market at the commencement of such period.

Payments under this Section shall be made upon written request of a Lender
delivered not later than fivethirty  (530) 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 written certificate of such Lender
setting forth in reasonable detail the amount or amounts that such Lender is
entitled to receive pursuant to this Section, which certificate shall be
conclusive absent manifest

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error.  The Borrower shall pay such Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.

Section 2.14. 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, unless otherwise
required by applicable law; provided that if the Borrower shall be required to
deduct or withhold any Taxes from such payments, then (i) the Borrower shall
make such deductions or withholdings, (ii) the Borrower shall timely pay the
full amount deducted or withheld to the relevant Governmental Authority in
accordance with applicable law and (iii) if such Tax is a Covered Tax, the sum
payable shall be increased as necessary so that after making all required
deductions and withholdings (including deductions and withholdings applicable to
additional sums payable under this Section 2.14) the Administrative Agent or
Lender receives an amount equal to the sum it would have received had no such
deductions or withholdings been made.

(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 and each Lender for and, within ten (10) Business Days
after written demand therefor, pay the full amount of any Covered Taxes
(including Covered Taxes imposed or asserted on or attributable to amounts
payable under this Section 2.14) payable or paid by the Administrative Agent or
such Lender, as the case may be, and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such Covered
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 the Borrower by a Lender or by the Administrative Agent on its own
behalf or on behalf of a Lender, shall be conclusive absent manifest error.

(d) Indemnification by the Lenders.  To the extent required by any applicable
law, the Administrative Agent may withhold from any payment to any Lender an
amount equivalent to any applicable withholding Tax. Without limiting the
provisions of Section 2.14(a) or (c), each Lender shall, and does hereby, agree
to indemnify the Administrative Agent, and shall make payable in respect thereof
within 10 days after demand therefor, (i) against any and all Taxes and any and
all related losses, claims, liabilities and expenses (including fees, charges
and disbursements of any counsel for the Administrative Agent) (collectively,
“Tax Damages”) incurred by or asserted against the Administrative Agent by the
Internal Revenue Service or any other Governmental Authority as a result of the
failure of the Administrative Agent to properly withhold Tax from amounts paid
to or for the account of such Lender for any reason (including because the
appropriate form was not delivered or not properly executed, or because such
Lender failed to notify the Administrative Agent of a change in circumstance
that rendered the exemption from, or reduction of withholding tax ineffective)
and (ii) Tax Damages attributable to such Lender’s failure to comply with the
provisions of Section 9.04 relating to the maintenance of a Participant
Register. 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

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authorizes the Administrative Agent to set off and apply any and all amounts at
any time owing to such Lender under this Agreement or any other Loan Document
against any amount due to the Administrative Agent under this paragraph. The
agreements in this paragraph shall survive the resignation and/or replacement of
the Administrative Agent, any assignment of rights by, or the replacement of, a
Lender, the termination of the Commitments and the repayment, satisfaction or
discharge of all other obligations.

(e) Evidence of Payments.  As soon as practicable after any payment of Taxes by
the Borrower to a Governmental Authority pursuant to this Section 2.14, 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.  If the Borrower fails to
pay any U.S. federal withholding Taxes that are Excluded Taxes when due to the
appropriate Governmental Authority or fails to remit to the Administrative Agent
the required receipts or other required documentary evidence on account of such
Excluded Taxes, the Borrower shall indemnify the Administrative Agent and each
Lender for any incremental Taxes that may become payable by the Administrative
Agent or such Lender as a result of such failure.

(f) Status of Lenders. 

(i) Any Lender that is entitled to an exemption from or reduction of withholding
Tax with respect to payments under this Agreement or any other Loan Documents
shall deliver to the Borrower and the Administrative Agent, at the time or times
prescribed by applicable law or reasonably requested by the Borrower or the
Administrative Agent, such properly completed and executed documentation
prescribed by applicable law or reasonably requested by the Borrower or the
Administrative Agent 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 2.14(f)(ii)(A)
or (B) or Section 2.14(g) 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.

(ii) Without limiting the generality of the foregoing, if the Borrower is a U.S.
Person,

(A)any Lender that is a U.S. Person shall deliver to the Borrower and the
Administrative Agent on or prior to the date on which such Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the
reasonable request of the Borrower or the Administrative Agent),

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executed originals of IRS Form W-9 certifying that such Lender is exempt from
U.S. federal backup withholding tax;

(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, in any event, only if such Foreign
Lender is legally entitled to do so) whichever of the following is applicable:

(1)

in the case of a Foreign Lender claiming the benefits of an income tax treaty to
which the United States is a party duly completed executed originals of Internal
Revenue Service Form W-8BEN or Internal Revenue Service Form W-8BEN-E, as
applicable, or any successor form establishing an exemption from, or reduction
of, U.S. federal withholding Tax (x) with respect to payments of interest under
any Loan Document, pursuant to the “interest” article of such tax treaty and (y)
with respect to any other applicable payments under any Loan Document, pursuant
to the “business profits” or “other income” article of such tax treaty,

(2)

duly completed executed originals 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,

(3)

in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (x) a certificate, signed
under penalties of perjury, to the effect that such Foreign Lender is not (I) a
“bank” within the meaning of Section 881(c)(3)(A) of the Code, (II) a “10
percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B)
of the Code, or (III) a “controlled foreign corporation” described in Section
881(c)(3)(C) of the Code and (y) duly completed executed originals of Internal
Revenue Service Form W-8BEN or Internal Revenue Service Form W-8BEN-E, as
applicable (or any successor form), certifying that the Foreign Lender is not a
U.S. Person, or

(4)

any other form as prescribed by applicable law as a basis for claiming exemption
from or a reduction in United States 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, including, to the

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extent a Foreign Lender is not the beneficial owner, duly completed executed
originals of Internal Revenue Service Form W-8IMY accompanied by Internal
Revenue Service Form W-8ECI, Internal Revenue Service Form W-8BEN or Internal
Revenue Service Form W-8BEN-E, as applicable, a certificate substantially
similar to the certificate described in Section 2.14(f)(ii)(B)(3)(x) above,
Internal Revenue Service Form W-9 and/or other certification documents from each
beneficial owner, as applicable.

(C) any Foreign Lender shall, to the extent it is legally entitled to do so,
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), executed originals of any other form 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 or the Administrative Agent
to determine the withholding or deduction required to be made.

(a) If a payment made to a Lender under this Agreement 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 Administrative Agent and the Borrower such documentation
prescribed by applicable law (including as prescribed by Section
1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably
requested by the Administrative Agent or the Borrower, at the time or times
prescribed by law and at such time or times reasonably requested by the
Administrative Agent or the Borrower, as may be necessary for the Administrative
Agent and the Borrower to comply with their 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 any such payment.
Solely for purposes of this clause (g), “FATCA” shall include any amendments
made to FATCA after the date of this Agreement.

Each Lender agrees that if any form or certification it previously delivered
under this Agreement expires or becomes obsolete or inaccurate in any respect,
it shall update such form or certification or promptly notify the Borrower and
the Administrative Agent in writing of its legal inability to do so.

 

(b) Treatment of Certain Refunds.  If the Administrative Agent or any Lender
determines, in its sole discretion exercised in good faith, that it has received
a refund of any Covered 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 2.14, it shall pay to the Borrower

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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 Covered Taxes giving rise to such refund), net of all reasonable
out-of-pocket expenses of the Administrative Agent or any Lender, 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 or any Lender, agrees to repay the
amount paid over to the Borrower pursuant to this paragraph (h) (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent or any Lender in the event the
Administrative Agent or any Lender is required to repay such refund to such
Governmental Authority.  Notwithstanding anything to the contrary in this
paragraph (h), in no event will the Administrative Agent or any Lender be
required to pay any amount to the Borrower pursuant to this paragraph (h) the
payment of which would place the Administrative Agent or such Lender in a less
favorable net position after-Taxes than the Administrative Agent or such Lender
would have been in if the Tax subject to indemnification and giving rise to such
refund had not been deducted, withheld or otherwise imposed and the
indemnification payments or additional amounts with respect to such Tax had
never been paid.  This paragraph (h) shall not be construed to require the
Administrative Agent or any Lender 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.

(c) Defined Terms.  For purposes of this Section 2.14, the term “applicable law”
includes FACTAFATCA.

Section 4.15. 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 under Sections
2.12,  2.13 or 2.14, or otherwise) or under any other Loan Document prior to
12:00 p.m., New York City time, on the date when due, in immediately available
funds, without set-off, deduction 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 pursuant to
Sections 2.12,  2.13,  2.14 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 Sections 2.12 and 2.13 or under any other Loan Document (except
to the extent otherwise provided therein)) are payable in Dollars. 

(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, interest

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and fees then due hereunder, such funds shall be applied (i) first, to pay
interest and fees then due hereunder, ratably among the parties entitled thereto
in accordance with the amounts of interest and fees then due to such parties,
and (ii) second, to pay principal then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal then due to such
parties.

(c) Pro Rata Treatment.  Except to the extent otherwise provided herein: (i)
each Borrowing shall be made from the Lenders, each payment of commitment fee
under Section 2.09 shall be made for account of the Lenders, and each
termination or reduction of the amount of the Commitments under Section 2.06,
 Section 2.08 or otherwise shall be applied to the respective Commitments of the
Lenders, pro rata according to the amounts of their respective Commitments; (ii)
each Borrowing shall be allocated pro rata among the Lenders according to the
amounts of their respective Commitments (in the case of the making of 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 Loans by the Borrower shall be made for account of the Lenders pro
rata in accordance with the respective unpaid principal amounts of the Loans
held by them; and (iv) each payment of interest on 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 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 Loans, resulting in such Lender receiving
payment of a greater proportion of the aggregate amount of its Loans, and
accrued interest thereon then due than the proportion received by any other
Lender, then the Lender receiving such greater proportion shall purchase (for
cash at face value) participations in the Loans of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans; 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 to any assignee,
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 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 the amount due.  In
such event, if the Borrower has not in fact made such payment, then each of

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the Lenders severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender 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.

(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(a) or (b) or
2.15(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 4.16. Defaulting Lenders.

 

Notwithstanding any provision of this Agreement to the contrary, if any Lender
becomes a Defaulting Lender, then the following provisions shall apply for so
long as such Lender is a Defaulting Lender:

(a) commitment fees pursuant to Section 2.09(a) shall cease to accrue on the
unfunded portion of the Commitment of such Defaulting Lender to the extent, and
during the period, such Lender is a Defaulting Lender;

(b) the Commitment and Revolving Credit Exposure of such Defaulting Lender shall
not be included in determining whether all Lenders, two-thirds of the Lenders or
the Required Lenders have taken or may take any action hereunder or under any
other Loan Document (including any consent to any amendment or waiver pursuant
to Section 9.02, except for any amendment or waiver described in Section
9.02(b)(i),  (ii) or (iii)); provided that any waiver, amendment or modification
requiring the consent of all Lenders, two-thirds of the Lenders or each affected
Lender which affects such Defaulting Lender differently than other Lenders or
affected Lenders (as applicable) shall require the consent of such Defaulting
Lender.

In the event that the Administrative Agent and the Borrower agree in writing
that a Defaulting Lender has adequately remedied all matters that caused such
Lender to be a Defaulting Lender, then, on the date of such agreement, such
Lender shall purchase at par the portion of the Loans of the other Lenders as
the Administrative Agent shall determine may be necessary in order for such
Lender to hold such Loans in accordance with its Applicable Percentage.

Section 4.17. Mitigation Obligations; Replacement of Lenders.

 

(a) Designation of a Different Lending Office.  If any Lender exercises its
rights under Section 2.11(b) or requests compensation under Section 2.12, or if
the Borrower is required to pay any Covered Taxes or additional amount to any
Lender or any Governmental Authority for account of any Lender pursuant to
Section 2.14, then such Lender shall use reasonable efforts (subject to overall
policy considerations of such Lender) 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 sole reasonable judgment of such Lender, such designation or assignment (i)
would eliminate or reduce amounts payable pursuant to Section 2.12 or 2.14, as
the case may be, in the future, or eliminate the circumstance giving rise to
such Lender

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exercising its rights under Section 2.11(b) 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 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 exercises its rights under Section
2.11(b) or requests compensation under Section 2.12, or if the Borrower is
required to pay any Covered Taxes or additional amount to any Lender or any
Governmental Authority for account of any Lender pursuant to Section 2.14 and,
in each case, such Lender has declined or is unable to designate a different
lending office in accordance with Section 2.17(a), or if any Lender becomes a
Defaulting Lender, or if any Lender becomes a Non-Consenting Lender, 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
and the other Loan Documents 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 which consent shall not be unreasonably withheld,
conditioned or delayed, (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its 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
2.12 or payments required to be made pursuant to Section 2.14, such assignment
will result in a reduction in such compensation or payments.  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.

(c) Defaulting Lenders.  If any Lender shall fail to make any payment required
to be made by it pursuant to Section 2.04 or 9.03(c), then the Administrative
Agent may, in its discretion and notwithstanding any contrary provision hereof,
(i) apply any amounts thereafter received by the Administrative Agent for the
account of such Lender for the benefit of the Administrative Agent to satisfy
such Lender’s obligations under such Sections until all such unsatisfied
obligations are fully paid, and/or (ii) hold any such amounts in a segregated
account as cash collateral for, and application to, any future funding
obligations of such Lender under such Sections, in the case of each of clauses
(i) and (ii) above, in any order as determined by the Administrative Agent in
its discretion.

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,
as applicable, is duly organized or incorporated, validly existing and in good
standing under the laws of the jurisdiction of its organization or
incorporation, has all requisite

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power and authority to carry on its business as now conducted and is qualified
to do business in, and is in good standing in, every jurisdiction where the
failure to do so could reasonably be expected to result in a Material Adverse
Effect.  There is no existing default under any charter, by-laws or other
organizational documents of Borrower or its Subsidiaries or any event which,
with the giving of notice or passage of time or both, would constitute a default
by any party thereunder.

 

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 stockholder action and the Board of
Directors of the Borrower and its Subsidiaries have approved the transactions
contemplated in this Agreement.  This Agreement has been duly executed and
delivered by the Borrower and constitutes, and each of the other Loan Documents
to which it is a party when executed and delivered will constitute, a legal,
valid and binding obligation of the Borrower, 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 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 (including the Investment Company Act and
the rules, regulations and orders issued by the SEC thereunder), (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 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. Financial Condition; No Material Adverse Effect.

 

(a) Financial Statements.  

(i) The financial statements delivered to the Administrative Agent and the
Lenders by the Borrower pursuant to Section 4.01(c) present fairly, in all
material respects, the consolidated financial position, assets and liabilities,
results of operations, changes in net assets, cash flows and investments of the
Borrower and its consolidated Subsidiaries as of the end of and for the
applicable period in accordance with GAAP.  On the Effective Date, none of the
Borrower or any of its Subsidiaries has any material contingent liabilities,
material liabilities for taxes, material unusual forward or material long-term
commitments or material unrealized or anticipated losses from any unfavorable
commitments not reflected in the financial statements referred to above. 

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(ii) The financial statements delivered to the Administrative Agent and the
Lenders by the Borrower pursuant to Sections 5.01(a) and (b) present fairly, in
all material respects, the consolidated financial position, assets and
liabilities, results of operations, changes in net assets, cash flows and
investments of the Borrower and its consolidated Subsidiaries as of the end of
and for the applicable period in accordance with GAAP, subject, in the case of
unaudited financial statements, to year-end audit adjustments and the absence of
footnotes.  None of the Borrower or any of its Subsidiaries has any material
contingent liabilities, material liabilities for taxes, material unusual forward
or material long-term commitments or material unrealized or anticipated losses
from any unfavorable commitments not reflected in such financial statements. 

(b) No Material Adverse Effect.  Since March 31, 2016, 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.    

(a) There are no actions, suits, investigations or proceedings by or before any
arbitrator or Governmental Authority now pending against or, to the knowledge of
the Borrower, threatened against or affecting the Borrower or any of its
Subsidiaries (a) 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 (b)
that involve this Agreement or the Transactions.

(b) The Class Action Judgment has been satisfied and paid in full.

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 could reasonably be expected to result in a
Material Adverse Effect.  Neither Borrower nor its Subsidiaries is in default in
any manner under any provision of any agreement or instrument to which it is a
party or by which it or any of its property is or may be bound, and no condition
exists which, with the giving of notice or the lapse of time or both, would
constitute such a default, in each case where such default could reasonably be
expected to result in a Material Adverse Effect. Each of the Borrower and its
Subsidiaries is in compliance with its respective Organization Documents in all
material respects.

 

Section 3.07. Taxes.    Each of the Borrower and its Subsidiaries has timely
filed or has caused to be timely filed all U.S. federal, state and material
local Tax returns that are required to be filed by it and all other material Tax
returns that are required to be filed by it and has paid all Taxes for which it
is directly or indirectly liable and any assessments made against it or any of
its property and all other Taxes, fees or other charges imposed on it or any of
its property by any Governmental Authority, except such Taxes, fees or other
charges that are being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with

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GAAP have been provided on the books of the Borrower or its Subsidiaries, as the
case may be.  The charges, accruals and reserves on the books of the Borrower
and any of its Subsidiaries in respect of Taxes and other governmental charges
are adequate in accordance with GAAP.  Neither the Borrower nor any of its
Subsidiaries has given or been requested to give a waiver of the statute of
limitations relating to the payment of any federal, state, local and foreign
Taxes or other impositions, and no Tax lien has been filed with respect to the
Borrower or any of its Subsidiaries.  There is no proposed Tax assessment
against the Borrower or any of its Subsidiaries, and there is no basis for such
assessment.

 

Section 3.08. ERISA.    

 

(a) Each Plan is in compliance in form and operation with its terms and with
ERISA and the Code (including without limitation the Code provisions compliance
with which is necessary for any intended favorable tax treatment) and all other
applicable laws and regulations, except as could not reasonably be expected to
result in a Material Adverse Effect.  Each Plan (and each related trust, if any)
that is intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the IRS to the effect that it meets the
requirements of Section 401(a) and 501(a) of the Code or is comprised of a
master and prototype plan that has received a favorable opinion letter from the
IRS, and nothing has occurred since the date of such determination that would
adversely affect such determination (or, in the case of a Plan with no
determination, nothing has occurred that would materially adversely affect the
issuance of a favorable determination letter or otherwise materially adversely
affect such qualification).  No ERISA Event has occurred or is reasonably
expected to occur that, alone or together with any other ERISA Events that have
occurred or are reasonably expected to occur, could reasonably be expected to
result in liability of the Borrower and its Subsidiaries in an aggregate amount
exceeding $5,000,000.

(b) (x) With respect to Pension Plans maintained by the Borrower, there exists
no Unfunded Pension Liability in the aggregate (taking into account only such
Pension Plans with positive Unfunded Pension Liability) in excess of $2,500,000,
and (y) with respect to Pension Plans maintained by the Borrower or its ERISA
Affiliates, there exists no Unfunded Pension Liability in an aggregate amount
(taking into account only such Pension Plans with positive Unfunded Pension
Liability) that would reasonably be expected to result in a Material Adverse
Effect (and in no event does the Borrower have actual knowledge of such Unfunded
Pension Liability in excess of $2,500,000). 

(c) Schedule 3.08 discloses all Unfunded Pension Liabilities with respect to
Pension Plans maintained by the Borrower or any of its ERISA Affiliates.

(d) (x) If the Borrower were to withdraw from all Multiemployer Plans in a
complete withdrawal as of the date this assurance is given or deemed given, the
aggregate Withdrawal Liability that would be incurred would not be in excess of
$2,500,000, and (y) if the Borrower and each of its ERISA Affiliates were to
withdraw from all Multiemployer Plans in a complete withdrawal as of the date
this assurance is given or deemed given, the aggregate Withdrawal Liability that
would be incurred would not reasonably be expected to have a Material Adverse
Effect (and in no event does Borrower have actual knowledge of such aggregate
potential Withdrawal Liability that, if incurred, would reasonably be expected
to result in liability to the

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Borrower (including, without limitation, liability imposed thereon by virtue of
ERISA or the Code) in excess of $2,500,000).

(e) There are no actions, suits or claims pending against or involving a Plan
(other than routine claims for benefits) or, to the knowledge of the Borrower or
any of its ERISA Affiliates, threatened, that would reasonably be expected to be
asserted successfully against any Plan and, if so asserted successfully, would
reasonably be expected either singly or in the aggregate to have a Material
Adverse Effect.

(f) The Borrower and each of its ERISA Affiliates have made all material
contributions to or under each Pension Plan and Multiemployer Plan required by
law within the applicable time limits prescribed thereby, the terms of such
Pension Plan or Multiemployer Plan, respectively, or any contract or agreement
requiring contributions to a Pension Plan or Multiemployer Plan save where any
failure to comply, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.

(g) The Borrower and any ERISA Affiliate have not ceased operations at a
facility so as to become subject to the provisions of Section 4068(a) of ERISA,
withdrawn as a substantial employer to as to become subject to the provisions of
Section 4063 of ERISA or ceased making contributions to any Pension Plan subject
to Section 4064(a) of ERISA to which it made contributions.  None of the
Borrower or any of its ERISA Affiliates has any liability under Section 4069 or
Section 4212(c) of ERISA.

Section 7.01. Disclosure.    

(a) All written information (which, for the avoidance of doubt, excludes all
financial projections, pro forma financial information, other forward-looking
information, information relating to third parties and information of a general
economic or general industry nature) which has been made available to the
Administrative Agent or any Lender by the Borrower or any of its
representatives, in connection with the transactions contemplated by this
Agreement or delivered under any Loan Document, taken as a whole, is complete,
true and correct in all material respects as of the date furnished and does not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein at the time made and
taken as a whole not misleading in light of the circumstances under which such
statements were made; and

(b) All financial projections, pro forma financial information and other
forward-looking information which has been delivered to the Administrative Agent
or any Lender by the Borrower or on behalf of the Borrower, in connection with
the transactions contemplated by this Agreement or delivered under any Loan
Document, are based upon good faith estimates and assumptions believed by the
Borrower to be reasonable at the time made, it being recognized that such
projections, financial information and other forward-looking information as they
relate to future events are not to be viewed as fact and to the extent they
relate to future events are subject to significant uncertainty and contingencies
(many of which are beyond the control of the Borrower) and that actual results
during the period or periods covered by such projections, financial information
and other forward-looking information (a) may materially differ from the
projected results set forth therein and (b) are subject to significant
uncertainties and contingencies,

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many of which are beyond the control of the Borrower, and that no assurance can
be given that the projections will be realized. 

