Exhibit 10.1
 
Execution Version
SECOND AMENDMENT AGREEMENT
 
SECOND AMENDMENT AGREEMENT, dated as of October 28, 2009 (this “Agreement” or
"Second Amendment"), is entered into by and among MCG CAPITAL CORPORATION, a
Delaware corporation (the “Company”), and the holders of the Notes party hereto
relating to the Note Purchase Agreement, dated as of October 11, 2005, between
the Company and each of the purchasers listed therein pursuant to which the
Company issued $50,000,000 aggregate principal amount of its 6.73% Series 2005-A
Senior Notes due October 11, 2010 (the “Notes” or "Existing Notes") , as amended
by that certain First Amendment Agreement (the "First Amendment" dated as of
February 26, 2009 and that certain Consent Request dated July 13, 2009 (as
amended, the “Note Purchase Agreement”).  Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings set forth in the
Note Purchase Agreement.
 
W I T N E S S E T H :
 
WHEREAS, the Company has entered into the Note Purchase Agreement with the
Purchasers, pursuant to which the Company issued and sold the Notes; and
 
WHEREAS, the parties hereto mutually desire to amend the terms of the Note
Purchase Agreement and to provide for the return and cancellation of the Notes
and the issuance of the New Notes (as defined herein).
 
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the parties hereto hereby agree as follows:
 
1. Prepayment.
 
1.1 As provided for in Section 8.2 of the Note Purchase Agreement but subject to
Section 1.3 below, on or before the Second Amendment Effective Date the Company
will prepay the Notes and the Series 2007-A Notes in the total principal amount
of $5,000,000 plus accrued interest on such amount (the "October Prepayment").
 
1.2 The October Prepayment shall be allocated pro rata as between the Notes and
the Series 2007-A Notes based on the outstanding principal amount thereof.
 
1.3 The holders of the Notes agree to waive (i) their right to the Make Whole
Amount on the October Prepayment as would otherwise be due and owing pursuant to
Section 8.2 of the Note Purchase Agreement following a prepayment; (ii) the
notices required to be delivered by the Company in connection with a prepayment
pursuant to Section 8.2 of the Note Purchase Agreement; and (iii) the minimum
prepayment requirement of $5,000,000 as set forth in Section 8.2 of the Note
Purchase Agreement.   Each of the foregoing waivers shall apply only to the
October Prepayment and shall not constitute a waiver, whether express or
implied, of any other provision of the Note Purchase Agreement or a waiver of
compliance with Section 8.2 in connection with any possible future prepayment.
 
2. Amendments to Note Purchase Agreement and Notes.  The Company and the
undersigned holders of the Notes hereby agree that as of the Second Amendment
Effective Date (as defined in Section 3 below), without any further action, the
Note Purchase Agreement and the Notes shall be amended as follows:
 
 
1
 

 
2.1 Exchange of Notes.  Subject to the terms and conditions of this Agreement,
upon delivery of the Notes by each holder to the Company, each holder shall
receive from the Company new notes in the form of Schedule 1 hereto and in the
principal amounts as set forth opposite such holder's name on Schedule A (the
"New Notes").
 
2.2 Increase in Interest Rate.  The applicable Interest Rate on the Notes shall
be permanently increased to 9.98% from and after the Interest Increase Effective
Date.
 
2.3 Maturity Date. The Maturity Date of the New Notes shall be October 11, 2011.
 
2.4 Schedule B Defined Terms.  Schedule B to the Note Purchase Agreement shall
be amended as follows:
 
(a) The definition of "Available Monetization Proceeds" in Schedule B shall be
deleted in its entirety and replaced with the following:
 
“Available Monetization Proceeds” shall mean, with respect to any Monetization
Event, the greatest of (i) 40% of Net Proceeds, (ii) from and after the date on
which the Company is no longer obligated pursuant to the CLFT Sale and Servicing
Agreement to reduce the obligations thereunder by the additional 7.5% of Net
Proceeds as required by Section 2.3(c) clause (ii) of the CLFT Sale and
Servicing Agreement, 45% of Net Proceeds or (iii) if a Subsidiary Non-Recourse
Debt Event of Default has occurred and is continuing, 60% of Net Proceeds.
 
(b) The definition of "Default Rate" in Schedule B shall be deleted in its
entirety and replaced with the following:
 
"'Default Rate' shall mean (a) with respect to the Series 2005-A Notes, that
rate of interest that is the greater of (a) 11.98% or (b) 2.00% over the rate of
interest publicly announced by Citibank, N.A., in New York, New York as its
“base” or “prime” rate and (b) with respect to the Notes of any Series or
tranche of Additional Notes, as set forth in the Supplement pursuant to which
such Series or tranche of Additional Notes was issued."

