Exhibit 10.8
EXECUTION COPY
TREASURY SECURED REVOLVING CREDIT AGREEMENT
dated as of June 4, 2007
among
KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY
as Borrower
THE LENDERS FROM TIME TO TIME PARTY HERETO
and
SUNTRUST BANK
as Administrative Agent
CITIBANK, N.A.
as Syndication Agent
 
 
SUNTRUST CAPITAL MARKETS, INC.
as Co-Arranger and Joint Book Manager
and
CITIGROUP CAPITAL MARKETS
as Co-Arranger and Joint Book Manager

 

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TABLE OF CONTENTS

              Page  
ARTICLE I DEFINITIONS; CONSTRUCTION
    1  
 
       
Section 1.1. Definitions
    1  
Section 1.2. Classifications of Loans and Borrowings
    19  
Section 1.3. Accounting Terms and Determination
    19  
Section 1.4. Terms Generally
    20  
 
       
ARTICLE II AMOUNT AND TERMS OF THE COMMITMENTS
    20  
 
       
Section 2.1. General Description of the Facility
    20  
Section 2.2. Revolving Loans
    20  
Section 2.3. Procedure for Borrowings
    21  
Section 2.4. Intentionally Omitted
    21  
Section 2.5. Funding of Borrowings
    21  
Section 2.6. Interest Elections
    22  
Section 2.7. Optional Reduction and Termination of Commitments
    23  
Section 2.8. Repayment of Loans
    23  
Section 2.9. Evidence of Indebtedness
    23  
Section 2.10. Prepayments
    24  
Section 2.11. Interest on Loans
    24  
Section 2.12. Fees
    25  
Section 2.13. Computation of Interest and Fees
    26  
Section 2.14. Inability to Determine Interest Rates
    26  
Section 2.15. Illegality
    26  
Section 2.16. Increased Costs
    27  
Section 2.17. Funding Indemnity
    28  
Section 2.18. Taxes
    28  
Section 2.19. Payments Generally; Pro Rata Treatment; Sharing of Set-offs
    30  
Section 2.20. Intentionally Omitted
    31  
Section 2.21. Intentionally Omitted
    31  
Section 2.22. Mitigation of Obligations
    31  
Section 2.23. Replacement of Lenders
    31  
 
       
ARTICLE III CONDITIONS PRECEDENT TO LOANS
    32  
 
       
Section 3.1. Conditions To Effectiveness
    32  
Section 3.2. Each Credit Event
    34  
Section 3.3. Delivery of Documents
    35  
 
       
ARTICLE IV REPRESENTATIONS AND WARRANTIES
    35  
 
       
Section 4.1. Existence; Power
    35  
Section 4.2. Organizational Power; Authorization
    35  
Section 4.3. Governmental Approvals; No Conflicts
    35  
Section 4.4. Financial Statements
    36  
Section 4.5. Litigation and Environmental Matters
    36  
Section 4.6. Compliance with Laws and Agreements
    36  
Section 4.7. Investment Company Act, Etc
    36  
Section 4.8. Taxes
    37  
Section 4.9. Margin Regulations
    37  

 

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              Page  
Section 4.10. Underwriting Policies
    37  
Section 4.11. ERISA
    37  
Section 4.12. Ownership of Property
    37  
Section 4.13. Disclosure
    38  
Section 4.14. Labor Relations
    38  
Section 4.15. Subsidiaries
    38  
Section 4.16. Insolvency
    38  
Section 4.17. OFAC
    39  
Section 4.18. Patriot Act
    39  
 
       
ARTICLE V AFFIRMATIVE COVENANTS
    39  
 
       
Section 5.1. Financial Statements and Other Information
    39  
Section 5.2. Notices of Material Events
    41  
Section 5.3. Existence; Conduct of Business
    41  
Section 5.4. Compliance with Laws, Etc
    42  
Section 5.5. Payment of Obligations
    42  
Section 5.6. Books and Records
    42  
Section 5.7. Visitation, Inspection, Etc
    42  
Section 5.8. Maintenance of Properties; Insurance
    42  
Section 5.9. Use of Proceeds
    43  
Section 5.10. Maintenance of RIC Status and Business Development Company
    43  
Section 5.11. Additional Subsidiaries; Additional Collateral
    43  
Section 5.12. Compliance with Underwriting Policies
    43  
 
       
ARTICLE VI FINANCIAL COVENANTS
    43  
 
       
Section 6.1. Minimum Asset Coverage Ratio
    43  
Section 6.2. Minimum Liquidity
    43  
Section 6.3. Minimum Consolidated Shareholders Equity
    43  
Section 6.4. Cash Collateral Coverage Ratio
    44  
 
       
ARTICLE VII NEGATIVE COVENANTS
    44  
 
       
Section 7.1. Indebtedness and Preferred Equity
    44  
Section 7.2. Negative Pledge
    45  
Section 7.3. Fundamental Changes
    45  
Section 7.4. Restricted Payments
    46  
Section 7.5. Sale of Assets
    47  
Section 7.6. Transactions with Affiliates
    47  
Section 7.7. Restrictive Agreements
    47  
Section 7.8. Sale and Leaseback Transactions
    48  
Section 7.9. Hedging Transactions
    48  
Section 7.10. Accounting Changes
    48  
Section 7.11. Amendment to Material Documents
    49  
Section 7.12. Loans, Etc
    49  
 
       
ARTICLE VIII EVENTS OF DEFAULT
    49  
 
       
Section 8.1. Events of Default
    49  
 
       
ARTICLE IX THE ADMINISTRATIVE AGENT
    52  
 
       
Section 9.1. Appointment of Administrative Agent
    52  
Section 9.2. Nature of Duties of Administrative Agent
    52  

ii 

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              Page  
Section 9.3. Lack of Reliance on the Administrative Agent
    53  
Section 9.4. Certain Rights of the Administrative Agent
    53  
Section 9.5. Reliance by Administrative Agent
    53  
Section 9.6. The Administrative Agent in its Individual Capacity
    53  
Section 9.7. Successor Administrative Agent
    54  
Section 9.8. Authorization to Execute other Loan Documents
    54  
Section 9.9. Documentation Agent; Syndication Agent
    54  
 
       
ARTICLE X MISCELLANEOUS
    54  
 
       
Section 10.1. Notices
    54  
Section 10.2. Waiver; Amendments
    57  
Section 10.3. Expenses; Indemnification
    58  
Section 10.4. Successors and Assigns
    59  
Section 10.5. Governing Law; Jurisdiction; Consent to Service of Process
    62  
Section 10.6. WAIVER OF JURY TRIAL
    63  
Section 10.7. Right of Setoff
    63  
Section 10.8. Counterparts; Integration
    64  
Section 10.9. Survival
    64  
Section 10.10. Severability
    64  
Section 10.11. Confidentiality
    64  
Section 10.12. Interest Rate Limitation
    65  
Section 10.13. Waiver of Effect of Corporate Seal
    65  
Section 10.14. Patriot Act
    65  
Section 10.15. NO ORAL AGREEMENTS, WAIVER
    66  

iii 

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Schedules

             
 
  Schedule I   -   Commitment Amounts
 
  Schedule II   -   Investment Credit Agreement
 
  Schedule 4.5   -   Environmental Matters
 
  Schedule 4.14   -   Subsidiaries
 
  Schedule 7.1   -   Outstanding Indebtedness
 
  Schedule 7.2   -   Existing Liens

Exhibits

             
 
  Exhibit A   -   Form of Revolving Note
 
  Exhibit C   -   Form of Assignment and Acceptance
 
  Exhibit D   -   Form of Subsidiary Guarantee
 
  Exhibit 2.3   -   Form of Notice of Revolving Borrowing
 
  Exhibit 2.6(b)   -   Form of Continuation/Conversion
 
  Exhibit 3.1(c)(viii)       Form of Responsible Officer’s Certificate
 
  Exhibit 5.1(c)   -   Form of Compliance Certificate

iv 

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TREASURY SECURED REVOLVING CREDIT AGREEMENT
          THIS TREASURY SECURED REVOLVING CREDIT AGREEMENT (this “Agreement”) is
made and entered into as of June 4, 2007, by and among KAYNE ANDERSON ENERGY
DEVELOPMENT COMPANY, a Maryland corporation (the “Borrower”), the several banks
and other financial institutions from time to time party hereto (the “Lenders”),
SUNTRUST BANK, in its capacity as Administrative Agent for the Lenders (the
“Administrative Agent”), and CITIBANK, N.A., as Syndication Agent (“Syndication
Agent”).
W I T N E S S E T H:
          WHEREAS, the Borrower has requested that Lenders establish a
$100,000,000 treasury secured revolving credit facility in favor of the
Borrower;
          WHEREAS, the Borrower has entered into that certain Senior Secured
Revolving Credit Agreement (in the form of Schedule II attached hereto) dated as
of the date hereof, by and among Borrower, the several banks and financial
institutions from time to time party thereto (the “Investment Lenders”) SunTrust
Bank as administrative agent and Citibank, N.A. as syndication agent (as the
same may be amended, restated, supplemented or otherwise modified from time to
time, the “Investment Credit Agreement”);
          WHEREAS, subject to the terms and conditions of this Agreement, the
Lenders severally, to the extent of their respective Commitments as defined
herein, are willing to establish the requested revolving credit facility in
favor of the Borrower;
          NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Borrower, the Lenders and the Administrative
Agent agree as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
          Section 1.1. Definitions. In addition to the other terms defined
herein, the following terms used herein shall have the meanings herein specified
(to be equally applicable to both the singular and plural forms of the terms
defined):
          “90-Day Treasury Securities” shall mean U.S. Government Securities of
the United States maturing within 90 days of the date of acquisition thereof.
          “Adjusted Borrowing Base” shall mean the Borrowing Base minus the
aggregate amount of Cash and Cash Equivalents included in the Investment Credit
Facility Collateral.
          “Adjusted Covered Debt Amount” shall mean, on any date, the Covered
Debt Amount minus the aggregate amount of Cash and Cash Equivalents included in
the Investment Credit Facility Collateral.

 

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          “Adjusted LIBO Rate” shall mean, with respect to each Interest Period
for a Eurodollar Borrowing, the rate per annum obtained by dividing (i) LIBOR
for such Interest Period by (ii) a percentage equal to 1.00 minus the Eurodollar
Reserve Percentage.
          “Administrative Agent” shall have the meaning assigned to such term in
the opening paragraph hereof.
          “Administrative Questionnaire” shall mean, with respect to each
Lender, an administrative questionnaire in the form prepared by the
Administrative Agent and submitted to the Administrative Agent duly completed by
such Lender.
          “Affiliate” shall mean, as to any Person, any other Person that
directly, or indirectly through one or more intermediaries, Controls, is
Controlled by, or is under common Control with, such Person. For the purposes of
this definition, “Control” shall mean the power, directly or indirectly, either
to (i) vote 5% or more of the securities having ordinary voting power for the
election of directors (or persons performing similar functions) of a Person or
(ii) direct or cause the direction of the management and policies of a Person,
whether through the ability to exercise voting power, by control or otherwise.
The terms “Controlling”, “Controlled by”, and “under common Control with” have
the meanings correlative thereto.
          “Aggregate Commitment Amount” shall mean the aggregate principal
amount of the Aggregate Commitments from time to time. On the Closing Date, the
Aggregate Commitment Amount equals $100,000,000.
          “Aggregate Commitment” shall mean, collectively, all Revolving
Commitments of all Lenders at any time outstanding.
          “Applicable Lending Office” shall mean, for each Lender and for each
Type of Loan, the “Lending Office” of such Lender (or an Affiliate of such
Lender) designated for such Type of Loan in the Administrative Questionnaire
submitted by such Lender or such other office of such Lender (or an Affiliate of
such Lender) as such Lender may from time to time specify to the Administrative
Agent and the Borrower as the office by which its Loans of such Type are to be
made and maintained.
          “Applicable Margin” shall mean, as of any date, with respect to all
Loans outstanding on any date, 0.00% per annum on Base Rate Loans and 0.20% per
annum on LIBOR Loans.
          “Applicable Percentage” shall mean, as of any date, with respect to
the commitment fee, 0.10% per annum.
          “Approved Brokerage Account” shall have the meaning assigned to such
term in the Investment Credit Agreement.
          “Approved Fund” shall mean any Person (other than a natural Person)
that is (or will be) engaged in making, purchasing, holding or otherwise
investing in commercial loans and similar extensions of credit in the ordinary
course of its business and that is administered or

2

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managed by (i) a Lender, (ii) an Affiliate of a Lender or (iii) an entity or an
Affiliate of an entity that administers or manages a Lender.
          “Asset Coverage Ratio” shall mean, as of any date, the ratio,
determined on a consolidated basis, without duplication, in accordance with
GAAP, of (i) the value of total assets of the Borrower and its Subsidiaries
(excluding the Cash Collateral), less all liabilities (other than Indebtedness,
including Indebtedness under this Agreement and the Investment Credit Agreement)
of the Borrower and its Subsidiaries, as of such date, to (ii) the aggregate
amount of Indebtedness, excluding Indebtedness under the this Agreement and
Indebtedness of any Special Purpose Subsidiary incurred from time to time so
long as such Indebtedness is non-recourse, as of such date.
          “Assignment and Acceptance” shall mean an assignment and acceptance
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 10.4(b)) and accepted by the Administrative
Agent, in the form of Exhibit C attached hereto or any other form approved by
the Administrative Agent.
          “Availability Period” shall mean the period from the Closing Date to
but excluding the Commitment Termination Date.
          “Base Rate” shall mean the higher of (i) the per annum rate which the
Administrative Agent publicly announces from time to time to be its prime
lending rate, as in effect from time to time, and (ii) the Federal Funds Rate,
as in effect from time to time, plus one-half of one percent (0.50%). The
Administrative Agent’s prime lending rate is a reference rate and does not
necessarily represent the lowest or best rate charged to customers. The
Administrative Agent may make commercial loans or other loans at rates of
interest at, above or below the Administrative Agent’s prime lending rate. Each
change in the Administrative Agent’s prime lending rate shall be effective from
and including the date such change is publicly announced as being effective.
          “Borrower” shall have the meaning in the introductory paragraph
hereof.
          “Borrowing” shall mean a borrowing consisting of Loans of the same
Class and Type, made, converted or continued on the same date and in case of
Eurodollar Loans, as to which a single Interest Period is in effect.
          “Borrowing Base” shall have the meaning assigned to such term in
Section 5.13 of the Investment Credit Agreement.
          “Business Day” shall mean (i) any day other than a Saturday, Sunday or
other day on which commercial banks in Atlanta, Georgia and New York, New York
are authorized or required by law to close and (ii) if such day relates to a
Borrowing of, a payment or prepayment of principal or interest on, a conversion
of or into, or an Interest Period for, a Eurodollar Loan or a notice with
respect to any of the foregoing, any day on which banks are not open for
dealings in Dollars are carried on in the London interbank market.
          “Capital Lease Obligations” of any Person shall mean all obligations
of such Person to pay rent or other amounts under any lease (or other
arrangement conveying the right to

3

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use) of 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.
          “Capital Stock” of any Person shall mean any and all shares of
corporate stock (however designated) of, and any and all other equity interests
and participations representing ownership interests (including membership
interests and limited liability company interests) in, such Person.
          “Cash” shall mean any immediately available funds in Dollars or in any
currency other than Dollars which is freely convertible currency.
          “Cash Collateral” shall mean the aggregate amount of all Cash and
90-day Treasury Securities, in each case in which Administrative Agent shall
have a first priority perfected security interest through deposit accounts
and/or brokerage accounts maintained with Administrative Agent or its affiliates
in form and substance satisfactory to the Administrative Agent.
          “Cash Collateral Coverage Ratio” shall mean the ratio of Cash
Collateral to the aggregate amount of the Revolving Credit Exposure of all
Lenders.
          “Cash Equivalents” shall mean investments (other than Cash) that are
one or more of the following obligations:
          (a) U.S. Government Securities, in each case maturing within one year
from the acquisition thereof;
          (b) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such acquisition date, a credit
rating of at least A1 from S&P and at least P1 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 or 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 Administrative Agent can perfect a security interest therein and
(ii) having, at such date of acquisition, a credit rating of at least A1 from
S&P and at least P1 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 a financial institution satisfying the criteria described
in clause (c) of this definition;
          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

4

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shall be deemed to be an equivalent rating in a successor rating category of
Moody’s or S&P, as the case may be; (iii) Cash Equivalents (other than U.S.
Government Securities or repurchase agreements) shall not include any such
investment of more than 10% of total assets of the Loan Parties in any single
issuer; and (iv) in no event shall Cash Equivalents include any obligation that
is not denominated in Dollars.
          “Change in Control” shall mean the occurrence of one or more of the
following events: (i) any sale, lease, exchange or other transfer (in a single
transaction or a series of related transactions) of all or substantially all of
the assets of the Borrower to any Person or “group” (within the meaning of the
Securities Exchange Act of 1934 and the rules of the Securities and Exchange
Commission thereunder in effect on the date hereof), (ii) 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 Securities and Exchange Commission thereunder as in effect on the date
hereof) of 35% or more of the outstanding shares of the voting stock of the
Borrower; (iii) occupation of a majority of the seats (other than vacant seats)
on the board of directors of the Borrower by Persons who were neither
(x) nominated by the current board of directors or (y) appointed by directors so
nominated; or (iv) KA Fund Advisors, LLC (or an Affiliate thereof approved by
the Administrative Agent (such approval not to be unreasonably withheld)) ceases
to retain its advisory duties over the Borrower in effect on the Closing Date.
          “Change in Law” shall mean (i) the adoption of any applicable law,
rule or regulation after the date of this Agreement, (ii) any change in any
applicable law, rule or regulation, or any change in the interpretation or
application thereof, by any Governmental Authority after the date of this
Agreement, or (iii) compliance by any Lender (or its Applicable Lending Office)
(or for purposes of Section 2.16(b), by such Lender’s parent corporation, if
applicable) with any request, guideline or directive (whether or not having the
force of law) of any Governmental Authority made or issued after the date of
this Agreement.
          “Class”, when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans
and when used in reference to any Commitment, refers to whether such Commitment
is a Revolving Commitment.
          “Clearing Account” shall have the meaning assigned to such term in the
Investment Credit Agreement.
          “Closing Date” shall mean the date on which the conditions precedent
set forth in Section 3.1 and Section 3.2 have been satisfied or waived in
accordance with Section 10.2.
          “Code” shall mean the Internal Revenue Code of 1986, as amended and in
effect from time to time.
          “Commitment” shall mean the Revolving Commitment.
          “Commitment Termination Date” shall mean the earliest of (i) June 4,
2010, (ii) the date on which the Aggregate Commitments are terminated pursuant
to Section 2.7 and (iii) the date on which all amounts outstanding under this
Agreement have been declared or have automatically become due and payable
(whether by acceleration or otherwise).

5

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          “Compliance Certificate” shall mean a certificate from the chief
executive officer or the chief financial officer of the Borrower in the form of,
and containing the certifications set forth in, the certificate attached hereto
as Exhibit 5.1(c).
          “Contractual Obligation” of any Person shall mean any provision of any
security issued by such Person or of any agreement, instrument or undertaking
under which such Person is obligated or by which it or any of the property in
which it has an interest is bound.
          “Control Agreement” shall mean that certain Cash Collateral Agreement
and Securities Account Control Agreement, dated as of the Closing Date, by and
among the Borrower, the Administrative Agent and SunTrust Bank, and each other
control agreement among the Borrower, the Administrative Agent and the
depository bank, custodian, securities intermediary or safekeeping intermediary
at which the account subject to such agreement is held, each as amended,
restated, supplemented or otherwise modified from time to time.
          “Covered Debt Amount” shall mean, as of any date, (i) all of the
Investment Revolving Credit Exposures of all Lenders on such date.
          “Credit Exposure” shall mean, for any Lender, the sum of (i) the
outstanding principal amount of such Lender’s Loans.
          “Default” shall mean any condition or event that, with the giving of
notice or the lapse of time or both, would constitute an Event of Default.
          “Default Interest” shall have the meaning set forth in
Section 2.11(c).
          “Distributable Cash Flow” shall have the meaning assigned to such term
in the Investment Credit Agreement.
          “Dollar(s)” and the sign “$” shall mean lawful money of the United
States of America.
          “Eligible Assignee” shall mean (i) a Lender; (ii) an Affiliate of a
Lender; (iii) an Approved Fund; and (iv) any other Person (other than a natural
Person) approved by the Administrative Agent, and unless an Event of Default has
occurred and is continuing, the Borrower (each such approval not to be
unreasonably withheld or delayed). If the consent of the Borrower to an
assignment or to an Eligible Assignee is required hereunder (including a consent
to an assignment which does not meet the minimum assignment thresholds specified
in paragraph (b)(i) of Section 10.4), the Borrower shall be deemed to have given
its consent five Business Days after the date notice thereof has actually been
delivered by the assigning Lender (through the Administrative Agent) to the
Borrower, unless such consent is expressly refused by the Borrower prior to such
fifth Business Day.
          “Environmental Laws” shall mean all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by or with any Governmental
Authority, relating in any way to the environment, preservation or reclamation
of natural resources, the management, Release or threatened Release of any
Hazardous Material or to health and safety matters.

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          “Environmental Liability” shall mean any liability, contingent or
otherwise (including any liability for damages, costs of environmental
investigation and remediation, costs of administrative oversight, fines, natural
resource damages, penalties or indemnities), of the Borrower or any Subsidiary
directly or indirectly resulting from or based upon (i) any actual or alleged
violation of any Environmental Law, (ii) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials,
(iii) any actual or alleged exposure to any Hazardous Materials, (iv) the
Release or threatened Release of any Hazardous Materials or (v) any contract,
agreement or other consensual arrangement pursuant to which liability is assumed
or imposed with respect to any of the foregoing.
          “Equity Interests” shall mean 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.
          “ERISA” shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute.
          “ERISA Affiliate” shall mean any trade or business (whether or not
incorporated), which, together with the Borrower, is treated as a single
employer under Section 414(b) or (c) of the Code or, solely for the purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
          “ERISA Event” shall mean (i) any “reportable event”, as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived);
(ii) the existence with respect to any Plan of an “accumulated funding
deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (iii) the filing pursuant to Section 412(d) of the Code
or Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (iv) the incurrence by the Borrower or any of
its ERISA Affiliates of any liability under Title IV of ERISA with respect to
the termination of any Plan; (v) the receipt by the Borrower or any ERISA
Affiliate from the PBGC or a plan administrator appointed by the PBGC of any
notice relating to an intention to terminate any Plan or Plans or to appoint a
trustee to administer any Plan; (vi) the incurrence by the Borrower or any of
its ERISA Affiliates of any liability with respect to the withdrawal or partial
withdrawal from any Plan or Multiemployer Plan; or (vii) the receipt by the
Borrower or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
          “Eurodollar” when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, bears interest at
a rate determined by reference to the Adjusted LIBO Rate.
          “Eurodollar Reserve Percentage” shall mean the aggregate of the
maximum reserve percentages (including, without limitation, any emergency,
supplemental, special or other marginal reserves) expressed as a decimal
(rounded upwards to the next 1/100th of 1%) in effect

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on any day to which the Administrative Agent is subject with respect to the
Adjusted LIBO Rate pursuant to regulations issued by the Board of Governors of
the Federal Reserve System (or any Governmental Authority succeeding to any of
its principal functions) with respect to eurocurrency funding (currently
referred to as “eurocurrency liabilities” under Regulation D). Eurodollar 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. The Eurodollar Reserve Percentage shall be adjusted automatically
on and as of the effective date of any change in any reserve percentage.
          “Event of Default” shall have the meaning provided in Article VIII.
          “Excluded Taxes” shall mean with respect to the Administrative Agent,
any Lender, or any other recipient of any payment to be made by or on account of
any obligation of the Borrower hereunder, (i) income or franchise taxes imposed
on (or measured by) its net income by the United States of America, or by the
jurisdiction 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, (ii) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction in which any Lender is located and (iii) in the case of a Foreign
Lender, any withholding tax that (x) is imposed on amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party to this
Agreement, (y) is imposed on amounts payable to such Foreign Lender at any time
that such Foreign Lender designates a new lending office, other than taxes that
have accrued prior to the designation of such lending office that are otherwise
not Excluded Taxes, and (z) is attributable to such Foreign Lender’s failure to
comply with Section 2.18(e).
          “Federal Funds Rate” shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the next 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with member banks
of the Federal Reserve System arranged by Federal funds brokers, as published by
the Federal Reserve Bank of New York on the next succeeding Business Day or if
such rate is not so published for any Business Day, the Federal Funds Rate for
such day shall be the average rounded upwards, if necessary, to the next 1/100th
of 1% of the quotations for such day on such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by the Administrative Agent.
          “Fee Letter” shall mean, collectively, that certain fee letter, dated
as of May 7, 2007, executed by the Administrative Agent and accepted by Borrower
and that certain fee letter, dated as of May 7, 2007, executed by the
Syndication Agent and accepted by Borrower.
          “Fiscal Quarter” shall mean any fiscal quarter of the Borrower.
          “Fiscal Year” shall mean any fiscal year of the Borrower.
          “Foreign Lender” shall mean any Lender that is not a United States
person under Section 7701(a)(30) of the Code.

