exv10wxay






Exhibit 10(a)




SECURED REVOLVING

CREDIT AGREEMENT




dated as of




April 24, 2008




among




MVC CAPITAL, INC.




as Borrower,




The Initial Guarantor Listed Herein,




The Lenders Listed Herein




and




BRANCH BANKING AND TRUST COMPANY,




as Administrative Agent




and




BB&T CAPITAL MARKETS,




as Lead Arranger






 









 








SECURED REVOLVING CREDIT AGREEMENT




          THIS SECURED REVOLVING CREDIT AGREEMENT is dated as of April 24, 2008 among MVC CAPITAL, INC.,
a Delaware corporation, as borrower, the INITIAL GUARANTOR listed on the signature pages hereof, as
guarantor, the LENDERS listed on the signature pages hereof and BRANCH BANKING AND TRUST COMPANY,
as Administrative Agent.




          The parties hereto agree as follows:




ARTICLE I

DEFINITIONS




          SECTION 1.01. Definitions. The terms as defined in this Section 1.01 shall, for all
purposes of this Agreement and any amendment hereto (except as otherwise expressly provided or
unless the context otherwise requires), have the meanings set forth herein:




          “Adjusted London InterBank Offered Rate” applicable to any Interest Period means a rate per
annum equal to the quotient obtained (rounded upwards, if necessary, to the next higher 1/100th of
1%) by dividing (i) the applicable London InterBank Offered Rate for such Interest Period by (ii)
1.00 minus the Euro-Dollar Reserve Percentage.




          “Administrative Agent” means BB&T, in its capacity as administrative agent for the Lenders,
and its successors and permitted assigns in such capacity.




          “Administrative Agent’s Letter Agreement” means that certain letter agreement, dated as of
April 24, 2008, between Borrower and the Administrative Agent relating to the terms of this
Agreement, and certain fees from time to time payable by the Borrower to the Administrative Agent,
together with all amendments and modifications thereto. If there is any conflict between the
provisions of this Agreement and the provisions of the Administrative Agent’s Letter Agreement, the
provisions of this Agreement will control.




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




          “Advances” means collectively the Revolver Advances. “Advance” means any one of such
Advances, as the context may require.




          “Affiliate” of any Person means (i) any other Person which directly, or indirectly through one
or more intermediaries, controls such Person, (ii) any other Person which directly, or indirectly
through one or more intermediaries, is controlled by or is under common control with such Person,
or (iii) any other Person of which such Person owns, directly or indirectly, 10% or more of the
common stock or equivalent equity interests. As used herein, the term “control” means possession,
directly or indirectly, of the power to direct or cause the direction of the management or policies
of a Person, whether through the ownership of voting securities, by contract or otherwise.




 









 








          “Agreement” means this Credit Agreement, together with all amendments and supplements hereto.




          “Applicable Laws” means all international, foreign, Federal, state and local statutes,
treaties, rules, guidelines, regulations, ordinances, codes, executive orders, and administrative
or judicial precedents or authorities, including the interpretation or administration thereof by
any Governmental Authority charged with the enforcement, interpretation or administration thereof,
and all applicable administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authority, in each case whether or not having the
force of law.




          “Applicable Margin” has the meaning set forth in Section 2.06(a).




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




          “Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a
Lender.




          “Assignment and Assumption” means an assignment and assumption entered into by a Lender and an
Eligible Assignee (with the consent of any party whose consent is required by Section 9.07), and
accepted by the Administrative Agent, in substantially the form of Exhibit I or any other form
approved by the Administrative Agent.




          “Authority” has the meaning set forth in Section 8.02.




          “Bankruptcy Code” means the United States Bankruptcy Reform Act of 1978 (11 U.S.C. §§101, et.
seq.), as amended from time to time.




          “Base Rate” means for any Base Rate Advance for any day, the rate per annum equal to the
higher as of such day of (i) the Prime Rate, or (ii) one percent (1.0%) above the Federal Funds
Rate. For purposes of determining the Base Rate for any day, changes in the Prime Rate or the
Federal Funds Rate shall be effective on the date of each such change.




          “Base Rate Advance” means, with respect to any Advance, such Advance when such Advance bears
or is to bear interest at a rate based upon the Base Rate.




          “BB&T” means Branch Banking and Trust Company, and its successors.




          “BB&T Collateral” shall mean the cash, Short Term Treasury Securities and Long Term Treasury
Securities of the Borrower that are the subject of a fully perfected first priority Lien granted
pursuant to a Security Agreement to the Administrative Agent for the


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benefit of the Lenders to
secure the whole or any part of the Obligations or any Guarantee thereof.




          “BB&T Collateral Coverage Ratio” shall mean the ratio of BB&T Collateral to the aggregate
amount of the Revolver Advances of all Lenders, as of any date, on such date.




          “Borrower” means MVC Capital, Inc., a Delaware corporation, and its successors and its
permitted assigns.




          “Borrowing” means a borrowing hereunder consisting of Revolver Advances made to the Borrower
at the same time by the Lenders pursuant to Article II. A Borrowing is a “Base Rate Borrowing” if
such Advances are Base Rate Advances or a “Euro-Dollar Borrowing” if such Advances are Euro-Dollar
Advances.




          “Capital Securities” means, with respect to any Person, any and all shares, interests
(including membership interests and partnership interests), participations or other equivalents
(however designated, whether voting or non-voting) of such Person’s capital (including any
instruments convertible into equity), whether now outstanding or issued after the Closing Date.




          “Capital Gains Fee” shall have the meaning set forth in Section 3(b)(ii) of that certain
Investment Advisory and Management Agreement dated as of October 31, 2006 between Borrower and
Tokarz Group Advisors LLC, a Delaware limited liability company.




          “CERCLA” means the Comprehensive Environmental Response Compensation and Liability Act, 42
U.S.C. §9601 et seq. and its implementing regulations and amendments.




          “CERCLIS” means the Comprehensive Environmental Response Compensation and Liability
Information System established pursuant to CERCLA.




          “Change in Control” means the occurrence of any of the following events: (a) any “person” or
“group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”)), excluding Michael Tokarz, shall become, or obtain rights (whether
by means of warrants, options or otherwise) to become, the
“beneficial owner” (as defined in Rules 13(d)-3 and
13(d) 5 under the Exchange Act), directly or indirectly, of more than 25% of the
outstanding Capital Securities of the Borrower; (b) the Board of Directors of the Borrower shall
cease to consist of a majority of Continuing Directors; or (c) the Borrower shall cease to own and
control, of record and beneficially, directly, 100% of each class of outstanding Capital Securities
of the Initial Guarantor and each other Subsidiary free and clear of all Liens (except Liens
created by the Guarantee and Collateral Agreement under the Guggenheim Credit Facility).




          “Change of Law” shall have the meaning set forth in Section 8.02.




          “Closing Certificate” has the meaning set forth in Section 3.01(d).




          “Closing Date” means April 24, 2008.




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          “Code” means the Internal Revenue Code of 1986, as amended, or any successor Federal tax code.
Any reference to any provision of the Code shall also be deemed to be a reference to any successor
provision or provisions thereof.




          “Collateral” shall mean: (1) the Securities Account (as defined in the Security Agreement)
and any and all assets and other property, tangible or intangible, now existing or hereafter
arising, maintained in, credited to or recorded in the Securities Account, including without
limitation any and all Investment Property (as defined in the Security Agreement), Treasury
Securities, securities and other financial assets maintained in, recorded in, credited to or
contained therein (including, without limitation, the BB&T Collateral); (2) any and all Security
Entitlements (as defined in the Security Agreement) with respect to the financial assets maintained
in, recorded in or credited to the Securities Account; (3) any and all other Investment Property or
assets from time to time maintained in, credited to or recorded in the Securities Account; (4) any
and all cash and cash equivalents from time to time maintained in, credited to or recorded in the
Securities Account; (5) all Supporting Obligations (as defined in the Security Agreement) which
relate to, arise from or are in connection with the assets maintained in, credited to or recorded
in the Securities Account; (6) all replacements or substitutions for any of the foregoing; and (7)
all proceeds and products of any of the foregoing and the proceeds and products of other proceeds
and products.




          “Collateral Documents” means, collectively, the Security Agreement and all other agreements
(including control agreements), instruments and other documents, whether now existing or hereafter
in effect, pursuant to which the Borrower or any Subsidiary shall grant or convey (or shall have
granted or conveyed) to the Secured Parties a Lien in, or any other Person shall acknowledge any
such Lien in, property as security for all or any portion of the Obligations, as any of them may be
amended, modified or supplemented from time to time.




          “Compliance Certificate” has the meaning set forth in Section 5.01(c).




          “Consolidated EBIT” means and includes, for the Borrower and the Consolidated Subsidiaries
that are Guarantors for any period, an amount equal to the sum of (a) operating income after
deduction of all operating expenses and other proper charges other than taxes and Consolidated
Interest Expense and (b) to the extent deducted from clause (a) above as an operating expense the
Incentive Compensation Expense in each case, as determined in accordance with GAAP.




          “Consolidated Interest Expense” for any period means interest, whether expensed or
capitalized, in respect of Debt of the Borrower or any of its respective Consolidated Subsidiaries
that are Guarantors outstanding during such period on a consolidated basis.




          “Consolidated Net Realized Income” means, for any period the net realized income of the
Borrower and the Consolidated Subsidiaries that are Guarantors as set forth or reflected on the
most recent consolidated income statement of the Borrower and its Consolidated Subsidiaries
prepared in accordance with GAAP.




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          “Consolidated Subsidiary” means at any date any Subsidiary or other entity the accounts of
which, in accordance with GAAP, would be consolidated with those of the Borrower in its
consolidated financial statements as of such date.




          “Consolidated Shareholders’ Equity” means, at any time, the shareholders’ equity of the
Borrower and its Consolidated Subsidiaries, as set forth in or reflected on the most recent
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries prepared in accordance
with GAAP, but excluding any redeemable preferred stock of the Borrower or any of its Consolidated
Subsidiaries. Consolidated Shareholders’ Equity would generally include, but not be limited to,
(a) the par or stated value of all outstanding Capital Securities, (b) additional paid-in capital,
(c) retained earnings and (d) various deductions such as (1) purchases of treasury stock, (2)
valuation allowances, (3) receivables due from an employee stock ownership plan, (4) employee stock
ownership plan debt guarantees and (5) translation adjustments for foreign currency translations.




          “Continuing Directors” means the directors of the Borrower on the Closing Date and each other
director of the Borrower, if, in each case, such other director’s nomination for election to the
Board of Directors of the Borrower is recommended by at least 66-2/3% of the then Continuing
Directors.




          “Controlled Group” means all members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common control which, together with any Loan Party,
are treated as a single employer under Section 414 of the Code.




          “Debt” of any Person means at any date, 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 to pay the deferred
purchase price of property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee under capital leases, (v) all
obligations of such Person to reimburse any bank or other Person in respect of amounts payable
under a banker’s acceptance, (vi) all Redeemable Preferred Securities of such Person, (vii) all
obligations (absolute or contingent) of such Person to reimburse any bank or other Person in
respect of amounts which are available to be drawn or have been drawn under a letter of credit or
similar instrument, (viii) all Debt of others secured by a Lien on any asset of such Person,
whether or not such Debt is assumed by such Person, (ix) all Debt of others Guaranteed by such
Person, (x) all obligations of such Person with respect to interest rate protection agreements,
foreign currency exchange agreements or other hedging agreements (valued as the termination value
thereof computed in accordance with a method approved by the International Swap Dealers Association
and agreed to by such Person in the applicable hedging agreement, if any); and (xi) all obligations
of such Person under any synthetic lease, tax retention operating lease, sale and leaseback
transaction, asset securitization, 
off-balance sheet loan or other off-balance sheet financing
product, (xiii) all obligations of such Person to purchase securities or other property arising out
of or in connection with the sale of the same or substantially similar securities or property and
(xiv) all obligations of such Person created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person. The Debt of any Person shall
include the Debt of any other entity (including any


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partnership in which such Person is a general partner) to the extent such Person is liable
therefore as a result of such Person’s ownership interest in or other relationship with such
entity, except to the extent the terms of such Debt provide that such Person is not liable
therefor.




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




          “Default Rate” means, with respect to the Advances, on any day, the sum of 2% plus the then
highest interest rate (including the Applicable Margin) which may be applicable to any Advance
(irrespective of whether any such type of Advance is actually outstanding hereunder).




          “Dollars” or “$” means dollars in lawful currency of the United States of America.




          “Domestic Business Day” means any day except a Saturday, Sunday or other day on which
commercial banks in North Carolina are authorized or required by law to close.




          “Domestic Subsidiary” means any Subsidiary which is organized under the laws of any state or
territory of the United States of America.




          “Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund,
and (d) any other Person (other than a natural person) approved by (i) the Administrative Agent,
and (ii) unless a Default has occurred and is continuing, the Borrower (each such approval not to
be unreasonably withheld or delayed except as expressly provided in Section 9.07(b)(iv));
provided that notwithstanding the foregoing, “Eligible Assignee” shall not include: (i) the
Borrower or any of the Borrower’s Affiliates or Subsidiaries; and (ii) so long as no Default has
occurred, a “business development company” under the Investment Company Act that actively competes
with the Borrower in making equity and debt investments.




          “Environmental Authority” means any foreign, federal, state, local or regional government that
exercises any form of jurisdiction or authority under any Environmental Requirement.




          “Environmental Authorizations” means all licenses, permits, orders, approvals, notices,
registrations or other legal prerequisites for conducting the business of a Loan Party or any
Subsidiary of a Loan Party required by any Environmental Requirement.




          “Environmental Judgments and Orders” means all judgments, decrees or orders arising from or in
any way associated with any Environmental Requirements, whether or not entered upon consent or
written agreements with an Environmental Authority or other entity arising from or in any way
associated with any Environmental Requirement, whether or not incorporated in a judgment, decree or
order.




          “Environmental Laws” means any and all federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants,


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franchises, licenses, agreements or other governmental restrictions relating to the environment or
to emissions, discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into the environment,
including, without limitation, ambient air, surface water, groundwater or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport
or handling of pollutants, contaminants, petroleum or petroleum products, chemicals or industrial,
toxic or hazardous substances or wastes or the clean-up or other remediation thereof.




          “Environmental Liabilities” means any liabilities, whether accrued, contingent or otherwise,
arising from and in any way associated with any Environmental Requirements.




          “Environmental Notices” means notice from any Environmental Authority or by any other person
or entity, of possible or alleged noncompliance with or liability under any Environmental
Requirement, including without limitation any complaints, citations, demands or requests from any
Environmental Authority or from any other person or entity for correction of any violation of any
Environmental Requirement or any investigations concerning any violation of any Environmental
Requirement.




          “Environmental Proceedings” means any judicial or administrative proceedings arising from or
in any way associated with any Environmental Requirement.




          “Environmental Releases” means releases as defined in CERCLA or under any applicable federal,
state or local environmental law or regulation and shall include, in any event and without
limitation, any release of petroleum or petroleum related products.




          “Environmental Requirements” means any legal requirement relating to health, safety or the
environment and applicable to a Loan Party, any Subsidiary of a Loan Party or the Properties,
including but not limited to any such requirement under CERCLA or similar state legislation and all
federal, state and local laws, ordinances, regulations, orders, writs, decrees and common law.




          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to
time, or any successor law and all rules and regulations from time to time promulgated thereunder.
Any reference to any provision of ERISA shall also be deemed to be a reference to any successor
provision or provisions thereof.




          “Euro-Dollar Advance” means, with respect to any Advance, such Advance during Interest Periods
when such Advance bears or is to bear interest at a rate based upon the London InterBank Offered
Rate.




          “Euro-Dollar Business Day” means any Domestic Business Day on which dealings in Dollar
deposits are carried out in the London interbank market.




          “Euro-Dollar Reserve Percentage” has the meaning set forth in Section 2.06(c).




          “Event of Default” has the meaning set forth in Section 6.01.




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          “Excluded Taxes” means, 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,
(a) taxes imposed on or measured by its overall net income (however denominated), and franchise
taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political
subdivision thereof) under the laws of which such recipient is organized or in which its principal
office is located or, in the case of any Lender, in which its applicable lending office is located,
(b) any branch profits taxes imposed by the United States of America or any similar tax imposed by
any other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender,
any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such
Foreign Lender becomes a party hereto (or designates a new lending office) or is attributable to
such Foreign Lender’s failure or inability (other than as a result of a Change of Law) to comply
with Section 2.12(e), except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment), to receive additional
amounts from the Borrower with respect to such withholding tax pursuant to Section 2.12(e).




          “Federal Funds Rate” means, for any day, the rate per annum (rounded upward, if necessary, to
the next higher 1/100th of 1%) equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the Domestic Business Day next
succeeding such day, provided that (i) if the day for which such rate is to be determined is not a
Domestic Business Day, the Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Domestic Business Day as so published on the next succeeding Domestic
Business Day, and (ii) if such rate is not so published for any day, the Federal Funds Rate for
such day shall be the average rate charged to BB&T on such day on such transactions as determined
by the Administrative Agent.




          “Fiscal Quarter” means any fiscal quarter of the Borrower.




          “Fiscal Year” means any fiscal year of the Borrower.




          “Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other
than that in which the Borrower is resident for tax purposes. For purposes of this definition, the
United States of America, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.




          “Foreign Subsidiary” means any Subsidiary which is not a Domestic Subsidiary.




          “Fund” means 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.