Section 7.02. Investment Company Act; Margin Regulations.

(a) Status as Business Development Company.  The Borrower is an “investment
company” that has elected to be regulated as a “business development company”
within the meaning of the Investment Company Act and qualifies as a RIC and has
qualified as a RIC at all times since the Borrower’s taxable year ended December
31, 1988.

(b) Compliance with Investment Company Act.  The business and other activities
of the Borrower and its Subsidiaries (including, without limitation, entering
into this Agreement and the borrowings made hereunder) do not result in a
violation or breach of the provisions of the Investment Company Act or any
rules, regulations or orders issued by the SEC thereunder, except where such
breaches or violations, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect.

(c) Investment Policies.  The Borrower is in compliance in all material respects
with the Investment Policies, as amended by Permitted Policy Amendments.

(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. On the Effective Date
and the Amendment No. 1 Effective Date, neither the Borrower nor any of its
Subsidiaries own any Margin Stock.

Section 7.03. Material Agreements and Liens.

 

(a) Material Agreements.  Schedule 3.11(a) is a complete and correct list 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 Amendment No. 1 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 Schedule 3.11(a).

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

Section 7.04. Subsidiaries and Investments..  

 

(a) Set forth in Schedule 3.12(a) is a complete and correct list of all of the
Subsidiaries of the Borrower as of the Amendment No. 1 Effective Date together
with, for each such Subsidiary, (i) the jurisdiction of organization of such
Subsidiary, (ii) each Person holding

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ownership interests in such Subsidiary and (iii) the percentage of ownership of
such Subsidiary represented by such ownership interests.  Except as disclosed in
Schedule 3.12(a), as of the Amendment No. 1 Effective Date, (x) the Borrower
owns, free and clear of Liens, and has the unencumbered right to vote, all
outstanding ownership interests in each Subsidiary shown to be held by it in
Schedule 3.12(a), and (y) all of the issued and outstanding capital stock of
each such Subsidiary organized as a corporation is validly issued, fully paid
and nonassessable (to the extent such concepts are applicable).

(b) Investments.  Set forth in Schedule 3.12(b) is a complete and correct list
of all Investments (other than Investments of the types referred to in clauses
(b), (c), (d), (e) and (i) of Section 6.04) held by the Borrower or any of its
Subsidiaries in any Person on the Amendment No. 1 Effective Date and, for each
such Investment, (i) the identity of the Person or Persons holding such
Investment, (ii) the nature of such Investment, (iii) the amount of such
Investment, (iv) the rate of interest charged for such Investment and (v) the
value assigned to such Investment by the Board of Directors of the
Borrower.  Except as disclosed in Schedule 3.12(b), as of the Amendment No. 1
Effective Date each of the Borrower and its Subsidiaries owns, free and clear of
all Liens (other than Liens permitted pursuant to Section 6.02), all such
Investments.

Section 7.05. Properties.

 

(a) Title Generally.  Each of the Borrower and its Subsidiaries 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 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 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 7.06. Solvency.  On the Amendment No. 1 Effective Date, and upon the
incurrence of any extension of credit hereunder, on any date on which this
representation and warranty is made, (a) the Borrower will be Solvent on an
unconsolidated basis, and (b) each Obligor will be Solvent on a consolidated
basis with the other Obligors.

 

Section 7.07. No Default.  No Default or Event of Default has occurred and is
continuing under this Agreement.

 

Section 7.08. Use of Proceeds.  The proceeds of the Loans shall be used for the
general corporate purposes of the Borrower and its Subsidiaries (other than SBIC
Subsidiaries except as expressly permitted under Section 6.03(e)) in the
ordinary course of its business, including making distributions not prohibited
by this Agreement, making payments on Indebtedness of the Obligors to the extent
permitted under this Agreement and the acquisition and funding (either directly
or through one or more wholly-owned Subsidiary Guarantors) of leveraged loans,
mezzanine loans, high yield securities, convertible securities, preferred stock,
common stock and other Portfolio Investments, but excluding, for clarity, Margin
Stock.

 

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Section 7.09. Security Documents.  The Guarantee and Security Agreement is
effective to create in favor of the Collateral Agent for the benefit of the
Secured Parties (as defined in the Guarantee and Security Agreement), legal,
valid and enforceable Liens on, and security interests in, the Collateral and,
when (i) all appropriate filings or recordings are made in the appropriate
offices as may be required under applicable law and, as applicable, (ii) upon
the taking of possession or control by the Collateral Agent of the Collateral
with respect to which a security interest may be perfected by possession or
control (which possession or control shall be given to the Collateral Agent to
the extent possession or control by the Collateral Agent is required by the
Guarantee and Security Agreement), the Liens created by the Guarantee and
Security Agreement shall constitute fully perfected Liens on, and security
interests in, all right, title and interest of the grantors in the Collateral
(other than such Collateral in which a security interest cannot be perfected
under the UCC as in effect at the relevant time in the relevant jurisdiction),
in each case subject to no Liens other than Permitted Liens.

 

Section 7.10. Compliance with Sanctions.  Neither the Borrower nor any of its
Subsidiaries, nor any executive officer or director thereof, nor, to the
knowledge of the Borrower, any Affiliate of the Borrower or any executive
officer or director thereof (i) is subject to, or subject of, sanctions
(collectively, “Sanctions”) administered by the United States Department of the
Treasury’s Office of Foreign Assets Control (“OFAC”), the U.S. Department of
State, the European Union, Her Majesty’s Treasury, the United Nations Security
Council, or any other relevant sanctions authority, or (ii) is located, has a
place of business or is organized or resident in a Sanctioned Country.
Furthermore, no part of the proceeds of a Loan will be used, directly or
indirectly, by the Borrower or, to the knowledge of the Borrower, any Affiliate
of the Borrower or by any of their respective executive officers or directors to
finance or facilitate a transaction with a person that is subject to Sanctions
or is located, has a place of business or is organized or resident in a
Sanctioned Country.

 

Section 7.11. Anti-Money Laundering Program.  The Borrower has implemented an
anti-money laundering program to the extent required by the Uniting And
Strengthening America By Providing Appropriate Tools Required To Intercept And
Obstruct Terrorism, as amended (the “USA PATRIOT Act”), and the rules and
regulations thereunder and maintains in effect and enforces policies and
procedures designed to ensure compliance by the Borrower and its Subsidiaries
(and, when acting on behalf of the Borrower and its Subsidiaries, their
respective directors, officers, employees and agents) with applicable Sanctions.

 

Section 7.12. Foreign Corrupt Practices Act.  Neither the Borrower nor any
Affiliate of the Borrower and, to the Borrower’s knowledge, no director,
officer, agent, employee, Affiliate or other person associated with or acting on
behalf of the Borrower or any Affiliate of the Borrower has: (i) used any
corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity or to influence official action;
(ii) made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment; or (iv)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended, and the rules and regulations thereunder (the
“FCPA”) and any applicable law or regulation implementing the OECD Convention on
Combating Bribery of Foreign Public Officials in International Business
Transactions (collectively with the FCPA, the “Anti-Corruption Laws”); and each
of the

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

 

Borrower and any Affiliate of the Borrower have conducted their businesses in
compliance with the Anti-Corruption Laws and have instituted and maintained
policies and procedures reasonably designed to ensure, and which are reasonably
expected to continue to ensure, compliance therewith.  Furthermore, no part of
the proceeds of a Loan will be used, directly or indirectly, by the Borrower or
any Affiliate of the Borrower, or by any of their respective directors,
officers, agents, employees, Affiliates or other persons associated with or
acting on behalf of the Borrower or any Affiliate of the Borrower, to finance or
facilitate a transaction in violation of the Anti-Corruption Laws.

 

Article IV

CONDITIONS

Section 4.01. Effective Date.  The effectiveness of this Agreement on the
Effective Date and of the obligations of the Lenders to make Loans 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 reasonably 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 (1) a counterpart of
this Agreement signed on behalf of such party or (2) written evidence
satisfactory to the Administrative Agent (which may include telecopy or e-mail
transmission of a signed signature page to this Agreement) that such party has
signed a counterpart of this Agreement.

(ii) Guarantee and Security Agreement; Custody Agreement.  The Guarantee and
Security Agreement, the Custody Agreement with respect to the Borrower’s
Custodian Account, the Document Custody Agreement and the Control Agreement,
each duly executed and delivered by each of the parties thereto, and all other
documents or instruments required to be delivered by the Guarantee and Security
Agreement, the Custody Agreement, the Document Custody Agreement, and the
Control Agreement in connection with the execution thereof.

(iii) Opinion of Counsel to the Borrower.  A favorable written opinion
(addressed to the Administrative Agent and the Lenders and dated the Effective
Date) of Thompson & Knight LLP, counsel for the Obligors, and of Robison
Belaustegui Sharp & Low, Nevada counsel for the Obligors, in each case in form
and substance reasonably satisfactory to the Administrative Agent and covering
such matters as the Administrative Agent may reasonably request (and the
Borrower hereby instructs such counsel to deliver such opinion to the Lenders
and the Administrative Agent). 

(iv) Corporate Documents.  The Administrative Agent shall have received a
certificate of the secretary or assistant secretary of each Obligor, dated the
Effective Date, certifying that attached thereto are (1) true and complete
copies of the organizational

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documents of each Obligor certified as of a recent date by the appropriate
governmental official, (2) signature and incumbency certificates of the officers
of such Person executing the Loan Documents to which it is a party, (3) true and
complete resolutions of the Board of Directors of each Obligor approving and
authorizing the execution, delivery and performance of this Agreement and the
other Loan Documents to which it is a party or by which it or its assets may be
bound as of the Effective Date and, in the case of the Borrower, authorizing the
borrowings hereunder, and that such resolutions are in full force and effect
without modification or amendment, (4) a good standing certificate from the
applicable Governmental Authority of each Obligor’s jurisdiction of
incorporation, organization or formation and in each jurisdiction in which it is
qualified as a foreign corporation or other entity to do business, each dated a
recent date prior to the Effective Date, and (5) such other documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the organization, existence and good standing of the Obligors, and
the authorization of the Transactions, all in form and substance reasonably
satisfactory to the Administrative Agent and its counsel.

(v) Officer’s Certificate. A certificate, dated the Effective Date and signed by
a Financial Officer of the Borrower, confirming compliance with the conditions
set forth in Sections 4.01(e) and (h) and Sections 4.02 (a),  (b),  (c) and (d).

(b) Liens.  The Administrative Agent shall have received results of a recent
lien search in each relevant jurisdiction with respect to the Obligors,
confirming the priority of the Liens in favor of the Collateral Agent created
pursuant to the Security Documents and revealing no liens on any of the assets
of the Borrower or its Subsidiaries 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, control agreements, stock certificates and other documents or
instruments required to be filed or executed and delivered in order to create in
favor of the Collateral Agent, for the benefit of the Administrative Agent and
the Lenders, a first-priority perfected (subject to Eligible Liens) security
interest in the Collateral (to the extent that such a security interest may be
perfected by filing, possession or control under the Uniform Commercial Code)
shall have been properly filed (or provided to the Administrative Agent) or
executed and delivered in each jurisdiction required.

(c) Financial Statements.  The Administrative Agent and the Lenders shall have
received, prior to the execution of this Agreement, (i) the audited consolidated
statements of assets and liabilities and the related audited consolidated
statements of operations, audited consolidated statements of changes in net
assets, audited consolidated statements of cash flows and related audited
consolidated schedule of investments of the Borrower and its consolidated
Subsidiaries as of and for the fiscal year ended March 31, 2016, and (ii) the
consolidated statements of assets and liabilities and the related consolidated
statements of operations, changes in net assets, consolidated statements of cash
flows and related consolidated schedule of investments of the Borrower and its
consolidated Subsidiaries as of and for the fiscal quarter ended June 30, 2016,
in each case, certified in writing 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.  The Administrative Agent and the
Lenders shall have

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received any other financial statements of the Borrower and its Subsidiaries as
they shall have reasonably requested. 

(d) Consents.  The Borrower shall have obtained and delivered to the
Administrative Agent certified copies of all consents, approvals,
authorizations, registrations, or filings (other than any filing required under
the Exchange Act or the rules or regulations promulgated thereunder, including
any filing required on Form 8-K) required to be made or obtained by the Borrower
and all guarantors in connection with the Transactions and any other evidence
reasonably requested by, and reasonably satisfactory to, the Administrative
Agent as to compliance with all material legal and regulatory requirements
applicable to the Obligors, 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.

(e) No Litigation.  There shall not exist any action, suit, investigation,
litigation or proceeding or other legal or regulatory developments pending or,
to the knowledge of the Borrower, threatened in any court or before any
arbitrator or Governmental Authority that relates to the Transactions or that
could reasonably be expected to have a Material Adverse Effect.

(f) Solvency Certificate.  On the Effective Date, the Administrative Agent shall
have received a solvency certificate of a Financial Officer of the Borrower
dated as of the Effective Date and addressed to the Administrative Agent and the
Lenders, and in form, scope and substance reasonably satisfactory to
Administrative Agent, with appropriate attachments and demonstrating that both
before and after giving effect to the Transactions, (a) the Borrower will be
Solvent on an unconsolidated basis and (b) each Obligor will be Solvent on a
consolidated basis with the other Obligors.

(g) Due Diligence.  All customary confirmatory due diligence on the Borrower and
its Subsidiaries shall have been completed by the Administrative Agent and the
Lenders and the results of such due diligence shall be satisfactory to the
Administrative Agent and the Lenders.  No information shall have become
available which the Administrative Agent reasonably believes has had, or could
reasonably be expected to have, a Material Adverse Effect.

(h) Default. No Default or Event of Default shall have occurred and be
continuing under this Agreement, nor any default or event of default that
permits (or which upon notice, lapse of time or both, would permit) the
acceleration of any Material Indebtedness, immediately before and after giving
effect to the Transactions, any incurrence of Indebtedness hereunder and the use
of the proceeds hereof.

(i) USA PATRIOT Act.  The Administrative Agent shall have received 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, as reasonably requested by the
Administrative Agent.

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(j) Investment Policies.  The Administrative Agent shall have received the
Investment Policies as in effect on the Effective Date in form and substance
reasonably satisfactory to the Administrative Agent.

(k) Borrowing Base Certificate.  The Administrative Agent shall have received a
Borrowing Base Certificate dated as of the Effective Date, showing a calculation
of the Borrowing Base as of the date immediately prior to the Effective Date, in
form and substance reasonably satisfactory to the Administrative Agent.

(l) [Reserved.]

(m) Insurance Certificates and Endorsements.  The Administrative Agent shall
have received certificates from the Borrower’s insurance broker or other
evidence satisfactory to it that all insurance required to be maintained
pursuant to the Loan Documents is in full force and effect, together with
endorsements naming the Collateral Agent, for the benefit of the Administrative
Agent and the Lenders, as additional insured and lender’s loss payee, as
applicable, thereunder. 

(n) Other Documents.  The Administrative Agent shall have received such other
documents, instruments, certificates, opinions and information as the
Administrative Agent may reasonably request or require in form and substance
reasonably satisfactory to the Administrative Agent.

(o) Fees and Expenses.  The Borrower shall have paid in full, to the extent not
paid pursuant to Section 2.09 hereof, to the Administrative Agent and the
Lenders all fees and expenses (including reasonable legal fees to the extent
invoiced) related to this Agreement owing on or prior to the Effective Date,
including any up-front fee due to any Lender on or prior to the Effective Date.

Section 4.02. Conditions to Each Credit Event.  The obligation of each Lender to
make any Loan, including any Loans on the Effective Date, 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 (other than any representation or warranty already qualified
by materiality or Material Adverse Effect, which shall be true and correct in
all respects) on and as of the date of such Loan, 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, no Default
or Event of Default shall have occurred and be continuing or would result from
such Loan after giving effect thereto;

(c) no Borrowing Base Deficiency shall exist at the time of and immediately
after giving effect to such Loan, and (x) solely in connection with the funding
of the initial Loan, the Borrower shall have delivered a Borrowing Base
Certificate as of the date of the funding of such Loan demonstrating that the
Covered Debt Amount (after giving effect to such Loan) shall not exceed the
Borrowing Base after giving effect to such Loan as well as any concurrent

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acquisitions of Portfolio Investments by the Borrower or payment of outstanding
Loans or Other Covered Indebtedness; and (y) in connection with the funding of
any Loan other than the initial Loan, either (i) the aggregate Covered Debt
Amount (after giving effect to such Loan) 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 Loan) shall not exceed the Borrowing Base after giving
effect to such Loan as well as any concurrent acquisitions of Portfolio
Investments by the Borrower or payment of outstanding Loans or Other Covered
Indebtedness;

(d) after giving effect to such Loan, the Borrower shall be in pro forma
compliance with each of the covenants set forth in Sections 6.07(a),  (b),  (d)
and (e);  

(e) the Custody Agreement, Document Custody Agreement and Control Agreement
shall have been duly executed and delivered by the Borrower, the Collateral
Agent, the Custodian and the Document Custodian, as applicable, and all other
control arrangements required at the time by Section 5.08(c)(ii) with respect to
the Obligors’ other deposit accounts and securities accounts shall have been
entered into;

(f) the proposed date of such Loan shall take place during the Availability
Period; and

(g) solely in connection with the funding of the initial Loan, the
Administrative Agent shall have received full, correct and complete copies of
custody reports (including (i) activity reports with respect to Cash and Cash
Equivalents included in the calculation of the Borrowing Base, (ii) an itemized
list of each account and the amounts therein with respect to Cash and Cash
Equivalents included in the calculation of the Borrowing Base and (iii) an
itemized list of each Portfolio Investment held in any Custodian Account owned
by the Borrower or any Subsidiary) reflecting all assets being held in any
Custodian Account owned by the Borrower or any of its Subsidiaries or otherwise
subject to the Custody Agreement or the Document Custody Agreement.

Each Borrowing 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 Termination Date, 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 for distribution to each Lender:

 

(a) within 90 days after the end of each fiscal year of the Borrower (commencing
with the fiscal year ending March 31, 2017), the audited consolidated statements
of

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assets and liabilities and the related audited consolidated statements of
operations, audited consolidated statements of changes in net assets, audited
consolidated statements of cash flows and related audited consolidated schedule
of investments of the Borrower and its Subsidiaries on a consolidated basis as
of the end of and for such year, setting forth in each case in comparative form
the figures for the previous fiscal year (to the extent full fiscal year
information is available), 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 (which report shall be unqualified as to going concern and scope of
audit and shall not contain any explanatory paragraph or paragraph of emphasis
with respect to going concern); provided that the requirements set forth in this
clause (a) may be fulfilled by providing to the Administrative Agent for
distribution to each Lender the report filed by the Borrower with the SEC on
Form 10-K for the applicable fiscal year;

(b) within 45 days after the end of each of the first three (3) fiscal quarters
of each fiscal year of the Borrower (commencing with the fiscal quarter ended
September 30, 2016), the consolidated statements of assets and liabilities and
the related consolidated statements of operations, consolidated statements of
changes in net assets, consolidated statements of cash flows and related
consolidated schedule of investments of the Borrower and its Subsidiaries on a
consolidated basis as of the end of and for such fiscal quarter and the then
elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for (or, in the case of the statement of assets and
liabilities, as of the end of) the corresponding period or periods of the
previous fiscal year (to the extent such information is available for 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 Administrative
Agent for distribution to each Lender the report filed by the Borrower with the
SEC on Form 10-Q for the applicable quarterly period; 

(c) concurrently with any delivery of financial statements under clause (a) or
(b) of this Section (or, solely with respect to clause (vi) of this Section
5.01(c), within ten (10) calendar days thereafter), a certificate of a Financial
Officer of the Borrower (i)  to the extent the requirements in clauses (a) and
(b) of this Section are not fulfilled by the Borrower delivering the applicable
report delivered to (or filed with) the SEC, certifying that such statements are
consistent with the financial statements filed by the Borrower with the SEC,
(ii) certifying as to whether the Borrower has knowledge that a Default or Event
of Default has occurred and, if a Default or 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(b),  (d),  (e) and (i), 6.02(f),
 6.03(e) and (g),  6.04(i) and (j),  6.05(b),  (d) and (e) and 6.07, (iv)
stating whether any change in GAAP as applied by (or in the application of GAAP
by) the Borrower has occurred since the Effective Date (but only if the Borrower
has not previously reported such change to the Administrative Agent) and, if any
such change has occurred (and has not been previously reported to the
Administrative Agent), specifying the effect of such change on the financial
statements accompanying such certificate, (v) attaching a list of Subsidiaries
as of the date of delivery of such certificate or a confirmation that there is
no change in such information

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since the date of the last such list, (vi) attaching a schedule providing
projected interest and principal payments for all debt Portfolio Investments as
of such date, regardless of whether such Portfolio Investments are Eligible
Portfolio Investments and (vii) providing a reconciliation of any difference
between the assets and liabilities of the Borrower and its consolidated
Subsidiaries presented in such financing statements and the assets and
liabilities of the Borrower and its Subsidiaries for purposes of calculating the
financial covenants in Section 6.07;

(d) as soon as available and in any event not later than twenty (20) calendar
days after the end of each monthly accounting period (ending on the last day of
each calendar month) of the Borrower and its Subsidiaries, commencing with the
monthly accounting period ending September 30, 2016, a Borrowing Base
Certificate as of the last day of such accounting period (which Borrowing Base
Certificate shall include: (i) an Excel schedule containing information
substantially similar to the information included on the Excel schedule included
in the Borrowing Base Certificate delivered to the Administrative Agent for the
period ended on August 29, 2016 and (ii) a calculation of the External Quoted
Value in accordance with methodologies described in Sections 5.12(b)(ii)(A)(w),
 (x),  (y) and (z), including screenshots showing actual bid prices or, as
applicable, closing prices);