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          “GAAP” shall mean generally accepted accounting principles in the
United States applied on a consistent basis and subject to the terms of
Section 1.3.
          “Governmental Authority” shall mean the government of the United
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
          “Guarantee” of or by any Person (the “guarantor”) shall mean 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, direct or indirect, of the guarantor
(i) 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, (ii) 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,
(iii) 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 (iv) as an
account party in respect of any letter of credit or letter of guaranty issued in
support of such Indebtedness or obligation; provided, that the term “Guarantee”
shall not include endorsements for collection or deposit in the ordinary course
of business. The amount of any Guarantee shall be deemed to be an amount equal
to the stated or determinable amount of the primary obligation in respect of
which Guarantee is made or, if not so stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith. The
term “Guarantee” used as a verb has a corresponding meaning.
          “Hazardous Materials” shall mean all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
          “Hedging Obligations” of any Person shall mean any and all obligations
of such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired under (i) any and all Hedging
Transactions, (ii) any and all cancellations, buy backs, reversals, terminations
or assignments of any Hedging Transactions and (iii) any and all renewals,
extensions and modifications of any Hedging Transactions and any and all
substitutions for any Hedging Transactions.
          “Hedging Transaction” of any Person shall mean any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into by such Person that is a rate swap, basis swap, forward rate transaction,
commodity swap, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collateral transaction, forward transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
these transactions) or

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any combination thereof, whether linked to one or more interest rates, foreign
currencies, commodity prices, equity prices or other financial measures.
          “Indebtedness” of any Person shall mean, without duplication (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person in respect of the deferred purchase price
of property or services (other than trade payables incurred in the ordinary
course of business on terms customary in the trade), (iv) all obligations of
such Person under any conditional sale or other title retention agreement(s)
relating to property acquired by such Person, (v) Capital Lease Obligations of
such Person, (vi) obligations, contingent or otherwise, of such Person in
respect of letters of credit, acceptances or similar extensions of credit, (vii)
guaranties by such Person of the type of Indebtedness described in clauses
(i) through (vi) above, (viii) all Indebtedness of a third party secured by any
Lien on property owned by such Person, whether or not such Indebtedness has been
assumed by such Person, (ix) all obligations of such Person, contingent or
otherwise, to purchase, redeem, retire or otherwise acquire for value any common
stock of such Person, (x) Off-Balance Sheet Liabilities retained in connection
with asset securitization programs, Synthetic Leases, sale and leaseback
transactions or other similar obligations arising with respect to any other
transaction which is the functional equivalent of or takes the place of
borrowing but which does not constitute a liability on the consolidated balance
sheet of such Person and its subsidiaries (xi) Net Mark to Market Exposure on
all Hedging Obligations, and (xii) obligations under any derivative contract
including any commodity agreement, or foreign exchange agreement. The
Indebtedness of any Person shall include the Indebtedness of any partnership or
joint venture in which such Person is a general partner or a joint venturer,
except to the extent that the terms of such Indebtedness provide that such
Person is not liable therefor.
          “Indemnified Taxes” shall mean Taxes other than Excluded Taxes.
          “Information Memorandum” shall mean the confidential executive summary
relating to the Loan Parties and the transactions contemplated by this Agreement
and the other Loan Documents.
          “Intercreditor Agreement” shall mean that certain Intercreditor
Agreement, dated as of the date hereof, by and among the Borrower, the Lenders,
the Administrative Agent and the Investment Lenders, the swingline lender, the
issuing bank and the administrative agent under the Investment Credit Agreement.
          “Interest Period” shall mean with respect to any Eurodollar Borrowing,
a period of one, two, three, six months or, to the extent available to each
Lender, twelve months; provided, that:
     (i) the initial Interest Period for such Borrowing shall commence on the
date of such Borrowing (including the date of any conversion from a Borrowing of
another Type), and each Interest Period occurring thereafter in respect of such
Borrowing shall commence on the day on which the next preceding Interest Period
expires;

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     (ii) if any Interest Period would otherwise end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day, unless such Business Day falls in another calendar month, in which
case such Interest Period would end on the next preceding Business Day;
     (iii) any Interest Period which begins on the last Business Day of a
calendar month or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period shall end on the last
Business Day of such calendar month;
     (iv) no Interest Period may extend beyond the Commitment Termination Date.
          “Investment Advisory Agreement” shall mean that certain Investment
Management Agreement, dated as of September 20, 2006, by and between Borrower
and KA Fund Advisors, LLC.
          “Investment Company Act” shall mean the Investment Company Act of
1940, as amended and in effect from time to time.
          “Investment Credit Agreement” shall have the meaning set forth in the
recitals to this Agreement.
          “Investment Credit Facility Collateral” shall mean all “Collateral” as
detailed in the Investment Credit Agreement
          “Investment Lenders” shall have the meaning set forth in the recitals
to this Agreement.
          “Investment Revolving Commitment” shall mean, with respect to each
Investment Lender, the obligation of such Investment Lender to make Investment
Revolving Loans in an aggregate principal amount not exceeding the amount set
forth with respect to such Investment Lender on Schedule I to the Investment
Credit Agreement, or in the case of a Person becoming an Investment Lender after
the Closing Date, the amount of the assigned “Investment Revolving Commitment”
as provided in the assignment and acceptance executed by such Person as an
assignee, as the same may be increased or decreased pursuant to terms hereof.
          “Investment Revolving Commitment Amount” shall mean the aggregate
principal amount of the Investment Revolving Commitments from time to time.
          “Revolving Credit Exposure” shall mean, with respect to any Investment
Lender at any time, the sum of the outstanding principal amount of such
Investment Lender’s Investment Revolving Loans, Investment LC Exposure and
Investment Swingline Exposure.
          “Investment Revolving Loans” shall have the meaning set forth in the
Investment Credit Agreement.
          “LC Exposure” shall have the meaning assigned to such term in the
Investment Credit Agreement.

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          “Lenders” shall have the meaning assigned to such term in the opening
paragraph of this Agreement.
          “LIBOR” shall mean, for any applicable Interest Period with respect to
any Eurodollar Loan, the British Bankers’ Association Interest Settlement Rate
per annum for deposits in Dollars for a period equal to such Interest Period
appearing on the display designated as Page 3750 on the Dow Jones Markets
Service (or such other page on that service or such other service designated by
the British Bankers’ Association for the display of such Association’s Interest
Settlement Rates for Dollar deposits) as of 11:00 a.m. (London, England time) on
the day that is two Business Days prior to the first day of the Interest Period
or if such Page 3750 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 if the Administrative Agent determines that the relevant foregoing sources
are unavailable for the relevant Interest Period, LIBOR 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 Dollars 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 10:00 a.m. (New York time) 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 Eurodollar
Loan of the Administrative Agent.
          “Lien” shall mean any mortgage, pledge, security interest, lien
(statutory or otherwise), charge, encumbrance, hypothecation, assignment,
deposit arrangement, or other arrangement having the practical effect of the
foregoing or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any
conditional sale or other title retention agreement and any capital lease having
the same economic effect as any of the foregoing).
          “Loan Documents” shall mean, collectively, this Agreement, the Notes
(if any), the Subsidiary Guarantee Agreements, the Security Documents, the Fee
Letter, all Notices of Revolving Borrowing, all Notices of
Conversion/Continuation, all Compliance Certificates, the Control Agreement, and
any and all other instruments, agreements, documents, certificates and writings
executed in connection with any of the foregoing.
          “Loan Parties” shall mean the Borrower and the Subsidiary Guarantors.
          “Loans” shall mean all Revolving Loans in the aggregate or any of
them, as the context shall require.
          “Material Adverse Effect” shall mean, with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration, or governmental investigation or proceeding),
whether singularly or in conjunction with any other event or events, act or
acts, condition or conditions, occurrence or occurrences whether or not related,
a material adverse change in, or a material adverse effect on, (i) the business,
results of operations, financial condition, assets, liabilities or prospects of
the Borrower or of the Borrower and its Subsidiaries, taken as a whole, (ii) the
ability of the Loan Parties to perform any of their respective obligations under
the Loan Documents, (iii) the rights and remedies of the

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Administrative Agent and the Lenders under any of the Loan Documents or (iv) the
legality, validity or enforceability of any of the Loan Documents.
          “Material Indebtedness” shall mean Indebtedness (other than the Loans)
and Hedging Obligations of the Borrower or any of its Subsidiaries, individually
or in an aggregate principal amount exceeding $5,000,000. For purposes of
determining the amount of attributed Indebtedness from Hedging Obligations, the
“principal amount” of any Hedging Obligations at any time shall be the Net
Mark-to-Market Exposure of such Hedging Obligations.
          “Moody’s” shall mean Moody’s Investors Service, Inc.
          “Multiemployer Plan” shall have the meaning set forth in
Section 4001(a)(3) of ERISA.
          “Net Mark to Market Exposure” shall mean, as of any date of
determination, the aggregate amount with respect to all Hedging Obligations of
the Borrower and its Subsidiaries of the excess (if any) of all unrealized
losses in respect of all such Hedging Obligations over all unrealized profits in
respect of all Hedging Transactions of the Borrower and its Subsidiaries.
“Unrealized losses” shall mean as to any Hedging Obligation, the fair market
value of the cost to such Person of replacing the Hedging Transaction giving
rise to such Hedging Obligation as of the date of determination (assuming the
Hedging Transaction were to be terminated as of that date), and “unrealized
profits” means as to any Hedging Transaction, the fair market value of the gain
to such Person in respect of the Hedging Transaction as of the date of
determination (assuming such Hedging Transaction were to be terminated as of
that date).
          “Notes” shall mean, collectively, the Revolving Credit Notes.
          “Notice of Conversion/Continuation” shall mean the notice given by the
Borrower to the Administrative Agent in respect of the conversion or
continuation of an outstanding Borrowing as provided in Section 2.6(b).
          “Notice of Revolving Borrowing” shall have the meaning as set forth in
Section 2.3.
          “Obligations” shall mean all amounts owing by the Borrower to the
Administrative Agent or any Lender pursuant to or in connection with this
Agreement or any other Loan Document, including without limitation, all
principal, interest (including any interest accruing after the filing of any
petition in bankruptcy or the commencement of any insolvency, reorganization or
like proceeding relating to the Borrower, whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding), all reimbursement
obligations, fees, expenses, indemnification and reimbursement payments, costs
and expenses (including all fees and expenses of counsel to the Administrative
Agent and any Lender incurred pursuant to this Agreement or any other Loan
Document), whether direct or indirect, absolute or contingent, liquidated or
unliquidated, now existing or hereafter arising hereunder or thereunder, and all
Hedging Obligations owed to the Administrative Agent, any Lender or any of their
Affiliates incurred in order to limit interest rate or fee fluctuation with
respect to the Loans and all obligations and liabilities incurred in connection
with collecting and enforcing the foregoing, together with all renewals,
extensions, modifications or refinancings thereof.

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          “Off-Balance Sheet Liabilities” of any Person shall mean (i) any
repurchase obligation or liability of such Person with respect to accounts or
notes receivable sold by such Person, (ii) any liability of such Person under
any sale and leaseback transactions that do not create a liability on the
balance sheet of such Person, (iii) any Synthetic Lease Obligation or (iv) any
obligation arising with respect to any other transaction which is the functional
equivalent of or takes the place of borrowing but which does not constitute a
liability on the balance sheet of such Person.
          “OSHA” shall mean the Occupational Safety and Health Act of 1970, as
amended from time to time, and any successor statute.
          “Other Lock-up Agreement” shall have the meaning assigned to such term
in Section 7.7
          “Other Taxes” shall mean any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement or any other
Loan Document.
          “Participant” shall have the meaning set forth in Section 10.4(d).
          “Payment Office” shall mean the office of the Administrative Agent
located at 303 Peachtree Street, N.E., Atlanta, Georgia 30308, or such other
location as to which the Administrative Agent shall have given written notice to
the Borrower and the other Lenders.
          “PBGC” shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA, and any successor entity performing similar functions.
          “Permitted Encumbrances” shall mean
     (i) Liens imposed by law for taxes not yet due or which are being contested
in good faith by appropriate proceedings diligently conducted and with respect
to which adequate reserves are being maintained in accordance with GAAP;
     (ii) statutory Liens of landlords, carriers, warehousemen, mechanics,
materialmen and similar Liens arising by operation of law in the ordinary course
of business for amounts not yet due or which are being contested in good faith
by appropriate proceedings and with respect to which adequate reserves are being
maintained in accordance with GAAP;
     (iii) pledges and deposits made in the ordinary course of business in
compliance with workers’ compensation, unemployment insurance and other social
security laws or regulations;
     (iv) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of business;

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     (v) judgment and attachment liens not giving rise to an Event of Default or
Liens created by or existing from any litigation or legal proceeding that are
currently being contested in good faith by appropriate proceedings and with
respect to which adequate reserves are being maintained in accordance with GAAP;
     (vi) customary rights of set-off, revocation, refund or chargeback under
deposit agreements or under the Uniform Commercial Code or common law of banks
or other financial institutions where Borrower or any of its Subsidiaries
maintains deposits (other than deposits intended as cash collateral) in the
ordinary course of business;
     (vii) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially
detract from the value of the affected property or materially interfere with the
ordinary conduct of business of the Borrower and its Subsidiaries taken as a
whole;
     (viii) Liens imposed on amounts held in the Borrower’s or its Subsidiaries’
Approved Brokerage Accounts in accordance with option transactions or other
similar transactions; provided, that in no event shall the sum of the fair
market value of the collateral securing (A) such Liens or the obligations
secured thereby and (B) the Liens or the obligations secured thereby provided
for in clause (ix) below exceed $5,000,000 in the aggregate at any time; and
     (ix) Liens securing obligations incurred under any Clearing Account;
provided, that the custodian of such Clearing Account and the Administrative
Agent have entered into an agreement in form and substance satisfactory to the
Administrative Agent which, among other things, requires all amounts and
Securities in excess of $1,000,000 to be transferred prior to the end of each
Business Day to a Collateral Account;
provided, that the term “Permitted Encumbrances” shall not include any Lien
securing Indebtedness, except for Indebtedness set forth on Schedule 7.1 hereto.
          “Person” shall mean any individual, partnership, firm, corporation,
association, joint venture, limited liability company, trust or other entity, or
any Governmental Authority.
          “Plan” shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or
Section 412 of the Code or Section 302 of ERISA, and in respect of which the
Borrower or any ERISA Affiliate is (or, if such plan were terminated, would
under Section 4069 of ERISA be deemed to be) an “employer” as defined in
Section 3(5) of ERISA.
          “Portfolio Investment” shall have the meaning assigned to such term in
the Investment Credit Agreement.
          “Pro Rata Share” shall mean with respect to the Commitment of any
Lender at any time, a percentage, the numerator of which shall be such Lender’s
Commitment (or if such Commitments have been terminated or expired or the Loans
have been declared to be due and payable, such Lender’s Credit Exposure), and
the denominator of which shall be the sum of

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Commitments of all Lenders (or if the Commitments have been terminated or
expired or the Loans have been declared to be due and payable, all Credit
Exposure).
          “Register” has the meaning assigned to such term in clause (c) of
Section 10.4.
          “Regulation D” shall mean Regulation D of the Board of Governors of
the Federal Reserve System, as the same may be in effect from time to time, and
any successor regulations.
          “Related Parties” shall mean, with respect to any specified Person,
such Person’s Affiliates and the respective directors, officers, employees,
agents and advisors of such Person and such Person’s Affiliates.
          “Release” shall mean any release, spill, emission, leaking, dumping,
injection, pouring, deposit, disposal, discharge, dispersal, leaching or
migration into the environment (including ambient air, surface water,
groundwater, land surface or subsurface strata) or within any building,
structure, facility or fixture.
          “Required Lenders” shall mean, at any time, Lenders holding more than
50% of the aggregate outstanding Commitments at such time or if the Lenders have
no Commitments outstanding, then Lenders holding more than 50% of the aggregate
Credit Exposure;
          “Requirement of Law” for any Person shall mean the articles or
certificate of incorporation, bylaws, partnership certificate and agreement, or
limited liability company certificate of organization and agreement, as the case
may be, and other organizational and governing documents of such Person, and any
law, treaty, rule or regulation, or determination of a Governmental Authority,
in each case applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject
          “Responsible Officer” shall mean any of the president, the chief
executive officer, the chief operating officer, the chief financial officer, the
treasurer or a vice president of the Borrower or such other representative of
the Borrower as may be designated in writing by any one of the foregoing with
the consent of the Administrative Agent; and, with respect to the financial
covenants only, the chief financial officer or the treasurer of the Borrower.
          “Restricted Payment” shall mean any dividend or distribution on any
class of the capital stock of Borrower or any of its Subsidiaries, or any
payment on account of, or assets set apart for a sinking or other analogous fund
for, the purchase, redemption, retirement, defeasance or other acquisition of,
any shares of capital stock or Indebtedness subordinated to the Obligations of
the Borrower or any Guarantee thereof or any options, warrants, or other rights
to purchase such capital stock or such Indebtedness, whether now or hereafter
outstanding.
          “Revolving Commitment” shall mean, with respect to each Lender, the
obligation of such Lender to make Revolving Loans to the Borrower in an
aggregate principal amount not exceeding the amount set forth with respect to
such Lender on Schedule I or in the case of a Person becoming a Lender after the
Closing Date, the amount of the assigned “Revolving Commitment” as provided in
the Assignment and Acceptance executed by such Person as an

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assignee, or the joinder executed by such Person, in each case as such
commitment may subsequently be increased or decreased pursuant to terms hereof.
          “Revolving Commitment Amount” shall mean the aggregate principal
amount of the Revolving Commitments from time to time. On the Closing Date, the
Revolving Commitment Amount equals $100,000,000.
          “Revolving Commitment Termination Date” shall mean the earliest of
(i) June 4, 2010, (ii) the date on which the Revolving Commitments are
terminated pursuant to Section 2.7 and (iii) the date on which all amounts
outstanding under this Agreement have been declared or have automatically become
due and payable (whether by acceleration or otherwise).
          “Revolving Credit Exposure” shall mean, with respect to any Lender at
any time, the sum of the outstanding principal amount of such Lender’s Revolving
Loans.
          “Revolving Credit Note” shall mean a promissory note of the Borrower
payable to the order of a requesting Lender in the principal amount of such
Lender’s Revolving Commitment, in substantially the form of Exhibit A.
          “Revolving Loan” shall mean a loan made by the Lender to the Borrower
under its Revolving Commitment, which may either be a Base Rate Loan or a
Eurodollar Loan.
          “RIC” or “Regulated Investment Company” shall mean a regulated
investment company as defined in Section 851(a) of the Code that qualifies for
the special tax treatment provided for by subchapter M of the Code.
          “Right of First Offer” shall mean any provision, term or condition
which gives a Person the first option of buying or providing an offer with
respect to a Security if the holder of such Security undertakes any action to
sell, transfer or otherwise liquidate, or to market or offer for sale, or
solicit offers to purchase such Security.
          “S&P” shall mean Standard & Poor’s, a Division of the McGraw Hill
Companies.
          “Security Agreement” shall mean that certain Cash Collateral Agreement
and Securities Account Control Agreement, dated as of the Closing Date, executed
by the Borrower granting to the Administrative Agent for the benefit of the
Lenders a security interest in the Cash Collateral, as amended, restated,
supplemented or otherwise modified from time to time.
          “Security Documents” shall mean, collectively, the Security Agreement,
any other Control Agreement, and all other instruments and agreements now or
hereafter securing the whole or any part of the Obligations or any Guarantee
thereof, all UCC financing statements and all other documents, instruments,
agreements and certificates executed and delivered by any Loan Party to the
Administrative Agent and the Lenders in connection herewith.
          “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 or public and private issuers and tax-exempt securities (including

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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.
          “Shareholders’ Equity” shall mean, at any date, the amount determined
on a consolidated basis, without duplication, in accordance with GAAP, of
shareholders equity for the Borrower and its Subsidiaries at such date.
          “Special Purpose Subsidiary” shall mean any single purpose Subsidiary
created for the purpose of holding specific assets.
          “Subsidiary” shall mean, with respect to any Person (the “parent”),
any corporation, partnership, joint venture, limited liability company,
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, partnership, joint venture, limited liability
company, association or other entity (i) 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 (ii) 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. Unless otherwise indicated, all references to “Subsidiary” hereunder
shall mean a Subsidiary of the Borrower.
          “Subsidiary Guarantee Agreement” shall mean any guaranty agreement, in
form and substance satisfactory to the Agent, executed from time to time by any
Subsidiary in favor of the Administrative Agent and the Lenders, as amended,
restated, supplemented or otherwise modified from time to time.
          “Subsidiary Guarantor” shall mean any Subsidiary of Borrower that
executes and delivers a Subsidiary Guarantee Agreement on the Closing Date or
from time to time pursuant to Section 5.11.
          “Swingline Exposure” shall mean, with respect to each Investment
Lender, the principal amount of the swingline loans in which such Investment
Lender is legally obligated either to make a loan or to purchase a participation
in accordance with Section 2.4 of the Investment Credit Agreement, which shall
equal such Investment Lender’s Pro Rata Share of all outstanding swingline loans
under the Investment Credit Agreement.
          “Syndication Agent” shall have the meaning assigned to such term in
the opening paragraph hereof.
          “Synthetic Lease” shall mean a lease transaction under which the
parties intend that (i) the lease will be treated as an “operating lease” by the
lessee pursuant to Statement of Financial Accounting Standards No. 13, as
amended and (ii) the lessee will be entitled to various tax and other benefits
ordinarily available to owners (as opposed to lessees) of like property.

