SECOND AMENDMENT TO SALE AND SERVICING AGREEMENT

 

THIS SECOND AMENDMENT TO THE SALE AND SERVICING AGREEMENT, dated as of July 29,
2005 (this “Amendment”), is entered into by and among MCG Commercial Loan
Funding Trust, as the seller (in such capacity, the “Seller”), MCG Capital
Corporation, as the originator (in such capacity, the “Originator”) and as the
servicer (in such capacity, the “Servicer”), Three Pillars Funding LLC, as a
purchaser (“Three Pillars”), SunTrust Capital Markets, Inc., as the
administrative agent (in such capacity, the “Administrative Agent”), and Wells
Fargo Bank, National Association, as the backup servicer (in such capacity, the
“Backup Servicer”) and as trustee (in such capacity, the “Trustee”).

 

RECITALS

 

1. The Seller, the Originator, the Servicer, Three Pillars, the Administrative
Agent, the Backup Servicer and the Trustee are parties to the Sale and Servicing
Agreement dated as of November 10, 2004 (the “Agreement”); and

 

2. Such parties hereto desire to amend the Agreement as hereinafter set forth.

 

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

 

1. Certain Defined Terms. Capitalized terms that are used herein without
definition and that are defined in the Agreement (including terms incorporated
by reference in the Agreement) shall have the same meanings herein as therein
defined.

 

2. Amendments to the Agreement. The Agreement is hereby amended as follows:

 

2.1 The definition of “Facility Amount” in Section 1.1 of the Agreement is
hereby amended to replace the amount “$150,000,000” therein with the amount
“$250,000,000”.

 

2.2 The “Commitment” of Three Pillars Funding LLC is hereby increased to
$250,000,000.

 

2.3 The Seller hereby agrees to deliver a replacement Variable Funding
Certificate to Three Pillars Funding LLC reflecting the facility increase
described above on or prior to the effective date hereof. Upon receipt of such
replacement Variable Funding Certificate, Three Pillars Funding LLC agrees to
deliver to the Trustee its existing Variable Funding Certificate for
cancellation.

 

2.4 Clause (3) of the definition of “Pool Concentration Criteria” in Section 1.1
of the Agreement is hereby amended to add a new industry segment as set forth
below:

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Segment

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   Percentage
Limit

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SIC Code(s) or Descriptions

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Manufacturing

   30%   Division D (Manufacturing), Major Groups 20 through 39, but excluding
Major Groups 21 (Tobacco), 22 (Textiles), 23 (Apparel), 25 (Furniture and
Fixtures), 27 (Printing, Publishing and Allied Industries) and 36 (Electronics)

 

2.5 Clause (3) of the definition of Pool Concentration Criteria in Section 1.1
of the Agreement is hereby amended to add “Manufacturing” to the “Combined
Limited to segments other than Radio, Television, Community Newspapers,
Publishing, Towers, Cable Television Operators, Business Information Services
and Security Alarm Leasing Companies” as follows:

 

Segment

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   Percentage
Limit

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SIC Code(s) or Descriptions

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Combined Limit to segments other than Radio, Television, Community Newspapers,
Publishing, Towers, Cable Television Operators, Business Information Services,
Security Alarm Leasing Companies, and Manufacturing (as defined above)    45%  
See codes above and definitions

 

2.6 Clause (11) of the definition of “Pool Concentration Criteria” in
Section 1.1 of the Agreement (with respect to the Senior B Loans) is hereby
amended to increase the percentage “25%” therein to “35%”.

 

2.7 The “Recovery Rate” for Senior Secured Loans (other than Senior B Loans)
under the definition of “S&P Priority Category Recovery Rate” in Section 1.1 of
the Agreement is hereby amended to increase the percentage from “53%” to “55%”.

 

2.8 The definition of “Pool Yield” in Section 1.1 of the Agreement is hereby
amended in its entirety to read as follows:

 

“Pool Yield”: As of any Determination Date, with respect to any Collection
Period, the percentage equivalent of a fraction (a) the numerator of which is
equal to 12 times the sum of (I) all Interest Collections on Loans included in
the Aggregate Outstanding Loan Balance as of the first (1st) day of the
Collection Period related to such Determination Date that are deposited into the
Collection Account during such Collection Period minus (II) the Carrying Costs
incurred during such Collection Period and (b) the denominator of which is equal
to the Aggregate Outstanding Loan Balance as of the first (1st) day of such
Collection Period.

 

3. No Waiver. The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of any party under the
Agreement or any other document, instrument or agreement executed in connection
therewith, nor constitute a waiver of any provision contained therein.

 

4. Conditions To Effectiveness. The effectiveness of the amendments in Section 2
hereof are subject to the condition precedent that each of the parties hereto
shall have received counterparts of this Amendment, duly executed by all the
parties hereto.

 

5. Reaffirmation of Covenants, Representations and Warranties. Upon the
effectiveness of this Amendment, each of the Seller, the Originator and the
Servicer hereby reaffirms all covenants, representations and warranties made in
the Agreement and the other Transaction Documents and agrees that all such
covenants, representations and warranties shall be deemed to have been remade as
of the effective date of this Amendment.

 

6. Representations and Warranties. Each of the Seller, the Originator and the
Servicer hereby represents and warrants that (i) this Amendment constitutes a
legal, valid and binding obligation of such Person, enforceable against it in
accordance with its terms and (ii) upon the effectiveness of this Amendment, no
Termination Event shall exist.

 

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7. Ratification. All of the provisions of this Amendment are incorporated by
reference into the Agreement, as if set forth in full therein. The Agreement, as
amended hereby, remains in full force and effect. Any reference to the Agreement
from and after the date hereof shall be deemed to refer to the Agreement as
amended hereby. As amended, the Agreement is hereby ratified and reaffirmed by
the parties hereto.

 

8. Counterparts. This Amendment may be executed in any number of counterparts
and by the different parties hereto on separate counterparts (including by
facsimile), each of which when so executed shall be deemed to be an original and
all of which when taken together shall constitute one and the same agreement.

 

9. Governing Law. THIS AMENDMENT, INCLUDING THE RIGHTS AND DUTIES OF THE PARTIES
HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF NEW YORK.

 

10. Section Headings. The various headings of this Amendment are included for
convenience only and shall not affect the meaning or interpretation of this
Amendment, the Agreement or any provision hereof or thereof.

 

[SIGNATURE PAGES FOLLOW]

 

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IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first written above.

 

 

MCG COMMERCIAL LOAN FUNDING TRUST,

as Seller

By:   Wilmington Trust Company, not in its individual capacity, but solely as
Owner Trustee By:   /s/ Jeanne M. Oller    

Name: Jeanne M. Oller

Title: Senior Financial Services Officer

MCG CAPITAL CORPORATION,

as Originator and as Servicer

By:   /s/ Michael R. McDonnell    

Name: Michael R. McDonnell

Title: Chief Financial Officer

THREE PILLARS FUNDING LLC,

as a Purchaser

By:   /s/ Doris J. Hearn    

Name: Doris J. Hearn

Title: Vice President

SUNTRUST CAPITAL MARKETS, INC.,

as Administrative Agent

By:   /s/ James Bennison    

Name: James Bennison

Title: Managing Director

 

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WELLS FARGO BANK, NATIONAL

ASSOCIATION, as Backup Servicer

By:   /s/ Cheryl Zimmerman    

Name: Cheryl Zimmerman

Title: Assistant Vice President

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee By:   /s/ Cheryl Zimmerman  
 

Name: Cheryl Zimmerman

Title: Assistant Vice President

 

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