(e) promptly but no later than two Business Days after any Financial Officer of
the Borrower shall at any time have knowledge (based upon facts and
circumstances known to him) that there is a Borrowing Base Deficiency or
knowledge that the Borrowing Base has declined by more than 15% from the
Borrowing Base stated in the Borrowing Base Certificate last delivered by the
Borrower to the Administrative Agent, a Borrowing Base Certificate as at the
date such Financial Officer has knowledge of such Borrowing Base Deficiency or
decline indicating the amount of the Borrowing Base Deficiency or decline as at
the date such Financial Officer obtained knowledge of such deficiency and the
amount of the Borrowing Base Deficiency or decline as of the date not earlier
than two Business Days prior to the date the Borrowing Base Certificate is
delivered pursuant to this paragraph;

(f) promptly upon receipt thereof copies of all significant written reports
submitted to the management or Board of Directors of the Borrower 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 sent to stockholders and
filed by the Borrower or any of its Subsidiaries with the SEC or with any
national securities exchange, as the case may be;

(h) within 45 days after the end of each fiscal quarter of the Borrower, all
internal and external valuation reports relating to the Eligible Portfolio
Investments (including all valuation reports delivered by the Approved
Third-Party Appraiser in connection with the quarterly appraisals of Unquoted
Investments in accordance with Section 5.12(b)(ii)(B)), and any other
information relating to the Eligible Portfolio Investments as reasonably
requested by the Administrative Agent or any Lender;

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(i) within thirty (30) days after the initial closing of each Eligible Portfolio
Investment that is acquired, made or entered into after the Effective Date, all
underwriting memoranda (or, if no underwriting memorandum has been prepared, all
materials similar to underwriting memoranda) for such Eligible Portfolio
Investments, and any other information relating to the Eligible Portfolio
Investments as reasonably requested by the Administrative Agent or any Lender;

(j) to the extent not otherwise provided by the Custodian and/or the Document
Custodian, within thirty (30) days after the end of each month, full, correct
and complete updated copies of custody reports (including (i) activity reports
with respect to Cash and Cash Equivalents included in the calculation of the
Borrowing Base, (ii) an itemized list of each account and the amounts therein
with respect to Cash and Cash Equivalents included in the calculation of the
Borrowing Base and (iii) an itemized list of each Portfolio Investment held in
any Custodian Account owned by the Borrower or any Subsidiary) reflecting all
assets being held in any Custodian Account owned by the Borrower or any of its
Subsidiaries or otherwise subject to the Custody Agreement or the Document
Custody Agreement;

(k) within 45 days after the end of each fiscal quarter of the Borrower a
certificate of a Financial Officer of the Borrower certifying that attached
thereto is a complete and correct description of all Portfolio Investments as of
the date thereof, including, with respect to each such Portfolio Investment, the
name of the Borrower or Subsidiary holding such Portfolio Investment and the
name of the Portfolio Company of such Portfolio Investment; 

(l) to the extent such information is not otherwise available in the financial
statements delivered pursuant to clause (a) or (b) of this Section, upon the
request of the Administrative Agent, within five (5) Business Days of the due
date set forth in clause (a) or (b) of this Section for any quarterly or annual
financial statements, as the case may be, a schedule prepared in accordance with
GAAP setting forth in reasonable detail with respect to each Portfolio
Investment where there has been a realized gain or loss in the most recently
completed fiscal quarter, (i) the cost basis of such Portfolio Investment, (ii)
the realized gain or loss associated with such Portfolio Investment, (iii) the
associated reversal of any previously unrealized gains or losses associated with
such Portfolio Investment, (iv) the proceeds received with respect to such
Portfolio Investment representing repayments of principal during the most
recently ended fiscal quarter, and (v) any other amounts received with respect
to such Portfolio Investment representing exit fees or prepayment penalties
during the most recently ended fiscal quarter; and

(m) 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. 

Section 5.02. Notices of Material Events.  Upon the Borrower becoming aware of
any of the following, the Borrower will furnish to the Administrative Agent and
each Lender prompt written notice of the following:

 

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(a) the occurrence of any Default or Event of Default (provided that if such
Default is subsequently cured within the time periods set forth herein, the
failure to provide notice of such Default shall not itself result in an Event of
Default hereunder);

(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) (i) the filing by the Borrower or any of its ERISA Affiliates of a Schedule
B (or such other schedule as contains actuarial information) to IRS Form 5500 in
respect of a Plan with Unfunded Pension Liabilities (and the Borrower shall
furnish to the Administrative Agent a copy of such Schedule B), (ii) 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 in an aggregate amount exceeding $5,000,000 (and the Borrower
shall furnish to the Administrative Agent a certificate of a Financial Officer
of the Borrower describing such ERISA Event and the action, if any, proposed to
be taken with respect to such ERISA Event and a copy of any notice filed with
the PBGC or the IRS pertaining to such ERISA Event and any notices received from
such Borrower or ERISA Affiliate from the PBGC or any other Governmental
Authority with respect thereto), (iii) the existence of material Unfunded
Pension Liabilities (taking into account only Plans with positive Unfunded
Pension Liabilities) and (iv) (x) the existence of material aggregate potential
Withdrawal Liability under Section 4201 of ERISA, if the Borrower and all of its
ERISA Affiliates were to withdraw completely from any and all Multiemployer
Plans, (y) the adoption of, or commencement of contributions to, any Plan
subject to Section 412 of the Code by the Borrower or any of its ERISA
Affiliates, or (z) the adoption of any amendment to a Plan subject to Section
412 of the Code that results in a material increase in contribution obligations
of the Borrower or any of its ERISA Affiliates; 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 to, do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges and franchises material to the conduct of
its business; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 6.03.

 

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

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GAAP and (c) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect.

 

Section 5.05. Maintenance of Properties; Insurance.  The Borrower will, and will
cause each of its 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, (b) maintain, with financially sound and reputable
insurance companies, insurance in such amounts and against such risks as are
customarily maintained by companies engaged in the same or similar business,
operating in the same or similar locations and (c) after the request of the
Administrative Agent, promptly deliver to the Administrative Agent any
certificate or certificates from the Borrower’s insurance broker or other
documentary evidence, in each case, demonstrating the effectiveness of, or any
changes to, such insurance.

 

Section 5.06. Books and Records; Inspection and Audit Rights.

 

(a) Books and Records; Inspection 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 of its Subsidiaries to, permit any
representatives designated by the Administrative Agent or any Lender, upon
reasonable prior notice to the Borrower, at the sole expense of the Borrower, to
(i) visit and inspect its properties, to examine and make extracts from its
books and records, and (ii) discuss its affairs, finances and condition with its
officers and independent accountants, all at such reasonable times and as often
as reasonably requested; provided that the Borrower or such Subsidiary shall be
entitled to have its representatives and advisors present during any inspection
of its books and records; provided,  further, that the Borrower shall not be
required to pay for more than two (2) such visits and inspections in any
calendar year unless an Event of Default has occurred and is continuing at the
time of any subsequent visits and inspections during such calendar year.

(b) Audit Rights.  The Borrower will, and will cause each of its Subsidiaries
to, permit any representatives designated by Administrative Agent (including any
consultants, accountants, lawyers and appraisers retained by the Administrative
Agent) to conduct evaluations and appraisals of the Borrower’s computation of
the Borrowing Base and the assets included in the Borrowing Base (including, for
clarity, audits of any Agency Accounts, funds transfers and custody procedures),
all at such reasonable times and as often as reasonably requested.  The Borrower
shall pay the reasonable, documented fees and expenses of representatives
retained by the Administrative Agent to conduct any such evaluation or
appraisal; provided that the Borrower shall not be required to pay such fees and
expenses for more than one such evaluation or appraisal during any calendar year
unless an Event of Default has occurred and is continuing at the time of any
subsequent evaluation or appraisal during such calendar year.  The Borrower also
agrees to modify or adjust the computation of the Borrowing Base and/or the
assets included in the Borrowing Base, to the extent required by the
Administrative Agent or the Required Lenders as a result of any such evaluation
or appraisal indicating that such computation or inclusion of assets is not
consistent with the terms of this Agreement, provided that if the Borrower
demonstrates that such evaluation or appraisal is incorrect, the Borrower shall
be permitted to re-adjust its computation of the Borrowing Base. 

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(c) Notwithstanding the foregoing, nothing contained in this Section 5.06 shall
impair or affect the rights of the Administrative Agent under Section
5.12(b)(ii) in any respect.

Section 5.07. Compliance with Laws and Agreements.  The Borrower will, and will
cause each of its Subsidiaries to, comply with all laws, rules, regulations,
including the Investment Company Act (if applicable to such Person), and orders
of any Governmental Authority applicable to it (including orders issued by the
SEC) or its property and all indentures, agreements and other instruments,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.  Policies and
procedures will be maintained and enforced by or on behalf of the Borrower that
are designed in good faith and in a commercially reasonable manner to promote
and achieve compliance, in the reasonable judgment of the Borrower, by the
Borrower and each of its Subsidiaries and, when acting on behalf of the Borrower
or any of its Subsidiaries, their respective directors, officers, employees and
agents with any applicable Anti-Corruption Laws and applicable Sanctions, in
each case, giving due regard to the nature of such Person’s business and
activities. The Borrower will, and will cause each of its Subsidiaries to, act
in accordance with their respective Organization Documents in all material
respects.

 

Section 5.08. Certain Obligations Respecting Subsidiaries; Further Assurances.

 

(a) Subsidiary Guarantors.  

(i) In the event that (1) the Borrower or any of its Subsidiaries shall form or
acquire any new Subsidiary (other than an SBIC Subsidiary), or any other Person
shall become a “Subsidiary” within the meaning of the definition thereof (other
than an SBIC Subsidiary) or (2) any SBIC Subsidiary shall no longer constitute a
“SBIC Subsidiary” pursuant to the definition thereof  (in which case such Person
shall be deemed to be a “new” Subsidiary for purposes of this Section 5.08), the
Borrower will, in each case, on or before thirty (30) days following such Person
becoming a Subsidiary or such SBIC Subsidiary no longer qualifying as such,
cause such new Subsidiary or former SBIC 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 the Administrative Agent shall have reasonably requested.

(ii) The Borrower acknowledges that the Administrative Agent and the Lenders
have agreed to exclude each SBIC Subsidiary as an Obligor only for so long as
such Person qualifies as an “SBIC Subsidiary” pursuant to the definition
thereof, and thereafter such Person shall no longer constitute an “SBIC
Subsidiary” for any purpose of this Agreement or any other Loan Document.

(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:

(i) 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 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) and the holders of any
Secured Longer-Term Indebtedness, perfected first-priority 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) with respect to each deposit account or securities account of the Obligors
(other than (A) any Agency Account, (B) any such accounts which hold solely
money or financial assets of an SBIC Subsidiary, (C) any payroll account so long
as such payroll account is coded as such, (D) withholding tax and fiduciary
accounts or any trust account maintained solely on behalf of a Portfolio
Investment, and (E) any account in which the aggregate value of deposits
therein, together with all other such accounts under this clause (E), does not
at any time exceed $75,000; provided that in the case of each of the foregoing
clauses (A) through (E), no other Person (other than the depository institution
at which such account is maintained) shall have “control” (within the meaning of
the Uniform Commercial Code) over such account, cause each 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 such deposit account or securities account (each, a
“Control Account”) and in that connection, the Borrower agrees, subject to
Sections 5.08(c)(iv) and (v) below, to cause all cash and other proceeds of
Portfolio Investments received by any Obligor to be immediately deposited into a
Control Account (or otherwise delivered to, or registered in the name of, the
Collateral Agent) and, both prior to and following such deposit, delivery or
registration such cash and other proceeds shall be held in trust by the Borrower
for the benefit and as the property of the Collateral Agent and shall not be
commingled with any other funds or property of such Obligor or any other Person
(including with any money or financial assets of the Borrower in its capacity as
an “agent” or “administrative agent” for any other Bank Loans subject to Section
5.08(c)(v) below);

(iii) cause the SBIC Subsidiaries to execute and deliver to the Administrative
Agent such certificates and agreements, in form and substance reasonably
satisfactory to the Administrative Agent, as it shall determine are necessary to
confirm that such SBIC Subsidiary qualifies or continues to qualify as an “SBIC
Subsidiary” pursuant to the definition thereof;

(iv) in the case of any Portfolio Investment consisting of a Bank Loan that does
not constitute all of the credit extended to the underlying borrower under the
relevant

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underlying loan documents and an SBIC Subsidiary holds any interest in the loans
or other extensions of credit under such loan documents, (x)(1) cause the
interest owned by such SBIC Subsidiary to be evidenced by a separate note or
notes, which note or notes are either (A) in the name of such SBIC Subsidiary or
(B) in the name of the Borrower, endorsed in blank and delivered to the
applicable SBIC Subsidiary and beneficially owned by the SBIC Subsidiary (or, in
the case of a Noteless Assigned Loan (as defined in Section 5.13), cause the
interest owned by such SBIC Subsidiary to be evidenced by separate assignment
documentation contemplated by paragraph 1(b) of Schedule 1.01(d) in the name of
such SBIC Subsidiary) and (2) not permit such SBIC Subsidiary to have a
participation acquired from an Obligor in such underlying loan documents and the
extensions of credit thereunder or any other indirect interest therein acquired
from an Obligor; and (y) ensure that, subject to Section 5.08(c)(v) below, all
amounts owing to any Obligor by the underlying borrower or other obligated party
are remitted by such borrower or obligated party (or the applicable
administrative agents, collateral agents or equivalent Person) directly  to the
Custodian Account and no other amounts owing by such underlying borrower or
obligated party are remitted to the Custodian Account;

(v) in the event that any Obligor is acting as an agent or administrative agent
under any loan documents with respect to any Bank Loan (or is acting in an
analogous agency capacity under any agreement related to any Portfolio
Investment) and such Obligor does not hold all of the credit extended to the
underlying borrower or issuer under the relevant underlying loan documents or
other agreements, ensure that (1) all funds held by such Obligor in such
capacity as agent or administrative agent are segregated from all other funds of
such Obligor and clearly identified as being held in an agency capacity (an
“Agency Account”); (2) all amounts owing on account of such Bank Loan or
Portfolio Investment by the underlying borrower or other obligated party are
remitted by such borrower or obligated party to either (A) such Agency Account
or (B) directly to an account in the name of the underlying lender to whom such
amounts are owed (for the avoidance of doubt, no funds representing amounts
owing to more than one underlying lender may be remitted to any single account
other than the Agency Account); and (3) within one (1) Business Day after
receipt of such funds, such Obligor acting in its capacity as agent or
administrative agent shall distribute any such funds belonging to any Obligor to
the Custodian Account (provided that if any distribution referred to in this
clause (c) is not permitted by applicable bankruptcy law to be made within such
one (1) Business Day period as a result of the bankruptcy of the underlying
borrower, such Obligor shall use commercially reasonable efforts to obtain
permission to make such distribution and shall make such distribution as soon as
legally permitted to do so);

(vi) cause the documentation relating to each Investment in Indebtedness
described in paragraph 1 of Schedule 1.01(d) to be delivered to the Custodian as
provided therein; and

(vii) in the case of any Portfolio Investment held by any SBIC Subsidiary,
including any cash collection related thereto, ensure that such Portfolio
Investment shall not be held in any Custodian Account, or any other account of
any Obligor.

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Notwithstanding anything to the contrary contained herein, if any instrument,
promissory note, agreement, document or certificate held by the Document
Custodian is destroyed or lost not as a result of any action of the Borrower,
then:

 

(i) in the case of any Investment in Indebtedness other than a Noteless Assigned
Loan, if such destroyed or lost document is an original promissory note
registered in the name of an Obligor, such original promissory note shall
constitute an “Undelivered Note” and the Borrower shall have up to twenty (20)
Business Days from the date when the Borrower has knowledge of such loss or
destruction to deliver to the Document Custodian a replacement promissory note
and comply with the requirements of paragraph (1)(c)(x) of Schedule 1.01(d);
 provided, that during such twenty (20) Business Day period the limitations
under paragraph (1)(a)(i) and (ii) of Schedule 1.01(d) shall apply; and

(ii) in the case of any Noteless Assigned Loans, if such destroyed instrument or
document is an original transfer document or instrument relating to such
Noteless Assigned Loan, the Borrower shall have up to twenty (20) Business Days
from the date when the Borrower has knowledge of such loss or destruction to
deliver to the Document Custodian a replacement instrument or document and
comply with the requirements of paragraph (1)(c)(x) of Schedule 1.01(d). 

Section 5.09. Use of Proceeds.  The Borrower will use the proceeds of the Loans
only for general corporate purposes of the Borrower and its Subsidiaries (other
than the SBIC Subsidiaries except as expressly permitted under Section 6.03(e))
in the ordinary course of business, including making distributions not
prohibited by this Agreement, making payments on Indebtedness of the Obligors to
the extent permitted under this Agreement and the acquisition and funding
(either directly or through one or more wholly-owned Subsidiary Guarantors) of
leveraged loans, mezzanine loans, high-yield securities, convertible securities,
preferred stock, common stock and other Portfolio 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.  On the first day (if any) an Obligor acquires any Margin Stock or at any
other time requested by the Administrative Agent or any Lender, the Borrower
shall furnish to the Administrative Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form G-3 or FR Form
U-1, as applicable, referred to in Regulation U.  Margin Stock shall be
purchased by the Obligors only with the proceeds of Indebtedness not directly or
indirectly secured by Margin Stock (within the meaning of Regulation U), or with
the proceeds of equity capital of the Borrower.  No Obligor will, to its actual
knowledge, directly or indirectly use the proceeds of the Loans or otherwise
make available such proceeds (I) to any Person for the purpose of financing the
activities of any Person currently (A) subject to, or the subject of, any
Sanctions or (B) organized or resident in a Sanctioned Country or (II) 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 any Anti-Corruption Laws.

 

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Section 5.10. Status of RIC and BDC.  The Borrower shall at all times maintain
its status as a “business development company” under the Investment Company Act
and as a RIC under the Code.  The Borrower shall remain an internally managed
business development company and shall not submit any vote to its shareholder to
approve any advisory agreement or contract.

 

Section 5.11. Investment Policies.  The Borrower shall at all times be in
compliance in all material respects with its Investment Policies, as amended by
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 Eligible Portfolio Investment to an Industry
Classification Group as reasonably determined by the Borrower.  To the extent
that the Borrower reasonably determines that any Eligible Portfolio Investment
is not adequately correlated with the risks of other Eligible Portfolio
Investments in an Industry Classification Group, such Eligible Portfolio
Investment may be assigned by the Borrower to an Industry Classification Group
that is more closely correlated to such Eligible Portfolio Investment. 

(b) Portfolio Valuation Etc.

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

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

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

(x)in the case of Bank Loans, the average of the recent bid prices as determined
by two Approved Dealers selected by the Borrower or

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an Approved Pricing Service which makes reference to at least two Approved
Dealers with respect to such Bank Loans,

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

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

(B)Unquoted Investments External Review.  With respect to Eligible Portfolio
Investments for which market quotations are not readily available (“Unquoted
Investments”):

(x)Commencing with the quarter ending September 30, 2016 and for each fiscal
quarter thereafter (or such other dates as are reasonably agreed by the Borrower
and the Administrative Agent (provided that such testing dates shall occur not
less than quarterly), each a “Valuation Testing Date”), the Administrative Agent
through an Independent Valuation Provider will, solely for the purposes of
determining the Borrowing Base, test the values as of such Valuation Testing
Date of those Unquoted Investments that are Portfolio Investments included in
the Borrowing Base selected by the Administrative Agent (such selected assets,
the “IVP Tested Assets” and such value, the “IVP External Unquoted Value”);
provided that the fair value of such Portfolio Investments tested by the
Independent Valuation Provider as of any Valuation Testing Date shall be
approximately 25% (but in no event shall exceed 30%) of the aggregate value of
the Unquoted Investments in the Borrowing Base (the determination of fair value
for such percentage thresholds shall be based off of the last determination of
value of the Portfolio Investments pursuant to this Section 5.12 and, for the
avoidance of doubt, in the case of any Unquoted Investments acquired during the
calendar quarter, the value shall be as determined pursuant to clause (E)(z)(2)
below); provided, further that the Administrative Agent shall provide written
notice to the Borrower, setting forth a description of which Unquoted
Investments shall be IVP Tested Assets as of such Valuation Testing Date, not
later than 15 days prior to the Valuation Testing Date (or such later date as
agreed to between the Administrative Agent and the Borrower).  Each such
valuation report shall also include the information required to comply with
clause (ii) of paragraph 7 and paragraph 22 of Schedule 1.01(d) for an IVP
Tested Asset (to the extent such provisions are applicable).

(y)With respect toThe Borrower shall value all Unquoted Investments that are not
IVP Tested Assets as of such Valuation Testing Date (the “Borrower Tested
Assets”), the Borrower shall requestin a manner consistent with its “Valuation
Policy”, as amended by Permitted Policy Amendments, and use an Approved
Third-Party

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

 

Appraiser to assist the Board of Directors of the Borrower in determining the
fair market value of the remainingat least 35% of the aggregate value of the
Unquoted Investments, as of each Valuation Testing Date  ( in the Borrowing Base
(such selected assets, the “Borrower Tested Assets”, and such value, the
“Borrower External Unquoted Value”), and to provide for which the determination
of fair value for such 35% threshold shall be based off of the last
determination of the value of the Portfolio Investments as of each Valuation
Testing Date, such assistance each quarter to include providing the Board of
Directors (with a copy to the Administrative Agent) with a written independent
valuation report as part of that assistance each quarter;  provided, however,
that notwithstanding the foregoing, the Board of Directors of the Borrower may,
without the assistance of an Approved Third-Party Appraiser, determine the fair
value of any Unquoted Investment with a fair value that is less than $4,000,000
so long as the aggregate Value of all such Unquoted Investments so determined
does not at any time exceed 10% of the aggregate Borrowing Base (the “No
External Review Assets”). Theanything to the contrary contained herein, the fair
market value of any Portfolio Investment (other than any No External Review
Assets, but only to the extent that the aggregate Value of all such assets that
have been determined without the assistance of any Approved Third-Party
Appraiser is less than 10% of the aggregate Borrowing Base) that has been
determined without the assistance ofthat has not been valued by an Independent
Valuation Provider or an Approved Third-Party Appraiser as at the last day of
any fiscal quarterfor more than three fiscal quarters shall be deemed to be zero
as at the last day of the immediately succeeding fiscal quarter (but effective
upon the date upon which the Borrowing Base Certificate for such last day is
required to be delivered) ifzero until such asset is valued by an Independent
Valuation Provider or an Approved Third-Party Appraiser has not assisted the
Board of Directors of the Borrower in determining the fair market value of such
Portfolio Investments, as at such date.  Each such valuation report shall also
include the information required to comply with clause (ii) of paragraph 7 and
paragraph 22 of Schedule 1.01(d).    