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          “Synthetic Lease Obligations” shall mean, with respect to any Person,
the sum of (i) all remaining rental obligations of such Person as lessee under
Synthetic Leases which are attributable to principal and, without duplication,
(ii) all rental and purchase price payment obligations of such Person under such
Synthetic Leases assuming such Person exercises the option to purchase the lease
property at the end of the lease term.
          “Tag Along Rights” shall mean tag along, co-sale or other similar
contractual rights that allow a holder of a Security to join in a proposed sale
of Securities by another Person and sell all or any portion of the Securities
held by such holder.
          “Taxes” shall mean any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
          “Type”, when used in reference to a Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Base
Rate.
          “Underwriting Policies” shall mean those investment objectives,
policies and restrictions that are set forth in the Borrower’s 2006 annual
report on Form 10K filed with the Securities and Exchange Commission, subject to
other modifications or supplements as may be adopted by the Borrower from time
to time and reflected in filings with the Securities and Exchange Commission
that do not result in a materially adverse change from those set forth in such
2006 annual report.
          “Uniform Commercial Code” or “UCC” means the Uniform Commercial Code
as in effect from time to time in the State of New York.
          “U.S. Government Securities” shall mean 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 Stats 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.
          “Withdrawal Liability” shall mean 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.
          Section 1.2. Classifications of Loans and Borrowings. For purposes of
this Agreement, Loans and Borrowings may be classified and referred to by Class
(e.g. a “Revolving Loan” or “Revolving Borrowing”), by Type (e.g. a “Eurodollar
Loan”, “Base Rate Loan”, “Eurodollar Borrowing” or “Base Rate Borrowing”) or by
Class and Type (e.g. a “Revolving Eurodollar Loan” or “Revolving Eurodollar
Borrowing”).
          Section 1.3. Accounting Terms and Determination. Unless otherwise
defined or specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared, in
accordance with GAAP as in effect from time to time, applied on a basis
consistent with the most recent audited consolidated financial statement of the
Borrower

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delivered pursuant to Section 5.1(a); provided, that if the Borrower notifies
the Administrative Agent that the Borrower wishes to amend any covenant in
Article VI to eliminate the effect of any change in GAAP on the operation of
such covenant (or if the Administrative Agent notifies the Borrower that the
Required Lenders wish to amend Article VI for such purpose), then the Borrower’s
compliance with such covenant shall be determined on the basis of GAAP in effect
immediately before the relevant change in GAAP became effective, until either
such notice is withdrawn or such covenant is amended in a manner satisfactory to
the Borrower and the Required Lenders.
          Section 1.4. 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”. In
the computation of periods of time from a specified date to a later specified
date, the word “from” means “from and including” and the word “to” means “to but
excluding”. Unless the context requires otherwise (i) 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 it was
originally executed or as it may from time to time be amended, restated,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (ii) any reference
herein to any Person shall be construed to include such Person’s successors and
permitted assigns, (iii) the words “hereof”, “herein” and “hereunder” and words
of similar import shall be construed to refer to this Agreement as a whole and
not to any particular provision hereof, (iv) all references to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles,
Sections, Exhibits and Schedules to this Agreement and (v) all references to a
specific time shall be construed to refer to the time in the city and state of
the Administrative Agent’s principal office, unless otherwise indicated.
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENTS
          Section 2.1. General Description of the Facility. Subject to and upon
the terms and conditions herein set forth, the Lenders hereby establish in favor
of the Borrower a revolving credit facility pursuant to which each Lender
severally agrees (to the extent of such Lender’s Commitment) to make Loans to
the Borrower in accordance with Section 2.2 and Section 2.3; provided, that in
no event shall the aggregate principal amount of all outstanding Loans exceed at
any time the Aggregate Commitment Amount from time to time in effect.
          Section 2.2. Revolving Loans. Subject to the terms and conditions set
forth herein, each Lender severally agrees to make Revolving Loans, ratably in
proportion to its Pro Rata Share, to the Borrower, from time to time during the
Availability Period, in an aggregate principal amount outstanding at any time
that will not result in (a) such Lender’s Revolving Credit Exposure exceeding
such Lender’s Revolving Commitment or (b) the aggregate

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Revolving Credit Exposures of all Lenders exceeding the Revolving Commitment
Amount. During the Availability Period, the Borrower shall be entitled to
borrow, prepay and reborrow Revolving Loans in accordance with the terms and
conditions of this Agreement; provided, that the Borrower may not borrow or
reborrow should there exist a Default or Event of Default or should Borrower
fail to maintain its status as a RIC as required pursuant to Section 5.10.
          Section 2.3. Procedure for Borrowings. The Borrower shall give the
Administrative Agent written notice (or telephonic notice promptly confirmed in
writing) of each Borrowing substantially in the form of Exhibit 2.3 (a “Notice
of Revolving Borrowing”) (x) prior to 11:00 a.m. (New York time) on the date of
each Base Rate Borrowing and (y) prior to 2:00 p.m. (New York time) three
(3) Business Days prior to the requested date of each Eurodollar Borrowing. Each
Notice of Revolving Borrowing shall be irrevocable and shall specify: (i) the
aggregate principal amount of such Borrowing, (ii) the date of such Borrowing
(which shall be a Business Day), (iii) the Class of such Loan comprising such
Borrowing; (iv) the Type of such Loan comprising such Borrowing and (v) in the
case of a Eurodollar Borrowing, the duration of the initial Interest Period
applicable thereto (subject to the provisions of the definition of Interest
Period). Each Borrowing shall consist entirely of Base Rate Loans or Eurodollar
Loans, as the Borrower may request. The aggregate principal amount of each
Eurodollar Borrowing shall be not less than $1,000,000 or a larger multiple of
$250,000, and the aggregate principal amount of each Base Rate Borrowing shall
not be less than $250,000 or a larger multiple of $100,000. At no time shall the
total number of Eurodollar Borrowings outstanding at any time exceed six.
Promptly following the receipt of a Notice of Revolving Borrowing in accordance
herewith, the Administrative Agent shall advise each Lender of the details
thereof and the amount of such Lender’s Loan to be made as part of the requested
Borrowing.
          Section 2.4. Intentionally Omitted.
          Section 2.5. Funding of Borrowings.
          (a) Each Lender will make available each Loan to be made by it
hereunder on the proposed date thereof by wire transfer in immediately available
funds by 11:00 a.m. (New York time) for Eurodollar Borrowings and 2:00 p.m. (New
York time) for Base Rate Borrowings to the Administrative Agent at the Payment
Office. The Administrative Agent will make such Loans available to the Borrower
by promptly crediting the amounts that it receives, in like funds by the close
of business on such proposed date, to an account maintained by the Borrower with
the Administrative Agent or at the Borrower’s option, by effecting a wire
transfer of such amounts to an account designated by the Borrower to the
Administrative Agent.
          (b) Unless the Administrative Agent shall have been notified by any
Lender (i) for Eurodollar Borrowings, prior to 5:00 p.m. (New York time) one
(1) Business Day prior to the date of such Eurodollar Borrowing in which such
Lender is to participate, and (ii) for Base Rate Borrowings, promptly and in no
event later than 2:00 p.m. (New York time) on the day of such Base Rate
Borrowing in which such Lender is to participate 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 amount available
to the Administrative Agent on such date, and the Administrative Agent, in
reliance on such

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assumption, may make available to the Borrower on such date a corresponding
amount. If such corresponding amount is not in fact made available to the
Administrative Agent by such Lender on the date of such Borrowing, the
Administrative Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest at the Federal Funds Rate until
the second Business Day after such demand and thereafter at the Base Rate. If
such Lender does not pay such corresponding amount forthwith upon the
Administrative Agent’s demand therefor, the Administrative Agent shall promptly
notify the Borrower, and the Borrower shall immediately pay such corresponding
amount to the Administrative Agent together with interest at the rate specified
for such Borrowing. Nothing in this subsection shall be deemed to relieve any
Lender from its obligation to fund its Pro Rata Share of any Borrowing hereunder
or to prejudice any rights which the Borrower may have against any Lender as a
result of any default by such Lender hereunder.
          (c) All Borrowings shall be made by the Lenders on the basis of their
respective Pro Rata Shares. No Lender shall be responsible for any default by
any other Lender in its obligations hereunder, and each Lender shall be
obligated to make its Loans provided to be made by it hereunder, regardless of
the failure of any other Lender to make its Loans hereunder.
          Section 2.6. Interest Elections.
          (a) Each Borrowing initially shall be of the Type specified in the
applicable Notice of Revolving Borrowing, and in the case of a Eurodollar
Borrowing, shall have an initial Interest Period as specified in such Notice of
Revolving Borrowing. Thereafter, the Borrower may elect to convert such
Borrowing into a different Type or to continue such Borrowing, and in the case
of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided
in this Section 2.6. The Borrower may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.
          (b) To make an election pursuant to this Section 2.6, the Borrower
shall give the Administrative Agent prior written notice (or telephonic notice
promptly confirmed in writing) of each Borrowing substantially in the form of
Exhibit 2.6(b) (a “Notice of Conversion/Continuation”) that is to be converted
or continued, as the case may be, (x) prior to 11:00 a.m. (New York time) one
(1) Business Day prior to the requested date of a conversion into a Base Rate
Borrowing and (y) prior to 2:00 p.m. (New York time) three (3) Business Days
prior to a continuation of or conversion into a Eurodollar Borrowing. Each such
Notice of Conversion/Continuation shall be irrevocable and shall specify (i) the
Borrowing to which such Notice of Continuation/Conversion applies and if
different options are being elected with respect to different portions thereof,
the portions thereof that are to be allocated to each resulting Borrowing (in
which case the information to be specified pursuant to clauses (iii) and
(iv) shall be specified for each resulting Borrowing); (ii) the effective date
of the election made pursuant to such Notice of Continuation/Conversion, which
shall be a Business Day, (iii) whether the resulting Borrowing is to be a Base
Rate Borrowing or a Eurodollar Borrowing; and (iv) if the resulting Borrowing is
to be a Eurodollar Borrowing, the Interest Period applicable thereto after
giving effect to such election, which shall be a period contemplated by the
definition of “Interest Period”. If any such Notice of Continuation/Conversion
requests a Eurodollar Borrowing but

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does not specify an Interest Period, the Borrower shall be deemed to have
selected an Interest Period of one month. The principal amount of any resulting
Borrowing shall satisfy the minimum borrowing amount for Eurodollar Borrowings
and Base Rate Borrowings set forth in Section 2.3.
          (c) If, on the expiration of any Interest Period in respect of any
Eurodollar Borrowing, the Borrower shall have failed to deliver a Notice of
Conversion/ Continuation, then, unless such Borrowing is repaid as provided
herein, the Borrower shall be deemed to have elected to convert such Borrowing
to a Base Rate Borrowing. No Borrowing may be converted into, or continued as, a
Eurodollar Borrowing if a Default or an Event of Default exists, unless the
Administrative Agent and each of the Lenders shall have otherwise consented in
writing. No conversion of any Eurodollar Loans shall be permitted except on the
last day of the Interest Period in respect thereof.
          (d) Upon receipt of any Notice of Conversion/Continuation, the
Administrative Agent shall promptly notify each Lender of the details thereof
and of such Lender’s portion of each resulting Borrowing.
          Section 2.7. Optional Reduction and Termination of Commitments.
          (a) Unless previously terminated, all Revolving Commitments shall
terminate on the Commitment Termination Date.
          (b) Upon at least three (3) Business Days’ prior written notice (or
telephonic notice promptly confirmed in writing) to the Administrative Agent
(which notice shall be irrevocable), the Borrower may reduce the Commitments in
part or terminate the Commitments in whole; provided, that any partial reduction
shall apply to reduce proportionately and permanently the Commitment of each
Lender, any partial reduction pursuant to this Section 2.7 shall be in an amount
of at least $1,000,000 and any larger multiple of $250,000, and no such
reduction shall be permitted which would reduce the Revolving Commitments to an
amount less than the outstanding Credit Exposures of all Lenders.
          Section 2.8. Repayment of Loans. The outstanding principal amount of
all Revolving Loans shall be due and payable (together with accrued and unpaid
interest thereon) on the Revolving Commitment Termination Date.
          Section 2.9. Evidence of Indebtedness. (a) Each Lender shall maintain
in accordance with its usual practice appropriate records evidencing the
Indebtedness of the Borrower to such Lender resulting from each Loan made by
such Lender from time to time, including the amounts of principal and interest
payable thereon and paid to such Lender from time to time under this Agreement.
The Administrative Agent shall maintain appropriate records in which shall be
recorded (i) the Commitment of each Lender, (ii) the amount of each Loan made
hereunder by each Lender, the Class and Type thereof and the Interest Period
applicable thereto, (iii) the date of each continuation thereof pursuant to
Section 2.6, (iv) the date of each conversion of all or a portion thereof to
another Type pursuant to Section 2.6, (v) the date and amount of any principal
or interest due and payable or to become due and payable from the Borrower to
each Lender hereunder in respect of such Loans and (vi) both the date and amount

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of any sum received by the Administrative Agent hereunder from the Borrower in
respect of the Loans and each Lender’s Pro Rata Share thereof. The entries made
in such records shall be prima facie evidence of the existence and amounts of
the obligations of the Borrower therein recorded; provided, that the failure or
delay of any Lender or the Administrative Agent in maintaining or making entries
into any such record or any error therein shall not in any manner affect the
obligation of the Borrower to repay the Loans (both principal and unpaid accrued
interest) of such Lender in accordance with the terms of this Agreement.
          (b) At the request of any Lender at any time, the Borrower agrees that
it will execute and deliver to such Lender a Revolving Note payable to the order
of such Lender.
          Section 2.10. Prepayments
          (a) The Borrower shall have the right at any time and from time to
time to prepay any Borrowing, in whole or in part, without premium or penalty,
by giving irrevocable written notice (or telephonic notice promptly confirmed in
writing) to the Administrative Agent no later than (i) in the case of prepayment
of any Eurodollar Borrowing, 2:00 p.m. (New York time) not less than three
(3) Business Days prior to any such prepayment, or (ii) in the case of any
prepayment of any Base Rate Borrowing, 11:00 a.m. on the same day of such
prepayment. Each such notice shall be irrevocable and shall specify the proposed
date of such prepayment and the principal amount of each Borrowing or portion
thereof to be prepaid. Upon receipt of any such notice, the Administrative Agent
shall promptly notify each affected Lender of the contents thereof and of such
Lender’s Pro Rata Share of any such prepayment. If such notice is given, the
aggregate amount specified in such notice shall be due and payable on the date
designated in such notice, together with accrued interest to such date on the
amount so prepaid in accordance with Section 2.11(c); provided, that if a
Eurodollar Borrowing is prepaid on a date other than the last day of an Interest
Period applicable thereto, the Borrower shall also pay all amounts required
pursuant to Section 2.17. Each partial prepayment of any Loan shall be in an
amount that would be permitted in the case of an advance of a Borrowing of the
same Type pursuant to Section 2.2. Each prepayment of a Borrowing shall be
applied ratably to the Loans comprising such Borrowing.
          (b) If at any time the Credit Exposure of all Lenders exceeds the
Aggregate Commitment Amount, as reduced pursuant to Section 2.7 or otherwise,
the Borrower shall immediately repay Revolving Loans in an amount equal to such
excess, together with all accrued and unpaid interest on such excess amount and
any amounts due under Section 2.17. Each prepayment shall be applied ratably to
the Base Rate Loans to the full extent thereof, and then to Eurodollar Loans to
the full extent thereof.
          (c) If at anytime the Borrower shall fail to maintain its status as a
RIC as required pursuant to Section 5.10, the Borrower shall immediately repay
all Obligations on full.
          Section 2.11. Interest on Loans.
          (a) The Borrower shall pay interest on each Base Rate Loan at the Base
Rate in effect from time to time and on each Eurodollar Loan at the Adjusted
LIBO Rate for the

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applicable Interest Period in effect for such Loan, plus, in each case, the
Applicable Margin in effect from time to time.
     (b) While an Event of Default exists or after acceleration, at the option
of the Required Lenders, the Borrower shall pay interest (“Default Interest”)
with respect to all Eurodollar Loans at the rate otherwise applicable for the
then-current Interest Period plus an additional 2% per annum until the last day
of such Interest Period, and thereafter, and with respect to all Base Rate Loans
and all other Obligations hereunder (other than Loans), at the rate in effect
for Base Rate Loans, plus an additional 2% per annum.
          (c) Interest on the principal amount of all Loans shall accrue from
and including the date such Loans are made to but excluding the date of any
repayment thereof. Interest on all outstanding Base Rate Loans shall be payable
quarterly in arrears on the last day of each March, June, September and December
and on the Commitment Termination Date. Interest on all outstanding Eurodollar
Loans shall be payable on the last day of each Interest Period applicable
thereto, and, in the case of any Eurodollar Loans having an Interest Period in
excess of three months or 90 days, respectively, on each day which occurs every
three months or 90 days, as the case may be, after the initial date of such
Interest Period, and on the Commitment Termination Date. Interest on any Loan
which is converted into a Loan of another Type or which is repaid or prepaid
shall be payable on the date of such conversion or on the date of any such
repayment or prepayment (on the amount repaid or prepaid) thereof. All Default
Interest shall be payable on demand.
          (d) The Administrative Agent shall determine each interest rate
applicable to the Loans hereunder and shall promptly notify the Borrower and the
Lenders of such rate in writing (or by telephone, promptly confirmed in
writing). Any such determination shall be conclusive and binding for all
purposes, absent manifest error.
          Section 2.12. Fees.
          (a) The Borrower shall pay to the Administrative Agent for its own
account fees in the amounts and at the times previously agreed upon by the
Borrower and the Administrative Agent.
          (b) The Borrower agrees to pay to the Administrative Agent for the
account of each Lender a commitment fee, which shall accrue at the Applicable
Percentage per annum on the daily amount of the unused Commitment of such Lender
during the Availability Period. For purposes of computing commitment fees with
respect to the Commitments, the Commitment of each Lender shall be deemed used
to the extent of the outstanding Loans of such Lender.
          (c) On the Closing Date, the Borrower shall pay to the Administrative
Agent for its own account fees in the amounts and at the times previously agreed
upon in writing by the Borrower and the Administrative Agent.
          (d) Accrued fees (other than the fees referenced in paragraphs (c) and
(d)) shall be payable quarterly in arrears on the last day of each March, June,
September and December, commencing on September 30, 2007 and on the Commitment
Termination Date (and

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if later, the date the Loans shall be repaid in their entirety); provided
further, that any such fees accruing after the Commitment Termination Date shall
be payable on demand.
          Section 2.13. Computation of Interest and Fees.
          All computations of interest and fees hereunder shall be made on the
basis of a year of 360 days for the actual number of days (including the first
day but excluding the last day) occurring in the period for which such interest
or fees are payable (to the extent computed on the basis of days elapsed). Each
determination by the Administrative Agent of an interest amount or fee hereunder
shall be made in good faith and, except for manifest error, shall be final,
conclusive and binding for all purposes.
          Section 2.14. Inability to Determine Interest Rates. If prior to the
commencement of any Interest Period for any Eurodollar Borrowing,
     (i) the Administrative Agent shall have determined (which determination
shall be conclusive and binding upon the Borrower) that, by reason of
circumstances affecting the relevant interbank market, adequate means do not
exist for ascertaining LIBOR for such Interest Period, or
     (ii) the Administrative Agent shall have received notice from the Required
Lenders that the Adjusted LIBO Rate does not adequately and fairly reflect the
cost to such Lenders (or Lender, as the case may be) of making, funding or
maintaining their (or its, as the case may be) Eurodollar Loans for such
Interest Period,
the Administrative Agent shall give written notice (or telephonic notice,
promptly confirmed in writing) to the Borrower and to the Lenders as soon as
practicable thereafter. Until the Administrative Agent shall notify the Borrower
and the Lenders that the circumstances giving rise to such notice no longer
exist, (i) the obligations of the Lenders to make Eurodollar Loans or to
continue or convert outstanding Loans as or into Eurodollar Loans shall be
suspended and (ii) all such affected Loans shall be converted into Base Rate
Loans on the last day of the then current Interest Period applicable thereto
unless the Borrower prepays such Loans in accordance with this Agreement. Unless
the Borrower notifies the Administrative Agent at least one Business Day before
the date of any Eurodollar Borrowing for which a Notice of Revolving Borrowing
has previously been given that it elects not to borrow on such date, then such
Borrowing shall be made as a Base Rate Borrowing.
          Section 2.15. Illegality. If any Change in Law shall make it unlawful
or impossible for any Lender to make, maintain or fund any Eurodollar Loan and
such Lender shall so notify the Administrative Agent, the Administrative Agent
shall promptly give notice thereof to the Borrower and the other Lenders,
whereupon until such Lender notifies the Administrative Agent and the Borrower
that the circumstances giving rise to such suspension no longer exist, the
obligation of such Lender to make Eurodollar Loans, or to continue or convert
outstanding Loans as or into Eurodollar Loans, shall be suspended. In the case
of the making of a Eurodollar Borrowing, such Lender’s Loan shall be made as a
Base Rate Loan as part of the same Borrowing for the same Interest Period and if
the affected Eurodollar Loan is then outstanding, such Loan shall be converted
to a Base Rate Loan either (i) on the last day of the then current

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Interest Period applicable to such Eurodollar Loan if such Lender may lawfully
continue to maintain such Loan to such date or (ii) immediately if such Lender
shall determine that it may not lawfully continue to maintain such Eurodollar
Loan to such date. Notwithstanding the foregoing, the affected Lender shall,
prior to giving such notice to the Administrative Agent, designate a different
Applicable Lending Office if such designation would avoid the need for giving
such notice and if such designation would not otherwise be disadvantageous to
such Lender in the good faith exercise of its discretion.
          Section 2.16. Increased Costs.
     (a) If any Change in Law shall:
     (i) impose, modify or deem applicable any reserve, special deposit or
similar requirement that is not otherwise included in the determination of the
Adjusted LIBO Rate hereunder against assets of, deposits with or for the account
of, or credit extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBO Rate); or
     (ii) impose on any Lender or the eurodollar interbank market any other
condition affecting this Agreement or any Eurodollar Loans made by such Lender;
and the result of either of the foregoing is to increase the cost to such Lender
of making, converting into, continuing or maintaining a Eurodollar Loan or to
reduce the amount received or receivable by such Lender hereunder (whether of
principal, interest or any other amount), then the Borrower shall promptly pay,
upon written notice from and demand by such Lender on the Borrower (with a copy
of such notice and demand to the Administrative Agent), to the Administrative
Agent for the account of such Lender, within five Business Days after the date
of such notice and demand, additional amount or amounts sufficient to compensate
such Lender for such additional costs incurred or reduction suffered.
          (b) If any Lender shall have determined that on or after the date of
this Agreement any Change in Law regarding capital 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 parent corporation) as a consequence of its
obligations hereunder to a level below that which such Lender or such Lender’s
parent corporation could have achieved but for such Change in Law (taking into
consideration such Lender’s policies or the policies of such Lender’s parent
corporation with respect to capital adequacy) then, from time to time, within
five (5) Business Days after receipt by the Borrower of written demand by such
Lender (with a copy thereof to the Administrative Agent), the Borrower shall pay
to such Lender such additional amounts as will compensate such Lender or such
Lender’s parent corporation for any such reduction suffered.
          (c) A certificate of a Lender setting forth the amount or amounts
necessary to compensate such Lender or such Lender’s parent corporation, as the
case may be, specified in paragraph (a) or (b) of this Section 2.16 shall be
delivered to the Borrower (with a copy to the Administrative Agent) and shall be
conclusive, absent manifest error. The Borrower shall pay any such Lender, as
the case may be, such amount or amounts within five (5) Business Days after
receipt thereof.

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          (d) Failure or delay on the part of any Lender to demand compensation
pursuant to this Section 2.16 shall not constitute a waiver of such Lender’s
right to demand such compensation.
          Section 2.17. Funding Indemnity. In the event of (a) the payment of
any principal of a Eurodollar Loan other than on the last day of the Interest
Period applicable thereto (including as a result of an Event of Default),
(b) the conversion or continuation of a Eurodollar Loan other than on the last
day of the Interest Period applicable thereto, or (c) the failure by the
Borrower to borrow, prepay, convert or continue any Eurodollar Loan on the date
specified in any applicable notice (regardless of whether such notice is
withdrawn or revoked), then, in any such event, the Borrower shall compensate
each Lender, within five (5) Business Days after written demand from such
Lender, for any loss, cost or expense attributable to such event. In the case of
a Eurodollar Loan, such loss, cost or expense shall be deemed to include an
amount determined by such Lender to be the excess, if any, of (A) the amount of
interest that would have accrued on the principal amount of such Eurodollar Loan
if such event had not occurred at the Adjusted LIBO Rate applicable to such
Eurodollar Loan for the period from the date of such event to the last day of
the then current Interest Period therefor (or in the case of a failure to
borrow, convert or continue, for the period that would have been the Interest
Period for such Eurodollar Loan) over (B) the amount of interest that would
accrue on the principal amount of such Eurodollar Loan for the same period if
the Adjusted LIBO Rate were set on the date such Eurodollar Loan was prepaid or
converted or the date on which the Borrower failed to borrow, convert or
continue such Eurodollar Loan. A certificate as to any additional amount payable
under this Section 2.17 submitted to the Borrower by any Lender (with a copy to
the Administrative Agent) shall be conclusive, absent manifest error.
          Section 2.18. Taxes.
          (a) Any and all payments by or on account of any obligation of the
Borrower hereunder shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided, that if the Borrower shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.18) the Administrative Agent or any Lender (as the case may
be) shall receive an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.
          (b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
          (c) The Borrower shall indemnify the Administrative Agent and each
Lender, within five (5) Business Days after written demand therefor, for the
full amount of any Indemnified Taxes or Other Taxes paid by the Administrative
Agent or such Lender, as the case may be, on or with respect to any payment by
or on account of any obligation of the Borrower hereunder (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under Section 2.18) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were

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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) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
          (e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the Code or any treaty to which the United
States is a party, with respect to payments under this Agreement shall deliver
to the Borrower (with a copy to the Administrative Agent), at the time or times
prescribed by applicable law, such properly completed and executed documentation
prescribed by applicable law or reasonably requested by the Borrower as will
permit such payments to be made without withholding or at a reduced rate.
Without limiting the generality of the foregoing, each Foreign Lender agrees
that it will deliver to the Administrative Agent and the Borrower (or in the
case of a Participant, to the Lender from which the related participation shall
have been purchased), as appropriate, two (2) duly completed copies of
(i) Internal Revenue Service Form W-8 ECI, or any successor form thereto,
certifying that the payments received from the Borrower hereunder are
effectively connected with such Foreign Lender’s conduct of a trade or business
in the United States; or (ii) Internal Revenue Service Form W-8 BEN, or any
successor form thereto, certifying that such Foreign Lender is entitled to
benefits under an income tax treaty to which the United States is a party which
reduces the rate of withholding tax on payments of interest; or (iii) Internal
Revenue Service Form W-8 BEN, or any successor form prescribed by the Internal
Revenue Service, together with a certificate (A) establishing that the payment
to the Foreign Lender qualifies as “portfolio interest” exempt from U.S.
withholding tax under Code section 871(h) or 881(c), and (B) stating that
(1) the Foreign Lender is not a bank for purposes of Code section 881(c)(3)(A),
or the obligation of the Borrower hereunder is not, with respect to such Foreign
Lender, a loan agreement entered into in the ordinary course of its trade or
business, within the meaning of that Section; (2) the Foreign Lender is not a
10% shareholder of the Borrower within the meaning of Code section 871(h)(3) or
881(c)(3)(B); and (3) the Foreign Lender is not a controlled foreign corporation
that is related to the Borrower within the meaning of Code section 881(c)(3)(C);
or (iv) such other Internal Revenue Service forms as may be applicable to the
Foreign Lender, including Forms W-8 IMY or W-8 EXP. Each such Foreign Lender
shall deliver to the Borrower and the Administrative Agent such forms on or
before the date that it becomes a party to this Agreement (or in the case of a
Participant, on or before the date such Participant purchases the related
participation). In addition, each such Foreign Lender shall deliver such forms
promptly upon the obsolescence or invalidity of any form previously delivered by
such Foreign Lender. Each such Foreign Lender shall promptly notify the Borrower
and the Administrative Agent at any time that it determines that it is no longer
in a position to provide any previously delivered certificate to the Borrower
(or any other form of certification adopted by the Internal Revenue Service for
such purpose).