          “GAAP” means generally accepted accounting principles applied on a basis consistent with those
which, in accordance with Section 1.02, are to be used in making the calculations for purposes of
determining compliance with the terms of this Agreement.




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          “Governmental Authority” means the government of the United States of America or any other
nation, or of 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 (including any

 supra-national bodies such as the European Union or the European Central
Bank).




          “Guarantee” by any Person means any obligation, contingent or otherwise, of such Person
directly or indirectly guaranteeing any Debt or other obligation of any other Person and, without
limiting the generality of the foregoing, any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to secure, purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to
provide collateral security, to take-or-pay, or to maintain financial statement conditions or
otherwise) or (ii) entered into for the purpose of assuring in any other manner the obligee of such
Debt or other obligation of the payment thereof or to protect such obligee against loss in respect
thereof (in whole or in part), provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business. The term “Guarantee”
used as a verb has a corresponding meaning.




          “Guaranteed Obligations” means any and all liabilities, indebtedness and obligations of any
and every kind and nature, heretofore, now or hereafter owing, arising, due or payable from the
Borrower to one or more of the Lenders, the Administrative Agent, or any of them, arising under or
evidenced by this Agreement, the Revolver Notes, the Collateral Documents or any other Loan
Document.




          “Guarantors” shall mean collectively: (a) the Initial Guarantor; and (b) all direct and
indirect Subsidiaries of the Borrower or Guarantor acquired, formed or otherwise in existence after
the Closing Date and required to become a Guarantor pursuant to Section 5.25.




          “Guggenheim Credit Facility” means that certain Credit Agreement dated April 27, 2006 among
the Borrower, the Guarantor and Guggenheim Corporate Funding, LLC, as administrative agent for the
lenders party thereto (as the same has been and may in the future be amended, modified, restated
and/or supplemented from time to time).




          “Hazardous Materials” includes, without limitation, (a) solid or hazardous waste, as defined
in the Resource Conservation and Recovery Act of 1980, 42 U.S.C. §6901 et seq. and its implementing
regulations and amendments, or in any applicable state or local law or regulation, (b) any
“hazardous substance”, “pollutant” or “contaminant”, as defined in CERCLA, or in any applicable
state or local law or regulation, (c) gasoline, or any other petroleum product or by-product,
including crude oil or any fraction thereof, (d) toxic substances, as defined in the Toxic
Substances Control Act of 1976, or in any applicable state or local law or regulation and (e)
insecticides, fungicides, or rodenticides, as defined in the Federal Insecticide, Fungicide, and
Rodenticide Act of 1975, or in any applicable state or local law or regulation, as each such Act,
statute or regulation may be amended from time to time.




          “Hedging Obligations” of any Person shall mean any and all obligations of such


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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 any combination thereof,
whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices
or other financial measures.




          “Incentive Compensation Expenses” shall mean all cash and non cash amounts paid or accrued by
the Borrower in respect of the Capital Gains Fee.




          “Indemnified Taxes” means Taxes other than Excluded Taxes.




          “Initial Guarantor” shall mean MVC Financial Services, Inc., a Delaware corporation.




          “Interest Coverage Ratio” shall mean, as of any date, the ratio of (i) Consolidated EBIT
(including revenue from the BB&T Collateral) to (ii) Consolidated Interest Expense (including
Consolidated Interest Expense from the Revolver Advances) computed as of the last day of each
Fiscal Quarter for the four consecutive Fiscal Quarters ended on such day.




          “Interest Period” means with respect to each Euro-Dollar Borrowing, the period commencing on
the date of such Borrowing and ending on the date 7 days (one week) thereafter or on the
numerically corresponding day in the first, second or third month thereafter, as the Borrower may
elect in the applicable Notice of Borrowing; provided that:





     (a) any Interest Period (subject to clause (b) below) which would otherwise end on a
day which is not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar
month (as the case may be), in which case such Interest Period shall end on the next
preceding Euro-Dollar Business Day;




     (b) any Interest Period which begins on the last Euro-Dollar Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the appropriate
subsequent calendar month) shall, subject to clause (c) below, end on the last Euro-Dollar
Business Day of the appropriate subsequent calendar month; and




     (c) no Interest Period may be selected that begins before the Termination Date and
would otherwise end after the Termination Date.



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          “Lender” means each lender listed on the signature pages hereof as having a Revolver
Commitment and their respective successors and assigns.




          “Lending Office” means, as to each Lender, its office located at its address set forth on the
signature pages hereof (or identified on the signature pages hereof as its Lending Office) or such
other office as such Lender may hereafter designate as its Lending Office by notice to the Borrower
and the Administrative Agent.




          “Lien” means, with respect to any asset, any mortgage, deed to secure debt, deed of trust,
lien, pledge, charge, security interest, security title, preferential arrangement which has the
practical effect of constituting a security interest or encumbrance, servitude or encumbrance of
any kind in respect of such asset to secure or assure payment of a Debt or a Guarantee, whether by
consensual agreement or by operation of statute or other law, or by any agreement, contingent or
otherwise, to provide any of the foregoing. For the purposes of this Agreement, the Borrower or
any Subsidiary shall be deemed to own subject to a Lien any asset which it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease
or other title retention agreement relating to such asset.




          “Loan Documents” means this Agreement, the Notes, the Collateral Documents, any other document
evidencing or securing the Advances, and any other document or instrument delivered from time to
time in connection with this Agreement, the Notes, the Collateral Documents or the Advances, as
such documents and instruments may be amended or supplemented from time to time.




          “Loan Parties” means collectively the Borrower and each Guarantor that is now or hereafter a
party to any of the Loan Documents.




          “Long Term Treasury Securities” shall mean Treasury Securities maturing after 90 days but
before 10 years of the date of acquisition thereof.




          “London InterBank Offered Rate” has the meaning set forth in Section 2.06(c).




          “Margin Stock” means “margin stock” as defined in Regulations T, U or X of the Board of
Governors of the Federal Reserve System, as in effect from time to time, together with all official
rulings and interpretations issued thereunder.




          “Material Adverse Effect” means, 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 singly 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 upon, any of (a) the financial condition,
operations, business or properties of the Loan Parties and their respective Subsidiaries taken as a
whole, (b) the rights and remedies of the Administrative Agent or the Lenders under the Loan
Documents, or the ability of the Borrower or any other Loan Party to perform its
obligations under the Loan Documents to which it is a party, as applicable, or (c) the
legality, validity or enforceability of any Loan Document.




11









 








          “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 Loan Parties and their 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 Loan Parties and their
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” means collectively the Revolver Notes and any and all amendments, consolidations,
modifications, renewals, substitutions and supplements thereto or replacements thereof. “Note”
means any one of such Notes.




          “Notice of Borrowing” has the meaning set forth in Section 2.02.




          “Notice of Continuation or Conversion” has the meaning set forth in Section 2.03.




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




          “Obligations” means the collective reference to all of the following indebtedness obligations
and liabilities: (a) the due and punctual payment by the Borrower of: (i) the principal of and
interest on the Notes (including without limitation, any and all Revolver Advances), when and as
due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise
and any renewals, modifications or extensions thereof, in whole or in part; (ii) each payment
required to be made by the Borrower under this Agreement, when and as due, including payments in
respect of reimbursement of disbursements, interest thereon, and obligations, if any, to provide
cash collateral and any renewals, modifications or extensions thereof, in whole or in part; and
(iii) all other monetary obligations of the Borrower to the Secured Parties under this Agreement
and the other Loan Documents to which the Borrower is or is to be a party and any renewals,
modifications or extensions thereof, in whole or in part; (b) the due and punctual performance of
all other obligations of the Borrower under this Agreement and the other Loan Documents to which
the Borrower is or is to be a party, and any renewals, modifications or extensions thereof, in
whole or in part; and (c) the due and punctual payment and performance of all obligations of the
Guarantors under this Agreement and the other Loan Documents to which they are or are to be a party
and any and all renewals, modifications or extensions thereof, in whole or in part.




          “Officer’s Certificate” has the meaning set forth in Section 3.01(e).




          “Operating Documents” means with respect to any corporation, limited liability company,
partnership, limited partnership, limited liability partnership or other legally


12









 







authorized
incorporated or unincorporated entity, the bylaws, operating agreement, partnership agreement,
limited partnership agreement, shareholder agreement or other applicable documents relating to the
operation, governance or management of such entity.




          “Organizational Action” means with respect to any corporation, limited liability company,
partnership, limited partnership, limited liability partnership or other legally authorized
incorporated or unincorporated entity, any corporate, organizational or partnership action
(including any required shareholder, member or partner action), or other similar official action,
as applicable, taken by such entity.




          “Organizational Documents” means with respect to any corporation, limited liability company,
partnership, limited partnership, limited liability partnership or other legally authorized
incorporated or unincorporated entity, the articles of incorporation, certificate of incorporation,
articles of organization, certificate of limited partnership or other applicable organizational or
charter documents relating to the creation of such entity.




          “Other Taxes” means 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 under any
other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect
to, this Agreement or any other Loan Document.




          “Participant” has the meaning set forth in Section 9.07(d).




          “Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56, signed into law October
26, 2001.




          “PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all
of its functions under ERISA.




          “Person” means a natural person, a corporation, a limited liability company, a partnership
(including without limitation, a joint venture), an unincorporated association, a trust or any
other entity or organization, including, but not limited to, a government or political subdivision
or an agency or instrumentality thereof.




          “Plan” means at any time an employee pension benefit plan which is covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the Code and is either (i)
maintained by a member of the Controlled Group for employees of any member of the Controlled Group
or (ii) maintained pursuant to a collective bargaining agreement or any other arrangement under
which more than one employer makes contributions and to which a member of the Controlled Group is
then making or accruing an obligation to make contributions or has within the preceding 5 plan
years made contributions.




          “Prime Rate” refers to that interest rate so denominated and set by BB&T from time to time as
an interest rate basis for borrowings. The Prime Rate is but one of several interest rate bases
used by BB&T. BB&T lends at interest rates above and below the Prime


13









 







Rate. The Prime Rate is not
necessarily the lowest or best rate charged by BB&T to its customers or other banks.




          “Properties” means all real property owned, leased or otherwise used or occupied by a Loan
Party or any Subsidiary of a Loan Party, wherever located. “Property” means any one of such
Properties.




          “Quarterly Payment Date” means each March 31, June 30, September 30 and December 31, or, if
any such day is not a Domestic Business Day, the next succeeding Domestic Business Day.




          “Redeemable Preferred Securities” of any Person means any preferred stock or similar Capital
Securities (including, without limitation, limited liability company membership interests and
limited partnership interests) issued by such Person which is at any time prior to the Termination
Date either (i) mandatorily redeemable (by sinking fund or similar payments or otherwise) or (ii)
redeemable at the option of the holder thereof.




          “Register” has the meaning set forth in Section 9.07(c).




          “Related Fund” means, with respect to any Lender that is a fund that invests in lender loans,
any other fund that invests in lender loans and is advised or managed by the same investment
advisor as such Lender.




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




          “Required Lenders” means at any time Lenders having at least 66-2/3% of the aggregate amount
of the Revolver Commitments or, if the Revolver Commitments are no longer in effect, Lenders
holding at least 66-2/3% of the aggregate outstanding principal amount of the Revolver Notes.




          “Revolver Advance” shall mean an advance made to the Borrower under this Agreement pursuant to
Section 2.01. A Revolver Advance is a “Base Rate Advance” if such Revolver Advance is part of a
Base Rate Borrowing or a “Euro-Dollar Advance” if such Revolver Advance is part of a Euro-Dollar
Borrowing.




          “Revolver Commitment” means, with respect to each Lender, (i) the amount set forth opposite
the name of such Lender on the signature pages hereof, or (ii) as to any Lender which enters into
an Assignment and Assumption (whether as transferor Lender or as assignee thereunder), the amount
of such Lender’s Revolver Commitment after giving effect to such Assignment and Assumption, in each
case as such amount may be reduced from time to time pursuant to Sections 2.08 and 2.09.




          “Revolver Notes” means the promissory notes of the Borrower, substantially in the form of
Exhibit B hereto, evidencing the obligation of the Borrower to repay the Revolver Advances,
together with all amendments, consolidations, modifications, renewals, substitutions


14









 







and
supplements thereto or replacements thereof and “Revolver Note” means any one of such Revolver
Notes.




          “RIC” or “regulated investment company” shall mean an investment company or business
development company that qualifies for the special tax treatment provided for by subchapter M of
the Code.




          “Sale/Leaseback Transaction” means any arrangement with any Person providing, directly or
indirectly, for the leasing by any Loan Party or any of its Subsidiaries of real or personal
property which has been or is to be sold or transferred by any Loan Party or such Subsidiary to
such Person or to any other Person to whom funds have been or are to be advanced by such Person on
the security of such property or rental obligations of any Loan Party or such Subsidiary.




          “Sanctioned Entity” shall mean (i) a country or a government of a country, (ii) an agency of
the government of a country, (iii) an organization directly or indirectly controlled by a country
or its government, (iv) a person or entity resident in or determined to be resident in a country,
that is subject to a country sanctions program administered and enforced by OFAC described or
referenced at http://www.ustreas.gov/offices/enforcement/ofac/ or as otherwise published
from time to time.




          “Secured Parties” shall mean collectively: (1) the Administrative Agent in its capacity as
such under this Agreement, the Collateral Documents and the other Loan Documents; (2) the Lenders,
and (3) the successors and assigns of the foregoing.




          “Security Agreement” means the Security Agreement by and between the Borrower and the
Administrative Agent for the benefit of the Secured Parties to be executed and delivered in
connection herewith.




          “Short Term Treasury Securities” shall mean Treasury Securities maturing within 90 days of the
date of acquisition thereof.




          “Subsidiary” of any Person means a corporation, partnership or other entity of which shares of
stock or other ownership interests having ordinary voting power (other than stock or such other
ownership interest having such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation, partnership or other
entity are at the time owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person; provided however, the term
“Subsidiary” shall not include any Person that constitutes an investment made by the Borrower or a
Subsidiary in the ordinary course of business and consistently with practices existing on the
Closing Date in a Person that is accounted for under GAAP as a portfolio investment of the
Borrower. Unless otherwise qualified, all references to a
“Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Borrower.




15









 








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




          “Termination Date” means the earlier to occur of (i) April 24, 2010, (ii) the date the
Revolver Commitments are terminated pursuant to Section 6.01 following the occurrence of an Event
of Default, or (iii) the date the Borrower terminates the Revolver Commitments entirely pursuant to
Section 2.09.




          “Third Parties” means all lessees, sublessees, licensees and other users of the Properties,
excluding those users of the Properties in the ordinary course of the Borrower’s business and on a
temporary basis.




          “Total Unused Revolver Commitments” means at any date, an amount equal to: (A) the aggregate
amount of the Revolver Commitments of all of the Lenders at such time, less (B) the sum of the
aggregate outstanding principal amount of the Revolver Advances of all of the Lenders at such time.




          “Treasury Securities” shall mean (i) Treasury Securities of the United States of America (ii)
other debt instruments fully guaranteed by the full faith and credit of the United States of
America, or (iii) securities of any governmental agency whose purchase has been approved in writing
by the Administrative Agent and the Lenders in their sole and absolute discretion.




          “Unused Commitment” means at any date, with respect to any Lender, an amount equal to its
Revolver Commitment less the sum of the aggregate outstanding principal amount of the sum of its
Revolver Advances.




          “Wholly Owned Subsidiary” means any Subsidiary all of the Capital Securities of which are at
the time directly or indirectly owned by the Borrower.




          SECTION 1.02. Accounting Terms and Determinations. Unless otherwise specified herein,
all terms of an accounting character 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, applied on a basis consistent (except for
changes concurred in by the Borrower’s independent public accountants or otherwise required by a
change in GAAP) with the most recent audited consolidated financial statements of the Borrower and
its Consolidated Subsidiaries delivered to the Administrative Agent for distribution to the
Lenders, unless with respect to any such change concurred in by the Borrower’s independent public
accountants or required by GAAP, in determining compliance with any of the provisions of this
Agreement or any of the other Loan Documents: (i) the Borrower shall have objected to determining
such compliance on such basis at the time of delivery of such financial statements, or (ii) the
Required Lenders shall so object in writing
within 30 days after the delivery of such financial statements, in either of which events such
calculations shall be made on a basis consistent with those used in the preparation of the latest
financial statements as to which such objection shall not have been made (which, if objection is


16









 







made in respect of the first financial statements delivered under Section 5.01 hereof, shall mean
the financial statements referred to in Section 4.04).




          SECTION 1.03. Use of Defined Terms. All terms defined in this Agreement shall have
the same meanings when used in any of the other Loan Documents, unless otherwise defined therein or
unless the context shall otherwise require.




          SECTION 1.04. Terms Generally. The definitions of terms herein shall apply equally to
the singular and plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The
word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the
context requires otherwise (a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or other document as
from time to time amended, supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference herein to any Person
shall be construed to include such Person’s successors and assigns, (c) the words “herein,”
“hereof” and “hereunder,” and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all references herein to
Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of,
and Exhibits and Schedules to, this Agreement, (e) any reference to any law or regulation herein
shall, unless otherwise specified, refer to such law or regulation as amended, modified or
supplemented from time to time; (f) the words “asset” and “property” shall be construed to have the
same meaning and effect and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights; and (g) titles of Articles and Sections
in this Agreement are for convenience only, and neither limit nor amplify the provisions of this
Agreement.