(z)The Administrative Agent (on its own initiative or upon the request of the
holders of a majority of the outstanding Loans) shall have sole and absolute
discretion exercised in good faith to reduce  the value of any Eligible
Portfolio Investment included in the Borrowing Base that are not IVP Tested
Assets, or to reject Collateral from inclusion in the Borrowing Base that are
not IVP Tested Assets (the “Revalue Right”); provided that the exercise of
Administrative Agent’s Revalue Right shall not result in more than a 10%
aggregate reduction in the Borrowing Base in any fiscal quarter of the Borrower.

(C)Internal Review.  The Borrower shall conduct internal reviews to determine
the value of all Eligible Portfolio Investments at least once each calendar week
which shall take into account any events of which the Borrower has

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

 

knowledge that adversely affect the value of any Eligible Portfolio Investment
(each such value, an “Internal Value”). 

(D)Value of Quoted Investments. Subject to Sections 5.12(b)(ii)(G) and
5.12(b)(iii), the “Value” of each Quoted Investment for all purposes of this
Agreement shall be the lowest of (1) the Internal Value of such Quoted
Investment as most recently determined by the Borrower pursuant to Section
5.12(b)(ii)(C), (2) the External Quoted Value of such Quoted Investment as most
recently determined pursuant to Section 5.12(b)(ii)(A) and (3) if such Quoted
Investment is a debt investment, the par or face value of the such Quoted
Investment.

(E)Value of Unquoted Investments. Subject to Sections 5.12(b)(ii)(G) and
5.12(b)(iii),  

(x) if the Internal Value of any Unquoted Investment as most recently determined
by the Borrower pursuant to Section 5.12(b)(ii)(C) falls below the range of the
IVP External Unquoted Value or the Borrower External Unquoted Value of such
Unquoted Investment as most recently determined pursuant to Section
5.12(b)(ii)(B), then the “Value” of such Unquoted Investment for all purposes of
this Agreement shall be deemed to be the lower of (i) the Internal Value and
(ii) if such Unquoted Investment is a debt investment, the par or face value of
such Unquoted Investment;

(y)(i) if the Internal Value of any Unquoted Investment as most recently
determined by the Borrower pursuant to Section 5.12(b)(ii)(C) falls above the
range of the Borrower External Unquoted Value of such Unquoted Investment as
most recently determined pursuant to Section 5.12(b)(ii)(B), then the “Value” of
such Unquoted Investment for all purposes of this Agreement shall be deemed to
be the lower of (i) the midpoint of the range of the Borrower External Unquoted
Value and (ii) if such Unquoted Investment is a debt investment, the par or face
value of such Unquoted Investment;

(ii) if the Internal Value of any Unquoted Investment as most recently
determined by the Borrower pursuant to Section 5.12(b)(ii)(C) falls more than 5%
above the midpoint of the range of the IVP External Unquoted Value of such
Unquoted Investment as most recently determined pursuant to Section
5.12(b)(ii)(B), then the “Value” of such Unquoted Investment for all purposes of
this Agreement shall be deemed to be the lower of (i) the midpoint of the range
of the IVP External Unquoted Value and (ii) if such Unquoted Investment is a
debt investment, the par or face value of such Unquoted Investment; and

(z)if the Internal Value of any Unquoted Investment as most recently determined
by the Borrower pursuant to Section 5.12(b)(ii)(C) is within the range of the
Borrower External Unquoted Value, or within or not more than 5% above the
midpoint of the range of the IVP External Unquoted Value, of such Unquoted
Investment as most recently determined pursuant to Section 5.12(b)(ii)(B), then
the “Value” of such Unquoted Investment for all purposes of

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

 

this Agreement shall be deemed to be the lower of (i) the Internal Value and
(ii) if such Unquoted Investment is a debt investment, the par or face value of
such Unquoted Investment;

except that:

(1)if the difference between the highest and lowest Borrower External Unquoted
Value in such range exceeds an amount equal to 6% (or, with respect to
determining the value of an Unquoted Investment that is Performing Common
Equity, 15%) of the midpoint of such range, the “Value” of such Unquoted
Investment for all purposes of this Agreement shall instead be deemed to be the
lowest of (i) the lowest Borrower External Unquoted Value in such range, (ii)
the Internal Value determined pursuant to Section 5.12(b)(ii)(C), and (iii) if
such Unquoted Investment is a debt investment, the par or face value  of such
Unquoted Investment; and

(2)if an External Unquoted Value with respect to an Unquoted Investment is
acquired during a fiscal quarterhas not been obtained, the “Value” of such
Unquoted Investment for all purposes of this Agreement shall be deemed to be
equal to the lowest of (x) the Internal Value of such Unquoted Investment as
determined by the Borrower pursuant to Section 5.12(b)(ii)(C), (y) the cost of
such Unquoted Investment until such time as the External Unquoted Value of such
Unquoted Investment is determined in accordance with Section 5.12(b)(ii)(B) as
at the Valuation Testing Date, and (z) if such Unquoted Investment is a debt
investment, the par or face value of such Unquoted Investment; and(3)the “Value”
of No External Review Assets for the sole purpose of this provision shall be the
lower of (x) the fair value as determined by the Board of Directors and (y) the
Internal Value.provided, however, that if an External Unquoted Value with
respect to an Unquoted Investment is not obtained as of the end of any three
consecutive fiscal quarters, the value of such Unquoted Investment shall be zero
until such asset is valued by an Independent Valuation Provider or Approved
Third-Party Appraiser.

(F)Actions Upon a Borrowing Base Deficiency. If, based upon such weekly internal
review, the Borrower determines that a Borrowing Base Deficiency exists or that
the Borrowing Base has declined by more than 15% from the Borrowing Base stated
in the Borrowing Base Certificate last delivered by the Borrower to the
Administrative Agent, then the Borrower shall, promptly and in any event within
two Business Days as provided in Section 5.01(e), deliver a Borrowing Base
Certificate reflecting the new amount of the Borrowing Base and shall take the
actions, and make the payments and prepayments (if any), all as more
specifically set forth in Section 2.08(b). 

(G)Failure to Determine Values.  If the Borrower shall fail to determine the
value of any Eligible Portfolio Investment as at any date pursuant to the

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

 

requirements (but subject to the exclusions) of the foregoing subclauses (A),
(B), (C), (D) or (E) (or if the Administrative Agent shall fail to determine the
value of any Eligible Portfolio Investment as described in the foregoing
subclause (B) as a result of any action, inaction or lack of cooperation of the
Borrower or any of its Affiliates), then the “Value” of such Eligible Portfolio
Investment as at such date shall be deemed to be zero.  Except as provided in
the immediately preceding sentence, if the Administrative Agent shall fail to
determine the value of any Eligible Portfolio Investment as at any date pursuant
to clause (B)(x), then the “Value” of such Eligible Portfolio Investment as at
such date (subject to clause (iii) below) shall be the lower of (x) the Internal
Value and (y) if such Unquoted Investment is a debt investment, the par or face
value of such Unquoted Investment; provided,  however, that if a Borrower
External Unquoted Value has been obtained with respect to such asset for the
quarterly period immediately preceding the current quarterly testing period,
then the “Value” of such Eligible Portfolio Investment will be determined as
provided in clause (E) above.

(H)Initial Value of Assets.  Notwithstanding anything to the contrary contained
herein, from the Effective Date until the date when valuation reports are
required to be delivered under Section 5.01(h) for the fiscal quarter ending
September 30, 2016, the Value of any Unquoted Investment included in the
Borrowing Base shall be the lower of (i) the Internal Value of such Unquoted
Investment determined by the Borrower pursuant to Section 5.12(b)(ii)(C) and
(ii) if such Unquoted Investment is a debt investment, the par or face value of
such Unquoted Investment.

(iii) Supplemental Testing of Values; Valuation Dispute
Resolutions.  Notwithstanding the foregoing, the Administrative Agent,
individually or at the request of the Required Lenders, shall at any time have
the right to request any Portfolio Investment (other than IVP Tested Assets as
of the most recent Valuation Testing Date) included in the Borrowing Base with a
value determined pursuant to Section 5.12(b)(ii) to be independently valued by
an Independent Valuation Provider.  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 (x) the value of any
Borrower Tested Asset determined pursuant to Section 5.12(b)(ii) is less than
the value determined by the Independent Valuation Provider pursuant to this
clause, then the value determined pursuant to Section 5.12(b)(ii) shall continue
to be used as the “Value” for purposes of this Agreement and (y) if the value of
any Borrower Tested Asset determined pursuant to Section 5.12(b)(ii) is greater
than the value determined by the Independent Valuation Provider and the
difference between such values is (1) less than or equal to 5% of the value
determined pursuant to Section 5.12(b)(ii), then the value determined pursuant
to Section 5.12(b)(ii) shall become the “Value” of such Portfolio Investment,
(2) greater than 5% and less than or equal to 20% of the value determined
pursuant to Section 5.12(b)(ii), then the average of the value determined
pursuant to Section 5.12(b)(ii) and the value determined by the Independent
Valuation Provider shall become the “Value” of such Portfolio Investment, and
(3) greater than 20% of the value determined pursuant to Section 5.12(b)(ii),
then either (i) the “Value” of such Portfolio Investment shall be the lesser of
the value determined pursuant to Section 5.12(b)(ii) and the value determined by
the

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

 

Independent Valuation Provider or (ii) if the Borrower so elects, the Borrower
and the Administrative Agent shall retain (at the Borrower’s sole cost and
expense) an additional Third-Party Appraiser and, upon completion of such
appraisal, the “Value” of such Portfolio Investment shall be the average of the
three valuations (with the average of the value determined pursuant to Section
5.12(b)(ii) and the value determined by the Independent Valuation Provider to be
used until the third value is obtained).  For purposes of this Section
5.12(b)(iii), the “Value” of any Portfolio Investment for which the Independent
Valuation Provider’s value is used shall be the midpoint of the range (if any)
determined by the Independent Valuation Provider.

(iv) Generally Applicable Valuation Provisions.

(A)The Independent Valuation Provider shall apply a recognized valuation
methodology that is commonly accepted in the Borrower’s industry for valuing
Portfolio Investments of the type being valued and held by the Obligors.  Other
procedures relating to the valuation will be reasonably agreed upon by the
Administrative Agent and the Borrower.

(B)All valuations shall be on a settlement date basis.  For the avoidance of
doubt, the value of any Portfolio Investments determined in accordance with any
provision of this Section 5.12 shall be the Value of such Portfolio Investment
for purposes of this Agreement until a new Value for such Portfolio Investment
is subsequently determined in good faith in accordance with this Section 5.12.

 

(C)The documented out-of-pocket costs of any valuation reasonably incurred by
the Administrative Agent under this Section 5.12 shall be at the expense of the
Borrower.

 

(D)The Administrative Agent shall provide a copy of the final results of any
valuation received by the Administrative Agent and performed by the Independent
Valuation Provider or the Approved Third-Party Appraiser to any Lender upon such
Lender’s request, except to the extent that such recipient has not executed and
delivered a non-reliance letter, confidentiality agreement or similar agreement,
in each case, requested or required by such Independent Valuation Provider or
Approved Third-Party Appraiser, as applicable.

 

(E)The foregoing valuation procedures shall only be required to be used for
purposes of calculating the Borrowing Base and shall not be required to be
utilized by the Borrower for any other purpose, including the delivery of
financial statements or valuations required under ASC 820 or the Investment
Company Act.

 

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

 

(c) Investment Company Diversification Requirements.  The Borrower (together
with its Subsidiaries to the extent required by the Investment Company Act) will
at all times comply with the portfolio diversification and similar requirements
set forth in the Investment Company Act applicable to business development
companies. The Borrower will at all times, subject to applicable grace periods
set forth in the Code, comply with the portfolio diversification and similar
requirements set forth in the Code applicable to RICs.

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 products obtained by multiplying (x) the Value of each Eligible
Portfolio Investment by (y) the applicable Advance Rate; provided that:

 

(a) the Advance Rate applicable to the aggregate Value of all Eligible Portfolio
Investments in their entirety shall be 0% at any time when the Borrowing Base is
composed entirely of Eligible Portfolio Investments issued by fewer than 15
different issuers;

(b) with respect to all Eligible Portfolio Investments issued by a single
issuer, the Advance Rate applicable to that portion of such Eligible Portfolio
Investments that exceeds 5.0% of the Obligors’ Net Worth shall be 0%; provided
that, with respect to each of the three (3) largest Portfolio Companies that
constitute Eligible Portfolio Investments (based on the fair value of the
Eligible Portfolio Investments), other than MRI to the extent the investment in
MRI constitutes an Eligible Portfolio Investment, only that portion of such
Eligible Portfolio Investments issued by such Portfolio Companies that exceeds
7.5% of the Obligors’ Net Worth shall have an Advance Rate of 0%;
provided further that, solely with respect to the investment in MRI (and solely
to the extent such investment constitutes an Eligible Portfolio Investment),
only that portion of such investment in MRI that exceeds 15% of the Obligors’
Net Worth shall have an Advance Rate of 0%;

(c) the portion of the Borrowing Base attributable to Eligible Portfolio
Investments that are not Cash, Cash Equivalents, Long-Term U.S. Government
Securities or Performing First Lien Bank Loans shall not exceed 70% of the
Borrowing Base, and the Borrowing Base shall be reduced by removing Eligible
Portfolio Investments therefrom (but not from the Collateral) to the extent such
portion would otherwise exceed 70% of the Borrowing Base;

(d) the portion of the Borrowing Base attributable to Eligible Portfolio
Investments that are not Cash, Cash Equivalents, Long-Term U.S. Government
Securities, Performing First Lien Bank Loans or Performing Last Out Loans shall
not exceed 50% of the Borrowing Base, and the Borrowing Base shall be reduced by
removing Eligible Portfolio Investments therefrom (but not from the Collateral)
to the extent such portion would otherwise exceed 50% of the Borrowing Base;

(e) the portion of the Borrowing Base attributable to Eligible Portfolio
Investments that are not Cash, Cash Equivalents, Long-Term U.S. Government
Securities, Performing First Lien Bank Loans, Performing Last Out Loans,
Performing Second Lien Bank Loans or Performing Covenant-Lite Loans shall not
exceed 35% of the Borrowing Base, and the Borrowing Base shall be reduced by
removing Eligible Portfolio Investments

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

 

therefrom (but not from the Collateral) to the extent such portion would
otherwise exceed 35% of the Borrowing Base;

(f) the portion of the Borrowing Base attributable to Eligible Portfolio
Investment that are No External Review Assets shall not exceed 10% of the
Borrowing Base, and the Borrowing Base shall be reduced by removing Eligible
Portfolio Investments therefrom (but not from the Collateral) to the extent such
portion would otherwise exceed 10% of the Borrowing Base; [Reserved];

(g) if at any time the Weighted Average Leverage Ratio is greater than 4.75, the
Borrowing Base shall be reduced by removing Debt Eligible Portfolio Investments
therefrom (but not from the Collateral) to the extent necessary to cause the
Weighted Average Leverage Ratio to be no greater than 4.75 (subject to all other
constraints, limitations and restrictions set forth herein); provided, that LTV
Transactions may be excluded from such calculations;

(h) the portion of the Borrowing Base attributable to Eligible Portfolio
Investments in each of the Industry Classification Groups that are part of the
Two Largest Industry Classification Groups shall, in each case, not exceed 20%
of the Borrowing Base, and the Borrowing Base shall be reduced by removing
Eligible Portfolio Investments therefrom (but not from the Collateral) to the
extent such portion would otherwise exceed 20% of the Borrowing Base;

(i) the portion of the Borrowing Base attributable to Eligible Portfolio
Investments in any single Industry Classification Group (other than each of the
Industry Classification Groups that are part of the Two Largest Industry
Classification Groups) shall not exceed 15% of the Borrowing Base, and the
Borrowing Base shall be reduced by removing Eligible Portfolio Investments
therefrom (but not from the Collateral) to the extent such portion would
otherwise exceed 15% of the Borrowing Base;

(j) if at any time the weighted average maturity of all Debt Eligible Portfolio
Investments (based on the fair value of such Eligible Portfolio Investments to
the extent included in the Borrowing Base) exceeds 6.25 years, the Borrowing
Base shall be reduced by removing Debt Eligible Portfolio Investments therefrom
(but not from the Collateral) to the extent necessary to cause the weighted
average maturity of all Debt Eligible Portfolio Investments included in the
Borrowing Base to be no greater than 6.25 years (subject to all other
constraints, limitations and restrictions set forth herein);

(k) the portion of the Borrowing Base attributable to Debt Eligible Portfolio
Investments with a maturity greater than 7 years shall not exceed 15% of the
Borrowing Base, and the Borrowing Base shall be reduced by removing Eligible
Portfolio Investments therefrom (but not from the Collateral) to the extent such
portion would otherwise exceed 15% of the Borrowing Base;

(l) the portion of the Borrowing Base attributable to Eligible Portfolio
Investments issued by one or more Portfolio Companies with a trailing
twelve-month total debt to EBITDA ratio of greater than 6.00 to 1.00 shall not
exceed 15% of the Borrowing

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

 

Base, and the Borrowing Base shall be reduced by removing Eligible Portfolio
Investments therefrom (but not from the Collateral) to the extent such portion
would otherwise exceed 15% of the Borrowing Base; provided, that LTV
Transactions may be excluded from such calculations;

(m) the portion of the Borrowing Base attributable to PIK Obligations and DIP
Loans shall not exceed 10% of the Borrowing Base, and the Borrowing Base shall
be reduced by removing Eligible Portfolio Investments therefrom (but not from
the Collateral) to the extent such portion would otherwise exceed 10% of the
Borrowing Base;

(n) if at any time the Weighted Average Fixed Coupon (after giving effect to any
Hedging Agreement) is less than the greater of (i) 8% and (ii) the one-month
LIBO Rate plus 4.5%, the Borrowing Base shall be reduced by removing Debt
Eligible Portfolio Investments therefrom (but not from the Collateral) to the
extent necessary to cause the Weighted Average Fixed Coupon to be at least equal
to the greater of (x) 8% and (y) the one-month LIBO Rate plus 4.5% (subject to
all other constraints, limitations and restrictions set forth herein);

(o) if at any time the Weighted Average Floating Spread (after giving effect to
any Hedging Agreement) is less than 4.5%, the Borrowing Base shall be reduced by
removing Debt Eligible Portfolio Investments therefrom (but not from the
Collateral) to the extent necessary to cause the Weighted Average Floating
Spread to be at least 4.5% (subject to all other constraints, limitations and
restrictions set forth herein);

(p) the portion of the Borrowing Base attributable to Eligible Portfolio
Investments that are Affiliate Investments (other than in MRI to the extent such
investment constitutes an Eligible Portfolio Investment) shall not exceed 20% of
the Borrowing Base, and the Borrowing Base shall be reduced by removing
Affiliate Investments, other than in MRI to the extent such investment
constitutes an Eligible Portfolio Investment, therefrom (but not from the
Collateral) to the extent such portion would otherwise exceed 20% of the
Borrowing Base; and

(q) no portion of the Borrowing Base shall be attributable to (a) any (i) Equity
Interests (other than of MRI to the extent the investment in MRI constitutes an
Eligible Portfolio Investment), (ii) warrants, options or other rights for the
purchase or acquisition of Equity Interests, (iii) any Investment in debt
Securities that is convertible into or exchangeable for shares of Equity
Interests, (b) any Structured Finance Obligation or an investment in any Third
Party Finance Companies or (c) investment in a joint venture or other Person
that is in the principal business of making debt or equity investments in other
Persons;  

(r) the portion of the Borrowing Base attributable to Foreign Eligible Portfolio
Investments shall not exceed 10% of the Borrowing Base, and the Borrowing Base
shall be reduced by removing Eligible Portfolio Investments therefrom (but not
from the Collateral) to the extent such portion would otherwise exceed 10% of
the Borrowing Base; and

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

 

(s) the portion of the Borrowing Base attributable to LTV Transactions shall not
exceed 10% of the Borrowing Base, and the Borrowing Base shall be reduced by
removing Eligible Portfolio Investments therefrom (but not from the Collateral)
to the extent such portion would otherwise exceed 10% of the Borrowing Base; and

(t) the portion of the Borrowing Base attributable to Debt Eligible Portfolio
Investments that are not Defaulted Obligations pursuant to clause (a)(v) of the
definition thereof, but as to which the Borrower has delivered written notice to
the Portfolio Company declaring such Indebtedness in default and such default
has not been remedied, cured or waived, shall not exceed 20% of the Borrowing
Base, and the Borrowing Base shall be reduced by removing Eligible Portfolio
Investments therefrom (but not from the Collateral) to the extent such portion
would otherwise exceed 20% of the Borrowing Base.

For all purposes of this Section 5.13, all issuers of Eligible Portfolio
Investments that are Affiliates of one another shall be treated as a single
issuer (unless such issuers are Affiliates of one another solely because they
are under the common Control of the same private equity sponsor or similar
sponsor).  For the avoidance of doubt, no Portfolio Investment shall be an
Eligible Portfolio Investment unless, among the other requirements set forth in
this Agreement, (i) such Investment is subject only to Eligible Liens and (ii)
such Investment is Transferable.  In addition, as used herein, the following
terms have the following meanings:

“Advance Rate” means, as to any Eligible Portfolio Investment and subject to
adjustment as provided above, the following percentages with respect to such
Eligible Portfolio Investment:

 

Eligible Portfolio Investment

Unquoted

Quoted

Cash and Cash Equivalents (including Short-Term U.S. Government Securities)

n/a

100%

Long-Term U.S. Government Securities

n/a

85%

Performing First Lien Bank Loans

6065%

7075%

Performing Last Out Loans

55%

65%

Performing Second Lien Bank Loans

50%

60%

Performing High Yield Securities

45%

55%

Performing Mezzanine Investments and Performing Covenant-Lite Loans

40%

50%

Performing PIK Obligations and Performing DIP Loans

35%

40%

Performing Common Equity of MRI

25%

30%

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“Approved Foreign Currency” means Canadian Dollars, Euro, Great British Pound
Sterling and any other currency approved from time to time by the Administrative
Agent in its reasonable discretion.