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          Section 2.19. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs.
          (a) The Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest, or of amounts payable under
Section 2.16, 2.17 or 2.18, or otherwise) prior to 12:00 noon (New York time),
on the date when due, in immediately available funds, free and clear of any
defenses, rights of set-off, counterclaim or withholding or deduction of taxes.
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 Payment Office, except that
payments pursuant to Sections 2.16, 2.17 and 2.18 and 10.3 shall be made
directly to the Persons entitled thereto. The Administrative Agent shall
distribute any such payments received by it for the 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 made payable for the period
of such extension. All payments hereunder shall be made in Dollars.
          (b) If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal, interest and
fees then due hereunder, such funds shall be applied (i) first, towards payment
of 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, towards payment of principal then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
principal then due to such parties.
          (c) 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 that would result in such Lender receiving payment
of a greater proportion of the aggregate amount of its and accrued interest
thereon 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 or
participant, other than to the Borrower or any Subsidiary or Affiliate thereof
(as to which the provisions of this paragraph shall apply). The Borrower
consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.

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          (d) 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 the 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 or amounts due. In such event,
if the Borrower has not in fact made such payment, then each of the Lenders , as
the case may be, 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 greater of the
Federal Funds Rate and a rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation.
          (e) If any Lender shall fail to make any payment required to be made
by it pursuant to 2.19(d) or (e), 2.18(d) or 10.3(d), then the Administrative
Agent may, in its discretion (notwithstanding any contrary provision hereof),
apply any amounts thereafter received by the Administrative Agent for the
account of such Lender to satisfy such Lender’s obligations under such Sections
until all such unsatisfied obligations are fully paid.
          Section 2.20. Intentionally Omitted.
          Section 2.21. Intentionally Omitted.
          Section 2.22. Mitigation of Obligations. If any Lender requests
compensation under Section 2.16, or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 2.18, then such Lender shall use reasonable
efforts to designate a different lending office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the sole judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable under
Section 2.16 or Section 2.18, as the case may be, in the future and (ii) would
not subject such Lender to any unreimbursed cost or expense and would not
otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay
all costs and expenses incurred by any Lender in connection with such
designation or assignment.
          Section 2.23. Replacement of Lenders. If any Lender requests
compensation under Section 2.16, or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority of the account of
any Lender pursuant to Section 2.18, or if any Lender defaults in its obligation
to fund Loans hereunder, 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 set forth in Section 10.4(b)) all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender); provided, that (i) the
Borrower shall have received the prior written consent of the Administrative
Agent, which consent shall not be unreasonably withheld, (ii) such Lender shall
have received payment of an amount equal to the outstanding principal amount of
all Loans owed to it, accrued interest thereon, accrued fees and all other
amounts payable to it hereunder, from the assignee (in the case of such
outstanding principal and accrued interest) and from the Borrower (in the case
of all other amounts) and (iii) in the case of a claim for compensation

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under Section 2.16 or payments required to be made pursuant to Section 2.18,
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.
ARTICLE III
CONDITIONS PRECEDENT TO LOANS
          Section 3.1. Conditions To Effectiveness. The obligations of the
Lenders to make Loans hereunder shall not become effective until the date on
which each of the following conditions is satisfied (or waived in accordance
with Section 10.2). The Administrative Agent and the Borrower shall execute a
notice confirming the satisfaction of such conditions and the occurrence of the
Closing Date.
          (a) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Closing Date, including reimbursement
or payment of all out-of-pocket expenses (including reasonable fees, charges and
disbursements of counsel to the Administrative Agent) required to be reimbursed
or paid by the Borrower hereunder, under any other Loan Document and under any
agreement with the Administrative Agent or SunTrust Capital Markets, Inc., as
Arranger.
          (b) The Administrative Agent shall have completed and be satisfied
with all due diligence with respect to the Borrower and its Subsidiaries,
including but not limited to review of the Underwriting Policies, risk
management procedures, accounting policies, systems integrity, compliance,
management and organizational structure, and the loan and investment portfolio
of the Borrower and its Subsidiaries;
          (c) The Administrative Agent (or its counsel) shall have received the
following:
     (i) a counterpart of this Agreement signed by or on behalf of each party
hereto or written evidence satisfactory to the Administrative Agent (which may
include telecopy transmission of a signed signature page of this Agreement) that
such party has signed a counterpart of this Agreement;
     (ii) duly executed Revolving Credit Notes payable to such Lender;
     (iii) duly executed originals of any Control Agreement with respect to Cash
Collateral held with any financial institution other than Administrative Agent
or its affiliates.
     (iv) the duly executed Security Agreement together with other applicable
documents under the laws of the jurisdictions with respect to the perfection of
the Liens granted on the Cash Collateral under the Security Agreement, as
requested by the Administrative Agent in order to perfect such Liens;

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     (v) the Subsidiary Guarantee Agreement duly executed by each Subsidiary;
     (vi) copies of duly executed payoff letters, if any, in form and substance
satisfactory to Administrative Agent, together with (a) UCC-3 or other
appropriate termination statements, in form and substance satisfactory to
Administrative Agent, releasing all Liens (other than Permitted Encumbrances)
upon any of the personal property of the Borrower and its Subsidiaries,
(b) cancellations and releases, in form and substance satisfactory to the
Administrative Agent, releasing all Liens (other than Permitted Encumbrances)
upon any of the real property of the Borrower and its Subsidiaries, and (c) any
other releases, terminations or other documents reasonably required by the
Administrative Agent to evidence the payoff of Indebtedness owed by the Borrower
and its Subsidiaries;
     (vii) a certificate of the Secretary or Assistant Secretary of each Loan
Party in the form of Exhibit 3.1(b)(vii), attaching and certifying copies of its
bylaws and of the resolutions of its board of directors, or partnership
agreement or limited liability company agreement, or comparable organizational
documents and authorizations, authorizing the execution, delivery and
performance of the Loan Documents to which it is a party and certifying the
name, title and true signature of each officer of such Loan Party executing the
Loan Documents to which it is a party;
     (viii) certified copies of the articles or certificate of incorporation,
certificate of organization or limited partnership, or other registered
organizational documents of each Loan Party, together with certificates of good
standing or existence, as may be available from the Secretary of State of the
jurisdiction of organization of such Loan Party and each other jurisdiction
where such Loan Party is required to be qualified to do business as a foreign
corporation;
     (ix) a favorable written opinion of Paul, Hastings, Janofsky & Walker,
counsel to the Loan Parties, addressed to the Administrative Agent and each of
the Lenders, and covering such matters relating to the Loan Parties, the Loan
Documents and the transactions contemplated therein as the Administrative Agent
or the Required Lenders shall reasonably request;
     (x) a certificate in the form of Exhibit 3.1(c)(x), dated the Closing Date
and signed by a Responsible Officer, certifying that (x) no Default or Event of
Default exists, (y) all representations and warranties of each Loan Party set
forth in the Loan Documents are true and correct and (z) since the date of the
financial statements of the Borrower described in Section 4.4, there shall have
been no change which has had or could reasonably be expected to have a Material
Adverse Effect;
     (xi) a duly executed Notice of Revolving Borrowing;
     (xii) a duly executed funds disbursement agreement, together with a report
setting forth the sources and uses of the proceeds hereof;

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     (xiii) a duly completed and executed certificate of the type described in
Section 5.1(c) including calculations of the financial covenants set forth in
Article VI hereof as of February 28, 2007;
     (xiv) certified copies of all consents, approvals, authorizations,
registrations and filings and orders required or advisable to be made or
obtained under any Requirement of Law, or by any Contractual Obligation of each
Loan Party, in connection with the execution, delivery, performance, validity
and enforceability of the Loan Documents or any of the transactions contemplated
thereby, 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 Commitments or any transaction being financed with the
proceeds thereof shall be ongoing;
     (xv) copies of (A) the internally prepared quarterly financial statements
of Borrower and its Subsidiaries on a consolidated basis for the Fiscal Quarter
ending on February 28, 2007, and (B) the audited consolidated financial
statements for Borrower and its Subsidiaries for the Fiscal Year ending
November 30, 2006;
     (xvi) certified copies of all agreements, indentures or notes governing the
terms of any Material Indebtedness and all other material agreements, documents
and instruments to which any Loan Party or any of its assets are bound;
     (xvii) duly executed Intercreditor Agreement; and
     (xviii) duly executed copy of the Investment Credit Agreement and the
documents executed in connection therewith.
          Section 3.2. Each Credit Event. The obligation of each Lender to make
a Loan on the occasion of any Borrowing is subject to the satisfaction of the
following conditions:
          (a) at the time of and immediately after giving effect to such
Borrowing, no Default or Event of Default shall exist;
          (b) at the time of and immediately after giving effect to such
Borrowing, all representations and warranties of each Loan Party set forth in
the Loan Documents shall be true and correct in all material respects on and as
of the date of such Borrowing before and after giving effect thereto;
          (c) the Borrower shall have delivered the required Notice of Revolving
Borrowing;
          (d) After giving effect to each Borrowing, the Borrower shall have
provided sufficient Cash Collateral such that the Cash Collateral Coverage Ratio
is at least 1.01:1.00; and
          (e) the Administrative Agent shall have received such other documents,
certificates, information or legal opinions as the Administrative Agent or the
Required Lenders

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may reasonably request, all in form and substance reasonably satisfactory to the
Administrative Agent or the Required Lenders.
          Each Borrowing shall be deemed to constitute a representation and
warranty by the Borrower on the date thereof as to the matters specified in
paragraphs (a), (b), (c) and (d) of this Section 3.2.
          Section 3.3. Delivery of Documents. All of the Loan Documents,
certificates, legal opinions and other documents and papers referred to in this
Article III, unless otherwise specified, shall be delivered to the
Administrative Agent for the account of each of the Lenders and, except for the
Notes, in sufficient counterparts or copies for each of the Lenders and shall be
in form and substance satisfactory in all respects to the Administrative Agent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
          The Borrower represents and warrants to the Administrative Agent and
each Lender as follows:
          Section 4.1. Existence; Power. The Borrower and each of its
Subsidiaries (i) is duly organized, validly existing and in good standing as a
corporation, partnership or limited liability company under the laws of the
jurisdiction of its organization, (ii) has all requisite power and authority to
carry on its business as now conducted, and (iii) is duly qualified to do
business, and is in good standing, in each jurisdiction where such qualification
is required, except where a failure to be so qualified could not reasonably be
expected to result in a Material Adverse Effect.
          Section 4.2. Organizational Power; Authorization. The execution,
delivery and performance by each Loan Party of the Loan Documents to which it is
a party are within such Loan Party’s organizational powers and have been duly
authorized by all necessary organizational, and if required, shareholder,
partner or member, action. This Agreement has been duly executed and delivered
by the Borrower, and constitutes, and each other Loan Document to which any Loan
Party is a party, when executed and delivered by such Loan Party, will
constitute, valid and binding obligations of the Borrower or such Loan Party (as
the case may be), enforceable against it in accordance with their respective
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the enforcement of
creditors’ rights generally and by general principles of equity.
          Section 4.3. Governmental Approvals; No Conflicts. The execution,
delivery and performance by the Borrower of this Agreement, and by each Loan
Party of the other Loan Documents to which it is a party (a) do not require any
consent or approval of, registration or filing with, or any action by, any
Governmental Authority, except those as have been obtained or made and are in
full force and effect, (b) will not violate any Requirements of Law applicable
to the Borrower or any of its Subsidiaries or any judgment, order or ruling of
any Governmental Authority, (c) will not violate or result in a default under
any indenture, material agreement or other material instrument binding on the
Borrower or any of its Subsidiaries or any of its assets or give rise to a right
thereunder to require any payment to be made by the Borrower or any of its

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Subsidiaries and (d) will not result in the creation or imposition of any Lien
on any asset of the Borrower or any of its Subsidiaries, except Liens (if any)
created under the Loan Documents.
          Section 4.4. Financial Statements. The Borrower has furnished to each
Lender (i) the audited consolidated balance sheet of the Borrower and its
Subsidiaries as of November 30, 2006 and the related consolidated statements of
income, shareholders’ equity and cash flows for the Fiscal Year then ended
audited by PricewaterhouseCoopers LLP and (ii) the unaudited consolidated
balance sheet of the Borrower and its Subsidiaries as of February 28, 2007, and
the related unaudited consolidated statements of income and cash flows for the
Fiscal Quarter and year-to-date period then ending, certified by a Responsible
Officer. Such financial statements fairly present the consolidated financial
condition of the Borrower and its Subsidiaries as of such dates and the
consolidated results of operations for such periods in conformity with GAAP
consistently applied, subject to year end audit adjustments and the absence of
footnotes in the case of the statements referred to in clause (ii). Since
November 30, 2006, there have been no changes with respect to the Borrower and
its Subsidiaries which have had or could reasonably be expected to have, singly
or in the aggregate, a Material Adverse Effect.
          Section 4.5. Litigation and Environmental Matters.
          (a) No litigation, investigation or proceeding of or before any
arbitrators or Governmental Authorities is pending against or, to the knowledge
of the Borrower, threatened against or affecting the Borrower or any of its
Subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination that could reasonably be expected to have, either individually or
in the aggregate, a Material Adverse Effect or (ii) which in any manner draws
into question the validity or enforceability of this Agreement or any other Loan
Document.
          (b) Except for the matters set forth on Schedule 4.5, neither the
Borrower nor any of its Subsidiaries (i) has failed to comply with any
Environmental Law or to obtain, maintain or comply with any permit, license or
other approval required under any Environmental Law, (ii) has become subject to
any Environmental Liability, (iii) has received notice of any claim with respect
to any Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
          Section 4.6. Compliance with Laws and Agreements. The Borrower and
each Subsidiary is in compliance with (a) all Requirements of Law and all
judgments, decrees and orders of any Governmental Authority applicable to each
of them and (b) all indentures, agreements or other instruments binding upon it
or its properties, except where non-compliance, either singly or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
          Section 4.7. Investment Company Act, Etc. Neither the Borrower nor any
of its Subsidiaries is (a) registered or required to be registered as an
“investment company”, as such term is defined in the Investment Company Act, or
(b) subject to any regulatory scheme limiting its or their ability to incur debt
or requiring any approval or consent from or registration or filing with, any
Governmental Authority in connection therewith, except that the Borrower is an
“investment company” that has elected to be regulated as a “business development
company” as defined in Section 2(a)(46) of the Investment Company Act and the
Borrower and its

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Subsidiaries are subject to regulation under the Investment Company Act as a
“business development company” and as controlled subsidiaries thereof,
respectively, including under Section 18, as modified by Section 61, of the
Investment Company Act.
          Section 4.8. Taxes. The Borrower and its Subsidiaries and each other
Person for whose taxes the Borrower or any Subsidiary could become liable have
timely filed or caused to be filed all Federal income tax returns and all other
material tax returns that are required to be filed by them, and have paid all
taxes shown to be due and payable on such returns or on any assessments made
against it or its property and all other taxes, fees or other charges imposed on
it or any of its property by any Governmental Authority, except where the same
are currently being contested in good faith by appropriate proceedings and for
which the Borrower or such Subsidiary, as the case may be, has set aside on its
books adequate reserves in accordance with GAAP. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of such
taxes are adequate, and no tax liabilities that could be materially in excess of
the amount so provided are anticipated.
          Section 4.9. Margin Regulations. None of the proceeds of any of the
Loans will be used, directly or indirectly, for any purpose that violates the
provisions of Regulation U of the Board of Governors of the Federal Reserve
System. Neither the Borrower nor its Subsidiaries is engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying “margin stock”.
          Section 4.10. Underwriting Policies. The Borrower and its Subsidiaries
is in compliance with all Underwriting Policies except to the extent that the
failure to so comply could not reasonably be expected to result in a Material
Adverse Effect.
          Section 4.11. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Standards No. 87) did not, as of the date of the most
recent financial statements reflecting such amounts, exceed the fair market
value of the assets of such Plan, and the present value of all accumulated
benefit obligations of all underfunded Plans (based on the assumptions used for
purposes of Statement of Financial Standards No. 87) did not, as of the date of
the most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of all such underfunded Plans.
          Section 4.12. Ownership of Property.
          (a) Each of the Borrower and its Subsidiaries has good title to, or
valid leasehold interests in, all of its real and personal property material to
the operation of its business, including all such properties reflected in the
most recent audited consolidated balance sheet of the Borrower referred to in
Section 4.4 or purported to have been acquired by the Borrower or any Subsidiary
after said date (except as sold or otherwise disposed of in the ordinary course
of business), in each case free and clear of Liens prohibited by this Agreement.
All leases that individually or in the aggregate are material to the business or
operations of the Borrower and its Subsidiaries are valid and subsisting and are
in full force.

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          (b) Each of the Borrower and its Subsidiaries owns, or is licensed, or
otherwise has the right, to use, all patents, trademarks, service marks, trade
names, copyrights and other intellectual property material to its business, and
the use thereof by the Borrower and its Subsidiaries does not infringe in any
material respect on the rights of any other Person.
          (c) The properties of the Borrower and its Subsidiaries are insured
with financially sound and reputable insurance companies which are not
Affiliates of the Borrower, in such amounts with such deductibles and covering
such risks as are customarily carried by companies engaged in similar businesses
and owning similar properties in localities where the Borrower or any applicable
Subsidiary operates.
          Section 4.13. Disclosure. The Borrower has disclosed to the Lenders
all agreements, instruments, and corporate or other restrictions to which the
Borrower or any of its Subsidiaries is subject, and all other matters known to
any of them, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. Neither the Information
Memorandum nor any of the reports (including without limitation all reports that
the Borrower is required to file with the Securities and Exchange Commission),
financial statements, certificates or other information furnished by or on
behalf of the Borrower to the Administrative Agent or any Lender in connection
with the negotiation or syndication of this Agreement or any other Loan Document
or delivered hereunder or thereunder (as modified or supplemented by any other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, taken as a
whole, in light of the circumstances under which they were made, not misleading.
          Section 4.14. Labor Relations. There are no strikes, lockouts or other
material labor disputes or grievances against the Borrower or any of its
Subsidiaries, or, to the Borrower’s knowledge, threatened against or affecting
the Borrower or any of its Subsidiaries, and no significant unfair labor
practice, charges or grievances are pending against the Borrower or any of its
Subsidiaries, or to the Borrower’s knowledge, threatened against any of them
before any Governmental Authority. All payments due from the Borrower or any of
its Subsidiaries pursuant to the provisions of any collective bargaining
agreement have been paid or accrued as a liability on the books of the Borrower
or any such Subsidiary, except where the failure to do so could not reasonably
be expected to have a Material Adverse Effect.
          Section 4.15. Subsidiaries. Schedule 4.14 sets forth the name of, the
ownership interest of the Borrower in, the jurisdiction of incorporation or
organization of, and the type of, each Subsidiary and identifies each Subsidiary
that is a Subsidiary Guarantor, in each case as of the Closing Date.
          Section 4.16. Insolvency. After giving effect to the execution and
delivery of the Loan Documents, the making of the Loans under this Agreement,
neither the Borrower nor its Subsidiaries will be “insolvent,” within the
meaning of such term as defined in § 101 of Title 11 of the United States Code,
as amended from time to time, or be unable to pay its debts generally as such
debts become due, or have an unreasonably small capital to engage in any
business or transaction, whether current or contemplated.

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          Section 4.17. OFAC. No Loan Party (i) is a person whose property or
interest in property is blocked or subject to blocking pursuant to Section 1 of
Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism
(66 Fed. Reg. 49079 (2001)), (ii) engages in any dealings or transactions
prohibited by Section 2 of such executive order, or is otherwise associated with
any such person in any manner violative of Section 2, or (iii) is a person on
the list of Specially Designated Nationals and Blocked Persons or subject to the
limitations or prohibitions under any other U.S. Department of Treasury’s Office
of Foreign Assets Control regulation or executive order.
          Section 4.18. Patriot Act. Each Loan Party is in compliance, in all
material respects, with (i) the Trading with the Enemy Act, as amended, and each
of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling
legislation or executive order relating thereto, and (ii) the Uniting And
Strengthening America By Providing Appropriate Tools Required To Intercept And
Obstruct Terrorism (USA Patriot Act of 2001). No part of the proceeds of the
Loans will be used, directly or indirectly, for any payments to any governmental
official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.
ARTICLE V
AFFIRMATIVE COVENANTS
          The Borrower covenants and agrees that so long as any Lender has a
Commitment hereunder or any Obligation remains unpaid or outstanding:
          Section 5.1. Financial Statements and Other Information. The Borrower
will deliver to the Administrative Agent:
          (a) as soon as available and in any event within 90 days after the end
of each Fiscal Year of Borrower, a copy of the annual audited report for such
Fiscal Year for the Borrower and its Subsidiaries, containing a consolidated
balance sheet of the Borrower and its Subsidiaries as of the end of such Fiscal
Year and the related consolidated statements of income, stockholders’ equity and
cash flows (together with all footnotes thereto) of the Borrower and its
Subsidiaries for such Fiscal Year, setting forth in each case in comparative
form the figures for the previous Fiscal Year, all in reasonable detail and
reported on by PricewaterhouseCoopers LLP or other independent public
accountants of nationally recognized standing (without a “going concern” or like
qualification, exception or explanation and without any qualification or
exception as to scope of such audit) to the effect that such financial
statements present fairly in all material respects the financial condition and
the results of operations of the Borrower and its Subsidiaries for such Fiscal
Year on a consolidated and consolidating basis in accordance with GAAP and that
the examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally accepted
auditing standards; provided, that to the extent that any Special Purpose
Subsidiary has entered into a financing transaction, securitization or other
monetization transaction and is treated as a consolidated entity

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and reflected on the consolidated balance sheet of the Borrower and its
Subsidiaries, concurrently with the delivery of the financial statements
referred to in this paragraph (a), the Borrower shall provide to the
Administrative Agent a balance sheet for each such Special Purpose Subsidiary as
of the end of such Fiscal Year and the related statements of income,
stockholders’ equity and cash flows (together with all footnotes thereto) of
such Special Purpose Subsidiary for such Fiscal Year, setting forth in each case
in comparative form the figures for the previous Fiscal Year;
          (b) as soon as available and in any event within 45 days after the end
of each Fiscal Quarter of the Borrower, an unaudited consolidated and
consolidating balance sheet of the Borrower and its Subsidiaries as of the end
of such Fiscal Quarter and the related unaudited consolidated and consolidating
statements of income and cash flows of the Borrower and its Subsidiaries for
such Fiscal Quarter and the then elapsed portion of such Fiscal Year, setting
forth in each case in comparative form the figures for the corresponding quarter
and the corresponding portion of Borrower’s previous Fiscal Year, all certified
by the chief financial officer or treasurer 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, subject to normal year-end audit adjustments and the absence of footnotes;
provided, that to the extent that any Special Purpose Subsidiary has entered
into a financing transaction, securitization or other monetization transaction
and is treated as a consolidated entity and reflected on the consolidated
balance sheet of the Borrower and its Subsidiaries, concurrently with the
delivery of the financial statements referred to in this paragraph (b), the
Borrower shall provide to the Administrative Agent a balance sheet for each such
Special Purpose Subsidiary as of the end of such Fiscal Quarter and the related
statements of income, stockholders’ equity and cash flows (together with all
footnotes thereto) of such Special Purpose Subsidiary for such Fiscal Quarter,
setting forth in each case in comparative form the figures for the previous
Fiscal Quarter;
          (c) concurrently with the delivery of the financial statements
referred to in clauses (a) and (b) above, a Compliance Certificate signed by the
principal financial officer of the Borrower;
          (d) concurrently with the delivery of the financial statements
referred to in clause (a) above, a certificate of the accounting firm that
reported on such financial statements stating whether they obtained any
knowledge during the course of their examination of such financial statements of
any Default or Event of Default (which certificate may be limited to the extent
required by accounting rules or guidelines);
          (e) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed with the
Securities and Exchange Commission, or any Governmental Authority succeeding to
any or all functions of said Commission, or with any national securities
exchange, or distributed by the Borrower to its shareholders generally, as the
case may be;
          (f) promptly following any request therefor, such other information
regarding the results of operations, business affairs, financial condition and
loan and securities portfolio of

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the Borrower or any Subsidiary as the Administrative Agent or any Lender may
reasonably request; and
          (g) as soon as available and in any event within five (5) Business
Days after the end of each month, a certificate from a Responsible Officer of
the Borrower certifying as to the mark to market value of the Cash Collateral as
of the end of such month.
          Section 5.2. Notices of Material Events. The Borrower will furnish to
the Administrative Agent and each Lender prompt written notice of the following:
          (a) the occurrence of any Default or Event of Default;
          (b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or, to the knowledge of
the Borrower, affecting the Borrower or any Subsidiary which, if adversely
determined, could reasonably be expected to result in a Material Adverse Effect;
          (c) the occurrence of any event or any other development by which the
Borrower or any of its Subsidiaries (i) fails to comply with any Environmental
Law or to obtain, maintain or comply with any permit, license or other approval
required under any Environmental Law, (ii) becomes subject to any Environmental
Liability, (iii) receives notice of any claim with respect to any Environmental
Liability, or (iv) becomes aware of any basis for any Environmental Liability
and in each of the preceding clauses, which individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect;
          (d) the occurrence of any ERISA Event that alone, or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
liability of the Borrower and its Subsidiaries in an aggregate amount exceeding
$1,000,000;
          (e) the occurrence of any default or event of default, or the receipt
by Borrower or any of its Subsidiaries of any written notice of an alleged
default or event of default, respect of any Material Indebtedness of the
Borrower or any of its Subsidiaries; and
          (f) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section 5.2 shall be accompanied by a written
statement of a Responsible Officer 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 5.3. 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 maintain in full force and effect its legal
existence and its respective rights, licenses, permits, privileges, franchises,
patents, copyrights, trademarks and trade names material to the conduct of its
business and will continue to engage in the same business as presently conducted
or such