ARTICLE II

THE CREDIT




          SECTION 2.01. Commitments to Make Advances. Each Lender severally agrees, on the
terms and conditions set forth herein, to make Revolver Advances to the Borrower from time to time
before the Termination Date; provided that, immediately after each such Revolver Advance is
made, the aggregate outstanding principal amount of Revolver Advances by such Lender shall not
exceed the amount of the Revolver Commitment of such Lender at such time, provided
further that the aggregate principal amount of all Revolver Advances shall not exceed the
aggregate amount of the Revolver Commitments of all of the Lenders at such time. Each Borrowing
under this Section 2.01 shall be in an aggregate principal amount of $500,000 or any larger
multiple of $100,000 (except that any such Borrowing may be in the aggregate amount of the Total
Unused Revolver Commitments) and shall be made from the several Lenders ratably in proportion to
their respective Revolver Commitments. Within the foregoing limits, the Borrower may borrow under
this Section, repay or, to the extent permitted by Section 2.10,
prepay Revolver Advances and reborrow under this Section 2.01 at any time before the
Termination Date.




          SECTION 2.02. Method of Borrowing Advances.




17









 









     (a) The Borrower shall give the Administrative Agent notice in the form attached hereto
as Exhibit A (a “Notice of Borrowing”) prior to (i) 9:30 A.M. (Eastern time) at least one
(1) Domestic Business Day before each Base Rate Borrowing, and (ii) 11:00 A.M. (Eastern
time) at least two (2) Euro-Dollar Business Days before each Euro-Dollar Borrowing if BB&T
is the sole Lender, or three (3) Euro-Dollar Business Days before each Euro-Dollar Borrowing
if BB&T is not the sole Lender, specifying:




     (i) the date of such Borrowing, which shall be a Domestic Business Day in the
case of a Base Rate Borrowing or a Euro-Dollar Business Day in the case of a
Euro-Dollar Borrowing,




     (ii) the aggregate amount of such Borrowing,




     (iii) whether the Revolver Advances comprising such Borrowing are to be Base
Rate Advances or Euro-Dollar Advances, and




     (iv) in the case of a Euro-Dollar Borrowing, the duration of the Interest
Period applicable thereto, subject to the provisions of the definition of Interest
Period.




     (b) Upon receipt of a Notice of Borrowing, the Administrative Agent shall promptly
notify each Lender of the contents thereof and of such Lender’s ratable share of such
Borrowing and such Notice of Borrowing, once received by the Administrative Agent, shall not
thereafter be revocable by the Borrower.




     (c) Not later than 11:00 A.M. (Eastern time) on the date of each Borrowing, each Lender
shall make available its ratable share of such Borrowing, in Federal or other funds
immediately available in Winston-Salem, North Carolina, to the Administrative Agent at its
address referred to in or specified pursuant to Section 9.01. Unless the Administrative
Agent determines that any applicable condition specified in Article III has not been
satisfied, the Administrative Agent will disburse the funds so received from the Lenders to
the Securities Account (as defined in the Security Agreement).




     (d) Notwithstanding anything to the contrary contained in this Agreement, no
Euro-Dollar Borrowing may be made if there shall have occurred a Default, which Default
shall not have been cured or waived.




     (e) In the event that a Notice of Borrowing fails to specify whether the Revolver
Advances comprising such Borrowing are to be Base Rate Advances or Euro-Dollar Advances,
such Revolver Advances shall be made as Base Rate Advances. If the Borrower is otherwise
entitled under this Agreement to repay any Revolver Advances maturing at the end of an
Interest Period applicable thereto with the proceeds of a new
Borrowing, and the Borrower fails to repay such Revolver Advances using its own moneys
and fails to give a Notice of Borrowing in connection with such new Borrowing, a new
Borrowing shall be deemed to be made on the date such Revolver Advances mature in an amount
equal to the principal amount of the Revolver Advances so



18









 







maturing, and the Revolver
Advances comprising such new Borrowing shall be Base Rate Advances.




     (f) Notwithstanding anything to the contrary contained herein, there shall not be more
than three (3) Interest Periods outstanding at any given time.



          SECTION 2.03. Continuation and Conversion Elections. By delivering a notice (a
“Notice of Continuation or Conversion”), which shall be substantially in the form of Exhibit C, to
the Administrative Agent on or before 12:00 P.M., Eastern time, on a Domestic Business Day (or
Euro-Dollar Business Day, in the case of Euro-Dollar Advances outstanding), the Borrower may from
time to time irrevocably elect, by notice one (1) Domestic Business Day prior in the case of a
conversion to Base Rate Advances, two (2) Euro-Dollar Business Days prior in the case of a
continuation of or conversion to Euro-Dollar Advances if BB&T is the sole Lender, or three (3)
Euro-Dollar Business Days prior in the case of a continuation of or conversion to Euro-Dollar
Advances if BB&T is not the sole Lender, that all, or any portion in an aggregate principal amount
of $500,000 or any larger integral multiple of $100,000 be, (i) in the case of Base Rate Advances,
converted into Euro-Dollar Advances or (ii) in the case of Euro-Dollar Advances, converted into
Base Rate Advances or continued as Euro-Dollar Advances; provided, however, that (x) each
such conversion or continuation shall be pro rated among the applicable outstanding Revolver
Advances of all Lenders that have made such Revolver Advances, and (y) no portion of the
outstanding principal amount of any Revolver Advances may be continued as, or be converted into,
any Euro-Dollar Advance when any Default has occurred and is continuing. In the absence of
delivery of a Notice of Continuation or Conversion with respect to any Euro-Dollar Advance at least
three (3) Euro-Dollar Business Days before the last day of the then current Interest Period with
respect thereto, such Euro-Dollar Advance shall, on such last day, automatically convert to a Base
Rate Advance.




          SECTION 2.04. Notes. The Revolver Advances of each Lender shall be evidenced by a
single Revolver Note payable to the order of such Lender for the account of its Lending Office in
an amount equal to the original principal amount of such Lender’s Revolver Commitment. Upon
receipt of each Lender’s Revolver Note pursuant to Section 3.01, the Administrative Agent shall
deliver such Revolver Note to such Lender. Each Lender shall record, and prior to any transfer of
its Revolver Note shall endorse on the schedule forming a part thereof appropriate notations to
evidence, the date, amount and maturity of, and effective interest rate for, each Revolver Advance
made by it, the date and amount of each payment of principal made by the Borrower with respect
thereto and such schedule shall constitute rebuttable presumptive evidence of the principal amount
owing and unpaid on such Lender’s Revolver Note; provided that the failure of any Lender to
make, or any error in making, any such recordation or endorsement shall not affect the obligation
of the Borrower hereunder or under the Revolver Note or the ability of any Lender to assign its
Revolver Note. Each Lender is hereby irrevocably authorized by the Borrower so to endorse its
Revolver Note and to attach to and make a part of any Revolver Note a continuation of any such
schedule as and when required.




          SECTION 2.05. Maturity of Advances. Each Revolver Advance included in any Borrowing
shall mature, and the principal amount thereof, together with all accrued unpaid interest thereon,
shall be due and payable on the Termination Date.




19









 








          SECTION 2.06. Interest Rates.





     (a) “Applicable Margin” shall mean 0.50%.




     (b) Each Base Rate Advance shall bear interest on the outstanding principal amount
thereof, for each day from the date such Advance is made until it becomes due, at a rate per
annum equal to the Base Rate for such day. Such interest shall be payable on each Quarterly
Payment Date while such Base Rate Advance is outstanding and on the date such Base Rate
Advance is converted to a Euro-Dollar Advance or repaid. Any overdue principal of and, to
the extent permitted by applicable law, overdue interest on any Base Rate Advance shall bear
interest, payable on demand, for each day until paid in full at a rate per annum equal to
the Default Rate.




     (c) Each Euro-Dollar Advance shall bear interest on the outstanding principal amount
thereof, for the Interest Period applicable thereto, at a rate per annum equal to the sum
of: (1) the Applicable Margin, plus (2) the applicable Adjusted London InterBank Offered
Rate for such Interest Period. Such interest shall be payable for each Interest Period on
the last day thereof. Any overdue principal of and, to the extent permitted by applicable
law, overdue interest on any Euro-Dollar Advance shall bear interest, payable on demand, for
each day until paid in full at a rate per annum equal to the Default Rate.




     The “London InterBank Offered Rate” applicable to any Euro-Dollar Advance means for the
Interest Period of such Euro-Dollar Advance the rate per annum determined on the basis of
the rate for deposits in Dollars of amounts equal or comparable to the principal amount of
such Euro-Dollar Advance offered for a term comparable to such Interest Period, which rate
appears on the display designated as Reuters Screen LIBOR01 Page (or such other successor
page as may replace Reuters Screen LIBOR01 Page or such other service or services as may be
nominated by the British Banker’s Association for the purpose of displaying London InterBank
Offered Rates for U.S. dollar deposits) determined as of 11:00 a.m. London, England time,
two (2) Euro-Dollar Business Days prior to the first day of such Interest Period,
provided that if no such offered rates appear on such page, the “London InterBank
Offered Rate” for such Interest Period will be the arithmetic average (rounded upward, if
necessary, to the next higher 1/100th of 1%) of rates quoted by not less than two (2) major
lenders in New York City, selected by the Administrative Agent, at approximately 10:00 A.M.,
New York City time, two (2) Euro-Dollar Business Days prior to the first day of such
Interest Period, for deposits in Dollars offered by leading European banks for a period
comparable to such Interest Period in an amount comparable to the principal amount of such
Euro-Dollar Advance.




     “Euro-Dollar Reserve Percentage” means for any day that percentage (expressed as a
decimal) which is in effect on such day, as prescribed by the Board of Governors of
the Federal Reserve System (or any successor) for determining the maximum reserve
requirement for a member bank of the Federal Reserve System in respect of “Eurocurrency
liabilities” (or in respect of any other category of liabilities which includes deposits by
reference to which the interest rate on such Euro-Dollar Advance is determined or any
category of extensions of credit or other assets which includes loans



20









 







by a non-United States
office of any Lender to United States residents). The Adjusted London InterBank Offered
Rate shall be adjusted automatically on and as of the effective date of any change in the
Euro-Dollar Reserve Percentage.




     (d) The Administrative Agent shall determine each interest rate applicable to the
Advances hereunder in accordance with the terms of this Agreement. The Administrative Agent
shall give prompt notice to the Borrower and the Lenders by telecopy of each rate of
interest so determined, and its determination thereof shall be conclusive in the absence of
manifest error.




     (e) After the occurrence and during the continuance of an Event of Default (other than
an Event of Default under Sections 6.01(g) or (h)), the principal amount of the Advances
(and, to the extent permitted by applicable law, all accrued interest thereon) may, at the
election of the Required Lenders, bear interest at the Default Rate; provided, however, that
automatically whether or not the Required Lenders elect to do so, (i) any overdue principal
of and, to the extent permitted by law, overdue interest on the Advances shall bear interest
payable on demand, for each day until paid at a rate per annum equal to the Default Rate,
and (ii) after the continuance and during the continuance of an Event of Default described
in Section 6.01(g) or 6.01(h), the principal amount of the Advances (and, to the extent
permitted by applicable law, all accrued interest thereon) shall bear interest payable on
demand for each day until paid at a rate per annum equal to the Default Rate.




     SECTION 2.07. Fees.




     (a) The Borrower shall pay to the Administrative Agent for the ratable account of each
Lender a commitment fee equal to the product of: (i) the aggregate of the daily average
amounts of such Lender’s Revolver Commitment, times (ii) a per annum percentage equal to
0.25%. Such commitment fee shall accrue from and including the Closing Date to and
including the Termination Date. Commitment fees shall be payable (i) quarterly in arrears
on each Quarterly Payment Date, and (ii) on the Termination Date; provided that should the
Revolver Commitments be terminated at any time prior to the Termination Date for any reason,
the entire accrued and unpaid fee shall be paid on the date of such termination.




     (b) The Borrower shall pay to the Administrative Agent for the ratable account of each
Lender a utilization fee in respect of any Fiscal Quarter in which Revolver Advances are
outstanding for more than 33.3% of the calendar days during such Fiscal Quarter equal to the
product of: (i) the aggregate of the daily average amounts of such Lender’s Revolver
Advances during such Fiscal Quarter, times (ii) a per annum percentage equal to 0.25%. Such
utilization fee shall accrue from and including the
Closing Date to and including the Termination Date. Utilization fees shall be payable
quarterly in arrears on each Quarterly Payment Date and on the Termination Date; provided
that should the Revolver Commitments be terminated at any time prior to the Termination Date
for any reason, the entire accrued and unpaid fee shall be paid on the date of such
termination.



21









 






     (c) The Borrower shall pay to the Administrative Agent, for the account and sole
benefit of the Administrative Agent, such fees and other amounts at such times as set forth
in the Administrative Agent’s Letter Agreement.



          SECTION 2.08. Optional Termination or Reduction of Commitments. The Borrower may,
upon at least 3 Domestic Business Day’s irrevocable notice to the Administrative Agent, terminate
at any time, or proportionately reduce from time to time by an aggregate amount of at least
$10,000,000 or any larger multiple of $1,000,000, the Revolver Commitments; provided, however: (1)
each termination or reduction, as the case may be, shall be permanent and irrevocable; (2) no such
termination or reduction shall be in an amount greater than the Total Unused Revolver Commitments
on the date of such termination or reduction; and (3) no such reduction pursuant to this Section
2.08 shall result in the aggregate Revolver Commitments of all of the Lenders to be reduced to an
amount less than $30,000,000, unless the Revolver Commitments are terminated in their entirety, in
which case all accrued fees (as provided under Section 2.07) shall be payable on the effective date
of such termination. Each reduction shall be made ratably among the Lenders in accordance with
their respective Revolver Commitments.




          SECTION 2.09. Termination of Commitments. The Revolver Commitments shall terminate on
the Termination Date and any Revolver Advances then outstanding (together with accrued interest
thereon) shall be due and payable on such date.




          SECTION 2.10. Optional Prepayments.





     (a) The Borrower may, upon at least one (1) Domestic Business Day’s notice to the
Administrative Agent, prepay any Base Rate Borrowing in whole at any time, or from time to
time in part in amounts aggregating at least $5,000,000 or any larger integral multiple of
$1,000,000 (or any lesser amount equal to the outstanding balance of such Advance), by
paying the principal amount to be prepaid together with accrued interest thereon to the date
of prepayment. Each such optional prepayment shall be applied to prepay ratably the Base
Rate Advances of the several Lenders included in such Base Rate Borrowing.




     (b) Subject to any payments required pursuant to the terms of Article VIII for such
Euro-Dollar Borrowing, the Borrower may, upon at least three (3) Domestic Business Day’s
prior written notice, prepay in minimum amounts of $5,000,000 with additional increments of
$1,000,000 (or any lesser amount equal to the outstanding balance of such Advances) all or
any portion of the principal amount of any Euro-Dollar Borrowing prior to the maturity
thereof, by paying the principal amount to be prepaid together with accrued interest thereon
to the date of prepayment and such payments required pursuant to the terms of Article VIII.
Each such optional prepayment shall be
applied to prepay ratably the Euro-Dollar Advances of the several Lenders included in
such Euro-Dollar Borrowing.




     (c) Upon receipt of a notice of prepayment pursuant to this Section 2.10, the
Administrative Agent shall promptly notify each Lender of the contents thereof and of such
Lender’s ratable share of such prepayment and such notice, once received by the
Administrative Agent, shall not thereafter be revocable by the Borrower.



22









 





          SECTION 2.11. Mandatory Prepayments.





     (a) On each date on which the Revolver Commitments are reduced or terminated pursuant
to Section 2.08 or Section 2.09, the Borrower shall repay or prepay such principal amount of
the outstanding Revolver Advances, if any (together with interest accrued thereon and any
amount due under Section 8.05), as may be necessary so that after such payment the aggregate
unpaid principal amount of the Revolver Advances does not exceed the aggregate amount of the
Revolver Commitments as then reduced. Each such payment or prepayment shall be applied
ratably to the Revolver Advances of the several Lenders outstanding on the date of payment
or prepayment in the following order or priority: (i) first, to Base Rate Advances; and
(ii) lastly, to Euro-Dollar Advances.




     (b) In the event that the aggregate principal amount of all Revolver Advances at any
one time outstanding shall at any time exceed the aggregate amount of the Revolver
Commitments of all of the Lenders at such time, the Borrower shall immediately repay so much
of the Revolver Advances as is necessary in order that the aggregate principal amount of the
Revolver Advances thereafter outstanding, shall not exceed the aggregate amount of the
Revolver Commitments of all of the Lenders at such time. Each such payment or prepayment
shall be applied ratably to the Revolver Advances of the several Lenders outstanding on the
date of payment or prepayment in the following order or priority: (i) first, to Base Rate
Advances; and (ii) lastly, to Euro-Dollar Advances.




     (c) If at any time the Borrower is not in compliance with Section 5.03, the Borrower
shall immediately repay so much of the Revolver Advances as is necessary in order that the
Borrower is, after giving effect to such repayment, in compliance with Section 5.03. Each
such payment or prepayment shall be applied ratably to the Revolver Advances of the several
Lenders outstanding on the date of payment or prepayment in the following order or priority:
(i) first, to Base Rate Advances, and (ii) lastly to Euro-Dollar Advances.




     SECTION 2.12. General Provisions as to Payments.