 

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

 

“Cash” has the meaning assigned to such term in Section 1.01 of this Agreement.

“Cash Equivalents” has the meaning assigned to such term in Section 1.01 of this
Agreement.

 

“Covenant-Lite Loan” means a Bank Loan that does not require the Portfolio
Company thereunder to comply with at least one financial covenant (including any
covenant relating to a borrowing base, asset valuation or similar asset-based
requirement), in each case, regardless of whether compliance with one or more
incurrence covenants is otherwise required by such Bank Loan.

 

“Debt Eligible Portfolio Investment” means an Eligible Portfolio Investment that
is an Investment in Indebtedness.

 

“Defaulted Obligation” means (a) any Investment in Indebtedness (i) as to which,
(x) a default as to the payment of principal and/or interest has occurred and is
continuing for a period of thirty two (32) consecutive days with respect to such
Indebtedness (without regard to any grace period applicable thereto, or waiver
thereof) or (y) a default not set forth in clause (x) has occurred and the
holders of such Indebtedness have accelerated all or a portion of the principal
amount thereof as a result of such default; (ii) as to which a default as to the
payment of principal and/or interest has occurred and is continuing on another
material debt obligation of the Portfolio Company under such Indebtedness which
is senior or pari passu in right of payment to such Indebtedness; (iii) as to
which the Portfolio Company under such Indebtedness or others have (x) engaged
in an out-of-court restructuring process (including through any provision of the
Uniform Commercial Code or other law) in the past 180 days or (y) instituted
proceedings to have such Portfolio Company adjudicated bankrupt or insolvent or
placed into receivership and such proceedings have not been stayed or dismissed
or such Portfolio Company has filed for

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

 

protection under Chapter 11 of the United States Bankruptcy Code (unless, in the
case of clause (ii) or (iii), such Indebtedness is a DIP Loan, in which case it
shall not be deemed to be a Defaulted Obligation under such clause); (iv) as to
which a default rate of interest has been and continues to be charged for more
than 120 consecutive days, or foreclosure on collateral for such Indebtedness
has been commenced and is being pursued by or on behalf of the holders thereof;
or (v) as to which the Borrower has delivered written notice to the Portfolio
Company declaring such Indebtedness in default orand such default has not been
remedied, cured or waived within 90 days after delivery of such notice; or (vi)
as to which the Borrower otherwise exercises significant remedies following a
default; and (b) stock in respect of which (x) the issuer (x) has failed to meet
any scheduled redemption obligations or pay its latest declared cash dividend
with respect to such stock or any other class of stock after the expiration of
any applicable grace period or (y) any outstanding indebtedness of the issuer of
such stock would satisfy clause (a) above if such indebtedness was an Investment
in Indebtedness (or if any agent or lender with respect to any indebtedness of
the issuer of such stock has delivered written notice declaring such
indebtedness in default or as to which any such agent or lender has exercised
significant remedies following a default).

 

“DIP Loan” means a Bank Loan, whether revolving or term, that is originated
after the commencement of a case under Chapter 11 of the Bankruptcy Code by
a  Portfolio Company, which is a debtor in possession as described in Section
1107 of the Bankruptcy Code or a debtor as defined in Section 101(13) of the
Bankruptcy Code in such case (a “Debtor”) organized under the laws of the United
States or any state therein and domiciled in the United States, which satisfies
the following criteria:  (a) the DIP Loan is duly authorized by a final order of
the applicable bankruptcy court or federal district court under the provisions
of subsection (b), (c) or (d) of 11 U.S.C. Section 364; (b) the Debtor’s
bankruptcy case is still pending as a case under the provisions of Chapter 11 of
Title 11 of the Bankruptcy Code and has not been dismissed or converted to a
case under the provisions of Chapter 7 of Title 11 of the Bankruptcy Code; (c)
the Debtor’s obligations under such loan have not been (i) disallowed, in whole
or in part, or (ii) subordinated, in whole or in part, to the claims or
interests of any other Person under the provisions of 11 U.S.C. Section 510; (d)
the DIP Loan is secured and the Liens granted by the applicable bankruptcy court
or federal district court in relation to the Loan have not been subordinated or
junior to, or pari passu with, in whole or in part, to the Liens of any other
lender under the provisions of 11 U.S.C. Section 364(d) or otherwise; (e) the
Debtor is not in default on its obligations under the loan; (f) neither the
Debtor nor any party in interest has filed a Chapter 11 plan with the applicable
federal bankruptcy or district court that, upon confirmation, would (i) disallow
or subordinate the loan, in whole or in part, (ii) subordinate, in whole or in
part, any Lien granted in connection with such loan, (iii) fail to provide for
the repayment, in full and in cash, of the loan upon the effective date of such
plan or (iv) otherwise impair, in any manner, the claim evidenced by the loan;
(g) the DIP Loan is documented in a form that is commercially reasonable; (h)
the DIP Loan shall not provide for more than 50% (or a higher percentage with
the consent of the Required Lenders) of the proceeds of such loan to be used to
repay prepetition obligations owing to all or some of the same lender(s) in a
“roll-up” or similar transaction; (i) no portion of the DIP Loan is payable in
consideration other than cash; and (j) no portion of the DIP Loan has been
credit bid under Section

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363(k) of the Bankruptcy Code or otherwise.  For the purposes of this
definition, an order is a “final order” if the applicable period for filing a
motion to reconsider or notice of appeal in respect of a permanent order
authorizing the Debtor to obtain credit has lapsed and no such motion or notice
has been filed with the applicable bankruptcy court or federal district court or
the clerk thereof.

 

“EBITDA” means the consolidated net income of the applicable Person (excluding
extraordinary gains and extraordinary losses (to the extent excluded in the
definition of “EBITDA” in the relevant agreement relating to the applicable
Eligible Portfolio Investment)) for the relevant period plus, without
duplication, the following to the extent deducted in calculating such
consolidated net income in the relevant agreement relating to the applicable
Eligible Portfolio Investment for such period: (i) consolidated interest charges
for such period, (ii) the provision for Federal, state, local and foreign income
taxes payable for such period, (iii) depreciation and amortization expense for
such period, and (iv) such other adjustments included in the definition of
“EBITDA” (or similar defined term used for the purposes contemplated herein) in
the relevant agreement relating to the applicable Eligible Portfolio Investment,
provided that such adjustments are usual and customary and substantially
comparable to market terms for substantially similar debt of other similarly
situated borrowers at the time such relevant agreements are entered into as
reasonably determined in good faith by the Borrower.

 

“Eligible Liens” has the meaning assigned to such term in Section 1.01 of this
Agreement.

 

“First Lien Bank Loan” means a Bank Loan that is entitled to the benefit of a
first lien and first priority perfected security interest on all or
substantially all of the assets of the respective borrower and
guarantors  obligated in respect thereof, and which has the most senior
pre-petition priority in any bankruptcy, reorganization, arrangement,
insolvency, or liquidation proceedings in such collateral; provided, however,
that, in the case of accounts receivable and inventory (and the proceeds
thereof), such lien and security interest may be second in priority to a
Permitted Prior Working Capital Lien; and further provided that any portion (and
only such portion) of such a Bank Loan which has a total debt to EBITDA ratio
above 4.00 to 1.00 will be deemed to be a Second Lien Bank Loan. For the
avoidance of doubt, in no event shall a First Lien Bank Loan include a Last Out
Loan.

 

“Fixed Rate Portfolio Investment” means a debt Eligible Portfolio Investment
that bears interest at a fixed rate.

“Floating Rate Portfolio Investment” means a debt Eligible Portfolio Investment
that bears interest at a floating rate.

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“Foreign Eligible Portfolio Investments” means Eligible Portfolio Investments
with respect to which any or all of the following is true: (i) such Eligible
Portfolio Investment is denominated and payable only in the currency of a
Permitted Foreign Jurisdiction, (ii) the issuer of such Eligible Portfolio
Investment is organized under the laws of a Permitted Foreign Jurisdiction,
(iii) the issuer of such Eligible Portfolio Investment is domiciled in a
Permitted Foreign Jurisdiction, (iv) the principal operations and property or
any other assets of the issuer of such Eligible Portfolio Investment pledged as
collateral are located in a Permitted Foreign Jurisdiction, or (v) the only
place of payment of such loans is a Permitted Foreign Jurisdiction.

“High Yield Securities” means debt Securities, 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) and (c) that are not Cash Equivalents, Mezzanine Investments
(described under clause (i) of the definition thereof) or Bank Loans.

 

“Last Out Loan” shall mean, with respect to any Bank Loan that is a term loan
structured in a first out tranche and a last out tranche (with the first out
tranche entitled to a lower interest rate but priority with respect to
payments), that portion of such Bank Loan that is the last out tranche; provided
that:

 

(a) such last out tranche is entitled (along with the first out tranche) to the
benefit of a first lien and first priority perfected security interest on all or
substantially all of the assets of the respective borrower and guarantors
obligated in respect thereof, and which has the most senior pre-petition
priority in any bankruptcy, reorganization, arrangement, insolvency, or
liquidation proceedings;

(b) the ratio of (x) the amount of the first out tranche to (y) EBITDA of the
underlying obligor does not at any time exceed 2.00 to 1.00;

 

(c) such last out tranche (i) gives the holders of such last out tranche full
enforcement rights during the existence of an event of default (subject to
customary exceptions, including standstill periods and if the holders of the
first out tranche have previously exercised enforcement rights), (ii) shall have
the same maturity date as the first out tranche, (iii) is entitled to the same
representations, covenants and events of default as the holders of the first out
tranche (subject to customary exceptions), and (iv) provides the holders
of  such last out tranche with customary protections (including consent rights
with respect to (1) any increase of the principal balance of the first out
tranche, (2) any increase of the margins (other than as a result of the
imposition of default interest) applicable to the interest rates with respect to
the first out tranche,  (3) any reduction of the final maturity of the first out
tranche, and (4) amending or waiving any provision in the underlying loan
documents that is specific to the holders of such last out tranche); and

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(d) such first out tranche is not subject to multiple drawings (unless, at the
time of such drawing and after giving effect thereto, the ratio referenced in
clause (b) above is not exceeded).

 

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

 

“LTV Transaction” means any transaction that (i) does not include a financial
covenant based on debt to EBITDA, debt to EBIT or a similar multiple of debt to
operating cash flow, (ii) is not a Covenant-Lite Loan, and (iii) is designated
as an LTV Transaction by the Borrower at the time of the initial investment.

“Mezzanine Investments” means (i) debt Securities (including convertible debt
Securities (other than the “in-the-money” equity component thereof)) (a) issued
by public or private Portfolio Companies, (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
Portfolio Company and (ii) a Bank Loan that is not a First Lien Bank Loan, a
Second Lien Bank Loan, High Yield Security, Last Out Loan or a Covenant-Lite
Loan.

“Noteless Assigned Loan” means a Bank Loan with respect to which: (a) the
underlying documentation does not require the underlying borrower to execute and
deliver a promissory note to evidence the indebtedness created under such Bank
Loan; (b) neither the Borrower nor any of its Affiliates was an agent with
respect to such Bank Loan at the time of origination; and (c) the applicable
Obligor has affirmatively requested (or in the case of a Bank Loan acquired by
an Obligor prior to the Effective Date, requested prior to the 15th Business Day
following the Effective Date) a promissory note from the underlying agent and
borrower and has used all commercially reasonable efforts to obtain such
promissory note but has been unable to obtain a promissory note from the
underlying borrower (but only for so long as the applicable Obligor has not
received such a promissory note); provided that, any portion of the Borrowing
Base that consists of an Eligible Portfolio Investment that is a Noteless
Assigned Loan shall be identified as such in any Borrowing Base Certificate.

 

“Performing” means with respect to any Eligible Portfolio Investment, such
Eligible Portfolio Investment is not a Defaulted Obligation and does not
represent debt or Equity Interests of an issuer that has issued a Defaulted
Obligation.

 

“Performing Common Equity” means Equity Interests (other than Preferred Stock)
and warrants of a Portfolio Company all of whose outstanding debt is Performing.

 

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“Performing Covenant-Lite Loans” means funded Covenant-Lite Loans that (a) are
not PIK Obligations and (b) are Performing.

 

“Performing DIP Loans” means funded DIP Loans that (a) are not PIK Obligations
and (b) are not Defaulted Obligations.

 

“Performing First Lien Bank Loans” means funded First Lien Bank Loans that (a)
are not PIK Obligations, DIP Loans, Covenant-Lite Loans or Second Lien Bank
Loans and (b) are Performing.

 

“Performing High Yield Securities” means funded High Yield Securities that (a)
are not PIK Obligations and (b) are Performing.

 

“Performing Last Out Loans” means funded Last Out Loans that (a) are not PIK
Obligations, DIP Loans, Covenant-Lite Loans or Second Lien Bank Loans and (b)
are Performing.

 

“Performing Mezzanine Investments” means funded Mezzanine Investments that (a)
are not PIK Obligations and (b) are Performing.

 

“Performing Second Lien Bank Loans” means funded Second Lien Bank Loans that (a)
are not PIK Obligations, DIP Loans, Covenant-Lite Loans or Last Out Loans and
(b) are Performing.

 

“Permitted Foreign Jurisdiction” means Canada, the United Kingdom, Guernsey,
Luxembourg and other countries and jurisdictions to be agreed upon.

 

“Permitted Prior Working Capital Lien” means, with respect to a Portfolio
Company that is a borrower under a Bank Loan, a security interest to secure a
working capital facility for such Portfolio Company in the accounts receivable
and inventory (and the proceeds thereof) of such Portfolio Company and any of
its subsidiaries that are guarantors of such working capital facility; provided
that (i) such Bank Loan has a second priority lien on such accounts receivable
and inventory (and the proceeds thereof), (ii) such working capital facility is
not secured by any other assets (other than a second priority lien, subject to
the first priority lien of the Bank Loan, on any other assets) and does not
benefit from any standstill rights or other agreements

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(other than customary rights) with respect to any other assets and (iii) the
maximum principal amount of such working capital facility is not at any time
greater than 15% of the aggregate enterprise value of the Portfolio Company (as
determined in accordance with the valuation methodology for determining the
enterprise value of the applicable Portfolio Company as established by an
Approved Third-Party Appraiser, Independent Valuation Provider or, with respect
to all other investments, in a commercially reasonable manner determined by the
Board of Directors of the general partners of the Borrower).

 

“PIK Obligation” means an obligation that provides that any portion of the
interest accrued for a specified period of time or until the maturity thereof
is, or at the option of the obligor may be, added to the principal balance of
such obligation or otherwise deferred and accrued rather than being paid in
cash, provided that any such obligation shall not constitute a PIK Obligation if
it (i) is a fixed rate obligation and requires payment of interest in cash on an
at least semi-annual basis at a rate of not less than 8% per annum or (ii) is
not a fixed rate obligation and requires payment of interest in cash on an at
least semi-annual basis at a rate of not less than 4.5% per annum in excess of
the applicable index.

 

“Preferred Stock,” as applied to the Equity Interests of any Person, means
Equity Interests 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 Equity Interests of
such Person, and shall include, without limitation, cumulative preferred,
non-cumulative preferred, participating preferred and convertible preferred
Equity Interests.

 

“Restructured Investment” means, as of any date of determination, (a) any
Portfolio Investment that has been a Defaulted Obligation within the past six
months, or (b) any Portfolio Investment that has in the past six months been on
cash non-accrual, or (c) any Portfolio Investment that has in the past six
months been amended or subject to a deferral or waiver if both (i) the effect of
such amendment, deferral or waiver is either, among other things, to (1) change
the amount of previously required scheduled debt amortization (other than by
reason of repayment thereof) or (2) extend the tenor of previously required
scheduled debt amortization, in each case such that the remaining weighted
average life of such Portfolio Investment is extended by more than 20% and (ii)
the reason for such amendment, deferral or waiver is related to the
deterioration of the credit profile of the underlying borrower such that, in the
absence of such amendment, deferral or waiver, it is reasonably expected by the
Borrower that such underlying borrower either (x) will not be able to make any
such previously required scheduled debt amortization payment or (y) is
anticipated to incur a breach of a material financial covenant.  A DIP Loan
shall not be deemed to be a Restructured Investment, so long as it does not meet
the conditions of the definition of Restructured Investment.

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“Second Lien Bank Loan” means a Bank Loan (other than a First Lien Bank Loan and
a Last Out Loan) that is entitled to the benefit of a first and/or second lien
and first and/or second priority perfected security interest on all or
substantially all of the 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 three (3) months of the applicable date of determination.

 

“Spread” means, with respect to a Floating Rate Portfolio Investment, the cash
interest spread of such Floating Rate Portfolio Investment over the applicable
LIBO Rate; provided, that, in the case of any Floating Rate Portfolio Investment
that does not bear interest by reference to the LIBO Rate, “Spread” shall mean
the cash interest spread of such Floating Rate Portfolio Investment over the
LIBO Rate in effect as of the date of determination for deposits in Dollars for
a period of three (3) months.

 

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

 

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“Third Party Finance Company” means a Person that is (i) an operating company
with employees, officers and directors, and (ii) in the primary business of
originating loans or factoring or financing receivables, inventory or other
current assets.

 

“U.S. Government Securities” has the meaning assigned to such term in Section
1.01 of this Agreement.

 

“Value” means, with respect to any Eligible Portfolio Investment, the value
thereof determined for purposes of this Agreement in accordance with Section
5.12(b)(ii).

“Weighted Average Fixed Coupon” means, as of any date of determination, the
number, expressed as a percentage, obtained by summing the products obtained by
multiplying the cash interest coupon of each Fixed Rate Portfolio Investment
included in the Borrowing Base as of such date by the outstanding principal
balance of such Fixed Rate Portfolio Investment as of such date, dividing such
sum by the aggregate outstanding principal balance of all such Fixed Rate
Portfolio Investments and rounding up to the nearest 0.01%. For the purpose of
calculating the Weighted Average Fixed Coupon, all Fixed Rate Portfolio
Investments that are not currently paying cash interest shall have an interest
rate of 0%.

 

“Weighted Average Floating Spread” means, as of any date of determination, the
number, expressed as a percentage, obtained by summing the products obtained by
multiplying, in the case of each Floating Rate Portfolio Investment included in
the Borrowing Base, on an annualized basis, the Spread of such Floating Rate
Portfolio Investment, by the outstanding principal balance of such Floating Rate
Portfolio Investment as of such date and dividing such sum by the aggregate
outstanding principal balance of all such Floating Rate Portfolio Investments
and rounding the result up to the nearest 0.01%.

 

“Weighted Average Leverage Ratio” means, as of any date of determination, the
number obtained by summing the products obtained by multiplying, in the case of
each Debt Eligible Portfolio Investment included in the Borrowing Base, the
leverage ratio (the ratio of indebtedness for borrowed money to EBITDA,
expressed as a number) for the Portfolio Company of such Eligible Portfolio
Investment of all Indebtedness that has a ranking of payment or lien priority
senior to or pari passu with and including the tranche that includes the
Borrower's Eligible Portfolio Investment, by the fair value of such Eligible
Portfolio Investment as of such date and dividing such sum by the aggregate of
the fair values of all such Eligible Portfolio Investments and rounding the
result up to the nearest 0.01.

Section 5.14. Taxes.  Each of the Borrower and its Subsidiaries will timely file
or cause to be timely filed all U.S. federal, state and material local Tax
returns that are required to be filed by it and all other material Tax returns
that are required to be filed by it and

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will pay all Taxes for which it is directly or indirectly liable and any
assessments made against it or any of its property and all other Taxes, fees or
other charges imposed on it or any of its property by any Governmental
Authority, except Taxes that are being contested in good faith by appropriate
proceedings, and with respect to which reserves in conformity with GAAP are
provided on the books of the Borrower or its Subsidiaries, as the case may
be.  The charges, accruals and reserves on the books of the Borrower and any of
its Subsidiaries in respect of Taxes and other governmental charges will be
adequate in accordance with GAAP.

 

Section 5.15. Anti-Hoarding of Assets at Non-Pledged SBIC Subsidiaries.  If any
Non-Pledged SBIC Subsidiary is not prohibited by any law, rule or regulation or
by any contract or agreement relating to indebtedness from distributing all or
any portion of its assets to an Obligor, then such Non-Pledged SBIC Subsidiary
shall, if a Significant Unsecured Indebtedness Event has occurred and is
continuing, distribute to an Obligor the amount of assets held by such
Non-Pledged SBIC Subsidiary that such Non-Pledged SBIC Subsidiary is permitted
to distribute and that, in the good faith judgment of the Borrower, such
Non-Pledged SBIC Subsidiary does not reasonably expect to utilize, in the
ordinary course of business, to obtain or maintain a financing; provided,
further, however, that if a Significant Unsecured Indebtedness Event has
occurred and is continuing and the value of the assets owned by such Non-Pledged
SBIC Subsidiary significantly exceeds the amount of indebtedness of such
Non-Pledged SBIC Subsidiary, even if such Non-Pledged SBIC Subsidiary is
prohibited by any contract or agreement relating to indebtedness from
distributing all or any portion of its assets to an Obligor,  the Borrower shall
use its commercially reasonable efforts to take such action as is necessary to
cause such SBIC Subsidiary to become an Obligor or distribute assets to an
Obligor in an amount equal to the amount of assets held by such Non-Pledged SBIC
Subsidiary that, in the good faith judgment of the Borrower, such Non-Pledged
SBIC Subsidiary does not reasonably expect to utilize, in the ordinary course of
business, to obtain or maintain a financing.

 

Section 5.16. Post-Closing Matters.