(c) The definition of “CLFT Sale and Servicing Agreement” in Schedule B shall be
deleted in its entirety and replaced with the following:
 
"'CLFT Sale and Servicing Agreement' means that certain Amended and Restated
Sale and Servicing Agreement dated as of February 26, 2009 (as amended and as
may be further amended from time to time), by and among the Company, as the
originator and servicer, the CLFT, as the seller, Three Pillars Funding LLC, as
a purchaser, SunTrust Capital Markets, Inc. (now, SunTrust Robinson Humphrey,
Inc.), as the administrative agent and the purchaser agent for Three Pillars
Funding LLC, and Wells Fargo Bank, National Association, as the backup servicer
and the trustee."
 
(d) A new definition of “Interest Increase Effective Date" shall be added to
Schedule B as follows:  shall be deleted in its entirety and replaced with the
following:
 
“Interest Increase Effective Date” means October 11, 2009.
 

2
 

3. Second Amendment Effective Date and Conditions Precedent.  This Agreement
shall become effective on the first date (the “Second Amendment Effective Date”)
on which each of the following conditions have been satisfied:
 
(a) October Prepayment.  The Company shall have paid to each holder of a Note
and a Series 2007-A Note, in the manner and at the address for payments
specified in the Note Purchase Agreements, each holder's pro rata share of the
October Prepayment.
 
(b) Exchange of Notes for New Notes. The Exchange of Notes for New Notes as
provided for in Section 2.1 hereof shall have occurred.
 
(c) Representations and Warranties.  The representations and warranties
contained in Section 4 of this Agreement shall be true in all material respects
on and as of the Second Amendment Effective Date.
 
(d) No Default.  No Default or Event of Default shall have occurred and be
continuing on the Second Amendment Effective Date.
 
(e) Officer's Certificate.  The Company shall have delivered to each holder of
New Notes an Officer’s Certificate, dated as of the date of this Agreement,
certifying that (i) the representations and warranties of the Company set forth
in Section 4 of this Agreement are true in all material respects, and (ii) no
Default or Event of Default has occurred and is continuing.
 
(f) Execution and Delivery by the All Holders.  As of the Second Amendment
Effective Date, this Agreement shall have been executed by all holders and
copies of the executed signature pages of the holders shall have been delivered
to each holder of Notes.
 
(g) Delivery by the Company.  As of the Second Amendment Effective Date, copies
of this Agreement executed by the Company shall have been delivered to each
holder of Notes.
 
(h) Series 2007-A Notes.  As of the Second Amendment Effective Date, all holders
under the Series 2007-A Note Purchase Agreement shall have executed an amendment
agreement addressing, among other matters, Sections 1.3 and 2.4 herein, and
copies of the executed signature pages shall have been delivered to each holder
of the Notes or Bracewell & Giuliani LLP on their behalf.
 
(i) Legal and Advisor Fees.  The Company shall have paid the reasonable fees and
expenses of Bracewell & Giuliani LLP, special counsel to the holders of Notes,
to the extent reflected in a statement rendered to the Company at least one
Business Day prior to the Second Amendment Effective Date.
 
4. Representations and Warranties of the Company.  The Company represents and
warrants to each undersigned holder of Notes that each of the representations
and warranties of the Company set forth in the Note Purchase Agreement are true
and correct in all material respects as of the Second Amendment Effective Date
(except for any such representations and warranties that were made by reference
to a specific earlier date and after giving effect to the supplemental schedules
attached hereto), and further represents and warrants as follows:
 
 
3
 

 
(a) Organization; Power and Authority.  The Company is a Delaware corporation
and is in good standing in its jurisdiction of organization.
 