     (a) The Borrower shall make each payment of principal of, and interest on, the Advances
and of fees hereunder without any set off, counterclaim or any deduction whatsoever, not
later than 11:00 A.M. (Eastern time) on the date when due, in Federal or other funds
immediately available in Winston-Salem, North Carolina, to the Administrative Agent at its
address referred to in Section 9.01. The Administrative Agent will promptly distribute to
each Lender its ratable share of each such payment received by the Administrative Agent for
the account of the Lenders.




     (b) Whenever any payment of principal of, or interest on, the Base Rate Advances or of
fees shall be due on a day which is not a Domestic Business Day, the date for payment
thereof shall be extended to the next succeeding Domestic Business Day. Whenever any
payment of principal of or interest on, the Euro-Dollar Advances shall be due on a day which
is not a Euro-Dollar Business Day, the date for payment thereof shall



23









 







be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case the date for payment thereof shall be the next
preceding Euro-Dollar Business Day. If the date for any payment of principal is extended by
operation of law or otherwise, interest thereon shall be payable for such extended time.




     (c) Funding by Lenders; Presumption by Administrative Agent. Unless the
Administrative Agent shall have received notice from a Lender prior to the proposed date of
any Borrowing that such Lender will not make available to the Administrative Agent such
Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has
made such share available on such date in accordance with Section 2.02 and may, in reliance
upon such assumption, make available to the Borrower a corresponding amount. In such event,
if a Lender has not in fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the
case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a
rate determined by the Administrative Agent in accordance with banking industry rules on
interbank compensation and (ii) in the case of a payment to be made by the Borrower, the
interest rate applicable to Base Rate Advances. If the Borrower and such Lender shall pay
such interest to the Administrative Agent for the same or an overlapping period, the
Administrative Agent shall promptly remit to the Borrower the amount of such interest paid
by the Borrower for such period. If such Lender pays its share of the applicable Borrowing
to the Administrative Agent, then the amount so paid shall constitute such Lender’s Advance
included in such Borrowing. Any payment by the Borrower shall be without prejudice to any
claim the Borrower may have against a Lender that shall have failed to make such payment to
the Administrative Agent




     (d) Payments by Borrower; Presumptions by Administrative Agent. 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 due. In such event, if the Borrower
has not in fact made such payment, then each of the Lenders severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such Lender, with
interest thereon, for each day from and including the date such amount is distributed to it
to but excluding the date of payment to the Administrative Agent, at the greater of the
Federal Funds Rate and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation




     (e) Taxes.



24









 






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




     (ii) Payment of Other Taxes by the Borrower. Without limiting the
provisions of paragraph (i) above, the Borrower shall timely pay any Other Taxes to
the relevant Governmental Authority in accordance with applicable law.




     (iii) Indemnification by the Borrower. The Borrower shall indemnify
the Administrative Agent and each Lender, within 10 days after demand therefor, for
the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts payable under this
Section) paid by the Administrative Agent or such Lender, as the case may be, and
any penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A certificate
as to the amount of such payment or liability delivered to the Borrower or by a
Lender (with a copy to the Administrative Agent), or by the Administrative Agent on
its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.




     (iv) Evidence of Payments. As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the
Borrower shall deliver to the Administrative Agent the original or a certified copy
of a receipt issued by such Governmental Authority evidencing such payment, a copy
of the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.




     (v) Status of Lenders. Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction in
which the Borrower is resident for tax purposes, or any treaty to which such
jurisdiction is a party, with respect to payments hereunder or under any other Loan
Document shall deliver to the Borrower (with a copy to the Administrative Agent), at
the time or times prescribed by applicable law or reasonably requested by the
Borrower or the Administrative Agent, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be made
without withholding or at a reduced rate of withholding. In



25









 







addition, any Lender,
if requested by the Borrower or the Administrative Agent, shall deliver such other
documentation prescribed by applicable law or reasonably requested by the Borrower
or the Administrative Agent as will enable the Borrower or the Administrative Agent
to determine whether or not such Lender is subject to backup withholding or
information reporting requirements.




     Without limiting the generality of the foregoing, in the event that the
Borrower is resident for tax purposes in the United States of America, any Foreign
Lender shall deliver to the Borrower and the Administrative Agent (in such number of
copies as shall be requested by the recipient) on or prior to the date on which such
Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the request of the Borrower or the Administrative Agent, but only if
such Foreign Lender is legally entitled to do so), whichever of the following is
applicable:




     (A) duly completed copies of Internal Revenue Service Form W-8BEN
claiming eligibility for benefits of an income tax treaty to which the
United States of America is a party,




     (B) duly completed copies of Internal Revenue Service Form W-8ECI,




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




     (D) any other form prescribed by applicable law as a basis for claiming
exemption from or a reduction in United States Federal withholding tax duly
completed together with such supplementary documentation as may be
prescribed by applicable law to permit the Borrower to determine the
withholding or deduction required to be made.




     (vi) Treatment of Certain Refunds. If the Administrative Agent or a
Lender determines, in its sole discretion, that it has received a refund of any
Taxes or Other Taxes as to which it has been indemnified by the Borrower or with
respect to which the Borrower has paid additional amounts pursuant to this Section,
it shall pay to the Borrower an amount equal to such refund (but only to the extent
of indemnity payments made, or additional amounts paid, by the Borrower under this
Section with respect to the Taxes or Other Taxes giving rise to such refund), net of
all out-of-pocket expenses of the Administrative Agent or such Lender, as the case
may be, and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund), provided



26









 







that the
Borrower, upon the request of the Administrative Agent or such Lender, agrees to
repay the amount paid over to the Borrower (plus any penalties, interest or other
charges imposed by the relevant Governmental Authority) to the Administrative Agent
or such Lender in the event the Administrative Agent or such Lender is required to
repay such refund to such Governmental Authority. This paragraph shall not be
construed to require the Administrative Agent or any Lender to make available its
tax returns (or any other information relating to its taxes that it deems
confidential) to the Borrower or any other Person.



          SECTION 2.13. Computation of Interest and Fees. Interest on the Advances shall be
computed on the basis of a year of 360 days and paid for the actual number of days elapsed
(including the first day but excluding the last day). Utilization fees, unused commitment fees and
any other fees payable hereunder shall be computed on the basis of a year of 360 days and paid for
the actual number of days elapsed (including the first day but excluding the last day).




ARTICLE III

CONDITIONS TO BORROWINGS




          SECTION 3.01. Conditions to Closing and First Borrowing. The obligation of each
Lender to make an Advance on the Closing Date is subject to the satisfaction of the conditions set
forth in Section 3.02 and the following additional conditions:





     (a) receipt by the Administrative Agent from each of the parties hereto of a duly
executed counterpart of this Agreement signed by such party;




     (b) receipt by the Administrative Agent of a duly executed Revolver Note for the
account of each Lender, complying with the provisions of Section 2.04;




     (c) receipt by the Administrative Agent of an opinion of Wildman, Harrold, Allen &
Dixon LLP, as counsel to the Loan Parties, dated as of the Closing Date (or in
the case of an opinion delivered pursuant to Section 5.25 hereof such later date as
specified by the Administrative Agent) substantially in the form of Exhibit E hereto and
covering such additional matters relating to the transactions contemplated hereby as the
Administrative Agent may reasonably request;




     (d) receipt by the Administrative Agent of a certificate (the “Closing Certificate”),
dated as of the Closing Date, substantially in the form of Exhibit F hereto, signed by a
chief financial officer or other authorized officer of each Loan Party, to the effect that,
to his knowledge, (i) no Default has occurred and is continuing on the Closing Date and (ii)
the representations and warranties of the Loan Parties contained in Article IV are true on
and as of the Closing Date hereunder;




     (e) receipt by the Administrative Agent of all documents which the Administrative Agent
or any Lender may reasonably request relating to the existence of each Loan Party, the
authority for and the validity of this Agreement, the Notes and the other Loan Documents,
and any other matters relevant hereto, all in form and substance



27









 







satisfactory to the
Administrative Agent, including without limitation a certificate of incumbency of each Loan
Party (the “Officer’s Certificate”), signed by the Secretary, an Assistant Secretary, a
member, manager, partner, trustee or other authorized representative of the respective Loan
Party, substantially in the form of Exhibit G hereto, certifying as to the names, true
signatures and incumbency of the officer or officers of the respective Loan Party,
authorized to execute and deliver the Loan Documents, and certified copies of the following
items: (i) the Loan Party’s Organizational Documents; (ii) the Loan Party’s Operating
Documents; (iii) if applicable, a certificate of the Secretary of State of such Loan Party’s
State of organization as to the good standing or existence of such Loan Party, and (iv) the
Organizational Action, if any, taken by the board of directors of the Loan Party or the
members, managers, trustees, partners or other applicable Persons authorizing the Loan
Party’s execution, delivery and performance of this Agreement, the Notes and the other Loan
Documents to which the Loan Party is a party;




     (f) receipt by the Administrative Agent of a Notice of Borrowing;




     (g) the Security Agreement and the other Collateral Documents, each in form and content
satisfactory to the Administrative Agent shall have been duly executed by the applicable
Loan Parties and such documents shall have been delivered to the Administrative Agent and
shall be in full force and effect and each document (including each Uniform Commercial Code
financing statement) required by law or reasonably requested by the Administrative Agent to
be filed, registered or recorded in order to create in favor of the Administrative Agent for
the benefit of the Secured Parties, upon filing, recording or possession by the
Administrative Agent, as the case may be, a valid, legal and perfected first-priority
security interest in and lien on the Collateral described in the Security Agreement shall
have been delivered to the Administrative Agent;




     (h) the Administrative Agent shall have received the results of a search of the Uniform
Commercial Code filings (or equivalent filings) made with respect to the Loan
Parties in the states (or other jurisdictions) in which the Loan Parties are organized,
the chief executive office of each such Person is located, any offices of such persons in
which records have been kept relating to Collateral described in the Collateral Documents
and the other jurisdictions in which Uniform Commercial Code filings (or equivalent filings)
are to be made pursuant to the preceding paragraph, together with copies of the financing
statements (or similar documents) disclosed by such search, and accompanied by evidence
satisfactory to the Administrative Agent that the Liens other than Permitted Liens indicated
in any such financing statement (or similar document) have been released or subordinated to
the satisfaction of Administrative Agent;




     (i) the Borrower shall have paid all fees required to be paid by it on the Closing
Date, including all fees required hereunder and under the Administrative Agent’s Letter
Agreement to be paid as of such date, and shall have reimbursed the Administrative Agent for
all fees, costs and expenses of closing the transactions contemplated hereunder and under
the other Loan Documents, including the reasonable



28









 







legal, audit and other document
preparation costs incurred by the Administrative Agent; and




     (j) such other documents or items as the Administrative Agent, the Lenders or their
counsel may reasonably request.



          SECTION 3.02. Conditions to All Borrowings. The obligation of each Lender to make an
Advance on the occasion of each Borrowing is subject to the satisfaction of the following
conditions:





     (a) receipt by the Administrative Agent of a Notice of Borrowing as required by Section
2.02;




     (b) receipt by the Administrative Agent of such documentation as the Administrative
Agent shall reasonably require (including, without limitation, certificate(s) from the
Borrower and the Securities Intermediary (as defined in the Security Agreement)) confirming
that (i) the Borrower is in compliance with the BB&T Collateral Coverage Ratio requirements
set forth in this Section 3.02, and (ii) after giving effect to such Borrowing and the
application of the proceeds thereof, the Borrower shall be in compliance with the BB&T
Collateral Coverage Ratio requirements set forth in Section 5.03;




     (c) the fact that, immediately before and after such Borrowing, no Default shall have
occurred and be continuing;




     (d) the Borrower shall have provided sufficient BB&T Collateral (after giving effect to
such Borrowing and the application of the proceeds thereof) such that the BB&T Collateral
Coverage Ratio (after giving effect to such Borrowing and the application of the proceeds
thereof) is at least 1.01 to 1.00 if all Collateral is cash or Short Term Treasury
Securities, or, if any Collateral is not cash or Short Term Treasury Securities, the
Borrower shall have provided sufficient BB&T Collateral such that the BB&T
Collateral Coverage Ratio (after giving effect to such Borrowing and the application of
the proceeds thereof) is at least 1.10 to 1.00;




     (e) the fact that the representations and warranties of the Loan Parties contained in
Article IV of this Agreement shall be true, on and as of the date of such Borrowing; and




     (f) the fact that, immediately after such Borrowing: (A) the aggregate outstanding
principal amount of the Revolver Advances of each Lender will not exceed the amount of its
Revolver Commitment and (B) the aggregate outstanding principal amount of the Revolver
Advances will not exceed the aggregate amount of the Revolver Commitments of all of the
Lenders as of such date.



          Each Borrowing hereunder shall be deemed to be a representation and warranty by the Loan
Parties on the date of such Borrowing as to the truth and accuracy of the facts specified in
clauses (c), (d), (e) and (f) of this Section.




29









 








ARTICLE IV

REPRESENTATIONS AND WARRANTIES




          The Borrower and Guarantors represent and warrant that:




          SECTION 4.01. Existence and Power. The Borrower is a corporation, and each Guarantor
is a corporation, limited liability company or other legal entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or organization, as
the case may be, is duly qualified to transact business in every jurisdiction where, by the nature
of its business, such qualification is necessary, and has all organizational powers and all
governmental licenses, authorizations, consents and approvals required to carry on its business as
now conducted.




          SECTION 4.02. Organizational and Governmental Authorization; No Contravention. The
execution, delivery and performance by each Loan Party of this Agreement, the Notes, the Collateral
Documents and the other Loan Documents to which such Loan Party is a party (i) are within such Loan
Party’s organizational powers, (ii) have been duly authorized by all necessary Organizational
Action, (iii) require no action by or in respect of, or filing with, any Governmental Authority
(iv) do not contravene, or constitute a default under, any provision of applicable law or
regulation or of the Organizational Documents and Operating Documents of such Loan Party or of any
agreement, judgment, injunction, order, decree or other instrument binding upon such Loan Party or
any of its Subsidiaries, and (v) do not result in the creation or imposition of any Lien on any
asset of such Loan Party or any of its Subsidiaries.




          SECTION 4.03. Binding Effect. This Agreement constitutes a valid and binding
agreement of the Loan Parties enforceable in accordance with its terms, and the Notes, the
Collateral Documents and the other Loan Documents, when executed and delivered in accordance with
this Agreement, will constitute valid and binding obligations of the Loan Parties party to such
Loan Document enforceable in accordance with their respective terms, provided
that the enforceability hereof and thereof is subject in each case to general principles of
equity and to Bankruptcy, insolvency and similar laws affecting the enforcement of creditors’
rights generally.




          SECTION 4.04. Financial Information.





     (a) The audited consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of October 31, 2007 and the related consolidated statements of income,
shareholders’ equity and cash flows for the Fiscal Year then ended, copies of which have
been delivered to the Administrative Agent for delivery to each of the Lenders, and the
unaudited consolidated financial statements of the Borrower and its Consolidated
Subsidiaries for the interim period ended January 31, 2008, copies of which have been
delivered to each of the Lenders, fairly present, in conformity with GAAP, the consolidated
financial position of the Borrower and its Consolidated Subsidiaries as of such dates and
their consolidated results of operations and cash flows for such periods stated.



30









 






     (b) Since October 31, 2007 there has been no event, act, condition or occurrence having
a Material Adverse Effect.



          SECTION 4.05. Litigation. There is no action, suit or proceeding pending, or to the
knowledge of the Loan Parties threatened, against or affecting the Loan Parties or any of their
respective Subsidiaries before any court or arbitrator or any Governmental Authority which in any
manner draws into question the validity or enforceability of, or could impair the ability of the
Loan Parties to perform their respective obligations under, this Agreement, the Notes, the
Collateral Documents or any of the other Loan Documents.




          SECTION 4.06. Compliance with ERISA.





     (a) The Loan Parties and each member of the Controlled Group have fulfilled their
obligations under the minimum funding standards of ERISA and the Code with respect to each
Plan and are in compliance with the applicable provisions of ERISA and the Code, and have
not incurred any liability to the PBGC or a Plan under Title IV of ERISA.




     (b) Neither the Loan Parties nor any member of the Controlled Group is or ever has been
obligated to contribute to any Multiemployer Plan.




     (c) The assets of the Loan Parties or any Subsidiary of any Loan Party do not and will
not constitute “plan assets,” within the meaning of ERISA, the Code and the respective
regulations promulgated thereunder. The execution, delivery and performance of this
Agreement, and the borrowing and repayment of amounts hereunder, do not and will not
constitute “prohibited transactions” under ERISA or the Code.



          SECTION 4.07. Taxes. There have been filed on behalf of the Loan Parties and their
respective Subsidiaries all Federal, state and local income, excise, property and other tax returns
which are required to be filed by them and all taxes due pursuant to such returns or
pursuant to any assessment received by or on behalf of the Loan Parties or any Subsidiary have
been paid. The charges, accruals and reserves on the books of the Loan Parties and their
respective Subsidiaries in respect of taxes or other governmental charges are, in the opinion of
the Loan Parties, adequate.




          SECTION 4.08. Subsidiaries. Each of the Subsidiaries is a corporation, a limited
liability company or other legal entity, duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, is duly qualified to transact business in every
jurisdiction where, by the nature of its business, such qualification is necessary, and has all
organizational powers and all governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted. No Loan Party has any Subsidiaries except
those Subsidiaries listed on Schedule 4.08 and as set forth in any Compliance Certificate
provided to the Administrative Agent and Lenders pursuant to Section 5.01(c) after the Closing
Date, which accurately sets forth each such Subsidiary’s complete name and jurisdiction of
organization.