 

(a) Within ten (10) Business Days after the Effective Date (or such longer
period approved by the Administrative Agent in its discretion), the
Administrative Agent shall have received copies of custody reports (including
(i) activity reports with respect to Cash and Cash Equivalents included in the
calculation of the Borrowing Base, (ii) an itemized list of each account and the
amounts therein with respect to Cash and Cash Equivalents included in the
calculation of the Borrowing Base and (iii) an itemized list of each Portfolio
Investment held in any Custodian Account owned by the Borrower or any
Subsidiary) reflecting all assets being held in any Custodian Account owned by
the Borrower or any of its Subsidiaries or otherwise subject to the Custody
Agreement or the Document Custody Agreement.

(b) To the extent not delivered on the Effective Date, within thirty (30) days
(or such longer period approved by the Administrative Agent in its discretion),
the Administrative Agent shall have received endorsements naming the Collateral
Agent, for the benefit of the Administrative Agent and the Lenders, as
additional insured and lender’s loss payee, as applicable, under all insurance
required to be maintained pursuant to the Loan Documents.

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Article VI

NEGATIVE COVENANTS

Until the Termination Date, the Borrower covenants and agrees with the Lenders
that:

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

 

(a) Indebtedness created hereunder or under any other Loan Document;

(b) (i) Unsecured Shorter-Term Indebtedness in an aggregate principal amount not
to exceed $5,000,000, so long as no Default or Event of Default exists at the
time of the incurrence, refinancing or replacement thereof (or immediately after
the incurrence, refinancing or replacement thereof), and (ii) Secured
Longer-Term Indebtedness, so long as (w) no Default or Event of Default exists
at the time of the incurrence, refinancing or replacement thereof (or
immediately after the incurrence, refinancing or replacement thereof), (x) prior
to and immediately after giving effect to the incurrence, refinancing or
replacement thereof, the Obligors’ Net Worth exceeds $225,000,000 and the
Borrower is in pro forma compliance with each of the covenants set forth in
Sections 6.07(a),  (b),  (d) and (e), and on the date of such incurrence,
refinancing or replacement the Borrower delivers to the Administrative Agent a
certificate of a Financial Officer to such effect, (y) prior to and immediately
after giving effect to the incurrence, refinancing or replacement thereof, the
Covered Debt Amount does not or would not exceed the Borrowing Base then in
effect and (z) on the date of the incurrence, refinancing or replacement
thereof, the Borrower delivers to the Administrative Agent and each Lender a
Borrowing Base Certificate as at such date demonstrating compliance with
subclause (y) after giving effect to such incurrence, refinancing or
replacement.  For purposes of preparing such Borrowing Base Certificate, (A) the
fair market value of Quoted Investments shall be the most recent quotation
available for such Eligible Portfolio Investment and (B) the fair market value
of Unquoted Investments shall be the Value set forth in the Borrowing Base
Certificate most recently delivered by the Borrower to the Administrative Agent
pursuant to Section 5.01(d) or if an Unquoted Investment is acquired after the
delivery of the Borrowing Base Certificate most recently delivered, then the
Value of such Unquoted Investment shall be the lower of the cost of such
Unquoted Investment and the Internal Value of such Unquoted Investment;
 provided, that the Borrower shall reduce the Value of any Eligible Portfolio
Investment referred to in this subclause (B) to the extent necessary to take
into account any events of which the Borrower has knowledge that adversely
affect the value of such Eligible Portfolio Investment;

(c) Unsecured Longer-Term Indebtedness, so long as (x) no Default or Event of
Default exists at the time of the incurrence, refinancing or replacement thereof
(or immediately after the incurrence, refinancing or replacement thereof) and
(y) prior to and immediately after giving effect to the incurrence, refinancing
or replacement thereof, the Borrower is in pro forma compliance with each of the
covenants set forth in Sections 6.07(a),  (b),  (d) and (e) and on the date of
such incurrence, refinancing or replacement the Borrower delivers to the
Administrative Agent a certificate of a Financial Officer to such effect;

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(d) Indebtedness of SBIC Subsidiaries; provided that (i) on the date that such
Indebtedness is incurred (for clarity, with respect to any and all revolving
loan facilities, term loan facilities, staged advance loan facilities or any
other credit facilities, “incurrence” shall be deemed to take place at the time
such facility is entered into, and not upon each borrowing thereunder), prior to
and immediately after giving effect to the incurrence thereof, the Borrower is
in pro forma compliance with each of the covenants set forth in Sections
6.07(a),  (b),  (d) and (e) and on the date of such incurrence Borrower delivers
to the Administrative Agent a certificate of a Financial Officer to such effect
and (ii) in the case of revolving loan facilities or staged advance loan
facilities, upon each borrowing thereunder, the Borrower is in pro forma
compliance with each of the covenants set forth in Sections 6.07(a),  (b),  (d)
and (e);  

(e) Other Permitted Indebtedness in an aggregate principal amount not to exceed
$5,000,000;

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

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

(h) obligations of the Borrower under a Permitted SBIC Guarantee;

(i) Indebtedness of the Borrower under any Hedging Agreements entered into in
the ordinary course of the Borrower’s business and not for speculative purposes,
in an aggregate amount not to exceed $10,000,000 at any time outstanding (for
clarity, the amount of any Indebtedness under any Hedging Agreement shall be the
amount such Obligor would be obligated for under such Hedging Agreement if such
Hedging Agreement were terminated at the time of determination);

(j) Indebtedness of the Borrower on account of the sale by the Borrower of the
first out tranche of any First Lien Bank Loan that arises solely as an
accounting matter under ASC 860; provided that such Indebtedness (i) is
non-recourse to the Borrower and its Subsidiaries and (ii) would not represent a
claim against the Borrower or any of its Subsidiaries in a bankruptcy,
insolvency or liquidation proceeding of the Borrower or its Subsidiaries, in
each case in excess of the amount sold or purportedly sold; and 

(k) 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.

Section 6.02. Liens.  The Borrower will not, nor will it permit any of its
Subsidiaries to, create, incur, assume or permit to exist any Lien on any
property or asset (including Equity Interests in any SBIC Subsidiary or any
other Subsidiary) 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 existing on the Effective
Date and set forth in Schedule 3.11(b),  provided that (i) no such Lien shall
extend to any other

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property or asset of the Borrower or any of its Subsidiaries, and (ii) any such
Lien shall secure only those obligations which it secures on the Effective Date
and extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof;

(b) Liens created pursuant to the Security Documents;

(c) Liens on assets owned by SBIC Subsidiaries;

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

(e) Permitted Liens;

(f) additional Liens securing Indebtedness not to exceed $3,000,000 in the
aggregate provided such Indebtedness is not otherwise prohibited under Section
6.01(e) of this Agreement; and

(g) Liens on Equity Interests in any SBIC Subsidiary created in favor of the
SBA.

Section 6.03. Fundamental Changes.  The Borrower will not, nor will it permit
any of its Subsidiaries (other than an SBIC Subsidiary) 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 its Subsidiaries (other than an SBIC Subsidiary)
to, acquire any business or property from, or capital stock of, or be a party to
any acquisition of, any Person, except for purchases or acquisitions of
Portfolio Investments and other assets in the normal course of the day-to-day
business activities of the Borrower and its Subsidiaries (other than an SBIC
Subsidiary) 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
its Subsidiaries (other than an SBIC Subsidiary) to, convey, sell, lease,
transfer or otherwise dispose of, in one transaction or a series of
transactions, any part of its assets (including Cash, Cash Equivalents and
Equity Interests), whether now owned or hereafter acquired, but excluding (x)
assets (including Cash and Cash Equivalents but excluding Portfolio Investments)
sold or disposed of in the ordinary course of business of the Borrower and its
Subsidiaries (including to make expenditures of cash in the normal course of the
day-to-day business activities of the Borrower and its Subsidiaries (other than
an SBIC Subsidiary)) and (y) subject to the provisions of clauses (d) and (e)
below, Portfolio Investments.

 

Notwithstanding the foregoing provisions of this Section:

(a) any Subsidiary 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 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 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 Portfolio
Investments (other than to an SBIC Subsidiary) so long as prior to and after
giving effect to such sale, transfer or other disposition (and any concurrent
acquisitions of Portfolio Investments or payment of outstanding Loans or Other
Covered Indebtedness) the Covered Debt Amount does not exceed the Borrowing
Base;

(e) the Obligors may sell, transfer or otherwise dispose of Portfolio
Investments (other than ownership interests in SBIC Subsidiaries), Cash and Cash
Equivalents to an SBIC Subsidiary so long as (i) prior to and immediately after
giving effect to such sale, transfer or other disposition (and any concurrent
acquisitions of Portfolio Investments or payment of outstanding Loans or Other
Covered Indebtedness) the Covered Debt Amount does not exceed the Borrowing Base
and no Default or Event of Default exists, and the Borrower delivers to the
Administrative Agent a certificate of a Financial Officer to such effect, (ii)
after giving effect to such sale, transfer or other disposition, either (x) the
amount by which the Borrowing Base exceeds the Covered Debt Amount immediately
prior to such sale, transfer or other disposition is not diminished as a result
of such sale, transfer or other disposition or (y) the Borrowing Base
immediately after giving effect to such sale, transfer or other disposition is
at least 120% of the Covered Debt Amount, (iii) if the aggregate amount of all
sales, transfers or other dispositions under this clause (e) made during the
term of this Agreement exceeds or will exceed, after giving effect to such sale,
transfer or other disposition, $40,000,000, prior to and after giving effect to
such sale, transfer or other disposition (and any concurrent acquisitions of
Portfolio Investments or payment of Loans or Other Covered Indebtedness), the
Obligors’ Net Worth exceeds $225,000,000 and (iv) if the sum of (x) all sales,
transfers or other dispositions under this clause (e) that occur after the
Revolver Termination Date and do not result in Net Asset Sale Proceeds for fair
value that are applied in accordance with Section 2.08(c)(i) and (y) all
Investments under Section 6.04(e) that occur after the Revolver Termination
Date, shall not exceed 20% of the Commitments on the Revolver Termination Date;

(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 or Event of
Default shall have occurred or be continuing;

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

(h) any Subsidiary of the Borrower may be liquidated or dissolved; provided that
(i) in connection with such liquidation or dissolution, any and all of the
assets of such Subsidiary shall be distributed or otherwise transferred to the
Borrower or any wholly owned

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Subsidiary Guarantor of the Borrower and (ii) the Borrower determines in good
faith that such liquidation is in the best interests of the Borrower and is not
materially disadvantageous to the Lenders.

Section 6.04. Investments.  The Borrower will not, nor will it permit any of its
Subsidiaries 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
business for financial planning and not for speculative purposes;

(d) Portfolio Investments by the Borrower and its Subsidiaries to the extent
such Portfolio Investments are permitted under the Investment Company Act (to
the extent such applicable Person is subject to the Investment Company Act) and
the Investment Policies (as amended by Permitted Policy Amendments); provided,
 however, that no Investment in any Joint Venture (other than the I-45 Entities,
the Investments in which are addressed in Section 6.04(i) below) shall be
permitted unless (i) immediately prior to, and immediately after giving effect
to such contribution, (A) no Default or Event of Default exists, (B) the
Obligors’ Net Worth exceeds $225,000,000 and the Borrower is in pro forma
compliance with each of the covenants set forth in Sections 6.07(a),  (b),  (d)
and (e) and (C) prior to and immediately after giving effect to the
contribution, the Covered Debt Amount does not or would not exceed the Borrowing
Base then in effect and (ii) on the date of such contribution, the Borrower
delivers to the Administrative Agent and each Lender (x) a Borrowing Base
Certificate as at such date demonstrating compliance with subclause (C) after
giving effect to such contribution and (y) a certification from a Financial
Officer certifying to subclauses (A) and (B);

(e) Equity Interests in (or capital contribution to) SBIC Subsidiaries to the
extent not prohibited by Section 6.03(e);

(f) Investments by any SBIC Subsidiary;

(g) Investments in Cash and Cash Equivalents;

(h) Investments described on Schedule 3.12(b) hereto;

(i) Investments in I-45 Entities; provided that, after the aggregate amount of
all contributions made by the Borrower or any of its Subsidiaries (whether
individually or collectively) to I-45 Entities exceeds or will exceed, after
giving effect to such contribution, $68,000,000, no Investment in any I-45
Entity shall be permitted unless (i) immediately prior to, and immediately after
giving effect to such contribution, (A) no Default or Event of Default exists,
(B) the Obligors’ Net Worth exceeds $225,000,000 and the Borrower is in pro
forma compliance with each of the covenants set forth in Sections 6.07(a),  (b),
 (d) and (e) and (C) prior to and immediately after giving effect to the
contribution, the Covered Debt Amount does not or would not exceed the Borrowing
Base then in effect and (ii) on the date of such contribution, the Borrower

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delivers to the Administrative Agent and each Lender (x) a Borrowing Base
Certificate as at such date demonstrating compliance with subclause (C) after
giving effect to such contribution and (y) a certification from a Financial
Officer certifying to subclauses (A) and (B); and

(j) additional Investments up to but not exceeding $5,000,000 in the aggregate
(for purposes of this clause (j), the aggregate amount of an Investment at any
time shall be deemed to be equal to (A) the aggregate amount of cash, together
with the aggregate fair market value of property loaned, advanced, contributed,
transferred or otherwise invested that gives rise to such Investment (calculated
at the time such Investment is made), minus (B) the aggregate amount of
dividends, distributions or other payments received in cash in respect of such
Investment; provided that in no event shall the aggregate amount of any
Investment be less than zero; and provided further that the amount of any
Investment shall not be reduced by reason of any write-off of such Investment,
nor increased by way of 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 its Subsidiaries (other than the SBIC Subsidiaries) to, declare or make,
or agree to pay or make, directly or indirectly, any Restricted Payment, except
that:

 

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

(b) the Borrower may declare and pay dividends and distributions in either case
in cash or other property (excluding for this purpose the Borrower’s common
stock) in or with respect to any taxable year of the Borrower (or any calendar
year, as relevant) in amounts not to exceed the higher of (x) the net investment
income of the Borrower for the applicable fiscal year determined in accordance
with GAAP and as specified in the annual financial statements most recently
delivered pursuant to Section 5.1(a) and (y) 110% (or 125% if (1) no Default or
Event of Default shall have occurred and be continuing and (2) the Covered Debt
Amount does not exceed 85% of the Borrowing Base calculated on a pro forma basis
after giving effect to any such dividends and distributions) of the amounts that
are required to be distributed to: (i) allow the Borrower to satisfy the minimum
distribution requirements imposed by Section 852(a) of the Code (or any
successor thereto) to maintain its eligibility to be taxed as a RIC for any such
taxable year, (ii) reduce to zero for any such taxable year its liability for
federal income taxes imposed on (y) its investment company taxable income
pursuant to Section 852(b)(1) of the Code (or any successor thereto), or (z) its
net capital gain pursuant to Section 852(b)(3) of the Code (or any successor
thereto), and (iii) reduce to zero its liability for federal excise taxes for
any such calendar year imposed pursuant to Section 4982 of the Code (or any
successor thereto) (such higher amount of (x) and (y), the “Required Payment
Amount”);

(c) the Subsidiaries of the Borrower may make Restricted Payments to the
Borrower or to any Subsidiary Guarantor;

(d) Obligors may make Restricted Payments to repurchase Equity Interests of the
Borrower from officers, directors and employees of the Borrower or any of its
Subsidiaries or their authorized representatives upon the death, disability or
termination of employment of such

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employees or termination of their seat on the Board of Directors of the Borrower
or any of its Subsidiaries; provided that (i) no Default or Event of Default
shall have occurred and be continuing or would result therefrom, (ii) such
Equity Interests are not registered on Form S-8 or other registration statement
or are not transferable under Rule 144 of the Securities Exchange Act of 1934,
and (iii) the aggregate amount of all repurchases in any calendar year shall not
exceed $500,000, with unused amounts in any calendar year being carried over to
succeeding calendar years subject to a maximum of $1,000,000 in any calendar
year; and

(e) the Borrower may make Restricted Payments during the Availability Period to
repurchase or redeem Equity Interests of the Borrower up to an aggregate amount
equal to $10,000,000 during such period, so long as on the date of such
Restricted Payment and after giving effect thereto:

(1)no Default or Event of Default shall have occurred and be continuing;

 

(2)prior to and immediately after giving effect to such Restricted Payment, the
Covered Debt Amount does not exceed 85% of the Borrowing Base calculated on a
pro forma basis after giving effect to any such Restricted Payment; and

 

(3)prior to and immediately after giving effect to such Restricted Payment, the
Borrower is in pro forma compliance with each of the covenants set forth in
Sections 6.07(a),  (b),  (d) and (e).

 

For the avoidance of doubt, the Borrower shall not declare any dividend to the
extent such declaration violates the provisions of the Investment Company Act
that are applicable to it.

Section 6.06. Certain Restrictions on Subsidiaries.  The Borrower will not
permit any of its Subsidiaries (other than SBIC 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 granting of Liens, the declaration or payment of
dividends, the making of loans, advances, guarantees or Investments or the sale,
assignment, transfer or other disposition of property, except for any
prohibitions or restraints contained in (i) any Indebtedness permitted under
Section 6.01(b) or (c), (ii) any Indebtedness permitted under Section 6.01(e)
secured by a Lien permitted under Section 6.02(f) provided that such
prohibitions and restraints are applicable by their terms only to the assets
that are subject to such Lien, (iii) any Indebtedness permitted under Section
6.01(f) or (g) secured by a Permitted Lien provided that such prohibitions and
restraints are applicable by their terms only to the assets that are subject to
such Lien and (iv) any agreement, instrument or other

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arrangement pertaining to any sale or other disposition of any asset permitted
by this Agreement so long as the applicable restrictions (i) only apply to such
assets and (ii) do not restrict prior to the consummation of such sale or
disposition the creation or existence of the Liens in favor of the Collateral
Agent pursuant to the Security Documents or otherwise required by this
Agreement, or the incurrence or payment of Indebtedness under this Agreement or
the ability of the Borrower and its Subsidiaries to perform any other obligation
under any of the Loan Documents.

 

Section 6.07. Certain Financial Covenants.

 

(a) Minimum Stockholders’ Equity.  After the Effective Date, theThe Borrower
will not permit Stockholders’ Equity as of the last day of any fiscal quarter of
the Borrower to be less than the greater of (i) 40% of the total assets of the
Borrower and its Subsidiaries as at the last day of such fiscal quarter
(determined on a consolidated basis, without duplication, in accordance with
GAAP) and (ii) the sum of (x) $200,000,000, plus (y) 65% of the aggregate net
proceeds of all sales of Equity Interests by the Borrower and its Subsidiaries
after the Effective Date (other than the proceeds of sales of Equity Interests
by and among the Borrower and its Subsidiaries).

(b) Asset Coverage Ratio.  After the Effective Date, theThe Borrower will not
permit the Asset Coverage Ratio to be less than 2.00 to 1.00 at any time.

(c) Consolidated Interest Coverage Ratio.  After the Effective Date, theThe
Borrower will not permit the Consolidated Interest Coverage Ratio to be less
than 2.50 to 1.00 as of the last day of any fiscal quarter of the Borrower.

(d) Liquidity Test.  After the Effective Date, theThe Borrower will not permit
the aggregate Value of the Eligible Portfolio Investments that can be converted
to Cash in fewer than 10 Business Days without more than a 5% change in price to
be less than 10% of the Covered Debt Amount for more than 30 Business Days
during any period when the Adjusted Covered Debt Balance is greater than 90% of
the Adjusted Borrowing Base.

(e) Obligors’ Net Worth Test.  After the Effective Date, theThe Borrower will
not permit the Obligors’ Net Worth to be less than $160,000,000.

Section 6.08. Transactions with Affiliates.  (a)  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 (i)
transactions in the ordinary course of business at prices and on terms and
conditions not less favorable to the Borrower or such Subsidiary (or, in the
case of a transaction between an Obligor and a non-Obligor Subsidiary, not less
favorable to such Obligor) than could be obtained at the time on an arm’s-length
basis from unrelated third parties, (ii) transactions between or among the
Obligors not involving any other Affiliate, (iii) 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, (iv) Restricted Payments permitted by Section 6.05,
dispositions permitted by Section

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6.03(e) and Investments permitted by Section 6.04(e), (v) the Existing Affiliate
Investments as the same may be amended as provided in Section 6.08(b) below,
(vi) existing transactions with Affiliates as set forth in Schedule 6.08, or
(vii) the payment of compensation and reimbursement of expenses of directors in
a manner consistent with current practice of the Borrower and general market
practice, and indemnification to directors in the ordinary course of business.

 

(b)The Borrower will not, and will not permit any of its Subsidiaries to, enter
into any transactions with any issuer of an Affiliate Investment (including the
Existing Affiliate Investments and any Investment that becomes an Affiliate
Investment as a result of such transaction or any modification, supplement or
waiver to an Existing Affiliate Investment or other existing Affiliate
Investment except to the extent in effect as of the Effective Date), except
transactions in the ordinary course of business that are either (i) on terms and
conditions not less favorable to the Borrower or such Subsidiary than could be
obtained at the time on an arm's-length basis from unrelated third parties or
(ii) in the nature of an amendment, supplement or modification to any such
Affiliate Investment on terms and conditions that are similar to those obtained
by debt or equity investors in similar types of investments in which such
investors do not have the controlling equity interest, in each case, as
reasonably determined in good faith by the Borrower.

Section 6.09. Lines of Business.  The Borrower will not, nor will it permit any
of its Subsidiaries to, engage to any material extent in any business other than
in accordance with its Investment Policies as amended by Permitted Policy
Amendments.

 

Section 6.10. No Further Negative Pledge.  The Borrower will not, and will not
permit any of its Subsidiaries 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 and the other Loan Documents and
documents with respect to Indebtedness under Section 6.01(b)(ii); (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; and (d) 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.