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other businesses that are reasonably related thereto; provided, that nothing in
this Section 5.3 shall prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 7.3.
          Section 5.4. Compliance with Laws, Etc. The Borrower will, and will
cause each of its Subsidiaries to, comply with all laws, rules, regulations and
requirements of any Governmental Authority applicable to its business and
properties, including without limitation, all Environmental Laws, ERISA and
OSHA, except where the failure to do so, either individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
          Section 5.5. Payment of Obligations. The Borrower will, and will cause
each of its Subsidiaries to, pay and discharge at or before maturity, all of its
obligations and liabilities (including without limitation all taxes, assessments
and other governmental charges, levies and all other claims that could result in
a statutory Lien) before the same shall become delinquent or in default, except
where (a) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on
its books adequate reserves with respect thereto in accordance with GAAP and
(c) the failure to make payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.
          Section 5.6. Books and Records. The Borrower will, and will cause each
of its Subsidiaries to, keep proper books of record and account in which full,
true and correct entries shall be made of all dealings and transactions in
relation to its business and activities to the extent necessary to prepare the
consolidated financial statements of Borrower in conformity with GAAP.
          Section 5.7. Visitation, Inspection, Etc. The Borrower will, and will
cause each of its Subsidiaries to, permit any representative of the
Administrative Agent, or any Lender, to visit and inspect its properties, to
conduct audits of the Cash Collateral, to examine its books and records and to
make copies and take extracts therefrom, and to discuss its affairs, finances
and accounts with any of its officers and with its independent certified public
accountants, all at such reasonable times and as often as the Administrative
Agent or any Lender may reasonably request after reasonable prior notice to the
Borrower; provided, however, if a Default or an Event of Default has occurred
and is continuing, no prior notice shall be required. All reasonable expenses
incurred by the Administrative Agent and, at any time after the occurrence and
during the continuance of a Default or an Event of Default, any Lenders in
connection with any such visit, inspection, audit, examination and discussions
shall be borne by the Borrower; provided, however, so long as no Default or
Event of Default has occurred and is continuing, Borrower shall not be required
to pay such expenses for any visits and inspections that exceed two visits or
inspections per Fiscal Year.
          Section 5.8. 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 with respect to its properties and
business, and the properties and business of its Subsidiaries, against loss or
damage of the kinds customarily insured against by companies in the same or
similar businesses

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operating in the same or similar locations, and (c) at all times shall name the
Administrative Agent as additional insured on all liability policies of the
Borrower and its Subsidiaries.
          Section 5.9. Use of Proceeds. The Borrower will use the proceeds of
all Revolving Loans to support portfolio growth and preserve future investment
flexibility permitted under the Internal Revenue Code. No part of the proceeds
of any Loan will be used, whether directly or indirectly, for any purpose that
would violate any rule or regulation of the Board of Governors of the Federal
Reserve System, including Regulations T, U or X.
          Section 5.10. Maintenance of RIC Status and Business Development
Company. The Borrower will maintain its status as a RIC under the Code and as a
“business development company” under the Investment Company Act.
          Section 5.11. Additional Subsidiaries; Additional Collateral. In the
event that any Person becomes a Subsidiary of Borrower after the date hereof
(other than a Special Purpose Subsidiary), Borrower will promptly notify
Administrative Agent of that fact and cause such Subsidiary to execute and
deliver to Administrative Agent a counterpart of the Subsidiary Guarantee
Agreement and deliver with respect to such Subsidiary documents of the type
delivered on the Closing Date under Section 3.1(c)(vii) and Section 3.1(c)(viii)
with respect to the Subsidiaries on the Closing Date.
          Section 5.12. Compliance with Underwriting Policies. The Borrower
shall, and shall cause its Subsidiaries, to comply at all times with its
Underwriting Policies.
ARTICLE VI
FINANCIAL COVENANTS
          The Borrower covenants and agrees that so long as any Lender has a
Commitment hereunder or any Obligation remains unpaid or outstanding:
          Section 6.1. Minimum Asset Coverage Ratio. The Borrower shall maintain
at all times an Asset Coverage Ratio of at least 2.50:1.0.
          Section 6.2. Minimum Liquidity. The Borrower will not permit the
aggregate value of the Portfolio Investments, as determined pursuant to
Section 5.12 of the Investment Credit Agreement, 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 during any period when Adjusted Covered Debt
Amount is greater than 90% of the Adjusted Borrowing Base.
          Section 6.3. Minimum Consolidated Shareholders Equity. The Borrower
will not permit Shareholder’s Equity at 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) $100,000,000 plus 25% of the net proceeds of the sale of Equity
Interests by the Borrower and its Subsidiaries after the Closing Date.

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          Section 6.4. Cash Collateral Coverage Ratio. The Borrower shall
maintain at all times on a consolidated basis a Cash Collateral Coverage Ratio
of at least 1.01:1.00.
ARTICLE VII
NEGATIVE COVENANTS
          The Borrower covenants and agrees that so long as any Lender has a
Commitment hereunder or any Obligation remains outstanding:
          Section 7.1. Indebtedness and Preferred Equity. The Borrower will not,
and will not permit any of its Subsidiaries to, create, incur, assume or suffer
to exist any Indebtedness, except:
          (a) Indebtedness created pursuant to the Loan Documents;
          (b) Indebtedness of the Borrower and its Subsidiaries existing on the
date hereof and set forth on Schedule 7.1 and extensions, renewals and
replacements of any such Indebtedness that do not increase the outstanding
principal amount thereof (immediately prior to giving effect to such extension,
renewal or replacement) or shorten the maturity or the weighted average life
thereof;
          (c) Indebtedness of the Borrower owing to any Subsidiary and of any
Subsidiary owing to the Borrower or any other Subsidiary;
          (d) Guarantees by the Borrower of Indebtedness of any Subsidiary
Guarantor and by any Subsidiary of Indebtedness of the Borrower;
          (e) Indebtedness in respect of Hedging Obligations not prohibited by
Section 7.9;
          (f) other unsecured Indebtedness in an aggregate principal amount not
to exceed $10,000,000 at any time outstanding;
          (g) Indebtedness incurred by any Special Purpose Subsidiary that is
non-recourse to the Loan Parties;
          (h) Indebtedness arising in connection with the accrual of any fees
and expenses required to be paid under the Investment Advisory Agreement;
          (i) Indebtedness created pursuant to the Investment Credit Agreement.
Borrower will not, and will not permit any Subsidiary Guarantor to, issue any
preferred stock or other preferred equity interests that (i) matures or is
mandatorily redeemable pursuant to a

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sinking fund obligation or otherwise, (ii) is or may become redeemable or
repurchaseable by Borrower or such Subsidiary Guarantor at the option of the
holder thereof, in whole or in part or (iii) is convertible or exchangeable at
the option of the holder thereof for Indebtedness or preferred stock or any
other preferred equity interests described in this paragraph, on or prior to, in
the case of clause (i), (ii) or (iii), the first anniversary of the Commitment
Termination Date.
          Section 7.2. Negative Pledge. The Borrower will not, and will not
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any
Lien on any of its assets or property now owned or hereafter acquired or,
except:
          (a) Liens securing the Obligations; provided, however, that no Liens
may secure Hedging Obligations without securing all other Obligations on a basis
at least pari passu with such Hedging Obligations and subject to the priority of
payments set forth in Section 2.19 of this Agreement;
          (b) Permitted Encumbrances;
          (c) any Liens on any property or asset of the Borrower or any
Subsidiary existing on the Closing Date set forth on Schedule 7.2; provided,
that such Lien shall not apply to any other property or asset of the Borrower or
any Subsidiary;
          (d) rights of set off, rights over a margin call account, any form of
cash collateral or similar arrangement, in any case for obligations incurred in
respect of any Hedging Transactions so long as such Liens do not encumber assets
securing the Obligations; and
          (e) Liens securing the obligations under the security documents
securing the Investment Credit Agreement as in effect on the Closing Date.
          Section 7.3. Fundamental Changes.
          (a) The Borrower will not, and will not permit any Subsidiary
Guarantor to, merge into or consolidate into any other Person, or permit any
other Person to merge into or consolidate with it, or sell, lease, transfer or
otherwise dispose of (in a single transaction or a series of transactions) all
or substantially all of its assets (in each case, whether now owned or hereafter
acquired) or all or substantially all of the stock of any of its Subsidiaries
(in each case, whether now owned or hereafter acquired) or liquidate or
dissolve; provided, that if at the time thereof and immediately after giving
effect thereto, no Default or Event of Default shall have occurred and be
continuing (i) the Borrower or any Subsidiary may merge with a Person if the
Borrower (or such Subsidiary if the Borrower is not a party to such merger) is
the surviving Person, (ii) any Subsidiary may merge into another Subsidiary;
provided, that if any party to such merger is a Subsidiary Guarantor, the
Subsidiary Guarantor shall be the surviving Person, (iii) any Subsidiary may
sell, transfer, lease or otherwise dispose of all or substantially all of its
assets to the Borrower or to a Subsidiary Guarantor, and (iv) any Subsidiary
(other than a Subsidiary Guarantor) may liquidate or dissolve if the Borrower
determines in good faith that such liquidation or dissolution is in the best
interests of the Borrower, and is not materially disadvantageous to the Lenders;
provided, that any such merger involving a Person that is not a wholly-owned
Subsidiary immediately prior to such merger shall not be permitted unless also
permitted by Section 7.4.

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          (b) The Borrower will not, and will not permit any of its Subsidiaries
to, engage in any business other than businesses of the type conducted by the
Borrower and its Subsidiaries on the date hereof and businesses reasonably
related thereto. The Special Purpose Subsidiaries will not engage in any
business other than to hold such assets and conduct such business as is
consistent with its purpose and businesses reasonably related thereto
          Section 7.4. Restricted Payments.
     The Borrower will not, nor will it permit any of its Subsidiaries to,
declare to make, or agree to pay or make, directly or indirectly, any Restricted
Payment, except that the Borrower may declare and pay:
          (a) dividends with respect to the capital stock of the Borrower
payable solely in additional shares of the Borrower’s common stock;
          (b) dividends and distributions in either case in cash or other
property (excluding for this purpose the Borrower’s common stock) in any taxable
year of the Borrower in amounts not to exceed the amount that is estimated in
good faith by the Borrower to be required to (i) reduce to zero for such taxable
year or for the previous taxable year, its investment company taxable income
(within the meaning of section 852(b)(2) of the Code), and reduce to zero the
tax imposed by section 852(b)(3) of the Code, and (ii) avoid federal excise
taxes for such taxable year imposed by section 4982 of the Code;
          (c) dividends and distributions in respect of Distributable Cash Flow
for the prior Fiscal Quarter and for the three Fiscal Quarters immediately
preceding such prior Fiscal Quarter that has not been previously distributed in
addition to the dividends and distributions permitted under the foregoing
clauses (a) and (b) subject to the requirements for such Restricted Payments in
Section 7.4(c) of the Investment Credit Agreement;
          (d) dividends and distributions in each case in cash or other property
(excluding for this purpose the Borrower’s common stock) in addition to the
dividends and distributions permitted under the foregoing clauses (a), (b) and
(c), so long as on the date of such Restricted Payment and after giving effect
thereto:
     (i) no Default or Event of Default shall have occurred and be continuing;
and
     (ii) the aggregate amount of Restricted Payments made during any taxable
year of the Borrower after the date hereof under this clause (c) shall not
exceed the sum of (x) an amount equal to 10% of the taxable income of the
Borrower for such taxable year determined under section 852(b)(2) of the Code,
but without regard to subparagraphs (A), (B) or (D) thereof, minus (y) the
amount, if any, by which dividends and distributions made during such taxable
year pursuant to the foregoing clause (b) (whether in respect of such taxable
year or the previous taxable year) based upon the Borrower’s estimate of taxable
income exceeded the actual amounts specified in subclauses (i) and (ii) of such
foregoing clause (b) for such taxable year.
          (e) other Restricted Payments permitted by and subject to the terms
and conditions of Section 7.4 of the Investment Credit Agreement.

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     Nothing herein shall be deemed to prohibit the payment of Restricted
Payments by any Subsidiary of the Borrower to the Borrower or to any other
Subsidiary Guarantor.
          Section 7.5. Sale of Assets. The Borrower will not, and will not
permit any of its Subsidiaries to, convey, sell, lease, assign, transfer or
otherwise dispose of, any of its assets, business or property, whether now owned
or hereafter acquired, or, in the case of any Subsidiary, issue or sell any
shares of such Subsidiary’s common stock to any Person other than the Borrower
or another Subsidiary Guarantor (or to qualify directors if required by
applicable law), except (a) the sale or other disposition for fair market value
of obsolete or worn out property or other property not necessary for operations
disposed of in the ordinary course of business; (b) the sale of inventory,
Portfolio Investments, or other investments in the ordinary course of business;
and (c) any sale or other disposition if, after giving effect thereto, the
Borrower shall be in compliance on a pro forma basis after giving effect to such
sale, with the covenants contained in Article 6, in each case recomputed as at
the last day of the most recently ended Fiscal Quarter of the Borrower for which
financial statements have been provided for under Section 5.1.
          Section 7.6. Transactions with Affiliates. The Borrower will not, and
will not permit any of its Subsidiaries to, sell, lease or otherwise transfer
any property or assets to, or purchase, lease or otherwise acquire any property
or assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) in the ordinary course of business at prices and on terms
and conditions not less favorable to the Borrower or such Subsidiary than could
be obtained on an arm’s-length basis from unrelated third parties,
(b) transactions between or among the Borrower and any Subsidiary Guarantor not
involving any other Affiliates, (c) transactions and transfers provided in the
Investment Advisory Agreement, and the Fee Waiver Agreement,(d) reasonable and
customary fees and expenses paid to members of the board of directors (or
similar governing body) of the Borrower and its Subsidiaries that are disclosed
in the quarterly filings of Borrower, (e) Restricted Payments permitted by
Section 7.4, (f) transactions in connection with the provision of managerial
assistance to affiliated Portfolio Investments, including fees or other
compensation payable in connection therewith, (g) co-investments with other
advisory clients of Borrower’s investment adviser or its Affiliate, brokerage
transactions with Affiliated broker-dealers, or other transactions with
Affiliates, in each case as permitted by applicable provisions of the Investment
Company Act and the rules promulgated thereunder, and (h) any investment in any
Affiliated Portfolio Investment or an investment transaction that results in the
creation of an Affiliate.
          Section 7.7. Restrictive Agreements. The Borrower will not, and will
not permit any Subsidiary to, directly or indirectly, enter into, incur or
permit to exist any agreement that prohibits, restricts or imposes any condition
upon (a) the ability of the Borrower or any Subsidiary to create, incur or
permit any Lien upon any of its assets or properties, whether now owned or
hereafter acquired, or (b) the ability of any Subsidiary to pay dividends or
other distributions with respect to its common stock, to make or repay loans or
advances to the Borrower or any other Subsidiary, to Guarantee Indebtedness of
the Borrower or any other Subsidiary or to transfer any of its property or
assets to the Borrower or any Subsidiary of the Borrower; provided, that (i) the
foregoing shall not apply to restrictions or conditions imposed by law or by
this Agreement or any other Loan Document; (ii) the foregoing shall not apply to
customary restrictions and conditions contained in agreements relating to the
sale of a Subsidiary pending such sale, provided such restrictions and
conditions apply only to the Subsidiary that is

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sold and such sale is permitted hereunder; (iii) clause (a) shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions and conditions
apply only to the property or assets securing such Indebtedness; (iv) clause
(a) shall not apply to customary provisions in leases and other contracts
restricting the assignment thereof; (v) the foregoing shall not apply to
restrictions or conditions imposed by the Investment Credit Agreement; (vi)
clause (b) shall not apply to any agreements containing provisions (other than
any Right of First Offer or Tag Along Rights) applicable to a Portfolio
Investment that prohibit, restrict or impose any condition upon the ability of
the Borrower or any other Subsidiary to transfer any of its property or assets
(each a “Lock-up Agreement”); and (v) clause (b) shall not apply to any
agreements that contain a Right of First Offer or Tag Along Rights applicable to
a Portfolio Investment.
          Section 7.8. Sale and Leaseback Transactions. The Borrower will not,
and will not permit any Subsidiary Guarantor to, enter into any arrangement,
directly or indirectly, whereby it shall sell or transfer any property, real or
personal, used or useful in its business, whether now owned or hereinafter
acquired, and thereafter rent or lease such property or other property that it
intends to use for substantially the same purpose or purposes as the property
sold or transferred.
          Section 7.9. Hedging Transactions. The Borrower will not, and will not
permit any of the Subsidiaries to, enter into any Hedging Transaction, other
than Hedging Transactions entered into in the ordinary course of business (i) to
hedge or mitigate risks to which the Borrower or any Subsidiary is exposed in
the conduct of its business or the management of its liabilities, or (ii) with
any counterparty who is or is anticipated to become, at the time that the
Hedging Transaction is entered into, a borrower from a Loan Party or the issuer
of a debt or equity interest to a Loan Party, which Hedging Transaction is
entered into to hedge or mitigate risks to which such counterparty and its
affiliates are exposed in the conduct of their businesses or the management of
their liabilities, or (iii) to hedge or mitigate risks to which a Loan Party is
exposed under Hedging Transactions described in the preceding clause (ii) or to
effect an offset or unwind of any other Hedging Transaction; provided that the
Loan Parties shall act in a reasonable and prudent manner to achieve, in the
aggregate, substantially offsetting Hedging Transactions under clause (iii) with
respect to the Net Mark to Market Exposure under the Hedging Transactions that
are from time to time outstanding under clause (ii). Solely for the avoidance of
doubt, the Borrower acknowledges that a Hedging Transaction entered into for
speculative purposes or of a speculative nature (which shall be deemed to
include any Hedging Transaction under which the Borrower or any of the
Subsidiaries is or may become obliged to make any payment (i) in connection with
the purchase by any third party of any common stock or any Indebtedness or
(ii) as a result of changes in the market value of any common stock or any
Indebtedness) is not a Hedging Transaction entered into in the ordinary course
of business to hedge or mitigate risks.
          Section 7.10. Accounting Changes. The Borrower will not, and will not
permit any of its Subsidiaries to, make any significant change in accounting
treatment or reporting practices, except as required or permitted by GAAP, or
change the fiscal year of the Borrower or of any Subsidiary Guarantor, except to
change the fiscal year of a Subsidiary Guarantor to conform its fiscal year to
that of the Borrower.

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          Section 7.11. Amendment to Material Documents. Upon the occurrence and
during the continuation of an Event of Default, the Borrower will not, and will
not permit any of its Subsidiaries to, agree to or permit any amendment,
modification or waiver of any provision of the Investment Advisory Agreement if
the effect of such amendment, modification or waiver is to increase the amount
of fees or other amounts payable by the Borrower or any of its Subsidiaries
under such agreements or alter the payment schedule with respect to such fees or
such other amounts without the prior written consent of the Administrative
Agent.
          Section 7.12. Loans, Etc. The Borrower will not permit at any time the
aggregate amount of all unfunded commitments of the Borrower and its
Subsidiaries to provide loans, advances or Guarantees with respect to such
Portfolio Investments (but excluding any “unapproved capital expenditure amount”
as defined below) to exceed the sum of (i) all cash of the Borrower and its
Subsidiaries held in deposit accounts that are subject to a Control Agreement
granting the administrative agent under the Investment Credit Agreement a first
priority security interest therein, excluding the Cash Collateral (as such term
is defined in the this Agreement) plus (ii) the difference between (x) the
Investment Revolving Commitment Amount minus (y) the Investment Revolving Credit
Exposure. For purposes of this Section 7.12, “unapproved capital expenditure
amount” means the portion of any commitment that (i) may only be used for
capital expenditures (including drilling and completion of wells, the purchase
of assets or other capital expenditures) that are approved by (or consented to
by) the Borrower or such Subsidiary in its sole discretion or words of similar
effect (whether under a specific approval or under a budget that must be
approved) and (ii) exceeds the amount of the capital expenditures that have been
so approved and that, if applicable, will not be paid from cash flow from
operations under the approved budget.
ARTICLE VIII
EVENTS OF DEFAULT
          Section 8.1. Events of Default. If any of the following events (each
an “Event of Default”) shall occur:
          (a) the Borrower shall fail to pay any principal of any Loan when and
as the same shall become due and payable, whether at the due date thereof or at
a date fixed for prepayment or otherwise; or
          (b) the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount payable under clause (a) of this
Section 8.1) payable under this Agreement or any other Loan Document, when and
as the same shall become due and payable, and such failure shall continue
unremedied for a period of three (3) Business Days; or
          (c) any representation or warranty made or deemed made by or on behalf
of the Borrower or any Subsidiary in or in connection with this Agreement or any
other Loan Document (including the Schedules attached thereto) and any
amendments or modifications hereof or waivers hereunder, or in any certificate,
report, financial statement or other document

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submitted to the Administrative Agent or the Lenders by any Loan Party or any
representative of any Loan Party pursuant to or in connection with this
Agreement or any other Loan Document shall prove to be incorrect when made or
deemed made or submitted; or
          (d) the Borrower shall fail to observe or perform any covenant or
agreement contained in Sections 5.1, 5.2, or 5.3 (with respect to the Borrower’s
existence) or in Articles VI or VII; or
          (e) any Loan Party shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those referred to in clauses
(a), (b) and (d) above or any other Loan Document), and such failure shall
remain unremedied for 30 days after the earlier of (i) any officer of the
Borrower becomes aware of such failure, or (ii) notice thereof shall have been
given to the Borrower by the Administrative Agent or any Lender; or
          (f) the Borrower or any Subsidiary (whether as primary obligor or as
guarantor or other surety) shall fail to pay any principal of or premium or
interest on any Material Indebtedness that is outstanding, when and as the same
shall become due and payable (whether at scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument evidencing or governing such Material Indebtedness; or any other
event shall occur or condition shall exist under any agreement or instrument
relating to such Material Indebtedness and shall continue after the applicable
grace period, if any, specified in such agreement or instrument, if the effect
of such event or condition is to accelerate, or permit the acceleration of, the
maturity of such Indebtedness; or any such Material Indebtedness shall be
declared to be due and payable; or required to be prepaid or redeemed (other
than by a regularly scheduled required prepayment or redemption), purchased or
defeased, or any offer to prepay, redeem, purchase or defease such Material
Indebtedness shall be required to be made, in each case prior to the stated
maturity thereof; or
          (g) the Borrower or any Subsidiary shall (i) commence a voluntary case
or other proceeding or file any petition seeking liquidation, reorganization or
other relief under any federal, state or foreign bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
custodian, trustee, receiver, liquidator or other similar official of it or any
substantial part of its property, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition described
in clause (i) of this Section 8.1, (iii) apply for or consent to the appointment
of a custodian, trustee, receiver, liquidator or other similar official for the
Borrower or any such Subsidiary 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; or
          (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 Subsidiary or its debts, or any substantial
part of its assets, under any federal, state or foreign bankruptcy, insolvency
or other similar law now or hereafter in effect or (ii) the appointment of a
custodian, trustee, receiver, liquidator or other similar official for the
Borrower or any Subsidiary or for a substantial part of its assets, and in any
such case, such proceeding or

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petition shall remain undismissed for a period of 60 days or an order or decree
approving or ordering any of the foregoing shall be entered; or
          (i) the Borrower or any Subsidiary shall become unable to pay, shall
admit in writing its inability to pay, or shall fail to pay, its debts as they
become due; or
          (j) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with other ERISA Events that have
occurred, could reasonably be expected to result in liability to the Borrower
and the Subsidiaries in an aggregate amount exceeding $1,000,000; or
          (k) any judgment or order for the payment of money in excess of
$5,000,000 in the aggregate shall be rendered against the Borrower or any
Subsidiary, and either (i) enforcement proceedings shall have been commenced by
any creditor upon such judgment or order or (ii) there shall be a period of 30
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect; or
          (l) any non-monetary judgment or order shall be rendered against the
Borrower or any Subsidiary that could reasonably be expected to have a Material
Adverse Effect, and there shall be a period of 30 consecutive days during which
a stay of enforcement of such judgment or order, by reason of a pending appeal
or otherwise, shall not be in effect; or
          (m) a Change in Control shall occur or exist;
          (n) the Liens created by the Security Documents shall, at any time,
not be valid and perfected (to the extent perfection by filing, registration,
recordation, possession or control is required herein or therein) in favor of
the Administrative Agent, free and clear of all other Liens (other than
Permitted Encumbrances); or
          (o) any provision of any Security Document shall for any reason cease
to be valid and binding on, or enforceable against, any Subsidiary Guarantor or
the Borrower, as applicable, or any Subsidiary Guarantor or the Borrower shall
so state in writing, any Subsidiary Guarantor or the Borrower shall seek to
terminate any Security Document;
then, and in every such event (other than an event with respect to the Borrower
described in clause (f) or (g) of this Section 8.1) and at any time thereafter
during the continuance of such event, the Administrative Agent may, and upon the
written request of the Required Lenders shall, by notice to the Borrower, take
any or all of the following actions, at the same or different times:
(i) terminate the Commitments, whereupon the Commitment of each Lender shall
terminate immediately; (ii) declare the principal of and any accrued interest on
the Loans, and all other Obligations owing hereunder, to be, whereupon the same
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;
(iii) exercise all remedies contained in any other Loan Document and
(iv) exercise any other remedies available at law or equity; and that, if an
Event of Default specified in either clause (g) or (h) shall occur, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon, and all fees, and all other
Obligations shall automatically become due and payable, without