31









 








          SECTION 4.09. Investment Company Act, Etc. Neither the Borrower nor any of its
Affiliates is a “holding company” as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 1935, as amended. The Borrower has elected to be a “business development
company” as defined in Section 2(a)(48) of the Investment Company Act and is subject to regulation
as such under the Investment Company Act including Section 18, as modified by Section 61, of the
Investment Company Act.




          SECTION 4.10. All Consents Required. All approvals, authorizations, consents, orders
or other actions of any Person or of any Governmental Authority (if any) required in connection
with the due execution, delivery and performance by the Loan Parties of this Agreement and any Loan
Document to which any Loan Party is a party, have been obtained.




          SECTION 4.11. Ownership of Property. Each of the Loan Parties and their respective
Subsidiaries has title or the contractual right to possess its properties sufficient for the
conduct of its business.




          SECTION 4.12. No Default. No Loan Party nor any of their respective Subsidiaries is
in default under or with respect to any agreement, instrument or undertaking to which it is a party
or by which it or any of its property is bound. No Default or Event of Default has occurred and is
continuing.




          SECTION 4.13. Intentionally deleted.




          SECTION 4.14. Environmental Matters.





     (a) No Loan Party nor any Subsidiary of a Loan Party is subject to any Environmental
Liability which would reasonably be expected to have a Material Adverse Effect and no Loan
Party nor any Subsidiary of a Loan Party has been designated as a potentially responsible
party under CERCLA. None of the Properties has been identified
on any current or proposed (i) National Priorities List under 40
C.F.R. § 300, 
 (ii) CERCLIS list  or (iii) any list arising from a state statute similar to CERCLA.




     (b) No Hazardous Materials have been or are being used, produced, manufactured,
processed, treated, recycled, generated, stored, disposed of, managed or otherwise handled
at, or shipped or transported to or from the Properties or are otherwise present at, on, in
or under the Properties, or, to the best of the knowledge of the Loan Parties, at or from
any adjacent site or facility, except for Hazardous Materials, such as cleaning solvents,
pesticides and other materials used, produced, manufactured, processed, treated, recycled,
generated, stored, disposed of, and managed or otherwise handled in minimal amounts in the
ordinary course of business in compliance with all applicable Environmental Requirements.




     (c) The Loan Parties, and each of their respective Subsidiaries, has procured all
Environmental Authorizations necessary for the conduct of the business contemplated on such
Property, and is in compliance in all material respects with all Environmental Requirements
in connection with the operation of the Properties and the Loan Party’s, and each of their
respective Subsidiary’s, respective businesses.



32









 





          SECTION 4.15. Compliance with Laws. Each Loan Party and each Subsidiary of a Loan
Party is in compliance with all applicable laws, including, without limitation, all Environmental
Laws and all regulations and requirements of the Securities and Exchange Commission and the
National Association of Securities Dealers, Inc. (including with respect to timely filing of
reports).




          SECTION 4.16. Capital Securities. All Capital Securities, debentures, bonds, notes
and all other securities of each Loan Party and their respective Subsidiaries presently issued and
outstanding are validly and properly issued in accordance with all applicable laws, including, but
not limited to, the “Blue Sky” laws of all applicable states and the federal securities laws.
Except for the pledge under the Guggenheim Credit Facility, the issued shares of Capital Securities
of each of the Loan Party’s respective Subsidiaries are owned by the Loan Parties free and clear of
any Lien or adverse claim.




          SECTION 4.17. Margin Stock. No Loan Party nor any of their respective Subsidiaries is
engaged principally, or as one of its important activities, in the business of purchasing or
carrying any Margin Stock, and no part of the proceeds of any Advance will be used to purchase or
carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any
Margin Stock, or be used for any purpose which violates, or which is inconsistent with, the
provisions of Regulation X of the Board of Governors of the Federal Reserve System. Following the
application of the proceeds from each Advance, not more than 25% of the value of the assets, either
of the Borrower only or of the Borrower and its Subsidiaries on a consolidated basis, will be
“Margin Stock.”




          SECTION 4.18. Insolvency. After giving effect to the execution and delivery of the
Loan Documents and the making of the Advances under this Agreement, no Loan Party will be
“insolvent,” within the meaning of such term as defined in § 101 of Title 11 of the United
States Code or Section 2 of the Uniform Fraudulent Transfer Act, or any other applicable state
law pertaining to fraudulent transfers, as each may be 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.




          SECTION 4.19. Security Documents. Upon execution by the Borrower, the Security
Agreement shall be effective to create in favor of the Administrative Agent, for the ratable
benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral
(as defined in the Security Agreement) and, upon filing of one or more Uniform Commercial Code
financing statements in the appropriate jurisdictions and execution and delivery of control
agreements in the form attached hereto as Exhibit H, Administrative Agent shall have a fully
perfected first priority Lien on, and security interest in, all right, title and interest of the
Borrower in such Collateral and the proceeds thereof that can be perfected upon filing of one or
more Uniform Commercial Code financing statements and execution and delivery of such control
agreements, in each case prior and superior in any right to any other Person.




          SECTION 4.20. Labor Matters. There are no significant strikes, lockouts, slowdowns or
other labor disputes against any Loan Party or any Subsidiary of any Loan Party pending or, to the
knowledge of any Loan Party, threatened. The hours worked by and payment





33











 




made to employees of the
Loan Parties and each Subsidiary of any Loan Party have been in material compliance with the Fair
Labor Standards Act and any other applicable federal, state or foreign law dealing with such
matters.




          SECTION 4.21. Patents, Trademarks, Etc. The Loan Parties and their respective
Subsidiaries own, or are licensed to use, all patents, trademarks, trade names, copyrights,
technology, know-how and processes, service marks and rights with respect to the foregoing that are
material to the businesses, assets, operations, properties or condition (financial or otherwise) of
the Loan Parties and their respective Subsidiaries taken as a whole. The use of such patents,
trademarks, trade names, copyrights, technology, know-how, processes and rights with respect to the
foregoing by the Loan Parties and their respective Subsidiaries, does not infringe on the rights of
any Person.




          SECTION 4.22. Intentionally deleted.




          SECTION 4.23. Anti-Terrorism Laws. None of the Loan Parties, nor any of their
respective Subsidiaries, is in violation of any laws relating to terrorism or money laundering,
including, without limitation, the Patriot Act.




          SECTION 4.24. Ownership Structure. As of the Closing Date, Schedule 4.24 is a
complete and correct list of all Subsidiaries of the Borrower setting forth for each such
Subsidiary, (i) the jurisdiction of organization of such Subsidiary, (ii) each Person holding any
Capital Securities in such Subsidiary, (iii) the nature of the Capital Securities held by each such
Person, and (iv) the percentage of ownership of such Subsidiary represented by such Capital
Securities. Except as disclosed in such Schedule, as of the Closing Date (i) the Borrower and its
Subsidiaries owns, free and clear of all Liens and has the unencumbered right to vote, all
outstanding Capital Securities in each Person shown to be held by it on such Schedule, (ii)
all of the issued and outstanding Capital Securities of each Person is validly issued, fully paid
and nonassessable and (iii) there are no outstanding subscriptions, options, warrants, commitments,
preemptive rights or agreements of any kind (including, without limitation, any stockholders’ or
voting trust agreements) for the issuance, sale, registration or voting of, or outstanding
securities convertible into, any additional Capital Securities of any type in, any such Person.




          SECTION 4.25. Reports Accurate; Disclosure. All information, exhibits, financial
statements, documents, books, records or reports furnished or to be furnished by the Loan Parties
to the Administrative Agent or any Lender in connection with this Agreement or any Loan Document,
including without limitation all reports furnished pursuant to Section 4.04, are true, complete and
accurate in all material respects; it being recognized by the Administrative Agent and the Lenders
that the projections and forecasts provided by Borrower in good faith and based upon reasonable
assumptions are not to be viewed as facts and that actual results during the period or periods
covered by any such projections and forecasts may differ from the projected or forecasted results.
Neither this Agreement, nor any Loan Document, nor any agreement, document, certificate or
statement furnished to the Administrative Agent or the Lenders in connection with the transactions
contemplated hereby contains any untrue statement of material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not misleading in light
of the circumstances under which they were made. There is no fact known to any Loan Party which
materially and adversely affects the



34









 






Borrower and its Subsidiaries, or in the future is reasonably
likely to have a Material Adverse Effect.




          SECTION 4.26. Location of Offices. The Borrower’s name is MVC Capital, Inc. The
location of Borrower (within the meaning of Article 9 of the Uniform Commercial Code) is Delaware.
The Borrower has not changed its name, identity, structure, existence or state of formation,
whether by amendment of its Organizational Documents, by reorganization or otherwise, or has not
changed its location (within the meaning of Article 9 of the Uniform Commercial Code) within the
four (4) months preceding the Closing Date or any subsequent date on which this representation is
made.




          SECTION 4.27. Affiliate Transactions. Except as permitted by Section 5.24, neither
the Borrower nor any Subsidiary nor any other Loan Party is a party to or bound by any agreement or
arrangement (whether oral or written) to which any Affiliate of the Borrower, any Subsidiary or any
other Loan Party is a party.




          SECTION 4.28. Intentionally deleted.




          SECTION 4.29. Survival of Representations and Warranties, Etc. All statements
contained in any certificate, financial statement or other instrument delivered by or on behalf of
the Borrower, any Subsidiary or any other Loan Party to the Administrative Agent or any Lender
pursuant to or in connection with this Agreement or any of the other Loan Documents (including, but
not limited to, any such statement made in or in connection with any amendment thereto or any
statement contained in any certificate, financial statement or other instrument delivered by or on
behalf of any Loan Party prior to the Closing Date and delivered to the Administrative Agent or any
Lender in connection with the underwriting or closing of the
transactions contemplated hereby) shall constitute representations and warranties made by the
Loan Parties in favor of the Administrative Agent and each of the Lenders under this Agreement.
All such representations and warranties shall survive the effectiveness of this Agreement, the
execution and delivery of the Loan Documents and the making of the Advances.




          SECTION 4.30. Intentionally deleted.




          SECTION 4.31. No Default or Event of Default. No event has occurred and is continuing
and no condition exists, or would result from any Advance or from the application of the proceeds
therefrom, which constitutes or would reasonably be expected to constitute a Default or Event of
Default.




          SECTION 4.32. USA PATRIOT Act; OFAC.





     (a) No Loan Party nor any Affiliate of a Loan Party is (1) a Person that resides or has
a place of business in a country or territory named on such lists or which is designated as
a Non-Cooperative Jurisdiction by the Financial Action Task Force on Money Laundering
(“FATF”), or whose subscription funds are transferred from or through such a jurisdiction;
(2) a “Foreign Shell Bank” within the meaning of the USA PATRIOT Act, i.e., a foreign lender
that does not have a physical presence in any country and that is not affiliated with a
Lender that has a physical presence and an



35









 







acceptable level of regulation and supervision;
or (3) a person or entity that resides in or is organized under the laws of a jurisdiction
designated by the United States Secretary of the Treasury under Section 311 or 312 of the
USA PATRIOT Act as warranting special measures due to money laundering concerns.




     (b) No Loan Party or any Affiliate of a Loan Party (i) is a Sanctioned Entity, (ii) has
a more than 10% of its assets located in a Sanctioned Entities, or (iii) derives more than
10% of its operating income from investments in, or transactions with Sanctioned Entities.
The proceeds of any Advance will not be used and have not been used to fund any operations
in, finance any investments or activities in or make any payments to, a Sanctioned Entity.
No Loan Party or any Affiliate of a Loan Party are in violation of and shall not violate any
of the country or list based economic and trade sanctions administered and enforced by OFAC
that are described or referenced at http://www.ustreas.gov/offices/enforcement/ofac/ or as
otherwise published from time to time.



ARTICLE V

COVENANTS




          The Borrower and Guarantors agree, jointly and severally, that, so long as any Lender has any
Revolver Commitment hereunder or any amount payable under any Note remains unpaid:




          SECTION 5.01. Information. The Borrower will deliver to the Administrative Agent, who
will then promptly deliver to each of the Lenders:





     (a) as soon as available and in any event within 90 days after the end of each Fiscal
Year, a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of
the end of such Fiscal Year and the related consolidated statements of income, shareholders’
equity and cash flows for such Fiscal Year, setting forth in each case in comparative form
the figures for the previous Fiscal Year, all certified by Ernst & Young LLP or other
independent public accountants reasonably acceptable to the Administrative Agent, with such
certification to be free of exceptions and qualifications not acceptable to the Required
Lenders;




     (b) as soon as available and in any event within 45 days after the end of each of the
first three Fiscal Quarters of each Fiscal Year, consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries as of the end of such Fiscal Quarter and the related
statement of income and statement of cash flows for such Fiscal Quarter and for the portion
of the Fiscal Year ended at the end of such Fiscal Quarter, setting forth in each case in
comparative form the figures for the corresponding Fiscal Quarter and the corresponding
portion of the previous Fiscal Year, all certified (subject to normal year-end adjustments)
as to fairness of presentation, GAAP and consistency by the chief financial officer of the
Borrower;




     (c) simultaneously with the delivery of each set of financial statements referred to in
clauses (a) and (b) above, a certificate, substantially in the form of



36









 







Exhibit M and with
compliance calculations in form and content satisfactory to the Administrative Agent (a
“Compliance Certificate”), of the chief financial officers or authorized officers of the
Borrower (i) setting forth in reasonable detail the calculations required to establish
whether the Loan Parties were in compliance with the requirements of Sections 5.03, 5.05 and
5.07 on the date of such financial statements, (ii) setting forth the identities of the
respective Subsidiaries on the date of such financial statements, and (iii) stating whether
any Default exists on the date of such certificate and, if any Default then exists, setting
forth the details thereof and the action which the Loan Parties are taking or propose to
take with respect thereto;




     (d) within 5 Domestic Business Days after the Borrower becomes aware of the occurrence
of any Default, a certificate of the chief financial officers or authorized officers of the
Borrower setting forth the details thereof and the action which the Borrower is taking or
proposes to take with respect thereto;




     (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) if and when the Borrower or any member of the Controlled Group (i) gives or is
required to give notice to the PBGC of any “reportable event” (as defined in Section 4043 of
ERISA) with respect to any Plan which might constitute grounds for a termination of such
Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such reportable event, a copy
of the notice of such reportable event given or required to be given to the PBGC;
(ii) receives notice of complete or partial withdrawal liability under Title IV of ERISA, a
copy of such notice; or (iii) receives notice from the PBGC under Title IV of ERISA of an
intent to terminate or appoint a trustee to administer any Plan, a copy of such notice;




     (g) promptly after the Borrower knows of the commencement thereof, notice of any
litigation, dispute or proceeding involving a claim against a Loan Party and/or any
Subsidiary of a Loan Party for $1,000,000 or more in excess of amounts covered in full by
applicable insurance; and




     (h) from time to time such additional information regarding the financial position or
business of the Borrower, its Subsidiaries, and each Loan Party as the Administrative Agent,
at the request of any Lender, may reasonably request.



          SECTION 5.02. Inspection of Property, Books and Records. The Borrower will (i) keep,
and will cause each of its Subsidiaries to keep, proper books of record and account in which full,
true and correct entries in conformity with GAAP shall be made of all dealings and transactions in
relation to its business and activities; (ii) permit, and will cause each Subsidiary of the
Borrower and each Loan Party to permit, with reasonable prior notice which notice shall not be
required in the case of an emergency, the Administrative Agent or its designee, at the expense of
the Borrower and Loan Parties, to examine and make abstracts from any of their



37









 






respective books and
records and to discuss their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants, but no more frequently than once each
Fiscal Quarter unless a Default shall have occurred and be continuing. The Loan Parties agree to
cooperate and assist in such visits and inspections.




          SECTION 5.03. BB&T Collateral Coverage Ratio. If all Collateral is cash or Short Term
Treasury Securities, the Borrower shall maintain at all times a BB&T Collateral Coverage Ratio of
at least 1.01:1.00. If any Collateral is not cash or Short Term Treasury Securities, the Borrower
shall maintain at all times a BB&T Collateral Coverage Ratio of at least 1.05:1.00.




          SECTION 5.04. Sale/Leasebacks. The Loan Parties shall not, nor shall they permit any
Subsidiary to, enter into any Sale/Leaseback Transaction




          SECTION 5.05. Minimum Consolidated Shareholders Equity. Consolidated Shareholders
Equity shall at no time be less than 80% of the Consolidated Shareholders Equity on January 31,
2008.




          SECTION 5.06. Intentionally deleted.




          SECTION 5.07. Interest Coverage Ratio. The Borrower will maintain, as of the end of
each Fiscal Quarter, commencing with the Fiscal Quarter ending July 31, 2008, an Interest Coverage
Ratio of not less than 2.25:1.00.




          SECTION 5.08. 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 5.09. Intentionally deleted.




          SECTION 5.10. Intentionally deleted.




          SECTION 5.11. Negative Pledge. No Loan Party nor any Subsidiary of a Loan Party will
create, assume or suffer to exist any Lien on any BB&T Collateral now owned or hereafter acquired
by it.




          SECTION 5.12. Maintenance of Existence, etc. Each Loan Party shall, and shall cause
each Subsidiary of a Loan Party to, maintain its organizational existence and carry on its business
in substantially the same manner and in substantially the same line or lines of business or line or
lines of business reasonably related to the business now carried on and maintained.