 

Section 6.11. Modifications of Indebtedness.  The Borrower will not, and will
not permit any of its Subsidiaries to, consent to any modification, supplement
or waiver of any of the provisions of any agreement, instrument or other
document evidencing or relating to any Secured Longer-Term Indebtedness,
Unsecured Longer-Term Indebtedness or Unsecured Shorter-Term Indebtedness that
would result in such Indebtedness not meeting the requirements of the definition
of “Secured Longer-Term Indebtedness”, “Unsecured Longer-Term Indebtedness” or
“Unsecured Shorter-Term Indebtedness”, as applicable, set forth in Section 1.01
of this Agreement, unless, in the case of Unsecured Longer-Term Indebtedness,
such Indebtedness would have been permitted to be incurred as Unsecured
Shorter-Term Indebtedness at the time of such modification, supplement or waiver
and the Borrower so designates such

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Indebtedness as “Unsecured Shorter-Term Indebtedness” (whereupon such
Indebtedness shall be deemed to constitute “Unsecured Shorter-Term Indebtedness”
for all purposes of this Agreement).  The Administrative Agent hereby
acknowledges and agrees that the Borrower may, at any time and from time to
time, without the consent of the Administrative Agent, freely amend, restate,
terminate, or otherwise modify any documents, instruments and agreements
evidencing, securing or relating to Indebtedness permitted pursuant to Section
6.01(d) and (e), including increases in the principal amount thereof,
modifications to the advance rates and/or modifications to the interest rate,
fees or other pricing terms; provided that no such amendment, restatement or
modification shall, unless Borrower complies with the terms of Section
5.08(a)(i) hereof, cause an SBIC Subsidiary to fail to be an “SBIC Subsidiary”
in accordance with the definition thereof. 

 

Section 6.12. Payments of Longer-Term Indebtedness.  The Borrower will not, nor
will it permit any of its Subsidiaries (other than SBIC Subsidiaries) to,
purchase, redeem, retire or otherwise acquire for value, or set apart any money
for a sinking, defeasance or other analogous fund for the purchase, redemption,
retirement or other acquisition of or make any voluntary or involuntary payment
or prepayment of the principal of or interest on, or any other amount owing in
respect of, any Secured Longer-Term Indebtedness or Unsecured Longer-Term
Indebtedness (other than the refinancing of Secured Longer-Term Indebtedness or
Unsecured Longer-Term Indebtedness with Indebtedness permitted under Section
6.01(b) and (c) or with the proceeds of any issuance of Equity Interests, in
each case to the extent not required to be used to repay Loans), except (a) for
regularly scheduled payments of interest in respect thereof required pursuant to
the instruments evidencing such Indebtedness and the payment when due of the
types of fees and expenses that are customarily paid in connection with such
Indebtedness (it being understood that (w) the conversion features into
Permitted Equity Interests under convertible notes, (x) the triggering of such
conversion and/or settlement thereof solely with Permitted Equity Interests, and
(y) any cash payment on account of interest or expenses on such convertible
notes made by the Borrower in respect of such triggering and/or settlement
thereof, shall be permitted under this clause (a)) or (b) for payments and
prepayments of Secured Longer-Term Indebtedness required to comply with
requirements of Section 2.08(b).

 

Section 6.13. Modification of Investment Policies.  Other than with respect to
Permitted Policy Amendments, the Borrower will not amend, supplement, waive or
otherwise modify in any material respect the Investment Policies as in effect on
the Effective Date.

 

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. Derivative Transactions.  The Borrower will not, nor will it
permit any of its Subsidiaries to, enter into any swap or derivative
transactions (including total return swaps) or other similar transactions or
agreements, except for Hedging Agreements to the extent permitted pursuant to
Section 6.01(i) and 6.04(c).

 

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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 fail to pay any principal of any Loan (including any
principal payable under Section 2.08(b) or (c)) 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;

(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 (5) 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 (except that such
materiality qualifier shall not be applicable to any representation or warranty
already qualified by materiality or Material Adverse Effect);

(d) the Borrower shall fail to observe or perform any covenant, condition or
agreement contained in (i) Section 5.01(e),  Section 5.02(a),  Section 5.03
(with respect to the Borrower’s and its Subsidiaries’ existence only, and not
with respect to the Borrower’s and its Subsidiaries’ rights, licenses, permits,
privileges or franchises), Sections 5.08(a) or (b),  Section 5.09,  Section
5.10,  Section 5.12(c) or Article VI or any Obligor shall default in the
performance of any of its obligations contained in Section 7 of the Guarantee
and Security Agreement or (ii) Section 5.01(f) or Sections 5.02(b),  (c) or (d)
and, in the case of this clause (ii), such failure shall continue unremedied for
a period of five (5) or more days after the Borrower has knowledge of such
failure;

(e) 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) or (d) of this Article) or any other Loan
Document and such failure shall continue unremedied for a period of thirty (30)
or more days after notice thereof from the Administrative Agent (given at the
request of any Lender) to the Borrower;

(f) 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;

(g) any event or condition occurs that (i) results in all or any portion of any
Material Indebtedness becoming due prior to its scheduled maturity or (ii) that
enables or permits (with or without the giving of notice, the lapse of time or
both) the holder or holders of any Material

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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, in
the case of this clause (ii), 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 are no longer enabled or permitted to 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 (g) 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 contingent mandatory
conversion or redemption event provided such conversion or redemption is
effectuated only in capital stock that is not Disqualified Equity Interests;

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

(i) the Borrower or any of its Subsidiaries shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (h) of this 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 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;

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

(k) there is rendered against the Borrower or any of its Subsidiaries or any
combination thereof (i) one or more judgments or orders for the payment of money
in an aggregate amount (as to all such judgments and orders) in excess of
$5,000,000 (to the extent not covered by independent third-party insurance as to
which the insurer has been notified of the potential claim and does not dispute
coverage) or (ii) any one or more non-monetary judgments that, individually or
in the aggregate, has resulted in or could reasonably be expected to result in a
Material Adverse Effect and, in either case, (1) enforcement proceedings,
actions or collection efforts are commenced by any creditor upon such judgment
or order, or (2) there is a period of thirty (30) consecutive days during which
such judgment is undischarged or a stay of enforcement of such judgment, by
reason of a pending appeal or otherwise, is not in effect;

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(l) 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 in an aggregate amount exceeding $5,000,000, (ii) (x)
there is or arises Unfunded Pension Liability with respect to Plans maintained
by Borrower (taking into account only such Plans with positive Unfunded Pension
Liability) of $2,500,000 or more, or (y) there is or arises Unfunded Pension
Liability with respect to Plans maintained by the Borrower or its ERISA
Affiliates in an aggregate amount (taking into account only such Plans with
positive Unfunded Pension Liability) that would reasonably be expected to result
in a Material Adverse Effect, or (iii) (x) if the Borrower were to withdraw from
all Multiemployer Plans in a complete withdrawal, the aggregate Withdrawal
Liability that would be incurred would be in excess of $2,500,000, or (y) if the
Borrower and each of its ERISA Affiliates were to withdraw from all
Multiemployer Plans in a complete withdrawal, the aggregate Withdrawal Liability
that would be incurred would reasonably be expected to result in a Material
Adverse Effect;

(m) a Change in Control shall occur;

(n) any SBIC Subsidiary shall become the subject of an enforcement action and be
transferred into liquidation status by the SBA;

(o) the Liens created by the Security Documents shall, at any time with respect
to Portfolio Investments held by Obligors having an aggregate Value in excess of
5% of the aggregate Value of all Portfolio Investments held by Obligors, 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 Collateral Agent (or any Obligor or any Affiliate of an Obligor shall so
assert in writing), 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 certificates representing securities
pledged under the Guarantee and Security Agreement; provided that if such
default is as a result of any action of the Administrative Agent or Collateral
Agent or a failure of the Administrative Agent or Collateral Agent to take any
action within its control, then there shall be no Default or Event of Default
hereunder unless such default shall continue unremedied for a period of ten (10)
consecutive Business Days after the earlier of (i) the Borrower becoming aware
of such default and (ii) the Borrower’s receipt of written notice of such
default thereof from the Administrative Agent, unless, in each case, the
continuance thereof is a result of a failure of the Collateral Agent or
Administrative Agent to take an action within their control (and the Borrower
has requested that the Collateral Agent or Administrative Agent take such
action);

(p) except for expiration in accordance with its terms, any of the Security
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 any Obligor, or there shall be any actual invalidity of any
guaranty thereunder or any Obligor or any Affiliate of an Obligor shall so
assert in writing; or

(q) 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;

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then, and in every such event (other than an event described in clause (h),  (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 described in clause (h),  (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.

Article VIII

THE ADMINISTRATIVE AGENT

Section 8.01. Appointment. 

 

(a) Appointment of the Administrative Agent.  Each of the Lenders 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.

(b) Appointment of the Collateral Agent.  Each of the Lenders hereby irrevocably
appoints the Collateral Agent as its collateral agent hereunder and under the
other Loan Documents and authorizes the Collateral Agent to have all the rights
and benefits hereunder and thereunder (including Section 9 of the Guarantee and
Security Agreement), and 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 (without having to
account therefor to any other Lender) accept deposits from, lend money to, make
investments in 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, and such Person and its Affiliates may accept fees and other
consideration from the Borrower or any Subsidiary or other Affiliate thereof for
services in connection with this Agreement or otherwise without having to
account for the same to the other Lenders.

 

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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 or Event of 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 such other number or percentage of the Lenders as shall be expressly
provided for herein or in the other Loan Documents) or in the absence of its own
gross negligence or willful misconduct as determined by a court of competent
jurisdiction by final and non-appealable judgment.  The Administrative Agent
shall be deemed not to have knowledge of any Default or Event of 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.  Notwithstanding anything to the contrary contained
herein, in no event shall the Administrative Agent be liable or responsible in
any way or manner for the failure to obtain or receive an IVP External Unquoted
Value for any asset or for the failure to send any notice required under Section
5.12(b)(ii)(B)(x).

 

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 or on behalf
of the proper Person or Persons, and shall not incur any liability for relying
thereon.  The Administrative Agent may consult with legal counsel, 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

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Parties.  The exculpatory provisions of the preceding paragraphs shall apply to
any such sub-agent 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.

 

Section 8.06. Resignation; Successor Administrative Agent.  The Administrative
Agent may resign at any time by notifying the Lenders 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 (provided that no such
consent shall be required if an Event of Default has occurred and is
continuing), 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 VIII 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.

 

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.

 

Section 8.08. Modifications to Loan Documents.  Except as otherwise provided in
Section 9.02(b) or 9.02(c) 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, agree to additional obligations being secured
by all or substantially all of such collateral security, or alter the relative
priorities of the obligations entitled to the benefits of the

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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.

 

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 to the extent permitted by Section 9.01(b) or otherwise
herein, e-mail, as follows:

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

Capital Southwest Corporation

Lincoln Center Tower

5400 LBJ Freeway, Suite 1300
Dallas, TX  75240

Attention:  Michael Sarner

Telephone:  214-884-3829

Facsimile: 214-238-5701

E-Mail: msarner@capitalsouthwest.com

 

with a copy to (which shall not constitute notice):

 

Thompson & Knight LLP

333 Clay St.811 Main Street, Suite 33002500

Houston, TX

Attention: Cassandra Mott

Telephone: (713) 951-5803

Facsimile: (832) 397-8012

E-Mail: cassandra.mott@tklaw.com

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(ii) if to the Administrative Agent, to it at:

ING Capital LLC
13251133 Avenue of the Americas
New York, New York 1001910036
Attention:  Grace Fu
Telephone:  (646) 424-7213
Facsimile:  (646) 424-6919

E-Mail: grace.fu@ing.com

 

with a copy, which shall not constitute notice, to:

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036
Attention:  Jay R. Alicandri, Esq.
Telephone:  (212) 698-3800
Facsimile:  (212) 698-3599

E-Mail:    jay.alicandri@dechert.com 

 

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

Any party hereto may change its address, telecopy number or e-mail address 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).

(b) Electronic Communications.  Notices and other communications to the Lenders
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 pursuant to Section 2.03 if such Lender 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.

Unless the Administrative Agent otherwise prescribes, (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”

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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,
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.

(c) Documents to be Delivered under Sections 5.01.  For so long as a Debtdomain™
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 Section 5.01 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 Debtdomain™ or such equivalent website; provided that the
Administrative Agent shall have no responsibility to maintain access to
Debtdomain™ or an equivalent website.

Section 9.02. Waivers; Amendments.

 

(a) No Deemed Waivers; Remedies Cumulative.  No failure or delay by the
Administrative Agent 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 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
shall not be construed as a waiver of any Default or Event of Default,
regardless of whether the Administrative Agent or any Lender may have had notice
or knowledge of such Default or Event of 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, subject to Section 2.16(b), 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 reduce the rate of interest
thereon, or reduce any fees payable hereunder, without the written consent of
each Lender directly affected thereby,

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

(iv) change Section 2.15(b),  (c) or (d) in a manner that would alter the pro
rata sharing of payments, or making of disbursements, required thereby without
the written consent of each Lender directly affected thereby,

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

(vi) permit the assignment or transfer by any Obligor of any of its rights or
obligations under any Loan Document without the consent of each Lender;

provided further that (x) no such agreement shall amend, modify or otherwise
affect the rights or duties of the Administrative Agent hereunder without the
prior written consent of the Administrative Agent, and (y) the consent of
Lenders holding not less than two-thirds of the total Revolving Credit Exposures
and unused Commitments will be required for  (A) any change adverse to the
Lenders affecting the provisions of this Agreement relating to the Borrowing
Base (including the definitions used therein), or the provisions of Section
5.12(b)(ii), and (B) 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.

(c) Amendments to Security Documents.  No Security Document nor any provision
thereof may be waived, amended or modified, except to the extent otherwise
expressly contemplated by the Guarantee and Security Agreement, and the Liens
granted under the Guarantee and Security Agreement may not be spread to secure
any additional obligations (including any increase in Loans hereunder, but
excluding (i) any such increase pursuant to a Commitment Increase under Section
2.06(f) and (ii) any Secured Longer-Term Indebtedness permitted hereunder)
except to the extent otherwise expressly contemplated by the Guarantee and
Security Agreement and 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, subject to Section 2.16(b), (i) without the
written consent of the holders exceeding 67% of the total Revolving Credit
Exposures and unused Commitments, no such waiver, amendment or modification to
the Guarantee and Security Agreement shall (A) release any Obligor representing
more than 10% of the Stockholders’ Equity from its obligations under the
Security Documents, (B) release any guarantor representing more than 10% of the
Stockholders’ Equity under the Guarantee and Security Agreement from its
guarantee obligations thereunder, or (C) amend the definition of “Collateral”
under the Security Documents (except to add additional collateral) and (ii)
without the written consent of each Lender, no such agreement shall (W) release
all or substantially all of the Obligors from their respective obligations under
the Security Documents, (X) release all or substantially all of the collateral
security or otherwise terminate all or substantially all of the Liens under the
Security Documents, (Y) release all or substantially all of

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the guarantors under the Guarantee and Security Agreement from their guarantee
obligations thereunder, or (Z) 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 the collateral security provided
thereby; except that no such consent described in clause (i) or (ii) above 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 or the
required number or percentage of Lenders have consented, or otherwise in
accordance with Section 9.15.

(d) Replacement of Non-Consenting Lender.  If, in connection with any proposed
amendment, waiver or consent requiring (i) the consent of “each Lender” or “each
Lender affected thereby,” or (ii) the consent of “two-thirds of the holders of
the total Revolving Credit Exposures and unused Commitments”, the consent of the
Required Lenders is obtained, but the consent of other necessary Lenders is not
obtained (any such Lender whose consent is necessary but not obtained being
referred to herein as a “Non-Consenting Lender”), then 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
2.17(b) so long as at the time of such replacement, each such replacement Lender
consents to the proposed change, waiver, discharge or termination.

Section 9.03. Expenses; Indemnity; Damage Waiver.

 

(a) Costs and Expenses. The Borrower shall pay (i) all reasonable and documented
out-of-pocket fees, costs and expenses incurred by the Administrative Agent, the
Collateral Agent and their Affiliates, including the reasonable fees, charges
and disbursements of one outside counsel and of any necessary special and/or
local counsel for the Administrative Agent and the Collateral Agent collectively
(other than the allocated costs of internal counsel), in connection with the
syndication of the credit facilities provided for herein, the preparation and
administration (other than internal overhead charges) 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) including all costs and expenses of the
Independent Valuation Provider, (ii) all out-of-pocket fees, costs and expenses
incurred by the Administrative Agent, the Collateral Agent or any Lender,
including fees, charges and disbursements of any counsel for the Administrative
Agent, the Collateral Agent or any Lender, 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, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect thereof and (iii) and all
reasonable out-of-pocket costs, expenses, taxes, 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.

(b) Indemnification by the Borrower.  The Borrower shall indemnify the
Administrative Agent 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,

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any and all losses, claims, damages, liabilities and related expenses (other
than Taxes or Other Taxes which shall only be indemnified by the Borrower to the
extent provided in Section 2.14), including the reasonable and documented fees,
charges and disbursements of any counsel for any Indemnitee (other than the
allocated costs of internal counsel), 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 (including any arrangement entered into with an
Independent Valuation Provider), (ii) any Loan or the use of the proceeds
therefrom 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, any Indemnitee 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 willful misconduct or gross negligence of such Indemnitee.

The Borrower shall not be liable to any Indemnitee for any special, indirect,
consequential or punitive damages (as opposed to direct or actual damages (other
than in respect of any such damages incurred or paid by an Indemnitee to a third
party)) 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 under paragraph (a)
or (b) of this Section (and without limiting its obligation to do so), each
Lender severally agrees to pay to the Administrative Agent, 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 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 the use of the
proceeds thereof.  No Indemnitee shall be liable for any damages arising from
the use of 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 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.

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(f) No Fiduciary Relationship. 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 the 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) except as
otherwise provided in any of the Loan Documents, 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 (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)
and (y) each Lender is acting hereunder solely as principal and not as the agent
or fiduciary of the Borrower or any of its Subsidiaries, their management or
stockholders. The Borrower and each Obligor each acknowledge and agree that it
has consulted 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
Obligor each agree that it will not claim that any Lender has rendered advisory
services hereunder of any nature or respect, or owes a fiduciary duty to the
Borrower or any of its Subsidiaries, in each case, in connection with such
transactions contemplated hereby or the process leading thereto.

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, 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 any of its rights or obligations
hereunder except in accordance with this Section (and any attempted assignment
or transfer by any Lender which is not in accordance with this Section shall be
treated as provided in the last sentence of Section 9.04(b)(iii)).  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 and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.

(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 all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitment and the

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Loans at the time owing to it) with the prior written consent (such consent not
to be unreasonably withheld, conditioned or delayed) of:

(A)the Borrower; provided that (i) 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, and (ii) the
Borrower shall be deemed to have consented to any such assignment unless it
shall object thereto by written notice to the Administrative Agent within five
(5) Business Days after having received written notice thereof; and

 

(B)the Administrative Agent; provided that no consent of the Administrative
Agent shall be required for an assignment by a Lender to a Lender or an
Affiliate of a Lender with prior written notice by such assigning Lender to the
Administrative Agent.

 

(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, the amount of the Commitment or Loans 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 $1,000,000 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 Commitments or Loans 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 Commitments and Loans;

(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 $3,500
(which fee shall not be payable in connection with an assignment to a Lender or
to an Affiliate of a Lender), for which the Borrower and the Guarantors shall
not be obligated (except in the case of an assignment pursuant to Section
2.17(b)); and

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

(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

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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
2.12,  2.13,  2.14 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 (f) of this Section.

(c) Maintenance of Registers by Administrative Agent.  The Administrative Agent,
acting solely for this purpose as a non-fiduciary 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 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, and the Borrower, the
Administrative Agent and the Lenders shall 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 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.

(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 Section 2.12 (or any other increased costs protection provision),
2.13 or 2.14.  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

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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 (f) 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.

(f) Participations.  Any Lender may 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 owing to it); provided that (i) such
Lender’s obligations under this Agreement and the other Loan Documents shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iii) the Borrower,
the Administrative Agent 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.  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 2.12,  2.13 and
2.14 (subject to the requirements and limitations therein, including Sections
2.14(f) and (g) (it being understood that the documentation required under
Sections 2.14(f) and (g) shall be delivered to the participating Lender)) 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 agrees
to be subject to the provisions of Section 2.17 

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

 

as if it were an assignee under paragraph (b) of this Section 9.04.  Each Lender
that sells a participation agrees, at the Borrower’s request and expense, to use
reasonable efforts to cooperate with the Borrower to effectuate the provisions
of Section 2.17 with respect to any Participant.  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 2.15(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 (each a “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 information relating to a
Participant’s interest in any commitments, loans, letters of credit or its other
obligations under any Loan Document) to any Person except to the extent that
such disclosure is necessary to establish that such commitment, loan, letter of
credit or other obligation is in registered form under Section 5f.103-1(c) of
the United States Treasury Regulations.  The entries in each 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 the 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 2.12 or 2.13 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 2.14 unless such Participant agrees to comply with Section
2.14(f) as though it were a Lender (it being understood that that the
documentation required under Section 2.14(f) shall be delivered to the
participating Lender).

(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, 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.

(i) No Assignments or Participations to the Borrower or Affiliates or Certain
Other Persons.  Anything in this Section to the contrary notwithstanding, no
Lender may (i) assign or participate any interest in any Commitment or Loan held
by it hereunder to the Borrower or any of its Affiliates or Subsidiaries without
the prior consent of each Lender, or (ii) assign any interest in any Commitment
or Loan held by it hereunder to a natural person (or a holding company,
investment vehicle or trust for, or owned and operated for the primary benefit
of, a natural person) or to any Person known by such Lender at the time of such
assignment to be a Defaulting Lender, a Subsidiary of a Defaulting Lender or a
Person who, upon consummation of such assignment would be a Defaulting Lender.

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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, regardless of any investigation made by any such other party or on its
behalf and notwithstanding that the Administrative Agent or any Lender may have
had notice or knowledge of any Default or Event of 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 and so long as the Commitments have not
expired or terminated.  The provisions of Sections 2.12,  2.13,  2.14 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 of 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.  This Agreement shall become
effective when provided in Section 4.01, 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 or electronic mail 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

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(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 any Obligor against any of and all the obligations of
any Obligor 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.  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 promptly to notify the Borrower after any such set-off and application
made by such Lender; provided that the failure to give such notice shall not
affect the validity of such set-off and application.

 

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, 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 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.