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presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.
ARTICLE IX
THE ADMINISTRATIVE AGENT
          Section 9.1. Appointment of Administrative Agent. Each Lender
irrevocably appoints SunTrust Bank as the Administrative Agent and authorizes it
to take such actions on its behalf and to exercise such powers as are delegated
to the Administrative Agent under this Agreement and the other Loan Documents,
together with all such actions and powers that are reasonably incidental
thereto. The Administrative Agent may perform any of its duties hereunder or
under the other Loan Documents by or through any one or more sub-agents or
attorneys-in-fact appointed by the Administrative Agent. The Administrative
Agent and any such sub-agent or attorney-in-fact may perform any and all of its
duties and exercise its rights and powers through their respective Related
Parties. The exculpatory provisions set forth in this Article shall apply to any
such sub-agent or attorney-in-fact and the Related Parties of the Administrative
Agent, any such sub-agent and any such attorney-in-fact 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 9.2. Nature of Duties of Administrative Agent. The
Administrative Agent shall not have any duties or obligations except those
expressly set forth in this Agreement and 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 an 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 those discretionary rights and powers
expressly contemplated by the Loan Documents that the Administrative Agent is
required to exercise in writing by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 10.2), and (c) except as expressly set forth in the 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
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, its sub-agents or attorneys-in-fact with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 10.2) or in the
absence of its own gross negligence or willful misconduct. The Administrative
Agent shall not be responsible for the negligence or misconduct of any
sub-agents or attorneys-in-fact selected by it with reasonable care. The
Administrative Agent shall not be deemed to have knowledge of any Default or
Event of Default unless and until written notice thereof (which notice shall
include an express reference to such event being a “Default” or “Event of
Default” hereunder) is given to the Administrative Agent by the Borrower or any
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 any 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

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of the covenants, agreements, or other terms and conditions set forth in any
Loan Document, (iv) the validity, enforceability, effectiveness or genuineness
of any Loan Document or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article III or elsewhere in any Loan
Document, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent. The Administrative Agent may consult with
legal counsel (including counsel for the Borrower) concerning all matters
pertaining to such duties.
          Section 9.3. Lack of Reliance on the Administrative Agent. Each of the
Lenders 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 of the Lenders 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 has deemed
appropriate, continue to make its own decisions in taking or not taking of any
action under or based on this Agreement, any related agreement or any document
furnished hereunder or thereunder.
          Section 9.4. Certain Rights of the Administrative Agent. If the
Administrative Agent shall request instructions from the Required Lenders with
respect to any action or actions (including the failure to act) in connection
with this Agreement, the Administrative Agent shall be entitled to refrain from
such act or taking such act, unless and until it shall have received
instructions from such Lenders; and the Administrative Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against the
Administrative Agent as a result of the Administrative Agent acting or
refraining from acting hereunder in accordance with the instructions of the
Required Lenders where required by the terms of this Agreement.
          Section 9.5. Reliance by Administrative Agent. 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, posting or other
distribution) believed by it to be genuine and to have been signed, sent or made
by the proper Person. The Administrative Agent may also rely upon any statement
made to it orally or by telephone and believed by it to be made by the proper
Person and shall not incur any liability for relying thereon. The Administrative
Agent may consult with legal counsel (including counsel for the Borrower),
independent public 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
such counsel, accountants or experts.
          Section 9.6. The Administrative Agent in its Individual Capacity. The
bank serving as the Administrative Agent shall have the same rights and powers
under this Agreement and any other Loan Document in its capacity as a Lender as
any other Lender and may exercise or refrain from exercising the same as though
it were not the Administrative Agent; and the terms “Lenders”, “Required
Lenders”, “holders of Notes”, or any similar terms shall, unless the context
clearly otherwise indicates, include the Administrative Agent in its individual
capacity. The bank acting as the Administrative Agent and its Affiliates may
accept deposits from, lend money to, and generally engage in any kind of
business with the Borrower or any Subsidiary or Affiliate of the Borrower as if
it were not the Administrative Agent hereunder.

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          Section 9.7. Successor Administrative Agent.
          (a) The Administrative Agent may resign at any time by giving notice
thereof to the Lenders and the Borrower. Upon any such resignation, the Required
Lenders shall have the right to appoint a successor Administrative Agent,
subject to the approval by the Borrower provided that no Default or Event of
Default shall exist at such time. If no successor Administrative Agent shall
have been so appointed, and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of resignation, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which shall be a commercial bank organized under the laws
of the United States of America or any state thereof or a bank which maintains
an office in the United States, having a combined capital and surplus of at
least $500,000,000.
          (b) Upon the acceptance of its appointment as the Administrative Agent
hereunder by a successor, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations under this Agreement and the
other Loan Documents. If within 45 days after written notice is given of the
retiring Administrative Agent’s resignation under this Section 9.7 no successor
Administrative Agent shall have been appointed and shall have accepted such
appointment, then on such 45th day (i) the retiring Administrative Agent’s
resignation shall become effective, (ii) the retiring Administrative Agent shall
thereupon be discharged from its duties and obligations under the Loan Documents
and (iii) the Required Lenders shall thereafter perform all duties of the
retiring Administrative Agent under the Loan Documents until such time as the
Required Lenders appoint a successor Administrative Agent as provided above.
After any retiring Administrative Agent’s resignation hereunder, the provisions
of this Article IX shall continue in effect for the benefit of such retiring
Administrative Agent and its representatives and agents in respect of any
actions taken or not taken by any of them while it was serving as the
Administrative Agent.
          Section 9.8. Authorization to Execute other Loan Documents Each Lender
hereby authorizes the Administrative Agent to execute on behalf of all Lenders
(a) all Loan Documents other than this Agreement, (b) any release of the
guaranty of a Subsidiary Guarantor to the extent expressly permitted by this
Agreement, and (c) any release of collateral to the extent expressly permitted
by this Agreement.
          Section 9.9. Documentation Agent; Syndication Agent. Each Lender
hereby designates Citibank, N.A. as Syndication Agent and agrees that the
Syndication Agent shall have no duties or obligations under any Loan Documents
to any Lender or any Loan Party.
ARTICLE X
MISCELLANEOUS
          Section 10.1. Notices.
          (a) Written Notices.

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     (i) Except in the case of notices and other communications expressly
permitted to be given by telephone, all notices and other communications to any
party herein to be effective shall be in writing and shall be delivered by hand
or overnight courier service, mailed by certified or registered mail or sent by
telecopy, as follows:

     
To the Borrower:
  Kayne Anderson Energy Development Company
 
  717 Texas Avenue, Suite 3100
 
  Houston, Texas 77002
 
  Attention: Terry Hart
 
  Telecopy Number: (713) 655-7359
 
   
With a copy to:
  Paul, Hastings, Janofsky & Walker LLP
 
  55 Second Street
 
  San Francisco, California 94105
 
  Attention: Kevin Fisher
 
  Telecopy Number: (415) 856-7100
 
   
To the Administrative Agent:
  SunTrust Bank
 
  303 Peachtree Street, N. E.
 
  Atlanta, Georgia 30308
 
  Attention: Sean Drinan
 
  Telecopy Number: (404) 827-6514
 
   
With a copy to:
  SunTrust Bank Agency Services
 
  303 Peachtree Street, N. E./25th Floor
 
  Atlanta, Georgia 30308
 
  Attention: Ms. Doris Folsum
 
  Telecopy Number: (404) 658-4906; and
 
   
 
  King & Spalding LLP
 
  1180 Peachtree Street, NE
 
  Atlanta, Georgia 30309
 
  Attention: W. Todd Holleman
 
  Telecopy Number: (404) 572-5100
 
   
To any other Lender:
  the address set forth in the Assignment and Acceptance executed by such Lender

Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All such notices
and other communications shall, when transmitted by overnight delivery, or
faxed, be effective when delivered for overnight (next-day) delivery, or
transmitted in legible form by facsimile machine, respectively, or if mailed,
upon the third Business Day after the date deposited into the mail or if
delivered, upon delivery; provided, that notices delivered to the Administrative
Agent shall not be effective until actually received by such Person at its
address specified in this Section 10.1.

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     (ii) Any agreement of the Administrative Agent and the Lenders herein to
receive certain notices by telephone or facsimile is solely for the convenience
and at the request of the Borrower. The Administrative Agent and the Lenders
shall be entitled to rely on the authority of any Person purporting to be a
Person authorized by the Borrower to give such notice and the Administrative
Agent and Lenders shall not have any liability to the Borrower or other Person
on account of any action taken or not taken by the Administrative Agent or the
Lenders in reliance upon such telephonic or facsimile notice. The obligation of
the Borrower to repay the Loans and all other Obligations hereunder shall not be
affected in any way or to any extent by any failure of the Administrative Agent
and the Lenders to receive written confirmation of any telephonic or facsimile
notice or the receipt by the Administrative Agent and the Lenders of a
confirmation which is at variance with the terms understood by the
Administrative Agent and the Lenders to be contained in any such telephonic or
facsimile notice.
          (b) Electronic Communications.
     (i) 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 Administrative
Agent, provided that the foregoing shall not apply to notices to any Lender
pursuant to Article 2 unless such Lender, and Administrative Agent have agreed
to receive notices under such Section by electronic communication and have
agreed to the procedures governing such communications. Administrative Agent or
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.
     (ii) Unless 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” function, as available, return e-mail or other
written acknowledgement); provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next Business Day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.
          (c) The Administrative Agent shall execute, without further consent or
approval of any Lender, so long as no Default or Event of Default shall have
occurred which is continuing or would result therefrom (i) a release of the
guaranty of a Subsidiary upon the sale or other disposition of such Subsidiary
permitted under the terms of this Agreement or pursuant to any consent or
approval by Required Lenders and (ii) a release of collateral upon the sale or
other disposition of such collateral permitted under the terms of this Agreement
or pursuant to any consent or approval by Required Lenders.

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          Section 10.2. Waiver; Amendments.
          (a) No failure or delay by the Administrative Agent or any Lender in
exercising any right or power hereunder or any other Loan Document, and no
course of dealing between the Borrower and the Administrative Agent or any
Lender, 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 right or power, preclude any other or further exercise
thereof or the exercise of any other right or power hereunder or thereunder. The
rights and remedies of the Administrative Agent and the Lenders hereunder and
under the other Loan Documents are cumulative and are not exclusive of any
rights or remedies provided by law. No waiver of any provision of this Agreement
or any other Loan Document 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 10.2, 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) No amendment or waiver of any provision of this Agreement or the
other Loan Documents, nor consent to any departure by the Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Borrower and the Required Lenders or the Borrower and the Administrative
Agent with the consent of the Required Lenders and then such waiver or consent
shall be effective only in the specific instance and for the spe cific purpose
for which given; provided, that no amendment or waiver 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
affected thereby, (iii) postpone the date fixed for any payment of any principal
of, or interest on, any Loan or interest thereon or any fees hereunder or reduce
the amount of, waive or excuse any such payment, or postpone the scheduled date
for the termination or reduction of any Commitment, without the written consent
of each Lender affected thereby, (iv) change Section 2.19 (b) or (c) in a manner
that would alter the pro rata sharing of payments required thereby, without the
written consent of each Lender, (v) change any of the provisions of this
Section 10.2 or the definition of “Required Lenders” or any other provision
hereof specifying the number or percentage of Lenders which are required to
waive, amend or modify any rights hereunder or make any determination or grant
any consent hereunder, without the consent of each Lender; (vi) release all or
substantially all of the guarantors or limit the liability of any such
guarantors under any guaranty agreement, without the written consent of each
Lender; (vii) release all or substantially all collateral (if any) securing any
of the Obligations, without the written consent of each Lender or (viii) change
Section 3.2(d) or Section 6.4 or amend or waive any Event of Default that would
result from a breach thereof, without the written consent of each Lender;
provided further, that no such agreement shall amend, modify or otherwise affect
the rights, duties or obligations of the Administrative Agent without the prior
written consent of such Person. Notwithstanding anything contained herein to the
contrary, this Agreement may be amended and restated without the consent of any
Lender (but with the consent of the Borrower and the Administrative Agent) if,
upon giving effect to such amendment and restatement, such Lender shall no
longer be a party to this Agreement (as so amended and restated), the
Commitments of such Lender shall have terminated (but such

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Lender shall continue to be entitled to the benefits of Sections 2.16, 2.17,
2.18 and 10.3), such Lender shall have no other commitment or other obligation
hereunder and shall have been paid in full all principal, interest and other
amounts owing to it or accrued for its account under this Agreement.
          Section 10.3. Expenses; Indemnification.
          (a) The Borrower shall pay (i) all reasonable, out-of-pocket costs and
expenses of the Administrative Agent and its Affiliates, including the
reasonable fees, charges and disbursements of counsel for the Administrative
Agent and its Affiliates, in connection with the syndication of the credit
facilities provided for herein, the preparation and administration of the Loan
Documents and any amendments, modifications or waivers thereof (whether or not
the transactions contemplated in this Agreement or any other Loan Document shall
be consummated) and (ii) all out-of-pocket costs and expenses (including,
without limitation, the reasonable fees, charges and disbursements of outside
counsel) incurred by the Administrative Agent or any Lender in connection with
the enforcement or protection of its rights in connection with this Agreement,
including its rights under this Section 10.3, or in connection with the Loans
made hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans.
          (b) The Borrower shall indemnify the Administrative Agent (and any
sub-agent thereof), and each Lender, and each Related Party of any of the
foregoing Persons (each such Person being called an “Indemnitee”) against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses (including the fees, charges and disbursements
of any counsel for any Indemnitee), and shall indemnify and hold harmless each
Indemnitee from all fees and time charges and disbursements for attorneys who
may be employees of any Indemnitee, incurred by any Indemnitee or asserted
against any Indemnitee by any third party or by the Borrower or any other Loan
Party arising out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto
of their respective obligations hereunder or thereunder or the consummation of
the transactions contemplated hereby or thereby, (ii) any Loan or the use or
proposed use of the proceeds therefrom , (iii) any actual or alleged presence or
Release of Hazardous Materials on or from any property owned or operated by the
Borrower or any of its Subsidiaries, or any Environmental Liability related in
any way to the Borrower or any of its Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory, whether
brought by a third party or by the Borrower or any other Loan 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 (x) are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of any Indemnitee or
(y) result from a claim brought by the Borrower or any other Loan Party against
an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder
or under any other Loan Document, if the Borrower or such Loan Party has
obtained a final and nonappealable judgment in its favor on such claim as
determined by a court of competent jurisdiction.

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          (c) The Borrower shall pay, and hold the Administrative Agent and each
of the Lenders harmless from and against, any and all present and future stamp,
documentary, and other similar taxes with respect to this Agreement and any
other Loan Documents, any collateral described therein, or any payments due
thereunder, and save the Administrative Agent and each Lender harmless from and
against any and all liabilities with respect to or resulting from any delay or
omission to pay such taxes.
          (d) To the extent that the Borrower fails to pay any amount required
to be paid to the Administrative Agent under clauses (a), (b) or (c) hereof,
each Lender severally agrees to pay to the Administrative Agent such Lender’s
Pro Rata Share (determined as of the time that the unreimbursed expense or
indemnity payment is sought) of such unpaid amount; provided, that the
unreimbursed expense or indemnified payment, 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.
          (e) 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 actual or direct damages) arising out of, in connection with or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
transactions contemplated therein, any Loan or the use of proceeds thereof.
          (f) All amounts due under this Section 10.3 shall be payable promptly
after written demand therefor.
          Section 10.4. Successors and Assigns.
          (a) 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 the Borrower may not assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
the Administrative Agent and each Lender, and no Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an assignee in
accordance with the provisions of paragraph (b) of this Section, (ii) by way of
participation in accordance with the provisions of paragraph (d) of this Section
or (iii) by way of pledge or assignment of a security interest subject to the
restrictions of paragraph (f) of this Section (and any other attempted
assignment or transfer by any party hereto shall be null and void). 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, Participants to the extent provided in paragraph (d) of this
Section 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) Any Lender may at any time 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 Loans at the time owing to it); provided that
any such assignment shall be subject to the following conditions:

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     (i) Minimum Amounts.
     (A) in the case of an assignment of the entire remaining amount of the
assigning Lender’s Commitment and the Loans at the time owing to it or in the
case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund,
no minimum amount need be assigned; and
     (B) in any case not described in paragraph (b)(i)(A) of this Section, the
aggregate amount of the Commitment (which for this purpose includes Loans and
Revolving Credit Exposure outstanding thereunder) or, if the applicable
Commitment is not then in effect, the principal outstanding balance of the Loans
and Revolving Credit Exposure of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Administrative Agent or, if “Trade Date”
is specified in the Assignment and Acceptance, as of the Trade Date) shall not
be less than $1,000,000, unless each of the Administrative Agent and, so long as
no Event of Default has occurred and is continuing, the Borrower otherwise
consents (each such consent not to be unreasonably withheld or delayed).
     (ii) Proportionate Amounts. Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loans, Revolving Credit
Exposure or the Commitment assigned, except that this clause (ii) shall not
prohibit any Lender from assigning all or a portion of its rights and
obligations among separate Commitments on a non-pro rata basis.
     (iii) Required Consents. No consent shall be required for any assignment
except to the extent required by paragraph (b)(i)(B) of this Section and, in
addition:
     (A) the consent of the Borrower (such consent not to be unreasonably
withheld or delayed) shall be required unless (x) an Event of Default has
occurred and is continuing at the time of such assignment or (y) such assignment
is to a Lender, an Affiliate of a Lender or an Approved Fund; and
     (B) the consent of the Administrative Agent (such consent not to be
unreasonably withheld or delayed) shall be required for assignments to a Person
that is not a Lender with a Commitment.
     (iv) Assignment and Acceptance. The parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Acceptance,
together with a processing and recordation fee of $3,500, and the assignee, if
it is not a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire.
     (v) No Assignment to Borrower. No such assignment shall be made to the
Borrower or any of the Borrower’s Affiliates or Subsidiaries.
     (vi) No Assignment to Natural Persons. No such assignment shall be made to
a natural person.

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Subject to acceptance and recording thereof by the Administrative Agent pursuant
to paragraph (c) of this Section 10.4, from and after the effective date
specified in each Assignment and Acceptance, the assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such
Assignment and Acceptance, 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 Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance 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 2.16, 2.17, 2.18 and 10.3 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 paragraph 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 (d) of this
Section 10.4. If the consent of the Borrower to an assignment is required
hereunder (including a consent to an assignment which does not meet the minimum
assignment thresholds specified above), the Borrower shall be deemed to have
given its consent five Business Days after the date notice thereof has actually
been delivered by the assigning Lender (through the Administrative Agent) to the
Borrower, unless such consent is expressly refused by the Borrower prior to such
fifth Business Day.
          (c) The Administrative Agent, acting solely for this purpose as an
agent of the Borrower, shall maintain at one of its offices in Atlanta, Georgia
a copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amount of the Loans and Revolving Credit Exposure owing to, each
Lender pursuant to the terms hereof from time to time (the “Register”).
Information contained in the Register with respect to any Lender shall be
available for inspection by such Lender at any reasonable time and from time to
time upon reasonable prior notice; information contained in the Register shall
also be available for inspection by the Borrower at any reasonable time and from
time to time upon reasonable prior notice. In establishing and maintaining the
Register, Administrative Agent shall serve as Company’s agent solely for tax
purposes and solely with respect to the actions described in this Section, and
the Borrower hereby agrees that, to the extent SunTrust Bank serves in such
capacity, SunTrust Bank and its officers, directors, employees, agents,
sub-agents and affiliates shall constitute “Indemnitees.”
          (d) Any Lender may at any time, without the consent of, or notice to,
the Borrower or the Administrative Agent sell participations to any Person
(other than a natural person, the Borrower or any of the Borrower’s Affiliates
or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s
rights and/or obligations under this Agreement (including all or a portion of
its Commitment and/or the Loans owing to it); provided that (i) such Lender’s
obligations under this Agreement 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
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement.
          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 to approve any amendment, modification or waiver of
any provision of this Agreement;

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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 with respect to the following to the extent affecting
such Participant: (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 affected thereby, (iii) postpone the date fixed
for any payment of any principal of, or interest on, any Loan or interest
thereon or any fees hereunder or reduce the amount of, waive or excuse any such
payment, or postpone the scheduled date for the termination or reduction of any
Commitment, without the written consent of each Lender affected thereby,
(iv) change Section 2.19(b) or (c) in a manner that would alter the pro rata
sharing of payments required thereby, without the written consent of each
Lender, (v) change any of the provisions of this Section 10.4 or the definition
of “Required Lenders” or any other provision hereof specifying the number or
percentage of Lenders which are required to waive, amend or modify any rights
hereunder or make any determination or grant any consent hereunder, without the
consent of each Lender; (vi) release any guarantor or limit the liability of any
such guarantor under any guaranty agreement without the written consent of each
Lender except to the extent such release is expressly provided under the terms
of the such guaranty agreement; or (vii) release all or substantially all
collateral (if any) securing any of the Obligations. Subject to paragraph (e) of
this Section 10.4, the Borrower agrees that each Participant shall be entitled
to the benefits of Sections 2.16, 2.17, and 2.18 to the same extent as if it
were a Lender and had acquired its interest by assignment pursuant to paragraph
(b) of this Section 10.4. To the extent permitted by law, each Participant also
shall be entitled to the benefits of Section 10.7 as though it were a Lender,
provided such Participant agrees to be subject to Section 2.19 as though it were
a Lender.
          (e) A Participant shall not be entitled to receive any greater payment
under Section 2.16 and Section 2.18 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 2.18 unless
the Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with
Section 2.18(e) as though it were a Lender.
          (f) 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 without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.
          Section 10.5. Governing Law; Jurisdiction; Consent to Service of
Process.
          (a) This Agreement and the other Loan Documents shall be construed in
accordance with and be governed by the law (without giving effect to the
conflict of law principles thereof) of the State of New York.
          (b) The Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the exclusive jurisdiction of the United States
District Court of the Southern

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District of New York, and of any state court of the State of New York sitting in
New York County and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or any other Loan
Document or the transactions contemplated hereby or thereby, 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 court
or, to the extent permitted by applicable law, 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 or
any other Loan Document shall affect any right that the Administrative Agent or
any Lender may otherwise have to bring any action or proceeding relating to this
Agreement or any other Loan Document against the Borrower or its properties in
the courts of any jurisdiction.
          (c) The Borrower irrevocably and unconditionally waives any objection
which it may now or hereafter have to the laying of venue of any such suit,
action or proceeding described in paragraph (b) of this Section 10.5 and brought
in any court referred to in paragraph (b) of this Section 10.5. Each of the
parties hereto irrevocably waives, to the fullest extent permitted by applicable
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
          (d) Each party to this Agreement irrevocably consents to the service
of process in the manner provided for notices in Section 10.1. Nothing in this
Agreement or in any other Loan Document will affect the right of any party
hereto to serve process in any other manner permitted by law.
          Section 10.6. WAIVER OF JURY TRIAL. EACH PARTY HERETO IRREVOCABLY
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
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (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 AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.8.
          Section 10.7. Right of Setoff. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, each Lender shall have the right, at any time or from time to time upon
the occurrence and during the continuance of an Event of Default, without prior
notice to the Borrower, any such notice being expressly waived by the Borrower
to the extent permitted by applicable law, to set off and apply against all
deposits (general or special, time or demand, provisional or final) of the
Borrower at any time held or other obligations at any time owing by such Lender
to or for the credit or the account of