          SECTION 5.13. Dissolution. No Loan Party nor any Subsidiary of a Loan Party shall
suffer or permit dissolution or liquidation either in whole or in part or redeem or retire any
shares of its own Capital Securities or that of any Subsidiary of a Loan Party, except through
corporate or company reorganization to the extent permitted by Section 5.14.




38









 








          SECTION 5.14. Consolidations, Mergers and Sales of Assets. No Loan Party will, nor
will it permit any Subsidiary of a Loan Party to, consolidate or merge with or into, or sell, lease
or otherwise transfer all or any substantial part of its assets to, any other Person, or
discontinue or eliminate any business line or segment, provided that (a) a Loan Party may merge
with another Person if (i) such Person was organized under the laws of the United States of America
or one of its states, (ii) the Loan Party is the Person surviving such merger, (iii) immediately
after giving effect to such merger, no Default shall have occurred and be continuing, and (iv) if
the Borrower merges with another Loan Party, the Borrower is the Person surviving such merger; (b)
Subsidiaries of a Loan Party (excluding Loan Parties) may merge with one another; and (c) the
foregoing limitation on the sale, lease or other transfer of assets and on the discontinuation or
elimination of a business line or segment shall not prohibit a transfer of assets or the
discontinuance or elimination of a business line or segment (in a single transaction or in a series
of related transactions) if, after giving effect thereto the Borrower and its Subsidiaries shall be
in compliance on a pro forma basis, after giving effect to such transfer, discontinuation or
elimination, with the terms and conditions of this Agreement.




          SECTION 5.15. Use of Proceeds. No portion of the proceeds of any Advance will be used
by the Borrower or any Subsidiary (i) in connection with, either directly or indirectly, any tender
offer for, or other acquisition of, stock of any corporation with a view towards obtaining control
of such other corporation, (ii) directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any Margin Stock, or (iii) for any purpose in
violation of any applicable law or regulation. Except as otherwise provided herein, the proceeds
of the Revolver Advances shall be used to: (i) support portfolio
growth and preserve future investment flexibility permitted under the Code (including, without
limitation, the purchase of Treasury Securities) and (ii) to pay fees and expenses incurred in
connection with this Agreement. No part of the proceeds of any Advance 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 5.16. Compliance with Laws; Payment of Taxes. Each Loan Party will, and will
cause each Subsidiary of a Loan Party and each member of the Controlled Group to, comply in all
material respects with applicable laws (including but not limited to ERISA and the Patriot Act),
regulations and similar requirements of governmental authorities (including but not limited to
PBGC), except where the necessity of such compliance is being contested in good faith through
appropriate proceedings diligently pursued. Each Loan Party will, and will cause each Subsidiary
of a Loan Party to, pay promptly when due all taxes, assessments, governmental charges, claims for
labor, supplies, rent and other obligations which, if unpaid, might become a lien against the
property of a Loan Party or any Subsidiary of a Loan Party, except liabilities being contested in
good faith by appropriate proceedings diligently pursued and against which, if requested by the
Administrative Agent, the Borrower shall have set up reserves in accordance with GAAP.




          SECTION 5.17. Insurance. Each Loan Party will maintain, and will cause each
Subsidiary of a Loan Party to maintain (either in the name of such Loan Party or in such
Subsidiary’s own name), with financially sound and reputable insurance companies, insurance on all
its Property in at least such amounts and against at least such risks as are usually insured



39









 






against in the same general area by companies of established repute engaged in the same or similar
business. Upon request, the Loan Parties shall promptly furnish the Administrative Agent copies of
all such insurance policies or certificates evidencing such insurance and such other documents and
evidence of insurance as the Administrative Agent shall request.




          SECTION 5.18. Change in Fiscal Year. No Loan Party will make any significant change
in accounting treatment or reporting practices, except as required or permitted by GAAP, or change
its Fiscal Year (except to conform with the Fiscal Year of the Borrower) without the consent of the
Required Lenders.




          SECTION 5.19. Maintenance of Property. Each Loan Party shall, and shall cause each
Subsidiary of a Loan Party to, maintain all of its properties and assets in good condition, repair
and working order, ordinary wear and tear excepted.




          SECTION 5.20. Environmental Notices. Each Loan Party shall furnish to the Lenders and
the Administrative Agent prompt written notice of all Environmental Liabilities, pending,
threatened or anticipated Environmental Proceedings, Environmental Notices, Environmental Judgments
and Orders, and Environmental Releases at, on, in, under or in any way affecting the Properties or
any adjacent property, and all facts, events, or conditions that could lead to any of the
foregoing.




          SECTION 5.21. Environmental Matters. No Loan Party or any Subsidiary of a Loan Party
will, nor will any Loan Party permit any Third Party to, use, produce, manufacture,
process, treat, recycle, generate, store, dispose of, manage at, or otherwise handle or ship
or transport to or from the Properties any Hazardous Materials except for Hazardous Materials such
as cleaning solvents, pesticides and other similar materials used, produced, manufactured,
processed, treated, recycled, generated, stored, disposed, managed or otherwise handled in minimal
amounts in the ordinary course of business in compliance with all applicable Environmental
Requirements.




          SECTION 5.22. Environmental Release. Each Loan Party agrees that upon the occurrence
of an Environmental Release at, under or on any of the Properties it will act immediately to
investigate the extent of, and to take appropriate remedial action to eliminate, such Environmental
Release, whether or not ordered or otherwise directed to do so by any Environmental Authority.




          SECTION 5.23. Intentionally deleted.




          SECTION 5.24. Transactions with Affiliates. No Loan Party nor any Subsidiary of a
Loan Party shall enter into, or be a party to, any transaction with any Affiliate of a Loan Party
or such Subsidiary (which Affiliate is not a Loan Party or a Subsidiary of a Loan Party), except as
permitted by law and pursuant to reasonable terms which are no less favorable to the Loan Party or
such Subsidiary than would be obtained in a comparable arm’s length transaction with a Person which
is not an Affiliate.




          SECTION 5.25. Joinder of Subsidiaries.



40









 








     (a) The Loan Parties shall cause any Person which becomes a Subsidiary of a Loan Party
after the Closing Date to become a party to, and agree to be bound by the terms of, this
Agreement and the other Loan Documents pursuant to a Joinder Agreement, in the form attached
hereto as Exhibit D satisfactory to the Administrative Agent in all respects and executed
and delivered to the Administrative Agent within ten (10) Domestic Business Days after the
day on which such Person became a Subsidiary. The Loan Parties shall also cause the items
specified in Section 3.01(c), (e), and (j) to be delivered to the Administrative Agent
concurrently with the instrument referred to above, modified appropriately to refer to such
instrument and such Subsidiary.




     (b) No Loan Party shall create, acquire or permit to exist any Foreign Subsidiary.




     (c) Once any Subsidiary becomes a party to this Agreement in accordance with Section
5.25(a), such Subsidiary (including, without limitation, all Initial Guarantors) thereafter
shall remain a party to this Agreement, even if such Subsidiary ceases to be a Subsidiary;
provided that if a Subsidiary ceases to be a Subsidiary of the Borrower as a result of the
Borrower’s transfer or sale of one hundred percent (100%) of the capital stock of such
Subsidiary in accordance with and to the extent permitted by the terms of Section 5.14, the
Administrative Agent and the Lenders agree to release such Subsidiary from this Agreement.



          SECTION 5.26. Intentionally deleted.




          SECTION 5.27. Partnerships and Joint Ventures. No Loan Party shall become a general
partner in any general or limited partnership or a joint venturer in any joint venture.




          SECTION 5.28. Intentionally deleted.




          SECTION 5.29. Intentionally deleted.




          SECTION 5.30. Modifications of Organizational Documents. The Borrower shall not, and
shall not permit any Loan Party or other Subsidiary to, amend, supplement, restate or otherwise
modify its Organizational Documents or Operating Documents or other applicable document if such
amendment, supplement, restatement or other modification could reasonably be expected to have a
Material Adverse Effect.




          SECTION 5.31. ERISA Exemptions. The Loan Parties shall not permit any of their
respective assets to become or be deemed to be “plan assets” within the meaning of ERISA, the Code
and the respective regulations promulgated thereunder.




          SECTION 5.32. Hedging Transactions. The Loan Parties will not, and will not permit
any of their 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 Loan
Parties are exposed in the conduct of their business or the management of their 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



41









 






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 any Loan
Party 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 Debt or (ii) as a result of changes in the market value of any
common stock or any Debt) is not a Hedging Transaction entered into in the ordinary course of
business to hedge or mitigate risks.




ARTICLE VI

DEFAULTS




          SECTION 6.01. Events of Default. If one or more of the following events (“Events of
Default”) shall have occurred and be continuing:





     (a) the Borrower shall fail to pay when due any principal of any Advance (including,
without limitation, any Advance or portion thereof to be repaid pursuant to Section 2.11) or
shall fail to pay any interest on any Advance within three Domestic Business Days after such
interest shall become due, or any Loan Party shall fail to pay any fee or other amount
payable hereunder within three Domestic Business Days after such fee or other amount becomes
due; or




     (b) any Loan Party shall fail to observe or perform any covenant contained in
Sections 5.02(ii), 5.03 to 5.05, 5.07, 5.08, 5.11, 5.12, 5.13, 5.14, 5.15, 5.25 or 5.30; or




     (c) any Loan Party shall fail to observe or perform any covenant or agreement contained
or incorporated by reference in this Agreement (other than those covered by clause (a) or
(b) above or clauses (n) or (p) below); provided that such failure continues for thirty days
after the earlier of (i) the first day on which any Loan Party has knowledge of such failure
or (ii) written notice thereof has been given to the Borrower by the Administrative Agent at
the request of any Lender; or




     (d) any representation, warranty, certification or statement made or deemed made by the
Loan Parties in Article IV of this Agreement or in any financial statement, material
certificate or other material document or report delivered pursuant to this Agreement shall
prove to have been untrue or misleading in any material respect when made (or deemed made);
or



42









 






     (e) any Loan Party or any Subsidiary of a Loan Party shall fail to make any payment in
respect of Debt (other than the Notes) having an aggregate principal amount in excess of
$500,000 after expiration of any applicable cure or grace period; or




     (f) any event or condition shall occur which (i) results in the acceleration of the
maturity of Debt outstanding of any Loan Party or any Subsidiary of a Loan Party in an
aggregate principal amount in excess of $500,000 or the mandatory prepayment or purchase of
such Debt by any Loan Party (or its designee) or such Subsidiary of a Loan Party (or its
designee) prior to the scheduled maturity thereof, or (ii) enables (or, with the giving of
notice or lapse of time or both, would enable) the holders of such Debt (other than Debt
covered by clause (t) below) or commitment to provide such Debt or any Person acting on such
holders’ behalf to accelerate the maturity thereof, terminate any such commitment or require
the mandatory prepayment or purchase thereof prior to the scheduled maturity thereof,
without regard to whether such holders or other Person shall have exercised or waived their
right to do so; or




     (g) any Loan Party or any Subsidiary of a Loan Party shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with respect to itself
or its debts under any Bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator, administrator,
custodian or other similar official of it or any substantial part of its property, or shall
consent to any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or shall fail generally,
or shall admit in writing its inability, to pay its debts as they become due, or shall take
any corporate action to authorize any of the foregoing; or




     (h) an involuntary case or other proceeding shall be commenced against any Loan Party
or any Subsidiary of a Loan Party seeking liquidation, reorganization or other relief with
respect to it or its debts under any Bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver, liquidator,
administrator, custodian or other similar official of it or any substantial part of its
property, and such involuntary case or other proceeding shall remain undismissed and
unstayed for a period of 60 days; or an order for relief shall be entered against any Loan
Party or any Subsidiary of a Loan Party under the federal Bankruptcy laws as now or
hereafter in effect; or




     (i) any Loan Party or any member of the Controlled Group shall fail to pay when due any
material amount which it shall have become liable to pay to the PBGC or to a Plan under
Title IV of ERISA; or notice of intent to terminate a Plan or Plans shall be filed under
Title IV of ERISA by any Loan Party, any member of the Controlled Group, any plan
administrator or any combination of the foregoing; or the PBGC shall institute proceedings
under Title IV of ERISA to terminate or to cause a trustee to be appointed to administer any
such Plan or Plans or a proceeding shall be instituted by a fiduciary of any such Plan or
Plans to enforce Section 515 or 4219(c)(5) of ERISA and such proceeding shall not have been
dismissed within 30 days thereafter; or a condition



43









 







shall exist by reason of which the PBGC
would be entitled to obtain a decree adjudicating that any such Plan or Plans must be
terminated; or




     (j) one or more judgments or orders for the payment of money in an aggregate amount in
excess of $500,000 shall be rendered against any Loan Party or any Subsidiary of a Loan
Party and such judgment or order shall continue unsatisfied and unstayed for a period of 30
days or any Loan Party or Subsidiary of a Loan Party shall have made payments in settlement
of any litigation or threatened proceeding in excess of $500,000; or




     (k) a federal tax lien shall be filed against any Loan Party or any Subsidiary of a
Loan Party under Section 6323 of the Code or a lien of the PBGC shall be filed against any
Loan Party or any Subsidiary of a Loan Party under Section 4068 of ERISA and in either case
such lien shall remain undischarged for a period of 30 days after the date of filing; or




     (l) a Change in Control shall occur; or




     (m) the Administrative Agent, as agent for the Secured Parties, shall fail for any
reason to have a valid first priority security interest in any of the Collateral; or




     (n) a default or event of default shall occur and be continuing under any of the
Collateral Documents or any Loan Party shall fail to observe or perform any obligation to
be observed or performed by it under any Collateral Document, and such default, event
of default or failure to perform or observe any obligation continues beyond any applicable
cure or grace period provided in such Collateral Document; or




     (o) (i) Michael Tokarz shall cease to hold the office of Chairman of the Borrower, and
such individual is not replaced as such officer by an individual reasonably satisfactory to
the Administrative Agent and Required Lenders within ninety (90) days after the date on
which such individual ceases to be such officer; or




     (p) (i) any of the Guarantors shall fail to pay when due any Guaranteed Obligations
(after giving effect to any applicable grace period) or shall fail to pay any fee or other
amount payable hereunder when due; or (ii) any Guarantor shall disaffirm, contest or deny
its obligations under Article X; or




     (q) if the Borrower at any time fails to own (directly or indirectly, through Wholly
Owned Subsidiaries) 100% of the outstanding shares of the voting stock, voting membership
interests or equivalent equity interests of each Guarantor; or




     (r) any Loan Party shall disaffirm, contest or deny its obligations under any Loan
Document; or




     (s) the occurrence of any event, act or condition which the Required Lenders determine
either does or has a reasonable probability of causing a Material Adverse Effect, or



44









 






     (t) any Loan Party shall default in any payment when due under the Guggenheim Credit
Facility, or any Loan Party shall default in the performance or observance of any other
obligation, covenant, condition or requirement of the Guggenheim Credit Facility and such
failure to perform or observe such other obligation, covenant, condition or requirement
continues unremedied for a period of ten (10) days after written notice has been given to
any Loan Party of the occurrence of such default,


then, and in every such event, the Administrative Agent shall (i) if requested by the Required
Lenders, by notice to the Borrower terminate the Revolver Commitments and they shall thereupon
terminate and (ii) if requested by the Required Lenders, by notice to the Borrower declare the
Notes (together with accrued interest thereon) and all other amounts payable hereunder and under
the other Loan Documents to be, and the Notes (together with all accrued interest thereon) and all
other amounts payable hereunder and under the other Loan Documents shall thereupon become,
immediately due and payable without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Loan Parties; provided that if any Event of Default
specified in clause (g) or (h) above occurs with respect to any Loan Party or any Subsidiary of a
Loan Party, without any notice to any Loan Party or any other act by the Administrative Agent or
the Lenders, the Revolver Commitments shall thereupon automatically terminate and the Notes
(together with accrued interest thereon) and all other amounts payable hereunder and under the
other Loan Documents shall automatically become immediately due and
payable without presentment, demand, protest or other notice of any kind, all of which are hereby
waived by the Loan Parties. Notwithstanding the foregoing, the Administrative Agent shall have
available to it all rights and remedies provided under the Loan Documents (including, without
limitation, the rights of a secured party pursuant to the Collateral Documents) and in addition
thereto, all other rights and remedies at law or equity, and the Administrative Agent shall
exercise any one or all of them at the request of the Required Lenders.




          SECTION 6.02. Notice of Default. The Administrative Agent shall give notice to the
Borrower of any Default under Section 6.01(c) promptly upon being requested to do so by any Lender
and shall thereupon notify all the Lenders thereof.




ARTICLE VII

THE ADMINISTRATIVE AGENT




          SECTION 7.01. Appointment and Authority. Each of the Lenders hereby irrevocably
appoints Branch Banking and Trust Company to act on its behalf as the Administrative Agent
hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such
actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by
the terms hereof or thereof, together with such actions and powers as are reasonably incidental
thereto. The provisions of this Article are solely for the benefit of the Administrative Agent and
the Lenders and neither the Borrower nor any other Loan Party shall have rights as a third party
beneficiary of any of such provisions.