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

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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 a loan transaction in which the
specification of Dollars and payment in New York City is of the essence, and
Dollars shall be the currency of account in all events relating to Loans.  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 Dollars and transfer to New York City under normal banking
procedures does not yield the amount of Dollars in New York City due
hereunder.  If for the purpose of obtaining judgment in any court it is
necessary to convert a sum due hereunder into another currency (the “Other
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 Dollars with the Other 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 Other Currency such Entitled Person may in accordance with
normal banking procedures purchase and transfer Dollars to New York City with
the amount of the Other 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 Dollars, the amount (if any) by which the sum originally due to such
Entitled Person in Dollars hereunder exceeds the amount of Dollars 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; Confidentiality.

 

(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

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

 

Loan or the termination of this Agreement or any provision hereof.  The
Administrative Agent, each Lender and their Affiliates (collectively, solely for
purposes of this paragraph, the “Lender”), may have economic interests that
conflict with those of the Borrower or any of its Subsidiaries and/or their
Affiliates.

(b) Confidentiality.  Each of the Administrative Agent and the Lenders agrees to
maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to its Affiliates and to its and its
Affiliates’ respective partners, directors, officers, employees, agents,
advisors and other representatives (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority purporting to have jurisdiction
over it (including any self-regulatory authority), (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party hereto, (e) in connection with the exercise of any remedies
hereunder or under any other Loan Document or any action or proceeding relating
to this Agreement or any other Loan Document or the enforcement of rights
hereunder or thereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement, or (ii) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating to
the Borrower and its obligations, (g) with the consent of the Borrower, (h) on a
confidential basis to (i) any rating agency in connection with rating the
Borrower or its Subsidiaries or the Loans and (ii) the CUSIP Service Bureau or
any similar agency in connection with the issuance and monitoring of CUSIP
numbers with respect to the Loans, (i) 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 or any of their
respective Affiliates on a nonconfidential basis from a source other than the
Borrower or (j) in connection with the Lenders’ right to grant a security
interest pursuant to Section 9.04(h) to the Federal Reserve Bank or any other
central bank, or subject to an agreement containing provisions substantially the
same as those of this Section, to any other pledgee or assignee pursuant to
Section 9.04(h).

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 (including any Portfolio
Investments), other than any such information that is available to the
Administrative Agent or any Lender on a nonconfidential 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 Effective Date, 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, which information includes the name
and address of the

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

 

Borrower and other information that will allow such Lender to identify the
Borrower in accordance with said Act.

 

Section 9.15. Termination.  Promptly upon the Termination Date, the
Administrative Agent shall direct the Collateral Agent to, on behalf of the
Administrative Agent, the Collateral Agent and the Lenders, deliver to Borrower
such termination statements and releases and other documents necessary or
appropriate to evidence the termination of this Agreement, the Loan Documents,
and each of the documents securing the obligations hereunder as the Borrower may
reasonably request, all at the sole cost and expense of the Borrower.

 

Section 9.16. Acknowledgment and Consent to Bail-In of EEA 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 any EEA 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 an EEA
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 an EEA Resolution
Authority to any such liabilities arising hereunder which may be payable to it
by any party hereto that is an EEA 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 EEA Financial Institution, its parent entity,
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 any EEA Resolution
Authority.

Section 9.17. Interest Rate Limitation.  Notwithstanding anything to the
contrary contained in any Loan Document, the interest paid or agreed to be paid
under the Loan Documents shall not exceed the maximum rate of non-usurious
interest permitted by applicable Law (the “Maximum Rate”).  If Administrative
Agent or any Lender shall receive interest in an amount that exceeds the Maximum
Rate, the excess interest shall be applied to the principal of the Loans or, if
it exceeds such unpaid principal, refunded to Borrower.  In determining whether
the interest contracted for, charged, or received by Administrative Agent or a
Lender exceeds the Maximum Rate, such Person may, to the extent permitted by
applicable law, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (b) exclude voluntary prepayments
and the effects thereof, and (c) amortize, prorate, allocate, and spread in

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

 

equal or unequal parts the total amount of interest throughout the contemplated
term of the Obligations hereunder.

 

[Remainder of Page Intentionally Left Blank]

 

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

 

 

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.

 

CAPITAL SOUTHWEST CORPORATION

 

 

By:
Name: 
Title: 

 

 

 

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

 

 

ING CAPITAL LLC, as Administrative Agent and a Lender

 

 

By:
Name: 
Title:

 

By:
Name: 
Title:

 

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

 

 

Schedule 1.01(a)

 

Approved Dealers and Approved Pricing Services

 

APPROVED DEALERS

 

Antares Capital

Ares Management

BNP Paribas SA

Bank of America Merrill Lynch

Barclays Bank PLC

BMO Capital Markets

Bank of NY Mellon (BNYM Capital Markets)

BTIG LLC

Cantor Fitzgerald & Co.

Citigroup Global Markets Inc.

Citicorp Securities Services, Inc.

Credit Agricole

Credit Suisse Securities (USA) LLC

Daiwa Capital Markets America Inc.

Deutsche Bank Securities Inc.

FBR Capital Markets & Co.

Fidelity Brokerage Services LLC

Fifth Third Bank

Goldman, Sachs & Co.

Golub Capital

Guggenheim Securities LLC

HSBC Securities (USA) Inc.

Imperial Capital LLC

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

 

ING Financial Markets LLC

Jefferies & Company, Inc.

J.P. Morgan Securities Inc.

Lazard Ltd.

Macquarie Capital USA Inc.

Mitsubishi UFJ Securities USA Inc.

Mizuho Securities USA Inc.

Morgan Stanley & Co. Incorporated

Morgan Stanley Smith Barney

Nomura Securities International, Inc.

RBC Capital Markets

RBS Securities Inc.

RW Baird

Scotia Bank

Societe General

SunTrust Banks

UBS Financial Services Inc.

UBS Securities LLC

Wells Fargo Advisors, LLC

Wells Fargo Securities, LLC

Wells Fargo Investments, LLC

 

 

APPROVED PRICING SERVICES

 

Bloomberg

Interactive Data Corporation

International Data Corporation

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

 

Reuters Loan Pricing Corporation

Markit Group Limited

 

 

 

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

 

 

Schedule 1.01(b)

 

Commitments

 

Lender

Commitment Amount

ING Capital LLC

$30,000,00045,000,000

Texas Capital Bank, N.A.

$30,000,000

Customers Bank

$25,000,000

EverBank Commercial Finance, Inc.

$20,000,000

AloStar Bank of Commerce

$20,000,000

ZB, N.A. dba Amegy Bank

$20,000,000

Texas CapitalLegacyTexas Bank, N.A.

$15,000,000

CustomersDallas Capital Bank

$15,000,0005,000,000

Total

$100,000,000180,000,000

 

 

 

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

 

 

Schedule 1.01(c)

 

[Intentionally Omitted]

 

 

 

 

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

 

 

Schedule 1.01(d)

 

Eligibility Criteria

 

A Portfolio Investment shall not be an Eligible Portfolio Investment on any date
of determination unless it meets all of the following criteria:

1)

(a) If an Investment in Indebtedness other than a Noteless Assigned Loan (and
other than a High Yield Security that is held through DTC and has been credited
to the Custodian Account pursuant to the terms of the Custody Agreement), such
Portfolio Investment is evidenced by an original promissory note registered in
the name of an Obligor, delivered to the Custodian and credited to the Custodian
Account pursuant to the terms of the Custody Agreement; provided, however, that
solely in the case of Portfolio Investments (other than Noteless Assigned Loans)
in which the Collateral Agent has a first priority perfected security interest
pursuant to a valid Uniform Commercial Code filing, (x) if such Portfolio
Investment is owned by such Obligor on the Effective Date, the Borrower shall
have up to 45 Business Days following the Effective Date to deliver such
original promissory note with respect to such Portfolio Investment to the
Custodian, and (y) (1) if such Portfolio Investment is acquired by the Obligor
after the Effective Date, the Borrower shall have up to 10 Business Days
following the acquisition of such Portfolio Investment to deliver an original
promissory note with respect to such Portfolio Investment to the Custodian or
the Collateral Agent and (2) as a result of the syndication, sale, transfer,
assignment or exchange of a portion of a Portfolio Investment the Borrower shall
have up to 20 Business Days to return, transfer, assign or exchange any
promissory note with respect to such Portfolio Investment and deliver new or
additional promissory notes to the Document Custodian or the Collateral Agent as
required above (each note referred to in clause (x) or (y) during the time when
it is not in the possession of the Document Custodian or the Collateral Agent,
an “Undelivered Note”) (it being understood that during the time periods in
clauses (x) and (y) above only the portion of such Portfolio Investment that has
not been syndicated, sold, transferred, assigned or exchanged shall satisfy the
criteria specified in this paragraph 1(a)); provided, further that (i) any
portion of the Borrowing Base that consists of an Eligible Portfolio Investment
that is an Undelivered Note shall be identified as such in any Borrowing Base
Certificate and (ii) with respect to Undelivered Notes under clause (y) above,
at no time may the aggregate amount of Undelivered Notes included in the
Borrowing Base constitute more than 10% of the Portfolio Investments included in
the Borrowing Base;

(b) If a debt investment is a Noteless Assigned Loan, the Custodian shall have
received and credited to the Custodian Account pursuant to the terms of the
Custody Agreement an original of each transfer document or instrument relating
to such Noteless Assigned Loan evidencing the assignment of such Noteless
Assigned Loan from any prior third party owner thereof directly to the
applicable Obligor (together with the consent of each party required under the
applicable loan documentation); provided that, any portion of the Borrowing Base
that consists of an Eligible Portfolio Investment that is a Noteless Assigned
Loan shall be identified as such in any Borrowing Base Certificate; and

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

 

(c) If any Investment in Indebtedness, (x) the Custodian shall have received
originals or copies of each of the following, to the extent applicable, any
related loan agreement, credit agreement, note purchase agreement, security
agreement (if separate from any mortgage), sale and servicing agreement,
acquisition agreement pursuant to which such Investment was acquired,
subordination agreement, intercreditor agreement or similar instruments,
guarantee, assumption or substitution agreement or similar material operative
document, in each case together with any amendment or modification thereto; and
(y) all documentation evidencing or otherwise relating to such Portfolio
Investment has been duly authorized and executed, is in full force and effect
and is the legal, binding and enforceable obligation of the parties thereto and
has been delivered to the Custodian;

(d) If any Affiliate of the Borrower holds a Portfolio Investment in the same
issuer and such investment is evidenced by a promissory note, the Borrower shall
hold a separate promissory note registered in the name of the Borrower
representing its interests in such issuer.

2)

Such Portfolio Investment, whether originated directly or purchased, was
underwritten and closed in all material respects in accordance with the
Investment Policies (as amended by Permitted Policy Amendments);

3)

If the issuer of such Portfolio Investment is a “Debtor” (as defined in the
definition of “DIP Loan”) and such Portfolio Investment is a Bank Loan, such
Portfolio Investment meets the other criteria set forth in the definition of
“DIP Loan”;

4)

Such Portfolio Investment is Transferable (as defined below);

5)

TheOther than with respect to LTV Transactions, the underlying issuer of such
Portfolio Investment shall have a trailing 12-month EBITDA of at least
$1,000,000 as calculated by the Borrower in a commercially reasonable manner;

6)

Such Portfolio Investment is not a Defaulted Obligation or a Restructured
Investment;

7)

Any Portfolio Company of such Portfolio Investment with trailing 24-month EBITDA
of less than $20,000,000 as calculated by the Borrower in a commercially
reasonable manner satisfies at least one of the following two conditions at all
times: (i) a total leverage ratio (based on trailing 12-month EBITDA) as
calculated by the Borrower in a commercially reasonable manner of less than
4.5x, or (ii) a loan (through the Borrower or Obligor’s exposure) to enterprise
value ratio of not more than 65%, where enterprise value shall be the value
determined by the Approved Third-Party Appraiser in its most recent valuation
report provided in connection with such Portfolio Investment (except that, prior
to the delivery of the first valuation report of the Approved Third-Party
Appraiser to be delivered after the Borrower's acquisition of such Portfolio
Investment, if such Portfolio Investment is acquired by the Borrower in
connection with or at the time of an applicable transaction involving the equity
of the Portfolio Company, the enterprise value of such Portfolio Company may be
imputed from such transaction by the Borrower in a commercially reasonable
manner);  

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

 

8)

Such Portfolio Investment does not represent an investment in any Portfolio
Company in which the Borrower or any of its Affiliates, or any entities advised
by any of the foregoing, holds any Investment other than an Investment that is
in the same class or classes as such Portfolio Investment (and, in the case of
multiple classes, such Investment shall represent a ratable strip of each class)
and is (a) made in accordance with the requirements of an effective SEC
exemptive order allowing such co-investment or joint follow-on investment or (b)
made in compliance with the Massachusetts Mutual Life Insurance Co., SEC No
Action Letter (pub. Avail. June 7, 2000), other interpretive guidance issued by
the SEC or the Investment Company Act; provided that the investments in LTI
Holdings, Inc., Prepaid Legal Services, Inc. and Water Pik, Inc. shall not be
excluded as an Eligible Portfolio Investment if (1) such investment is owned
directly by the Borrower, (2) such investment constitutes a Portfolio Investment
and (3) such exclusion is based solely on this paragraph 8 and only for so long
as such investment has not been increased, adversely modified or otherwise
restructured after the Effective Date.

9)

Such Portfolio Investment does not represent an investment in any SBIC
Subsidiary, investment fund, Structured Finance Obligation, Third Party Finance
Companies, or similar off balance sheet financing vehicle, or any joint venture
or other Person that is in the principal business of making debt or equity
investments primarily in other unaffiliated Persons;

10)

(x) Such Portfolio Investment is owned by the Borrower or any Obligor, free and
clear of any liens and Collateral Agent holds a first priority, perfected
security interest in the Portfolio Investment (subject to no other Lien other
than any Eligible Liens), (y) the Collateral Agent or the Custodian as bailee on
behalf of the Collateral Agent is holding all documents evidencing or otherwise
relating to such Portfolio Investment (which may be copies, except as required
in paragraph (1)(a) above) and (z) the other steps to ensure that the Collateral
Agent has “control” or other customary protection of the relevant Portfolio
Investment set forth in Section 5.08 and in the Guarantee and Security Agreement
have been taken;

11)

Such Portfolio Investment and related documents are in compliance, in all
material respects, with applicable laws rules and regulations (including
relating to usury, truth in lending, fair credit billing, fair credit reporting,
equal credit opportunity, fair debt collection practices and privacy, OFAC and
USA PATRIOT Act);

12)

Such Portfolio Investment is denominated and payable only in US dollarsDollars
or an Approved Foreign Currency and the issuer of such Portfolio Investment is
organized under the laws of the United States or any state or
Commonwealthcommonwealth thereof or any Permitted Foreign Jurisdiction or
province thereof, is domiciled in the United States or any Permitted Foreign
Jurisdiction, and its principal operations and any property or other assets of
the issuer thereunder pledged as collateral are primarily located in the United
States or any Permitted Foreign Jurisdiction, and the only place of payment of
such loans is the United States or any Permitted Foreign Jurisdiction; provided
that no credit shall be given to the Borrowing Base if any obligor does not
qualify for zero withholding for loans to Permitted Foreign Jurisdiction
borrowers;  

13)

Such Portfolio Investment, if a debt investment, bears interest which is due and
payable no less frequently than semi-annually and provides for a fixed amount of
principal payable on a scheduled payment date and or at maturity, and does not
have a final maturity greater than 10 years;

14)

Such Portfolio Investment, if a debt investment, includes a contractual
provision requiring all payments to be made without set off, defense or
counterclaim, and does not include a contractual provision granting rights of
rescission, set off, counterclaim or defense in favor of the obligor in respect
of such Portfolio Investment, and no material dispute has been asserted with
respect to such Portfolio Investment;

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

 

15)

Such Portfolio Investment is not (x) secured primarily by a mortgage, deed of
trust or similar lien on real estate, or (y) issued by a Person whose primary
asset is real estate, or whose value is otherwise primarily derived from real
estate;

16)

Such Portfolio Investment does not represent a consumer obligation (including a
mortgage loan, auto loan, credit card loan or personal loan);

17)

No payment in respect of such Portfolio Investment, if a debt investment, is
subject to withholding in respect to taxes of any nature, unless the issuer is
required to make customary and market-based gross-up payments on an after tax
basis for the full amount of such tax;

18)

Such Portfolio Investment is not a derivative instrument;

19)

The issuer of such Portfolio Investment (or an agent on its behalf) is required
to make payments directly into an account of the Borrower or any Obligor over
which the Collateral Agent has “control” and no other person’s assets are
commingled in such account;

20)

No Person acting as administrative agent, collateral agent or in a similar
capacity shall be an Affiliate of the Borrower unless such person is an
Obligor; 

21)

In the case of any Existing Affiliate Investment, neither such investment nor
any investment in the same issuer held by the Borrower or any of its Affiliates,
or any entities advised by any of the foregoing, has been, or will be,
increased, amended, modified or otherwise restructured after the Effective Date,
except for any follow-on Investment made after the Effective Date in the same
Portfolio Company that has been made (i) for the purpose of facilitating the
growth of such issuer and not to avert a default under any existing investment,
(ii) on substantially similar terms as the existing investment of the same
investor, (iii) in compliance with laws, rules and regulations (including laws,
rules and regulations applicable to business development companies), and (iv) in
a manner that would not be adverse to any existing Eligible Portfolio Investment
in such Portfolio Company;

22)

If such Portfolio Investment is a Bank Loan and the issuer of such Portfolio
Investment has issued a Permitted Prior Working Capital Lien, the Borrower has
delivered to the Administrative Agent a written valuation report of an Approved
Third-Party Appraiser determining the enterprise value of such issuer to be used
for purposes of the conditions outlined in clause (iii) of the definition of
“Permitted Prior Working Capital Lien” (except that, prior to the delivery of
the first valuation report of the Approved Third-Party Appraiser to be delivered
after the Borrower’s acquisition of such Portfolio Investment, the enterprise
value of such Portfolio Investment shall be calculated by the Borrower in a
commercially reasonable manner); and,

23)

If such Portfolio Investment is in MRI, such Portfolio Investment is an Eligible
Portfolio Investment and it satisfies at all times: (i) a total leverage ratio
(based on trailing 12-month EBITDA) as calculated by the Borrower in a
commercially reasonable manner of not greater than 1.00 to 1.00, (ii) the
aggregate payments made in cash by MRI to the Borrower in the form of dividends
(other than any dividends on account of taxes, indemnification or expense
reimbursement) and management fees (and excluding reimbursement of any fees,
costs or expenses) shall not be less than $1,500,000 per year and (iii) the
Borrower owns, directly, not less than 98% of each class and each series of the
Equity Interests of MRI.

 

For purposes of paragraph (4) above, “Transferable” means, in the case of any
Portfolio Investment, both that:

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

 

(i) the applicable Obligor may create a security interest in or pledge all of
its rights under and interest in such Portfolio Investment to secure its
obligations under this Agreement or any other Loan Document, and that such
pledge or security interest may be enforced in any manner permitted under
applicable law; and

(ii) such Portfolio Investment (and all documents related thereto) contains no
provision that directly or indirectly restricts the assignment of such
Obligor’s, or any assignee of Obligor’s, rights under such Portfolio Investment
(including any requirement that the Borrower maintain a minimum ownership
percentage of such Portfolio Investment); provided that, such Portfolio
Investment may contain the following restrictions on customary and market based
terms: (a) restrictions pursuant to which assignments may be subject to the
consent of the obligor or Portfolio Company or agent under the Portfolio
Investment so long as the applicable provision also provides that such consent
may not be unreasonably withheld, (b) restrictions on transfer to parties that
are not ‘eligible assignees’ within the customary and market based meaning of
the term, and (c) restrictions on transfer to the applicable obligor or issuer
under the Portfolio Investment or its equity holders or financial sponsor
entities.

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

 

Schedule 1.01(e)

Industry Classification Groups

 

1)

Aerospace & Defense

2)

Automotive

3)

Banking

4)

Beverage, Food, & Tobacco

5)

Capital Equipment

6)

Chemicals, Plastics, & Rubber

7)

Construction & Building

8)

Consumer Goods: Durable

9)

Consumer Goods: Non-Durable

10)

Containers, Packaging, & Glass

11)

Energy: Electricity

12)

Energy: Oil & Gas

13)

Environmental Industries

14)

Fire: Finance

15)

Fire: Insurance

16)

Fire: Real Estate

17)

Forest Products & Paper

18)

Healthcare & Pharmaceuticals

19)

High Tech Industries

20)

Hotel, Gaming, & Leisure

21)

Media: Advertising, Printing & Publishing

22)

Media: Broadcasting & Subscription

23)

Media: Diversified & Production

24)

Metals & Mining

25)

Retail

26)

Services: Business

27)

Services: Consumer

28)

Sovereign & Public Finance

29)

Telecommunications

30)

Transportation: Cargo

31)

Transportation: Consumer

32)

Utilities: Electric

33)

Utilities: Oil & Gas

34)

Utilities: Water

35)

Wholesale

 

 

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

 

Exhibit B

 

[See Attached]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

SCHEDULE 3.08

 

Unfunded Pension Liabilities

 

None.

 

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

 

SCHEDULE 3.11(a)

 

Material Agreements

 

The Borrower entered into an Indenture, dated as of October 23, 2017, between
the Borrower, as the issuer, and U.S. Bank National Association, as the trustee
(the “Base Indenture”).  No Indebtedness is outstanding under the Base Indenture
but in connection therewith, the Borrower filed a Form N-2 Registration
Statement under the Securities Act providing for the issuance of up to
$500,000,000 of debt securities.

 

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

 

 

SCHEDULE 3.11(b)

 

Liens

 

 

None.

 

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

 

SCHEDULE 3.12(a)

 

Subsidiaries

 

Subsidiary

Jurisdiction of Incorporation and Type of Organization

% of Equity Interest owned by Borrower

Certificate No. (if any)

Capital Southwest Management Corporation

Nevada corporation

100%

1

Capital Southwest Equity Investments, Inc.

Delaware corporation

100%

R-1

 

 

 

 

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

 

SCHEDULE 3.12(b)

 

Investments

 

None.

 

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

 

 

SCHEDULE 6.08

 

Certain Affiliate Transactions

 

None.

 

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