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the Borrower against any and all Obligations held by such Lender irrespective of
whether such Lender shall have made demand hereunder and although such
Obligations may be unmatured. Each Lender agrees promptly to notify the
Administrative Agent and the Borrower after any such set-off and any application
made by such Lender; provided, that the failure to give such notice shall not
affect the validity of such set-off and application. Each Lender agrees to apply
all amounts collected from any such set-off to the Obligations before applying
such amounts to any other Indebtedness or other obligations owed by the Borrower
and any of its Subsidiaries to such Lender.
          Section 10.8. Counterparts; Integration. This Agreement may be
executed by one or more of the parties to this Agreement on any number of
separate counterparts (including by telecopy), and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. This
Agreement, the Fee Letter, the other Loan Documents, and any separate letter
agreement(s) relating to any fees payable to the Administrative Agent constitute
the entire agreement among the parties hereto and thereto regarding the subject
matters hereof and thereof and supersede all prior agreements and
understandings, oral or written, regarding such subject matters.
          Section 10.9. 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 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 2.16, 2.17, 2.18, and 10.3 and Article IX shall survive
and remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans and the Commitments
or the termination of this Agreement or any provision hereof. All
representations and warranties made herein, in the certificates, reports,
notices, and other documents delivered pursuant to this Agreement shall survive
the execution and delivery of this Agreement and the other Loan Documents, and
the making of the Loans.
          Section 10.10. Severability. Any provision of this Agreement or any
other Loan Document held to be illegal, invalid or unenforceable in any
jurisdiction, shall, as to such jurisdiction, be ineffective to the extent of
such illegality, invalidity or unenforceability without affecting the legality,
validity or enforceability of the remaining provisions hereof or thereof; and
the illegality, invalidity or unenforceability of a particular provision in a
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
          Section 10.11. Confidentiality. Each of the Administrative Agent and
each Lender agrees to take normal and reasonable precautions to maintain the
confidentiality of any information designated in writing as confidential and
provided to it by the Borrower or any Subsidiary, except that such information
may be disclosed (i) to any Related Party of the Administrative Agent or any
such Lender, including without limitation accountants, legal

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counsel and other advisors, (ii) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (iii) to the extent
requested by any regulatory agency or authority, (iv) to the extent that such
information becomes publicly available other than as a result of a breach of
this Section 10.11, or which becomes available to the Administrative Agent, any
Lender or any Related Party of any of the foregoing on a nonconfidential basis
from a source other than the Borrower, (v) in connection with the exercise of
any remedy hereunder or any suit, action or proceeding relating to this
Agreement or the enforcement of rights hereunder, (vi) subject to provisions
substantially similar to this Section 10.11, to any actual or prospective
assignee or Participant, or (vii) with the consent of the Borrower. Any Person
required to maintain the confidentiality of any information as provided for in
this Section 10.11 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 its own
confidential information.
          Section 10.12. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which may be treated as
interest on such Loan under applicable law (collectively, the “Charges”), shall
exceed the maximum lawful rate of interest (the “Maximum Rate”) which may be
contracted for, charged, taken, received or reserved by a Lender holding such
Loan in accordance with applicable law, the rate of interest payable in respect
of such Loan hereunder, together with all Charges payable in respect thereof,
shall be limited to the Maximum Rate and, to the extent lawful, the interest and
Charges that would have been payable in respect of such Loan but were not
payable as a result of the operation of this Section 10.12 shall be cumulated
and the interest and Charges payable to such Lender in respect of other Loans or
periods shall be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon at the Federal Funds Rate to
the date of repayment (to the extent permitted by applicable law), shall have
been received by such Lender.
          Section 10.13. Waiver of Effect of Corporate Seal. The Borrower
represents and warrants that neither it nor any other Loan Party is required to
affix its corporate seal to this Agreement or any other Loan Document pursuant
to any Requirement of Law or regulation, agrees that this Agreement is delivered
by Borrower under seal and waives any shortening of the statute of limitations
that may result from not affixing the corporate seal to this Agreement or such
other Loan Documents.
          Section 10.14. Patriot Act. The Administrative Agent and each Lender
hereby notifies the Loan Parties that pursuant to the requirements of the USA
PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
(the “Patriot Act”), it is required to obtain, verify and record information
that identifies each Loan Party, which information includes the name and address
of such Loan Party and other information that will allow such Lender or the
Administrative Agent, as applicable, to identify such Loan Party in accordance
with the Patriot Act. Each Loan Party shall, and shall cause each of its
Subsidiaries to, provide to the extent commercially reasonable, such information
and take such other actions as are reasonably requested by the Administrative
Agent or any Lender in order to assist the Administrative Agent and the Lenders
in maintaining compliance with the Patriot Act.

65

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          Section 10.15. NO ORAL AGREEMENTS, WAIVER.
          (a) THE LOAN DOCUMENTS EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING
BETWEEN THE PARTIES AND SUPERSEDE ALL OTHER AGREEMENTS AND UNDERSTANDINGS
BETWEEN SUCH PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF. THE LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
(remainder of page left intentionally blank)

66

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed under seal in the case of the Borrower by their respective authorized
officers as of the day and year first above written.

                  KAYNE ANDERSON ENERGY         DEVELOPMENT COMPANY    
 
           
 
  By:        
 
           
 
      Name:    
 
      Title:    

[SIGNATURE PAGE TO TREASURY SECURED REVOLVING CREDIT AGREEMENT]

 

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                  SUNTRUST BANK, as Administrative         Agent and as a Lender
   
 
           
 
  By:        
 
           
 
      Name:    
 
      Title:    

[SIGNATURE PAGE TO TREASURY SECURED REVOLVING CREDIT AGREEMENT]

 

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                  CITIBANK, N.A., as Syndication Agent and as a Lender    
 
           
 
  By:        
 
           
 
      Name:    
 
      Title:    

[SIGNATURE PAGE TO TREASURY SECURED REVOLVING CREDIT AGREEMENT]

 

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                  LANDESBANK BADEN-WUERTTEMBERG,         as Co-Documentation
Agent and as a Lender    
 
           
 
  By:        
 
           
 
  Name:        
 
  Title:        

[SIGNATURE PAGE TO TREASURY SECURED REVOLVING CREDIT AGREEMENT]

 

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                  BMO CAPITAL MARKETS FINANCING, INC., as a Lender    
 
           
 
  By:        
 
           
 
  Name:        
 
  Title:        

[SIGNATURE PAGE TO TREASURY SECURED REVOLVING CREDIT AGREEMENT]

 

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                  BMO CAPITAL MARKETS, as Co-Documentation Agent    
 
           
 
  By:        
 
           
 
  Name:        
 
  Title:        

[SIGNATURE PAGE TO TREASURY SECURED REVOLVING CREDIT AGREEMENT]

 

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                  CUSTODIAL TRUST COMPANY, as a Lender    
 
           
 
  By:        
 
           
 
  Name:        
 
  Title:        

[SIGNATURE PAGE TO TREASURY SECURED REVOLVING CREDIT AGREEMENT]

 

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                  MERRILL LYNCH BANK USA, as a Lender    
 
           
 
  By:        
 
           
 
  Name:        
 
  Title:        

[SIGNATURE PAGE TO TREASURY SECURED REVOLVING CREDIT AGREEMENT]

 

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Schedule I
COMMITMENT AMOUNTS

         
SunTrust Bank
  $ 8,500,000  
Citibank, N.A.
  $ 8,500,000  
Landesbank Baden-Wuerttemberg
  $ 48,000,000  
BMO Capital Markets Financing, Inc.
  $ 20,000,000  
Custodial Trust Company
  $ 10,000,000  
Merrill Lynch Bank USA
  $ 5,000,000  

 

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SCHEDULE 4.5
ENVIRONMENTAL MATTERS
Schedule 4.5

 

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SCHEDULE 4.14
SUBSIDIARIES

                  Company   Owner     Ownership Interests  
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               

 

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SCHEDULE 7.1
OUTSTANDING INDEBTEDNESS

 

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SCHEDULE 7.2
EXISTING LIENS

 

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EXHIBIT A
FORM OF REVOLVING CREDIT NOTE

     
[$                    ]
  Atlanta, Georgia
 
  June 4, 2007

     FOR VALUE RECEIVED, the undersigned, KAYNE ANDERSON ENERGY DEVELOPMENT
COMPANY, a Maryland corporation (the “Borrower”), hereby promises to pay to
[name of Lender] (the “Lender”) or its registered assigns, at the office of
SunTrust Bank (“SunTrust”) at 303 Peachtree St., N.E., Atlanta, Georgia 30308,
on the Revolving Commitment Termination Date (as defined in the Treasury Secured
Revolving Credit Agreement, dated as of June 4, 2007, as the same may be
amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among the Borrower, the lenders from time to time party
thereto and SunTrust, as administrative agent for the lenders, the lesser of the
principal sum of [amount of such Lender’s Revolving Commitment] and the
aggregate unpaid principal amount of all Revolving Loans made by the Lender to
the Borrower pursuant to the Credit Agreement, in lawful money of the United
States of America in immediately available funds, and to pay interest from the
date hereof on the principal amount thereof from time to time outstanding, in
like funds, at said office, at the rate or rates per annum and payable on such
dates as provided in the Credit Agreement. In addition, should legal action or
an attorney-at-law be utilized to collect any amount due hereunder, the Borrower
further promises to pay all costs of collection, including the reasonable
attorneys’ fees of the Lender.
     Upon the occurrence of an Event of Default, the Borrower promises to pay
interest, on demand, at a rate or rates provided in the Credit Agreement.
     All borrowings evidenced by this Revolving Credit Note and all payments and
prepayments of the principal hereof and the date thereof shall be endorsed by
the holder hereof on the schedule attached hereto and made a part hereof or on a
continuation thereof which shall be attached hereto and made a part hereof, or
otherwise recorded by such holder in its internal records; provided, that the
failure of the holder hereof to make such a notation or any error in such
notation shall not affect the obligations of the Borrower to make the payments
of principal and interest in accordance with the terms of this Revolving Credit
Note and the Credit Agreement.
     This Revolving Credit Note is issued in connection with, and is entitled to
the benefits of, the Credit Agreement which, among other things, contains
provisions for the acceleration of the maturity hereof upon the happening of
certain events, for prepayment of the principal hereof prior to the maturity
hereof and for the amendment or waiver of certain provisions of the Credit
Agreement, all upon the terms and conditions therein specified.

A-1

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     THIS REVOLVING CREDIT NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.

            KAYNE ANDERSON ENERGY
DEVELOPMENT COMPANY
      By:           Name:           Title:        

[SIGNATURE PAGE TO REVOLVING CREDIT NOTE]

 

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LOANS AND PAYMENTS

                              Unpaid                 Principal   Name of Person
    Amount and   Payments of   Balance of   Making Date   Type of Loan  
Principal   Note   Notation
 
               

A-3

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EXHIBIT C
FORM OF ASSIGNMENT AND ACCEPTANCE
[date to be supplied]
     Reference is made to the Treasury Secured Revolving Credit Agreement dated
as of June 4, 2007 (as amended and in effect on the date hereof, the “Credit
Agreement”), among Kayne Anderson Energy Development Company, a Maryland
corporation, the lenders from time to time party thereto and SunTrust Bank, as
Administrative Agent for such lenders. Terms defined in the Credit Agreement are
used herein with the same meanings.
     The [name of assignor] (the “Assignor”) hereby sells and assigns, without
recourse, to [name of assignee] (the “Assignee”), and the Assignee hereby
purchases and assumes, without recourse, from the Assignor, effective as of the
Assignment Date set forth below, the interests set forth below (the “Assigned
Interest”) in the Assignor’s rights and obligations under the Credit Agreement,
including, without limitation, the interests set forth below in the Revolving
Commitment of the Assignor on the Assignment Date and Revolving Loans owing to
the Assignor which are outstanding on the Assignment Date, but excluding accrued
interest and fees to and excluding the Assignment Date. The Assignee hereby
acknowledges receipt of a copy of the Credit Agreement. From and after the
Assignment Date (i) the Assignee shall be a party to and be bound by the
provisions of the Credit Agreement and, to the extent of the Assigned Interest,
have the rights and obligations of a Lender thereunder and (ii) the Assignor
shall, to the extent of the Assigned Interest, relinquish its rights and be
released from its obligations under the Credit Agreement.
     This Assignment and Acceptance is being delivered to the Administrative
Agent together with (i) if the Assignee is a Foreign Lender, any documentation
required to be delivered by the Assignee pursuant to Section 2.18(e) of the
Credit Agreement, duly completed and executed by the Assignee, and (ii) if the
Assignee is not already a Lender under the Credit Agreement, an Administrative
Questionnaire in the form supplied by the Administrative Agent, duly completed
by the Assignee. The Assignee shall pay the fee payable to the Administrative
Agent pursuant to Section 10.4(b) of the Credit Agreement.
     The Assignor (a) represents and warrants that (i) it is the legal and
beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free
and clear of any lien, encumbrance or other adverse claim and (ii) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Acceptance and to consummate the transactions contemplated
hereby, and (b) assumes no responsibility with respect to (i) any statements,
warranties or representations made in or in connection with the Credit Agreement
or any other Credit Document, (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Documents or any
collateral thereunder, (iii) the financial condition of the Borrower, any of its
Subsidiaries or Affiliates or any other Person obligated in respect of any
Credit Document or (iv) the performance or observance by the Borrower, any of
its Subsidiaries or Affiliates or any other Person of any of their respective
obligations under any Credit Document.

C-1

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     The Assignee (a) represents and warrants that (i) it has full power and
authority, and has taken all action necessary, to execute and deliver this
Assignment and Acceptance and to consummate the transactions contemplated hereby
and to become a Lender under the Credit Agreement, (ii) it meets all
requirements of an Eligible Assignee under the Credit Agreement (subject to
receipt of such consents as may be required under the Credit Agreement),
(iii) from and after the Effective Date, it shall be bound by the provisions of
the Credit Agreement as a Lender thereunder and, to the extent of the Assigned
Interest, shall have the obligations of a Lender thereunder, (iv) it has
received a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 5.1 thereof, as applicable,
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and
Acceptance and to purchase the Assigned Interest on the basis of which it has
made such analysis and decision independently and without reliance on the
Administrative Agent or any other Lender, and (v) if it is a Foreign Lender,
attached to the Assignment and Acceptance is any documentation required to be
delivered by it pursuant to the terms of the Credit Agreement, duly completed
and executed by the Assignee; and (b) agrees that (i) it will, independently and
without reliance on the Administrative Agent, the Assignor or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Credit Documents, and (ii) it will perform in accordance with their
terms all of the obligations which by the terms of the Credit Documents are
required to be performed by it as a Lender.
     From and after the Effective Date, the Administrative Agent shall make all
payments in respect of the Assigned Interest (including payments of principal,
interest, fees and other amounts) to the Assignor for amounts which have accrued
to but excluding the Effective Date and to the Assignee for amounts which have
accrued from and after the Effective Date.
     This Assignment and Acceptance shall be binding upon, and inure to the
benefit of, the parties hereto and their respective successors and assigns. This
Assignment and Acceptance may be executed in any number of counterparts, which
together shall constitute one instrument. Delivery of an executed counterpart of
a signature page of this Assignment and Acceptance by telecopy shall be
effective as delivery of a manually executed counterpart of this Assignment and
Acceptance. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York.
Assignment Date:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee’s Address for Notices:
Effective Date of Assignment:
(“Effective Date”):

C-2

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                              Percentage Assigned of             Revolving
Commitment (set             forth, to at least 8 decimals, as             a
percentage of the aggregate     Principal Amount   Revolving Commitments of all
Facility   Assigned   Lenders thereunder)
Revolving Loans:
  $       %    

The terms set forth above are hereby agreed to:

            [Name of Assignor], as Assignor
      By:           Name:           Title:           [Name of Assignee], as
Assignee
      By:           Name:           Title:        

C-3

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The undersigned hereby consents to the within assignment1:

                      KAYNE ANDERSON ENERGY
DEVELOPMENT COMPANY       SunTrust Bank, as Administrative Agent:    
 
                   
By:
          By:        
 
 
 
Name:          
 
Name:    
 
  Title:           Title:    

 

1   Consents to be included to the extent required by Section 10.4(b) of the
Credit Agreement.

[SIGNATURE PAGE TO ASSIGNMENT AND ACCEPTANCE]

 

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EXHIBIT D
SUBSIDIARY GUARANTY AGREEMENT
     THIS SUBSIDIARY GUARANTY AGREEMENT (the “Agreement”), dated as of June 4,
2007, by and among KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY, a Maryland
corporation (the “Borrower”), each of the subsidiaries of the Borrower listed on
Schedule I hereto (each such subsidiary individually, a “Guarantor” and
collectively, the “Guarantors”) and SUNTRUST BANK, a Georgia banking
corporation, as administrative agent (the “Administrative Agent”) for the
several banks and other financial institutions (the “Lenders”) from time to time
party to the Treasury Secured Revolving Credit Agreement, dated as of the date
hereof, by and among the Borrower, the Lenders, the Administrative Agent (as
amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”; capitalized terms used herein and not otherwise defined
herein shall the meanings assigned to such terms in the Credit Agreement).
W I T N E S S E T H:
     WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to
establish a revolving credit facility in favor of the Borrower;
     WHEREAS, each of the Guarantors is a direct or indirect Subsidiary of the
Borrower and will derive substantial benefit from the making of Loans by the
Lenders; and
     WHEREAS, it is a condition precedent to the obligations of the
Administrative Agent and the Lenders under the Credit Agreement that each
Guarantor execute and deliver to the Administrative Agent a Subsidiary Guaranty
Agreement in the form hereof, and each Guarantor wishes to fulfill said
condition precedent;
     NOW, THEREFORE, in order to induce Lenders to extend the Loans and to make
the financial accommodations as provided for in the Credit Agreement and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
     Section 1. Guarantee. Each Guarantor unconditionally guarantees, jointly
with the other Guarantors and severally, as a primary obligor and not merely as
a surety, (i) the due and punctual payment of all Obligations including, without
limitation, (A) the principal of and premium, if any, and interest (including
interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise and (B) all other monetary obligations, including fees, costs,
expenses and indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in

D-1

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such proceeding), of the Loan Parties to the Administrative Agent and the
Lenders under the Credit Agreement and the other Loan Documents, (ii) the due
and punctual performance of all covenants, agreements, obligations and
liabilities of the Loan Parties under or pursuant to the Credit Agreement and
the other Loan Documents; and (iii) the due and punctual payment and performance
of all obligations of the Borrower, monetary or otherwise, arising under any
Hedging Transaction incurred to limit interest rate or fee fluctuation with
respect to the Loans entered into with a counterparty that was a Lender or an
Affiliate of a Lender at the time such Hedging Transaction was entered into
(each such person a “Specified Hedge Provider”; the Administrative Agent, the
Lenders and the Specified Hedge Providers, collectively, the “Secured Parties”
and each individually a “Secured Party”) (all the monetary and other obligations
referred to in the preceding clauses (i) through (iii) being collectively called
the “Guaranteed Obligations”). Each Guarantor further agrees that the Guaranteed
Obligations may be extended or renewed, in whole or in part, without notice to
or further assent from such Guarantor, and that such Guarantor will remain bound
upon its guarantee notwithstanding any extension or renewal of any Guaranteed
Obligations.
     Section 2. Obligations Not Waived. To the fullest extent permitted by
applicable law, each Guarantor waives presentment or protest to, demand of or
payment from the other Loan Parties of any of the Guaranteed Obligations, and
also waives notice of acceptance of its guarantee and notice of protest for
nonpayment. To the fullest extent permitted by applicable law, the obligations
of each Guarantor hereunder shall not be affected by (i) the failure of the
Administrative Agent or any Lender to assert any claim or demand or to enforce
or exercise any right or remedy against the Borrower or any other Guarantor
under the provisions of the Credit Agreement, any other Loan Document or
otherwise, (ii) the failure of any Secured Party to assert any claim or demand
or to enforce or exercise any right or remedy against the Borrower or any other
Guarantor under the provisions or any instruments, agreements or documents
executed in connection with any Hedging Transaction incurred to limit interest
rate or fee fluctuation with respect to the Loans entered into with a Specified
Hedge Provider (each such document, a “Hedging Document”), (iii) any rescission,
waiver, amendment or modification of, or any release from any of the terms or
provisions of, this Agreement, any other Loan Document, any Hedging Document,
any guarantee or any other agreement, including with respect to any other
Guarantor under this Agreement, or (iv) the failure to perfect any security
interest in, or the release of, any of the security held by or on behalf of the
Administrative Agent or any Secured Party.
     Section 3. Guarantee of Payment. Each Guarantor further agrees that its
guarantee constitutes a guarantee of payment when due and not of collection, and
waives any right to require that any resort be had by the Administrative Agent
or any Secured Party to any of the security held for payment of the Guaranteed
Obligations or to any balance of any deposit account or credit on the books of
the Administrative Agent or any Secured Party in favor of the Borrower or any
other Person.
     Section 4. No Discharge or Diminishment of Guarantee. The obligations of
each Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than the indefeasible payment in
full in cash of the

D-2

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Guaranteed Obligations), including any claim of waiver, release, surrender,
alteration or compromise of any of the Guaranteed Obligations, and shall not be
subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Guaranteed Obligations or otherwise. Without limiting the generality of the
foregoing, the obligations of each Guarantor hereunder shall not be discharged
or impaired or otherwise affected by the failure of the Administrative Agent or
any Secured Party to assert any claim or demand or to enforce any remedy under
the Credit Agreement, any other Loan Document, any Hedging Document or any other
agreement, by any waiver or modification of any provision of any thereof, by any
default, failure or delay, willful or otherwise, in the performance of the
Guaranteed Obligations, or by any other act or omission that may or might in any
manner or to the extent vary the risk of any Guarantor or that would otherwise
operate as a discharge of each Guarantor as a matter of law or equity (other
than the indefeasible payment in full in cash of all the Obligations).
     Section 5. Defenses of Borrower Waived. To the fullest extent permitted by
applicable law, each Guarantor waives any defense based on or arising out of any
defense of any Loan Party or the unenforceability of the Guaranteed Obligations
or any part thereof from any cause, or the cessation from any cause of the
liability of any Loan Party, other than the final and indefeasible payment in
full in cash of the Guaranteed Obligations. The Administrative Agent and the
Secured Parties may, at their election, foreclose on any security held by one or
more of them by one or more judicial or nonjudicial sales, accept an assignment
of any such security in lieu of foreclosure, compromise or adjust any part of
the Guaranteed Obligations, make any other accommodation with any other Loan
Party or any other guarantor, without affecting or impairing in any way the
liability of any Guarantor hereunder except to the extent the Guaranteed
Obligations have been fully, finally and indefeasibly paid in cash. Pursuant to
applicable law, each Guarantor waives any defense arising out of any such
election even though such election operates, pursuant to applicable law, to
impair or to extinguish any right of reimbursement or subrogation or other right
or remedy of such Guarantor against the Borrower or any other Guarantor or
guarantor, as the case may be, or any security.
     Section 6. Agreement to Pay; Subordination. In furtherance of the foregoing
and not in limitation of any other right that the Administrative Agent or any
Secured Party has at law or in equity against any Guarantor by virtue hereof,
upon the failure of the Borrower or any other Loan Party to pay any Obligation
when and as the same shall become due, whether at maturity, by acceleration,
after notice of prepayment or otherwise, each Guarantor hereby promises to and
will forthwith pay, or cause to be paid, to the Administrative Agent for the
benefit of the Secured Parties in cash the amount of such unpaid Obligation.
Upon payment by any Guarantor of any sums to the Administrative Agent, all
rights of such Guarantor against any Loan Party arising as a result thereof by
way of right of subrogation, contribution, reimbursement, indemnity or otherwise
shall in all respects be subordinate and junior in right of payment to the prior
indefeasible payment in full in cash of all the Guaranteed Obligations. In
addition, any indebtedness of any Loan Party now or hereafter held by any
Guarantor is hereby subordinated in right of payment to the prior payment in
full in cash of the Guaranteed

D-3

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Obligations. If any amount shall erroneously be paid to any Guarantor on account
of (i) such subrogation, contribution, reimbursement, indemnity or similar right
or (ii) any such indebtedness of any Loan Party, such amount shall be held in
trust for the benefit of the Administrative Agent and the Secured Parties and
shall forthwith be paid to the Administrative Agent to be credited against the
payment of the Guaranteed Obligations, whether matured or unmatured, in
accordance with the terms of the Loan Documents.
     Section 7. Information. Each Guarantor assumes all responsibility for being
and keeping itself informed of other Loan Parties’ financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Guaranteed Obligations and the nature, scope and extent of the risks that
such Guarantor assumes and incurs hereunder, and agrees that none of the
Administrative Agent or the Secured Parties will have any duty to advise any of
the Guarantors of information known to it or any of them regarding such
circumstances or risks.
     Section 8. Indemnity and Subrogation. In addition to all such rights of
indemnity and subrogation as the Guarantors may have under applicable law (but
subject to Section 6), the Borrower agrees that (a) in the event a payment shall
be made by any Guarantor under this Agreement, the Borrower shall indemnify such
Guarantor for the full amount of such payment and such Guarantor shall be
subrogated to the rights of the person to whom such payment shall have been made
to the extent of such payment and (b) in the event any assets of any Guarantor
shall be sold to satisfy a claim of any Secured Party under this Agreement, the
Borrower shall indemnify such Guarantor in an amount equal to the greater of the
book value or the fair market value of the assets so sold.
     Section 9. Contribution and Subrogation. Each Guarantor (a “Contributing
Guarantor”) agrees (subject to Section 6) that, in the event a payment shall be
made by any other Guarantor under this Agreement or assets of any other
Guarantor shall be sold to satisfy a claim of any Secured Party and such other
Guarantor (the “Claiming Guarantor”) shall not have been fully indemnified by
the Borrower as provided in Section 8, the Contributing Guarantor shall
indemnify the Claiming Guarantor in an amount equal to the amount of such
payment or the greater of the book value or the fair market value of such
assets, as the case may be, in each case multiplied by a fraction of which the
numerator shall be the net worth of the Contributing Guarantor on the date
hereof and the denominator shall be the aggregate net worth of all the
Guarantors on the date hereof (or, in the case of any Guarantor becoming a party
hereto pursuant to Section 21, the date of the Supplement hereto executed and
delivered by such Guarantor). Any Contributing Guarantor making any payment to a
Claiming Guarantor pursuant to this Section 9 shall be subrogated to the rights
of such Claiming Guarantor under Section 8 to the extent of such payment.
     Section 10. Subordination. Notwithstanding any provision of this Agreement
to the contrary, all rights of the Guarantors under Section 8 and Section 9 and
all other rights of indemnity, contribution or subrogation under applicable law
or otherwise shall be fully subordinated to the indefeasible payment in full in
cash of the Guaranteed Obligations. No failure on the part of the Borrower or
any Guarantor to make the payments required under applicable law or otherwise
shall in any respect limit the