          SECTION 7.02. Rights as a Lender. The Person serving as the Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and
may exercise the same as though it were not the Administrative Agent and the term



45









 






“Lender” or
“Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires,
include the Person serving as the Administrative Agent hereunder in its individual capacity. Such
Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or
in any other advisory capacity for and generally engage in any kind of business with the Borrower
or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent
hereunder and without any duty to account therefor to the Lenders




          SECTION 7.03. Exculpatory Provisions. The Administrative Agent shall not have any
duties or obligations except those expressly set forth herein and in the other Loan Documents.
Without limiting the generality of the foregoing, the Administrative Agent:





     (a) shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing;




     (b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly contemplated hereby
or by the other Loan Documents that the Administrative Agent is required to exercise as
directed in writing by the Required Lenders (or such other number or percentage of the
Lenders as shall be expressly provided for herein or in the other Loan Documents),
provided that the Administrative Agent shall not be required to take any
action that, in its opinion or the opinion of its counsel, may expose the
Administrative Agent to liability or that is contrary to any Loan Document or applicable
law; and




     (c) shall not, except as expressly set forth herein and in the other Loan Documents,
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 Affiliates that is communicated to or
obtained by the Person serving as 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 (i) with
the consent or at the request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be
necessary, under the circumstances as provided in Sections 9.05 and 6.01) or (ii) in the absence of
its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to
have knowledge of any Default unless and until notice describing such Default is given to the
Administrative Agent by the Borrower or a Lender.




          The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection with this Agreement or
any other Loan Document, (ii) the contents of any certificate, report or other document delivered
hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance
of any of the covenants, agreements or other terms or conditions set forth herein or therein or the
occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this
Agreement, any other Loan Document or any other agreement, instrument or document or (v) the
satisfaction of any condition set forth in Article III or elsewhere herein, other than to confirm
receipt of items expressly required to be



46









 




delivered to the Administrative Agent.



          SECTION 7.04. 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, Internet or intranet website posting or other distribution) believed by it to be genuine
and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative
Agent also may rely upon any statement made to it orally or by telephone and believed by it to have
been made by the proper Person, and shall not incur any liability for relying thereon. In
determining compliance with any condition hereunder to the making of an Advance, that by its terms
must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such
condition is satisfactory to such Lender unless the Administrative Agent shall have received notice
to the contrary from such Lender prior to the making of such Advance. The Administrative Agent may
consult with legal counsel (who may be counsel for the Borrower), independent accountants and other
experts selected by it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts.




          SECTION 7.05. Delegation of Duties. The Administrative Agent may perform any and all
of its duties and exercise its rights and powers hereunder or under any other Loan Document by or
through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent
and any such sub-agent may perform any and all of its duties and exercise its rights and powers by
or through their respective Related Parties. The exculpatory provisions of this Article shall
apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such
sub-agent, and shall apply to their respective activities in connection with the syndication of the
credit facilities provided for herein as well as activities as Administrative Agent.




          SECTION 7.06. Resignation of Administrative Agent. The Administrative Agent may at
any time give notice of its resignation to the Lenders and the Borrower. Upon receipt of any such
notice of resignation, the Required Lenders shall have the right, in consultation with the
Borrower, to appoint a successor, which shall be a bank with an office in the United States of
America, or an Affiliate of any such bank with an office in the United States of America. If no
such successor shall have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice of its resignation,
then the retiring Administrative Agent may on behalf of the Lenders, appoint a successor
Administrative Agent meeting the qualifications set forth above provided that if the Administrative
Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such
appointment, then such resignation shall nonetheless become effective in accordance with such
notice and (1) the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder and under the other Loan Documents (except that in the case of any collateral
security held by the Administrative Agent on behalf of the Lenders under any of the Loan Documents,
the retiring Administrative Agent shall continue to hold such collateral security until such time
as a successor Administrative Agent is appointed) and (2) all payments, communications and
determinations provided to be made by, to or through the Administrative Agent shall instead be made
by or to each Lender directly, until such time as



47









 






the Required Lenders appoint a successor
Administrative Agent as provided for above in this paragraph. Upon the acceptance of a successor’s
appointment as Administrative Agent hereunder, such successor shall succeed to and become vested
with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative
Agent, and the retiring Administrative Agent shall be discharged from all of its duties and
obligations hereunder or under the other Loan Documents (if not already discharged therefrom as
provided above in this paragraph). The fees payable by the Borrower to a successor Administrative
Agent shall be the same as those payable to its predecessor unless otherwise agreed between the
Borrower and such successor. After the retiring Administrative Agent’s resignation hereunder and
under the other Loan Documents, the provisions of this Article and Section 9.03 shall continue in
effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective
Related Parties in respect of any actions taken or omitted to be taken by any of them while the
retiring Administrative Agent was acting as Administrative Agent.




          SECTION 7.07. Non-Reliance on Administrative Agent and Other Lenders. Each Lender
acknowledges that it has, independently and without reliance upon the Administrative Agent or any
other Lender or any of their Related Parties and based on such documents and information as it has
deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other Lender or any of
their Related Parties and based on such documents and information as it shall from time to time
deem appropriate, continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document or any related agreement or any document furnished
hereunder or thereunder.




          SECTION 7.08. No Other Duties, etc. Anything herein to the contrary notwithstanding,
none of the Arrangers listed on the cover page hereof shall have any powers, duties or
responsibilities under this Agreement or any of the other Loan Documents, except in its capacity,
as applicable, as the Administrative Agent or a Lender hereunder.




ARTICLE VIII

CHANGE IN CIRCUMSTANCES; COMPENSATION




          SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair. If on or
prior to the first day of any Interest Period:





     (a) the Administrative Agent determines that deposits in Dollars (in the applicable
amounts) are not being offered in the relevant market for such Interest Period, or




     (b) the Required Lenders advise the Administrative Agent that the London InterBank
Offered Rate as determined by the Administrative Agent will not adequately and fairly
reflect the cost to such Lenders of funding the Euro-Dollar Advances for such Interest
Period, so as to allow them to maintain the same yield as they earned at the time this
Agreement was executed,


the Administrative Agent shall forthwith give notice thereof to the Borrower and the Lenders,


48









 






whereupon until the Administrative Agent notifies the Borrower that the circumstances giving rise
to such suspension no longer exist, the obligations of the Lenders to make Euro-Dollar Advances
specified in such notice, or to permit continuations or conversions into Euro-Dollar Loans, shall
be suspended. Unless the Borrower notifies the Administrative Agent at least 2 Euro-Dollar
Business Days before the date of any Borrowing of Euro-Dollar Loans for which a Notice of Borrowing
has previously been given, or continuation or conversion into such Euro-Dollar Loans for which a
Notice of Continuation or Conversion has previously been given, that it elects not to borrow or so
continue or convert on such date, such Borrowing shall instead be made as a Base Rate Borrowing, or
such Euro-Dollar Loan shall be converted to a Base Rate Loan.




          SECTION 8.02. Illegality. If, after the date hereof, the adoption of any applicable
law, rule, treaty or regulation, or any change in any existing or future law, rule, treaty or
regulation, or any change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or administration
thereof (any such authority, bank or agency being referred to as an “Authority” and any such event
being referred to as a “Change of Law”), or compliance by any Lender (or its Lending
Office) with any request or directive (whether or not having the force of law) of any
Authority shall make it unlawful or impossible for any Lender (or its Lending Office) to make,
maintain or fund its Euro-Dollar Advances and such Lender shall so notify the Administrative Agent,
the Administrative Agent shall forthwith give notice thereof to the other Lenders and the Borrower,
whereupon until such Lender notifies the Borrower and the Administrative Agent that the
circumstances giving rise to such suspension no longer exist, the obligation of such Lender to make
or permit continuations or conversions of Euro-Dollar Advances shall be suspended. Before giving
any notice to the Administrative Agent pursuant to this Section, such Lender shall designate a
different Lending Office if such designation will avoid the need for giving such notice and will
not, in the judgment of such Lender, be otherwise disadvantageous to such Lender. If such Lender
shall determine that it may not lawfully continue to maintain and fund any of its portion of the
outstanding Euro-Dollar Advances to maturity and shall so specify in such notice, the Borrower
shall immediately prepay in full the then outstanding principal amount of the Euro-Dollar Advances
of such Lender, together with accrued interest thereon and any amount due such Lender pursuant to
Section 8.05. Concurrently with prepaying such Euro-Dollar Advances, the Borrower shall borrow a
Base Rate Advance in an equal principal amount from such Lender (on which interest and principal
shall be payable contemporaneously with the related Euro-Dollar Advances of the other Lenders), and
such Lender shall make such a Base Rate Advance.




          SECTION 8.03. Increased Cost and Reduced Return.





     (a) If after the date hereof, a Change of Law or compliance by any Lender (or its
Lending Office) with any request or directive (whether or not having the force of law) of
any Authority:




     (i) shall subject any Lender (or its Lending Office) to any tax of any kind
whatsoever with respect to this Agreement or any Euro-Dollar Advances made by it, or
shall change the basis of taxation of payments to any Lender (or its



49









 







Lending Office)
in respect thereof (except for changes in the rate of tax on the overall net income
of such Lender or its Lending Office imposed by the jurisdiction in which such
Lender’s principal executive office or Lending Office is located); or




     (ii) shall impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement (including, without
limitation, any such requirement imposed by the Board of Governors of the Federal
Reserve System, but excluding any such requirement included in an applicable
Euro-Dollar Reserve Percentage) against assets of, deposits with or for the account
of, or credit extended or participated in by, any Lender (or its Lending Office); or




     (iii) shall impose on any Lender (or its Lending Office) or the London
interbank market any other condition, cost or expense affecting this Agreement or
Euro-Dollar Advances by such Lender or participation therein;




and the result of any of the foregoing is to increase the cost to such Lender (or its
Lending Office) of making or maintaining any Euro-Dollar Advance (or of maintaining its
obligation to make any such Advance), or to reduce the amount of any sum received or
receivable by such Lender (or its Lending Office) under this Agreement or under its Notes
with respect thereto, by an amount deemed by such Lender, in its reasonable discretion, to
be material, then, upon demand by such Lender (with a copy to the Administrative Agent), the
Borrower shall pay to such Lender such additional amount or amounts as will reasonably
compensate such Lender for such additional or increased cost or reduction suffered.




     (b) If any Lender shall have determined that after the date hereof the adoption of any
applicable law, rule or regulation regarding capital adequacy, or any change in any existing
or future law, rule or regulation, or any change in the interpretation or administration
thereof, or compliance by any Lender (or its Lending Office) with any request or directive
regarding capital adequacy (whether or not having the force of law) of any Authority, has or
would have the effect of reducing the rate of return on such Lender’s capital as a
consequence of its obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, change or compliance (taking into consideration such
Lender’s policies with respect to capital adequacy) by an amount deemed by such Lender, in
its reasonable discretion, to be material, then from time to time, upon demand by such
Lender, the Borrower shall pay to such Lender such additional amount or amounts as will
reasonably compensate such Lender for such reduction.




     (c) Each Lender will promptly notify the Borrower and the Administrative Agent of any
event of which it has knowledge, occurring after the date hereof, which will entitle such
Lender to compensation pursuant to this Section and will designate a different Lending
Office if such designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the reasonable judgment of such Lender, be



50









 







otherwise
disadvantageous to such Lender. A certificate of any Lender claiming compensation under
this Section and setting forth the additional amount or amounts to be paid to it hereunder
shall be conclusive in the absence of manifest error. In determining such amount, such
Lender may use any reasonable averaging and attribution methods.




     (d) Failure or delay on the part of any Lender to demand compensation pursuant to this
Section shall not constitute a waiver of such Lender’s right to demand such compensation,
provided that the Borrower shall not be required to compensate a Lender pursuant to
this Section for any increased costs incurred or reductions suffered more than nine months
prior to the date that such Lender notifies the Borrower of the event giving rise to such
increased costs or reductions and of such Lender’s intention to claim compensation therefor
(except that, if the event giving rise to such increased costs or reductions is retroactive,
then the nine-month period referred to above shall be extended to include the period of
retroactive effect thereof).



          SECTION 8.04. Base Rate Advances Substituted for Affected Euro-Dollar Advances. If
(i) the obligation of any Lender to make or maintain a Euro-Dollar Advance has
been suspended pursuant to Section 8.02 or (ii) any Lender has demanded compensation under
Section 8.03, and the Borrower shall, by at least 5 Euro-Dollar Business Days’ prior notice to such
Lender through the Administrative Agent, have elected that the provisions of this Section shall
apply to such Lender, then, unless and until such Lender notifies the Borrower that the
circumstances giving rise to such suspension or demand for compensation no longer apply:





     (a) all Advances which would otherwise be made by such Lender as or permitted to be
continued as or converted into Euro-Dollar Advances shall instead be made as or converted
into Base Rate Advances, (in all cases interest and principal on such Advances shall be
payable contemporaneously with the related Euro-Dollar Advances of the other Lenders), and




     (b) after its portion of the Euro-Dollar Advance has been repaid, all payments of
principal which would otherwise be applied to repay such Euro-Dollar Advance shall be
applied to repay its Base Rate Advance instead.




In the event that the Borrower shall elect that the provisions of this Section shall apply to any
Lender, the Borrower shall remain liable for, and shall pay to such Lender as provided herein, all
amounts due such Lender under Section 8.03 in respect of the period preceding the date of
conversion of such Lender’s portion of any Advance resulting from the Borrower’s election.



          SECTION 8.05 Compensation. Upon the request of any Lender, delivered to the Borrower
and the Administrative Agent, the Borrower shall pay to such Lender such amount or amounts as shall
compensate such Lender for any loss, cost or expense incurred by such Lender as a result of:





     (a) any payment or prepayment (pursuant to Sections 2.10, 2.11, 6.01, 8.02 or
otherwise) of a Euro-Dollar Advance on a date other than the last day of an Interest Period
for such Advance; or



51









 







     (b) any failure by the Borrower to prepay a Euro-Dollar Advance on the date for such
prepayment specified in the relevant notice of prepayment hereunder; or




     (c) any failure by the Borrower to borrow a Euro-Dollar Advance on the date for the
Borrowing of which such Euro-Dollar Advance is a part specified in the applicable Notice of
Borrowing delivered pursuant to Section 2.02;


such compensation to include, without limitation, an amount equal to the excess, if any, of (x) the
amount of interest which would have accrued on the amount so paid or prepaid or not prepaid or
borrowed for the period from the date of such payment, prepayment or failure to prepay or borrow to
the last day of the then current Interest Period for such Euro-Dollar Advance (or, in the case of a
failure to prepay or borrow, the Interest Period for such Euro-Dollar Advance which would have
commenced on the date of such failure to prepay or borrow) at the applicable rate of interest for
such Euro-Dollar Advance provided for herein over (y) the amount of interest (as reasonably
determined by such Lender) such Lender would have paid on deposits in Dollars
of comparable amounts having terms comparable to such period placed with it by leading lenders in
the London interbank market (if such Advance is a Euro-Dollar Advance).




ARTICLE IX

MISCELLANEOUS




          SECTION 9.01. Notices Generally.





     (a) Except in the case of notices and other communications expressly permitted to be
given by telephone (and except as provided in paragraph (b) below), all notices and other
communications provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by telecopier as
follows:




     (i) if to the Borrower or any other Loan Party, to it at MVC Capital, Inc., 287
Bowman, 2nd Floor, Purchase, New York 10577, Attention of Chief Financial
Officer (Telecopier No. 914-701-0315; Telephone No. 914-701-0310);




     (ii) if to the Administrative Agent, to Branch Banking and Trust Company at 200
West Second Street, 16th Floor, Winston-Salem, NC 27101, Attention of
Greg Drabik, Vice President (Telecopier No. 336-733-2740; Telephone No.
336-733-2730);




     (iii) if to a Lender, to it at its address (or telecopier number) set forth in
its Administrative Questionnaire.




Notices sent by hand or overnight courier service, or mailed by certified or registered
mail, shall be deemed to have been given when received; notices sent by telecopier shall be
deemed to have been given when sent (except that, if not given during normal business hours
for the recipient, shall be deemed to have been given at the opening of business on the next
business day for the recipient). Notices delivered through electronic



52









 







communications to the
extent provided in paragraph (b) below, shall be effective as provided in said
paragraph (b).




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




Unless the Administrative Agent otherwise prescribes, (i) notices and other communications
sent to an e-mail address shall be deemed received upon the sender’s
receipt of an acknowledgement from the intended recipient (such as by the “return receipt
requested” 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) Change of Address, Etc. Any party hereto may change its address or
telecopier number for notices and other communications hereunder by notice to the other
parties hereto.



          SECTION 9.02. No Waivers. No failure or delay by the Administrative Agent or any
Lender in exercising any right, power or privilege hereunder or under any Note or other Loan
Document shall operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.




          SECTION 9.03. Expenses; Indemnity; Damage Waiver.





     (a) Costs and Expenses. The Loan Parties shall, jointly and severally, pay
(i) all reasonable out-of-pocket expenses incurred by the Administrative Agent (including
the reasonable fees, charges and disbursements of counsel for the Administrative Agent), in
connection with the syndication of the credit facilities provided for herein, the
preparation, negotiation, execution, delivery and administration of this Agreement and the
other Loan Documents or any amendments, modifications or waivers of the provisions hereof or
thereof (whether or not the transactions contemplated hereby or thereby shall be
consummated), and (ii)  all out-of-pocket expenses incurred by the



53









 







Administrative Agent or
any Lender (including the fees, charges and disbursements of any counsel for the
Administrative Agent or any Lender, in connection with the enforcement or protection of its
rights (A) in connection with this Agreement and the other Loan Documents, including its
rights under this Section, or (B) in connection with the Advances made hereunder, including
all such out-of-pocket expenses incurred during any workout, restructuring or negotiations
in respect of such Advances.