(b) Authorization, etc.  This Agreement and the New Notes  have been duly
authorized by all necessary corporate action on the part of the Company, and
upon execution and delivery hereof and of the New Notes, this Agreement, the
Note Purchase Agreement, as amended hereby, and the New Notes will constitute
legal, valid and binding obligations of the Company enforceable against the
Company in accordance with their respective terms, except as such enforceability
may be limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors’ rights
generally and (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
 
(c) Compliance with Laws, Other Instruments, etc.  The execution, delivery and
performance by the Company of this Agreement and the New Notes will not
(i) contravene the provisions of the certificate of incorporation or bylaws of
the Company or result in a breach of any of the terms of any Material agreement
or instrument by which the Company or any of its Subsidiaries is bound or to
which the Company or any of its Subsidiaries is a party, including, without
limitation, any Subsidiary Non-Recourse Debt Documents, (ii) result in a breach
of any of the terms, conditions or provisions of any order, judgment, decree, or
ruling of any court, arbitrator or Governmental Authority applicable to the
Company or any of its Subsidiaries or (iii) violate any provision of any statute
or other rule or regulation of any Governmental Authority applicable to the
Company or any of its Subsidiaries.
 
(d) Governmental Authorizations, etc.  No consent, approval or authorization of,
or registration, filing or declaration with, any Governmental Authority is
required in connection with the execution, delivery or performance by the
Company of this Agreement or the New Notes.
 
(e) Existing Revolving Credit Facility.  The Existing Revolving Credit Facility
has been repaid in full and cancelled in its entirety.
 
(f) No Default.  No Default or Event of Default has occurred and is continuing.
 
5. Survival of Representations and Warranties.  All representations and
warranties contained herein shall survive the execution and delivery of this
Agreement and the New Notes.  All representations and warranties contained
herein also shall survive the transfer by a holder of any New Note or portion
thereof or interest therein and the payment of any New Note, and may be relied
upon by any subsequent holder, regardless of any investigation made at any time
by or on behalf of any holder.  All statements contained in any certificate or
other instrument delivered by or on behalf of the Company pursuant to this
Agreement shall be deemed representations and warranties of the Company under
this Agreement.
 
6. Ratification of Note Purchase Agreement.  This Agreement shall be construed
in connection with and as part of the Note Purchase Agreement, and except as
modified and expressly amended by this Agreement, all terms, conditions and
covenants contained in the Note Purchase Agreement and the New Notes are hereby
ratified and shall remain in full force and effect.
 
 
 
4
 

 
7. References to Note Purchase Agreement and New Notes.  Any and all notices,
requests, certificates and other instruments executed and delivered after the
execution and delivery of this Agreement may refer to the Note Purchase
Agreement without making specific reference to this Agreement but nevertheless
all such references shall include this Agreement unless the context otherwise
requires.  Any and all notices, requests, certificates and other instruments
executed and delivered after the execution and delivery of the New Notes may
refer to the Notes without making specific reference to the New Notes but
nevertheless all such references shall be deemed to refer to the New Notes
unless the context otherwise requires.  From and after the Second Amendment
Effective Date, all references to Notes in the Note Purchase Agreement shall be
deemed to refer to the New Notes as well.
 
8. Expenses.  The Company agrees to pay all reasonable out-of-pocket expenses of
the holders arising in connection with this Agreement, the exchange of the Notes
and the transactions contemplated hereby, including without limitation the
reasonable fees and expenses, including reasonable post-closing fees and
expenses, of Bracewell & Giuliani LLP, special counsel for the holders of the
Notes.
 
9. Headings.  The descriptive headings of the various Sections or parts of this
Agreement are for convenience only and shall not affect the meaning or
construction of any of the provisions hereof.
 
10. Governing Law.  THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE
OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT
WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH
STATE.
 
11. Counterparts.  This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original and all of which shall constitute one
and the same instrument, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart.
 
[Signature page follows]
 
 
5
 

 

 
This Agreement is hereby accepted and
agreed to as of the date thereof.

 
MCG CAPITAL CORPORATION
 
By:
/s/ Stephen J. Bacica
   
Name: Stephen J. Bacica
   
Title: Chief Financial Officer

 
 

 

Signature Page to 2005 Second Amendment Agreement
MCG Capital Corporation

 

This Agreement is hereby accepted and
agreed to as of the date thereof.

 
The Guardian Life Insurance Company of America
 
By:
/s/ Brian Keating
   
Name: Brian Keating
   
Title: Managing Director

 

 
 

 
The Guardian Insurance & Annuity Company, Inc.
 
By:
/s/ Brian Keating
   
Name: Brian Keating
   
Title: Managing Director

 
 

 
Nationwide Life Insurance Company
 
Nationwide Life and Annuity Insurance Company
 
Nationwide Multiple Maturity Separate Account
 
By:
/s/ Thomas A. Gleason
   
Name: Thomas A. Gleason
   
Title: Authorized Signatory

 
 

 
Signature Page to 2005 Second Amendment Agreement
MCG Capital Corporation