D-4

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obligations and liabilities of any Guarantor with respect to its obligations
hereunder, and each Guarantor shall remain liable for the full amount of the
obligations of such Guarantor hereunder.
     Section 11. Representations and Warranties. Each Guarantor represents and
warrants as to itself that all representations and warranties relating to it (as
a Subsidiary of the Borrower) contained in the Credit Agreement are true and
correct.
     Section 12. Termination. The guarantees made hereunder (i) shall terminate
when all the Guaranteed Obligations (other than those Guaranteed Obligations
relating to the Hedging Obligations) have been paid in full in cash and the
Lenders have no further commitment to lend under the Credit Agreement and
(ii) shall continue to be effective or be reinstated, as the case may be, if at
any time payment, or any part thereof, of any Obligation is rescinded or must
otherwise be restored by any Lender or any Guarantor upon the bankruptcy or
reorganization of the Borrower, any Guarantor or otherwise. In connection with
the foregoing, the Administrative Agent shall execute and deliver to such
Guarantor or Guarantor’s designee, at such Guarantor’s expense, any documents or
instruments, without representation or recourse, which such Guarantor shall
reasonably request from time to time to evidence such termination and release.
     Section 13. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Guarantors that are contained in
this Agreement shall bind and inure to the benefit of each party hereto and
their respective successors and assigns. This Agreement shall become effective
as to any Guarantor when a counterpart hereof executed on behalf of such
Guarantor shall have been delivered to the Administrative Agent, and a
counterpart hereof shall have been executed on behalf of the Administrative
Agent, and thereafter shall be binding upon such Guarantor and the
Administrative Agent and their respective successors and assigns, and shall
inure to the benefit of such Guarantor, the Administrative Agent and the Secured
Parties, and their respective successors and assigns, except that no Guarantor
shall have the right to assign its rights or obligations hereunder or any
interest herein (and any such attempted assignment shall be void). If all of the
capital stock of a Guarantor is sold, transferred or otherwise disposed of
pursuant to a transaction permitted by the Credit Agreement, such Guarantor
shall be released from its obligations under this Agreement without further
action. This Agreement shall be construed as a separate agreement with respect
to each Guarantor and may be amended, modified, supplemented, waived or released
with respect to any Guarantor without the approval of any other Guarantor and
without affecting the obligations of any other Guarantor hereunder.
     Section 14. Waivers; Amendment.
     (a) No failure or delay of the Administrative Agent of any kind in
exercising any power, right or remedy hereunder and no course of dealing between
any Guarantor on the one hand the and Administrative Agent or any holder of any
Note on the other hand shall operate as a waiver thereof, nor shall any single
or partial exercise of any such

D-5

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power, right or remedy hereunder, under any other Loan Document or under any
Hedging Document, or any abandonment or discontinuance of steps to enforce such
a power, right or remedy, preclude any other or further exercise thereof or the
exercise of any other power, right or remedy. The rights and of the
Administrative Agent hereunder and of the Secured Parties under the other Loan
Documents and the Hedging Documents, as applicable, 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 any Guarantor
therefrom shall in any event be effective unless the same shall be permitted by
subsection (b) below, and then such waiver and consent shall be effective only
in the specific instance and for the purpose for which given. No notice or
demand on any Guarantor in any case shall entitle such Guarantor to any other or
further notice in similar or other circumstances.
     (b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to a written agreement entered into between the
Guarantors with respect to which such waiver, amendment or modification relates
and the Administrative Agent, with the prior written consent of the Required
Lenders (except as otherwise provided in the Credit Agreement).
     Section 15. Notices. All communications and notices hereunder shall be in
writing and given as provided in Section 10.1 of the Credit Agreement. All
communications and notices hereunder to each Guarantor shall be given to it at
its address set forth on Schedule I attached hereto.
     Section 16. Severability. Any provision of this Agreement held to be
illegal, invalid or unenforceable in any jurisdiction, shall, as to such
jurisdiction, be ineffective to the extent of such illegality, invalidity or
unenforceability without affecting the legality, validity or enforceability of
the remaining provisions hereof or thereof; and the illegality, invalidity or
unenforceability of a particular provision in a particular jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
     Section 17. Counterparts; Integration. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract (subject to Section 13), and
shall become effective as provided in Section 13. Delivery of an executed
signature page to this Agreement by facsimile transmission shall be as effective
as delivery of a manually executed counterpart of this Agreement. This Agreement
constitutes the entire agreement among the parties hereto regarding the subject
matters hereof and supersedes all prior agreements and understandings, oral or
written, regarding such subject matter.
     Section 18. Rules of Interpretation. The rules of interpretation specified
in Section 1.4 of the Credit Agreement shall be applicable to this Agreement.
     Section 19. Governing Law; Jurisdiction; Consent to Service of Process.

D-6

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     (a) This Agreement shall be construed in accordance with and be governed by
the law (without giving effect to the conflict of law principles thereof) of the
State of [State].
     (b) Each Guarantor hereby irrevocably and unconditionally submits, for
itself and its property, to the exclusive jurisdiction of the United States
courts located within the Southern district in the State of New York, and any
state court of the State of New York located in New York, New York and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, any other Loan Document or any Hedging Document or
the transactions contemplated hereby or thereby, 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 court or, to the
extent permitted by applicable law, such Federal court. Each Guarantor agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement shall affect any right that
the Administrative Agent, the Issuing Bank or any Secured Party may otherwise
have to bring any action or proceeding relating to this Agreement against any
Guarantor or its properties in the courts of any jurisdiction.
     (c) Each Guarantor irrevocably and unconditionally waives any objection
which it may now or hereafter have to the laying of venue of any such suit,
action or proceeding described in paragraph (b) of this Section and brought in
any court referred to in paragraph (b) of this Section. Each party hereto
irrevocably waives, to the fullest extent permitted by applicable law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
     (d) Each Guarantor irrevocably consents to the service of process in the
manner provided for notices in Section 10.1 of the Credit Agreement. Nothing in
this Agreement will affect the right of the Administrative Agent or any Secured
Party to serve process in any other manner permitted by law.
     Section 20. Waiver of Jury Trial. EACH PARTY HERETO IRREVOCABLY 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 THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY HEDGING DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (i) 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 (ii) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE HEDGING

D-7

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DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
     Section 21. Additional Guarantors. Pursuant to Section 5.11 of the Credit
Agreement, each Subsidiary that was not in existence on the date of the Credit
Agreement is required to enter into this Agreement as a Guarantor upon becoming
a Subsidiary. Upon execution and delivery after the date hereof by the
Administrative Agent and such Subsidiary of an instrument in the form of Annex
1, such Subsidiary shall become a Guarantor hereunder with the same force and
effect as if originally named as a Guarantor herein. The execution and delivery
of any instrument adding an additional Guarantor as a party to this Agreement
shall not require the consent of any other Guarantor hereunder. The rights and
obligations of each Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Guarantor as a party to this Agreement.
     Section 22. Right of Setoff. If an Event of Default shall have occurred and
be continuing, each Secured Party is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held and other Indebtedness at any time owing by such Secured Party to or
for the credit or the account of any Guarantor against any or all the
obligations of such Guarantor now or hereafter existing under this Agreement,
the other Loan Documents and the Hedging Documents held by such Secured Party,
irrespective of whether or not such Person shall have made any demand under this
Agreement, any other Loan Document or any Hedging Document and although such
obligations may be unmatured. The rights of each Secured Party under this
Section 22 are in addition to other rights and remedies (including other rights
of setoff) that such Secured Party may have.
     Section 23. Savings Clause.
     (a) It is the intent of each Guarantor and the Administrative Agent that
each Guarantor’s maximum obligations hereunder shall be, but not in excess of:
     (i) in a case or proceeding commenced by or against any Guarantor under the
provisions of Title 11 of the United States Code, 11 U.S.C. §§101 et seq. (the
“Bankruptcy Code”) on or within two years from the date on which any of the
Guaranteed Obligations are incurred, the maximum amount which would not
otherwise cause the Guaranteed Obligations (or any other obligations of such
Guarantor owed to the Administrative Agent or the Secured Parties) to be
avoidable or unenforceable against such Guarantor under (i) Section 548 of the
Bankruptcy Code or (ii) any state fraudulent transfer or fraudulent conveyance
act or statute applied in such case or proceeding by virtue of Section 544 of
the Bankruptcy Code; or
     (ii) in a case or proceeding commenced by or against any Guarantor under
the Bankruptcy Code subsequent to two years from the date on which any of the
Guaranteed Obligations are incurred, the maximum amount which would

D-8

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not otherwise cause the Guaranteed Obligations (or any other obligations of such
Guarantor to the Administrative Agent or the Secured Parties) to be avoidable or
unenforceable against such Guarantor under any state fraudulent transfer or
fraudulent conveyance act or statute applied in any such case or proceeding by
virtue of Section 544 of the Bankruptcy Code; or
     (iii) in a case or proceeding commenced by or against any Guarantor under
any law, statute or regulation other than the Bankruptcy Code (including,
without limitation, any other bankruptcy, reorganization, arrangement,
moratorium, readjustment of debt, dissolution, liquidation or similar debtor
relief laws), the maximum amount which would not otherwise cause the Guaranteed
Obligations (or any other obligations of such Guarantor to the Administrative
Agent or the Secured Parties) to be avoidable or unenforceable against such
Guarantor under such law, statute or regulation including, without limitation,
any state fraudulent transfer or fraudulent conveyance act or statute applied in
any such case or proceeding.
     (b) The substantive laws under which the possible avoidance or
unenforceability of the Guaranteed Obligations (or any other obligations of such
Guarantor to the Administrative Agent or the Secured Parties) as may be
determined in any case or proceeding shall hereinafter be referred to as the
“Avoidance Provisions”. To the extent set forth in Section 23(a)(i), (ii), and
(iii), but only to the extent that the Guaranteed Obligations would otherwise be
subject to avoidance or found unenforceable under the Avoidance Provisions, if
any Guarantor is not deemed to have received valuable consideration, fair value
or reasonably equivalent value for the Guaranteed Obligations, or if the
Guaranteed Obligations would render such Guarantor insolvent, or leave such
Guarantor with an unreasonably small capital to conduct its business, or cause
such Guarantor to have incurred debts (or to have intended to have incurred
debts) beyond its ability to pay such debts as they mature, in each case as of
the time any of the Guaranteed Obligations are deemed to have been incurred
under the Avoidance Provisions and after giving effect to the contribution by
such Guarantor, the maximum Guaranteed Obligations for which such Guarantor
shall be liable hereunder shall be reduced to that amount which, after giving
effect thereto, would not cause the Guaranteed Obligations (or any other
obligations of such Guarantor to the Administrative Agent or the Secured
Parties), as so reduced, to be subject to avoidance or unenforceability under
the Avoidance Provisions.
     (c) This Section 23 is intended solely to preserve the rights of the
Administrative Agent and the Secured Parties hereunder to the maximum extent
that would not cause the Guaranteed Obligations of such Guarantor to be subject
to avoidance or unenforceability under the Avoidance Provisions, and neither the
Guarantors nor any other Person shall have any right or claim under this
Section 23 as against the Administrative Agent or Secured Parties that would not
otherwise be available to such Person under the Avoidance Provisions.
[Signatures Follow]

D-9

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

 

         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

            KED MME Investment Partners, LP
      By           Name:           Title:           KED MME Investment GP, LLC
      By           Name:           Title:           KED LCP Investment Partners,
LP
      By           Name:           Title:           KED LCP Investment GP, LLC
      By           Name:           Title:           KED DF Investment Partners,
LP
      By           Name:           Title:        

[SIGNATURE PAGE TO SUBSIDIARY GUARANTY AGREEMENT]

 

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

 

            KED DF Investment GP, LLC
      By           Name:           Title:           KED VP Investment Partners,
LP
      By           Name:           Title:           KED VP Investment GP, LLC
      By           Name:           Title:           KAYNE ANDERSON ENERGY
DEVELOPMENT COMPANY
      By           Name:           Title:        

D-12

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          SUNTRUST BANK, as     Administrative Agent    
 
       
By
       
Name:
 
 
   
Title:
       

[SIGNATURE PAGE TO SUBSIDIARY GUARANTY AGREEMENT]

 

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

 

SCHEDULE I TO THE
SUBSIDIARY GUARANTY AGREEMENT

      Guarantor(s)   Address
Kayne Anderson Energy Development Company
  717 Texas Avenue, Suite 3100, Houston, TX, 77002
 
   
KED MME Investment Partners, LP
  717 Texas Avenue, Suite 3100, Houston, TX, 77002
 
   
KED MME Investment GP, LLC
  717 Texas Avenue, Suite 3100, Houston, TX, 77002
 
   
KED LCP Investment Partners, LP
  717 Texas Avenue, Suite 3100, Houston, TX, 77002
 
   
KED LCP Investment GP, LLC
  717 Texas Avenue, Suite 3100, Houston, TX, 77002
 
   
KED DF Investment Partners, LP
  717 Texas Avenue, Suite 3100, Houston, TX, 77002
 
   
KED DF Investment GP, LLC
  717 Texas Avenue, Suite 3100, Houston, TX, 77002
 
   
KED VP Investment Partners, LP
  717 Texas Avenue, Suite 3100, Houston, TX, 77002
 
   
KED VP Investment GP, LLC
  717 Texas Avenue, Suite 3100, Houston, TX, 77002

D-12

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ANNEX 1
to
SUBSIDIARY GUARANTY AGREEMENT
  SUPPLEMENT NO. ___ dated as of                     , to the Subsidiary
Guaranty Agreement, dated as of June 4, 2007 (the “Guaranty Agreement”), among
KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY, a Maryland corporation (the
“Borrower”), each of the subsidiaries of the Borrower listed on Schedule I
thereto (each such subsidiary individually, a “Guarantor” and collectively, the
“Guarantors”) and SUNTRUST BANK, a Georgia banking corporation, as
administrative agent (the “Administrative Agent”) for the Lenders (as defined in
the Credit Agreement referred to below).
     Reference is made to the Treasury Secured Revolving Credit Agreement, dated
as of June 4, 2007 (as amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”), among the Borrower, the lenders from
time to time party thereto (the “Lenders”) and SunTrust Bank, as Administrative
Agent.
     Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned to such terms in the Guaranty Agreement and the Credit
Agreement.
     The Guarantors have entered into the Guaranty Agreement in order to induce
the Lenders to make Loans. Pursuant to Section 5.11 of the Credit Agreement,
each Subsidiary that was not in existence or not a Guarantor on the date of the
Credit Agreement is required to enter into the Guaranty Agreement as a Guarantor
upon becoming a Subsidiary. Section 21 of the Guaranty Agreement provides that
additional Subsidiaries of the Borrower may become Guarantors under the Guaranty
Agreement by execution and delivery of an instrument in the form of this
Supplement. The undersigned Subsidiary of the Borrower (the “New Guarantor”) is
executing this Supplement in accordance with the requirements of the Credit
Agreement to become a Guarantor under the Guaranty Agreement in order to induce
the Lenders to make additional Loans and as consideration for Loans previously
made.
     Accordingly, the Administrative Agent and the New Guarantor agree as
follows:
     Joinder. In accordance with Section 21 of the Guaranty Agreement, the New
Guarantor by its signature below becomes a Guarantor under the Guaranty
Agreement with the same force and effect as if originally named therein as a
Guarantor and the New Guarantor hereby (i) agrees to all the terms and
provisions of the Guaranty Agreement applicable to it as Guarantor thereunder
and (ii) represents and warrants that the representations and warranties made by
it as a Guarantor thereunder are true and correct on and as of the date hereof.
Each reference to a Guarantor in the Guaranty Agreement shall be deemed to
include the New Guarantor. The Guaranty Agreement is hereby incorporated herein
by reference.
     Representations and Warranties. The New Guarantor represents and warrants
to the Administrative Agent and the Secured Parties that this Supplement has
been duly

D-13

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authorized, executed and delivered by it and that each of this Supplement and
the Guaranty Agreement constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms.
     Binding Effect. This Supplement shall become effective when it shall have
been executed by the New Guarantor and thereafter shall be binding upon the New
Guarantor and shall inure to the benefit of the Administrative Agent and the
Secured Parties. Upon the effectiveness of this Supplement, this Supplement
shall be deemed to be a part of and shall be subject to all the terms and
conditions of the Guaranty Agreement. The New Guarantor shall not have the right
to assign its rights hereunder or any interest herein without the prior written
consent of the Secured Parties.
     Governing Law. THIS SUPPLEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW
(WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE
OF NEW YORK.
     Execution in Counterparts. This Supplement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
     Notices to New Guarantor. All communications and notices hereunder shall be
in writing and given as provided in Section 15 of the Guaranty Agreement. All
communications and notices hereunder to the New Guarantor shall be given to it
at the address set forth under its signature below, with a copy to the
Borrower..
[Signatures Follow]

D-14

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

 

     IN WITNESS WHEREOF, the New Guarantor and the Administrative Agent have
duly executed this Supplement to the Guaranty Agreement as of the day and year
first above written.

            [NAME OF NEW GUARANTOR]
      By           Name:           Title:           Address:           SUNTRUST
BANK, as
Administrative Agent
      By           Name:           Title:        

 

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EXHIBIT 2.3
FORM OF NOTICE OF REVOLVING BORROWING
[DATE]
SunTrust Bank,
  as Administrative Agent
  for the Lenders referred to below
303 Peachtree Street, N.E.
Atlanta, GA 30308
Ladies and Gentlemen:
     Reference is made to the Treasury Secured Revolving Credit Agreement dated
as of June 4, 2007 (as amended and in effect on the date hereof, the “Credit
Agreement”), among the undersigned, as Borrower, the lenders from time to time
party thereto, and SunTrust Bank, as Administrative Agent. Terms defined in the
Credit Agreement are used herein with the same meanings. This notice constitutes
a Notice of Revolving Borrowing, and the Borrower hereby requests a Revolving
Borrowing under the Credit Agreement, and in that connection the Borrower
specifies the following information with respect to the Revolving Borrowing
requested hereby:

  (A)   Aggregate principal amount of Revolving Borrowing1:
                                             (B)   Date of Revolving Borrowing
(which is a Business Day)2:                                              (C)  
Interest Rate basis3:                                              (D)  
Interest Period4:                                              (E)   Location
and number of Borrower’s account to which proceeds of Revolving Borrowing are to
be disbursed:                                         

 

1   Not less than $1,000,000 and an integral multiple of $250,000 for Eurodollar
borrowing and not less than $250,000 and an integer multiple of $100,000 for
Base Rate Borrowing.   2   With respect to Base Rate Borrowings, notice must be
given prior to 11:00 a.m. (New York time) on the day of borrowing, and with
respect to Eurodollar Borrowings, notice must be given prior to 2:00 p.m. (New
York time) no later than three (3) business days prior to the date of borrowing.
  3   Eurodollar Borrowing or Base Rate Borrowing.   4   Which must comply with
the definition of “Interest Period” and end not later than the Revolving
Commitment Termination Date.

Exhibit 2.3-1

 

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

 

     The Borrower hereby represents and warrants that the conditions specified
in paragraphs (a), (b) and (c) of Section 3.2 of the Credit Agreement are
satisfied.

            Very truly yours,

KAYNE ANDERSON ENERGY
DEVELOPMENT COMPANY
      By:           Name:           Title:        

[SIGNATURE PAGE TO NOTICE OF REVOLVING BORROWING]

 

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EXHIBIT 2.6(b)
FORM OF CONTINUATION/CONVERSION
[DATE]
SunTrust Bank,
  as Administrative Agent
  for the Lenders referred to below
303 Peachtree Street, N.E.
Atlanta, GA 30308
Ladies and Gentlemen:
     Reference is made to the Treasury Secured Revolving Credit Agreement dated
as of June 4, 2007 (as amended and in effect on the date hereof, the “Credit
Agreement”), among the undersigned, as Borrower, the lenders named therein, and
SunTrust Bank, as Administrative Agent. Terms defined in the Credit Agreement
are used herein with the same meanings. This notice constitutes a Notice of
Continuation/Conversion and the Borrower hereby requests the conversion or
continuation of a Revolving Borrowing under the Credit Agreement, and in that
connection the Borrower specifies the following information with respect to the
Revolving Borrowing to be converted or continued as requested hereby:

  (A)   Revolving Borrowing to which this request applies:     (B)   Principal
amount of Revolving Borrowing to be converted/continued:
                                             (C)   Effective date of election
(which is a Business Day):                                              (D)  
Interest rate basis:                                              (E)   Interest
Period:                                         

Exhibit 2.6(b)-1

 

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

 

            Very truly yours,

KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY
      By:           Name:           Title:        

[SIGNATURE PAGE TO CONTINUATION/CONVERSION]

 

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EXHIBIT 3.1(c)(x)
FORM OF RESPONSIBLE OFFICER’S CERTIFICATE
     Reference is made to the Treasury Secured Revolving Credit Agreement dated
as of June 4, 2007 (the “Credit Agreement”), among KAYNE ANDERSON ENERGY
DEVELOPMENT COMPANY (the “Borrower”), the lenders from time to time party
thereto, and SunTrust Bank, as Administrative Agent. Terms defined in the Credit
Agreement are used herein with the same meanings. This certificate is being
delivered pursuant to Section 3.1(c)(x) of the Credit Agreement.
     I,                                         , [                        
                ] of the Borrower, DO HEREBY CERTIFY that:
     (a) the representations and warranties of the Borrower set forth in the
Credit Agreement are true and correct on and as of the date hereof;
     (b) no Default or Event of Default has occurred and is continuing at the
date hereof; and
     (c) since [the date], which is the date of the most recent financial
statements described in Section 5.1(a) of the Credit Agreement, there has been
no change which has had or could reasonably be expected to have a Material
Adverse Effect.

 

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

 

     IN WITNESS WHEREOF, I have hereunto signed my name this ___ day of June,
2007.

                         
 
  Name:        
 
  Title:        

[SIGNATURE PAGE TO RESPONSIBLE OFFICER’S CERTIFICATE]

 

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

 

EXHIBIT 5.1(c)
FORM OF COMPLIANCE CERTIFICATE
[DATE]

     
To:
  SunTrust Bank, as Administrative Agent
 
  303 Peachtree St., N.E.
 
  Atlanta, GA 30308
 
  Attention:                     

Ladies and Gentlemen:
     Reference is made to that certain Treasury Secured Revolving Credit
Agreement dated as of June 4, 2007 (as amended and in effect on the date hereof,
the “Credit Agreement”), among KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY (the
“Borrower”), the lenders named therein, and SunTrust Bank, as Administrative
Agent. Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Credit Agreement.
     I,                     , being the duly elected and qualified, and acting
in my capacity as [chief executive officer][chief financial officer] of the
Borrower hereby certify to the Administrative Agent and each Lender as follows:
     1. The consolidated financial statements of the Borrower and its
Subsidiaries attached hereto for the fiscal [quarter][year] ending
                                         fairly present in all material respects
the financial condition of the Borrower and its Subsidiaries as at the end of
such fiscal [quarter][year] on a consolidated basis, and the related statements
of operations and cash flows of the Borrower and its Subsidiaries for such
fiscal [quarter][year], in accordance with generally accepted accounting
principles in the United States consistently applied (subject, in the case of
such quarterly financial statements, to normal year-end audit adjustments and
the absence of footnotes).
     2. The calculations set forth in Attachment 1 are computations of the
financial covenants set forth in Article VI of the Credit Agreement calculated
or derived from the financial statements referenced in clause 1 above in
accordance with the terms of the Credit Agreement.
     3. The Borrower and its Subsidiaries have complied with all the terms and
provisions of Section 3.02(a) of the Sarbanes-Oxley Act as in effect on the date
hereof.
     4. Based upon a review of the activities of the Borrower and its
Subsidiaries and the financial statements attached hereto during the period
covered thereby, as of the date hereof, there exists no Default or Event of
Default.
Exhibit 5.1(c)-1

 

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  Name:        
 
  Title:  
 
   
 
     
 
   

Exhibit 5.1(c)-1

 

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Attachment to Compliance Certificate
Exhibit 5.1(c)-2