     (b) Indemnification by the Borrower. The Loan Parties shall, jointly and
severally, 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, penalties, damages, liabilities and related expenses (including the fees, charges
and disbursements of any counsel for 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 Advance or the use or proposed use of the proceeds therefrom,
(iii) any actual or alleged presence or Environmental Releases 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 such 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.




     (c) Reimbursement by Lenders. To the extent that a Loan Party for any reason
fails to pay any amount required under paragraph (a) or (b) of this Section to be paid by it
to the Administrative Agent (or any sub-agent thereof), or any Related Party of any of the
foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such
sub-agent) or such Related Party, as the case may be, such Lender’s Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount, provided that the unreimbursed expense or indemnified
loss, claim, damage, liability or related expense, as the case may be, was incurred by or
asserted against the Administrative Agent (or any such sub-agent) in its capacity as such,
or against any Related Party of any of the foregoing acting for the Administrative Agent (or
any such sub-agent) in connection with such capacity. The



54









 







obligations of the Lenders under
this paragraph (c) are subject to the provisions of Section 9.13.




     (d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by
applicable law, the Loan Parties shall not assert, and hereby waive, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection with, or as a
result of, this Agreement, any other Loan Document or any agreement or instrument
contemplated hereby, the transactions contemplated hereby or thereby, any Advance or the use
of the proceeds thereof. No Indemnitee referred to in paragraph (b) above shall be liable
for any damages arising from the use by unintended recipients of any information or other
materials distributed by it through telecommunications, electronic or other information
transmission systems in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby.




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



          SECTION 9.04. Setoffs; Sharing of Set-Offs; Application of Payments.





     (a) If an Event of Default shall have occurred and be continuing, each Lender and each
of their respective Affiliates is hereby authorized at any time and from time to time, to
the fullest extent permitted by applicable law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final, in whatever currency) at any time
held and other obligations (in whatever currency) at any time owing by such Lender or any
such Affiliate to or for the credit or the account of the Borrower or any other Loan Party
against any and all of the obligations of the Borrower or such Loan Party now or hereafter
existing under this Agreement or any other Loan Document to such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement or any other Loan
Document and although such obligations of the Borrower or such Loan Party may be contingent
or unmatured or are owed to a branch or office of such Lender different from the branch or
office holding such deposit or obligated on such indebtedness. The rights of each Lender
and their respective Affiliates under this Section are in addition to other rights and
remedies (including other rights of setoff) that such Lender or their respective Affiliates
may have. Each Lender agrees to notify the Borrower and the Administrative Agent promptly
after any such setoff and application, provided that the failure to give such notice
shall not affect the validity of such setoff and application.




     (b) If any Lender shall, by exercising any right of setoff or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of its Advances
or other obligations hereunder resulting in such Lender’s receiving payment of a proportion
of the aggregate amount of its Advances and accrued interest thereon or other such
obligations greater than its pro rata share thereof as provided herein, then
the Lender receiving such greater proportion shall (a) notify the Administrative Agent of
such fact, and (b) purchase (for cash at face value) participations in the Advances and such
other obligations of the other Lenders, or make such other adjustments as shall be



55









 







equitable, 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 Advances and other amounts owing them, 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
(x) any payment made by a Loan Party pursuant to and in accordance with the express
terms of this Agreement or (y) any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its
Advances to any assignee or participant, other than to the Borrower or any
Subsidiary thereof (as to which the provisions of this paragraph shall apply).




Each Loan Party 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 each Loan Party rights of setoff and
counterclaim with respect to such participation as fully as if such Lender were a direct
creditor of each Loan Party in the amount of such participation.




     (c) Prior to the occurrence of a Default, the Administrative Agent shall apply all
payments and prepayments in respect of the obligations of the Borrower under this Agreement
or any other Loan Document in such order as shall be specified by the Borrower. After the
occurrence of a Default, the Administrative Agent shall, unless otherwise specified at the
direction of the Required Lenders which direction shall be consistent with the last two
sentences of this paragraph (c), apply all payments and prepayments in respect of any
obligations of the Borrower and other Loan Parties under this Agreement or any other Loan
Document and all proceeds of collateral, if any, in the following order:




     (i) first, to pay interest on and then principal of any portion of the Advances
which the Administrative Agent may have advanced on behalf of any Lender for which
the Administrative Agent has not then been reimbursed by such Lender or the
Borrower;




     (ii) second, to pay obligations of the Borrower in respect of any fees,
expenses, reimbursements or indemnities then due to the Administrative Agent;




     (iii) third, to pay obligations of the Borrower in respect of any fees,
expenses, reimbursements or indemnities then due to the Lenders;




     (iv) fourth, to pay interest due in respect of Advances;



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     (v) fifth, to the ratable payment or prepayment of principal outstanding on
Advances in such order as the Administrative Agent may determine in its sole
discretion; and




     (vi) sixth, to the ratable payment of all other obligations of the Loan
Parties.




     (d) Unless otherwise designated (which designation shall only be applicable prior to
the occurrence of a Default) by the Borrower, all principal payments in respect of Advances
shall be applied first, to repay outstanding Base Rate Advances, and then to
repay outstanding Euro-Dollar Advances with those Advances which have earlier expiring
Interest Periods being repaid prior to those which have later expiring Interest Periods.
The order of priority set forth in clauses (i) and (ii) of this paragraph (c) and the
related provisions of this Agreement are set forth solely to determine the rights and
priorities of the Administrative Agent. The order of priority set forth in clauses
(iii)
through (vi) of this paragraph (c) may at any time and from time to time be
changed by the Required Lenders without necessity of notice to or consent of or approval by
the Borrower, or any other Person. The order of priority set forth in clauses (i)
through (ii) of this paragraph (c) may be changed only with the prior written
consent of the Administrative Agent.



          SECTION 9.05. Amendments and Waivers.





     (a) Any provision of this Agreement, the Notes or any other Loan Documents may be
amended or waived if, but only if, such amendment or waiver is in writing and is signed by
the Borrower and the Required Lenders (and, if the rights or duties of the Administrative
Agent are affected thereby, by the Administrative Agent); provided that no such
amendment or waiver shall, unless signed by all the Lenders, (i) increase the Revolver
Commitment of any Lender or subject any Lender to any additional obligation, (ii) reduce the
principal of or decrease the rate of interest on any Advance or decrease any fees hereunder,
(iii) defer the date fixed for any payment of principal of or interest on any Advance or any
fees hereunder, (iv) reduce the amount of principal, decrease the amount of interest or
decrease the amount of fees due on any date fixed for the payment thereof, (v) change the
percentage of the Revolver Commitments or of the aggregate unpaid principal amount of the
Notes, or the percentage of Lenders, which shall be required for the Lenders or any of them
to take any action under this Section or any other provision of this Agreement, (vi) change
the manner of application of any payments made under this Agreement or the other Loan
Documents, (vii) release or substitute all or any material portion of the Collateral held as
security for the Obligations, (viii) change or modify the definition of “Required Lenders,”
or (ix) release any guaranty given to support payment of the Guaranteed Obligations.




     (b) No Loan Party will solicit, request or negotiate for or with respect to any
proposed waiver or amendment of any of the provisions of this Agreement unless each Lender
shall be informed thereof by the Borrower, or by the Administrative Agent, and shall be
afforded an opportunity of considering the same and shall be supplied by the Borrower, or by
the Administrative Agent, if the Borrower so requests and to the extent



57









 







already furnished to
the Administrative Agent, with sufficient information to enable it to make an informed
decision with respect thereto. Executed or true and correct copies of any waiver or consent
effected pursuant to the provisions of this Agreement shall be delivered by the Borrower to
the Administrative Agent for delivery to each Lender forthwith following the date on which
the same shall have been executed and delivered by the requisite percentage of Lenders. No
Loan Party will, directly or indirectly, pay or cause to be paid any remuneration, whether
by way of supplemental or additional interest, fee or otherwise, to any Lender (in its
capacity as such) as consideration for or as an inducement to the entering into by such
Lender of any waiver or amendment of any of the terms and provisions of this Agreement
unless such remuneration is concurrently paid, on the same terms, ratably to all such
Lenders.



          SECTION 9.06. Margin Stock Collateral. Each of the Lenders represents to the
Administrative Agent and each of the other Lenders that it in good faith is not, directly or
indirectly (by negative pledge or otherwise), relying upon any Margin Stock as collateral in
the extension or maintenance of the credit provided for in this Agreement.




          SECTION 9.07. Successors and Assigns.





     (a) Successors and Assigns Generally. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that neither the Borrower nor any other Loan
Party may assign or otherwise transfer any of its rights or obligations hereunder and no
Lender may assign or otherwise transfer any of its rights or obligations hereunder except
(i) to an Eligible 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) Assignments by Lenders. Any Lender may at any time assign to one or more
Eligible Assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Revolver Commitment and the Revolver Advances at the time
owing to it); provided that




     (i) except in the case of an assignment of the entire remaining amount of the
assigning Lender’s Revolver Commitment and the Revolver Advances at the time owing
to it or in the case of an assignment to a Lender or an Affiliate of a Lender or an
Approved Fund with respect to a Lender, the aggregate amount of the Revolver
Commitment (which for this purpose includes Revolver Advances outstanding
thereunder) or, if the applicable Revolver Commitment is not then in



58









 







effect, the
principal outstanding balance of the Revolver Advances of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Assumption with respect to such assignment is delivered to the Administrative Agent
or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade
Date) shall not be less than $5,000,000, unless each of the Administrative Agent
and, so long as no Default has occurred and is continuing, the Borrower otherwise
consent (each such consent not to be unreasonably withheld or delayed);




     (ii) 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 Revolver Advances or the Revolver Commitment assigned;




     (iii) any assignment of a Revolver Commitment must be approved by the
Administrative Agent unless the Person that is the proposed assignee is itself a
Lender with a Revolver Commitment (whether or not the proposed assignee would
otherwise qualify as an Eligible Assignee);




     (iv) so long as no Default has occurred, the Borrower must consent (any such
consent may be withheld by Borrower for any reason or no reason) to any assignment
by BB&T of its initial Revolver Commitment; and




     (v) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing and
recordation fee of $3,500, which fee shall not be chargeable to Borrower, and the
Eligible Assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an Administrative Questionnaire.




Subject to acceptance and recording thereof by the Administrative Agent pursuant to
paragraph (c) of this Section, from and after the effective date specified in each
Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this
Agreement and, to the extent of the interest assigned by such Assignment and Assumption,
have the rights and obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and Assumption,
be released from its obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under this
Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled
to the benefits of Sections 8.03 and 9.03 with respect to facts and circumstances occurring
prior to the effective date of such assignment. Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this 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.




     (c) Register. The Administrative Agent, acting solely for this purpose as an
agent of the Borrower, shall maintain at one of its offices in Winston-Salem, North



59









 







Carolina
a copy of each Assignment and Assumption delivered to it and a register for the recordation
of the names and addresses of the Lenders, and the Revolver Commitments of, and principal
amounts of the Revolver Advances owing to, each Lender pursuant to the terms hereof from
time to time (the “Register”). The entries in the Register shall be conclusive, and
the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall be available
for inspection by the Borrower and any Lender, at any reasonable time and from time to time
upon reasonable prior notice




     (d) Participations. 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 or 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 Revolver
Commitment and/or the Revolver Advances 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, (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, and (iv) so long as no Default has occurred, the proposed
participant is not a “business development company” under the Investment Company Act that
actively competes with the Borrower in making equity and debt investments.




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;
provided that such agreement or instrument may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, modification or waiver
described in Section 9.05(a) that affects such Participant. Subject to paragraph (e) of
this Section, the Borrower agrees that each Participant shall be entitled to the benefits of
Sections 8.01 through 8.05 inclusive to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section. To the
extent permitted by law, each Participant also shall be entitled to the benefits of
Section 9.04 as though it were a Lender, provided such Participant agrees to be subject to
Section 9.04 as though it were a Lender.




     (e) Limitations upon Participant Rights. A Participant shall not be entitled
to receive any greater payment under Section 8.03 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 2.12 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 2.12 as though it were a Lender.



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     (f) Certain Pledges. Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any 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 9.08. Confidentiality. Each of the Administrative Agent and the Lenders
agrees to maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective
partners, directors, officers, employees, agents, advisors and other representatives (it being
understood that the Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information confidential), (b) to the extent
requested by
any regulatory authority purporting to have jurisdiction over it (including any
self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the
extent required by applicable laws or regulations or by any subpoena or similar legal process,
(d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or
under any other Loan Document or any action or proceeding relating to this Agreement or any other
Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to (i) any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap
or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the
Borrower or (h) to the extent such Information (x) becomes publicly available other than as a
result of a breach of this Section or (y) becomes available to the Administrative Agent, any Lender
or any of their respective Affiliates on a nonconfidential basis from a source other than the
Borrower.




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




          SECTION 9.09. Representation by Lenders. Each Lender hereby represents that it is a
commercial lender or financial institution which makes loans in the ordinary course of its business
and that it will make its Advances hereunder for its own account in the ordinary course of such
business; provided, however, that, subject to Section 9.07, the disposition of the
Note or Notes held by that Lender shall at all times be within its exclusive control.




          SECTION 9.10. Obligations Several. The obligations of each Lender hereunder are
several, and no Lender shall be responsible for the obligations or commitment of any other Lender
hereunder. Nothing contained in this Agreement and no action taken by the



61









 






Lenders pursuant hereto
shall be deemed to constitute the Lenders to be a partnership, an association, a joint venture or
any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt and each Lender shall be entitled to protect and enforce its rights
arising out of this Agreement or any other Loan Document and it shall not be necessary for any
other Lender to be joined as an additional party in any proceeding for such purpose.




          SECTION 9.11. Survival of Certain Obligations. Sections 8.03(a), 8.03(b), 8.05 and
9.03, and the obligations of the Loan Parties thereunder, shall survive, and shall continue to be
enforceable notwithstanding, the termination of this Agreement, and the Revolver Commitments and
the payment in full of the principal of and interest on all Advances.




          SECTION 9.12. North Carolina Law. This Agreement and each Note shall be construed in
accordance with and governed by the law of the State of North Carolina.




          SECTION 9.13. Severability. In case any one or more of the provisions contained in
this Agreement, the Notes or any of the other Loan Documents should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired thereby and shall be
enforced to the greatest extent permitted by law.




          SECTION 9.14. Interest. In no event shall the amount of interest due or payable
hereunder or under the Notes exceed the maximum rate of interest allowed by applicable law, and in
the event any such payment is inadvertently made to any Lender by the Borrower or inadvertently
received by any Lender, then such excess sum shall be credited as a payment of principal, unless
the Borrower shall notify such Lender in writing that it elects to have such excess sum returned
forthwith. It is the express intent hereof that the Borrower not pay and the Lenders not receive,
directly or indirectly in any manner whatsoever, interest in excess of that which may legally be
paid by the Borrower under applicable law.




          SECTION 9.15. Interpretation. No provision of this Agreement or any of the other Loan
Documents shall be construed against or interpreted to the disadvantage of any party hereto by any
court or other governmental or judicial authority by reason of such party having or being deemed to
have structured or dictated such provision.




          SECTION 9.16. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.




          SECTION 9.17. Waiver of Jury Trial; Consent to Jurisdiction. The Borrower, each of
the other Loan Parties, and each of the Lenders and the Administrative Agent (1) irrevocably
waives, to the fullest extent permitted by law, any and all right to trial by jury in any legal
proceeding arising out of this Agreement, any of the other Loan Documents, or any of the
transactions contemplated hereby or thereby, (2) submits to personal jurisdiction in the State of
North Carolina, the courts thereof and the United States District Courts sitting therein, for the
enforcement of this Agreement, the Notes and the other Loan Documents, (3) waives any and all
personal rights under the law of any jurisdiction to object on any basis (including, without



62









 






limitation, inconvenience of forum) to jurisdiction or venue within the State of North Carolina for
the purpose of litigation to enforce this Agreement, the Notes or the other Loan Documents, and (4)
agrees that service of process may be made upon it in the manner prescribed in Section 9.01 for the
giving of notice to the Borrower. Nothing herein contained, however, shall: (i) prevent the
Administrative Agent from bringing any action or exercising any rights against any security and
against the Borrower or any other Loan Party personally, and against any assets of the Borrower or
any other Loan Party, within any other state or jurisdiction; or (ii) affect the right to serve
legal process in any other manner permitted by law.




          SECTION 9.18. Independence of Covenants. All covenants under this Agreement and the
other Loan Documents shall be given independent effect so that if a particular
action or condition is not permitted by any such covenant, the fact that it would be permitted
by an exception to, or would be otherwise allowed by, another covenant shall not avoid the
occurrence of a Default if such action is taken or such condition exists.




ARTICLE X

GUARANTY




          SECTION 10.01. Unconditional Guaranty. Each Guarantor hereby irrevocably,
unconditionally and jointly and severally guarantees, each as a primary obligor and not merely as a
surety, to the Administrative Agent and the Lenders the due and punctual payment of the principal
of and the premium, if any, and interest on the Guaranteed Obligations and any and all other
amounts due under or pursuant to the Loan Documents, when and as the same shall become due and
payable (whether at stated maturity or by optional or mandatory prepayment or by declaration,
redemption or otherwise) in accordance with the terms of the Loan Documents. The Guarantors’
guaranty under this Section is an absolute, present and continuing guarantee of payment and not of
collectibility, and is in no way conditional or contingent upon any attempt to collect from the
Borrower, any of the Guarantors or any other guarantor of the Guaranteed Obligations (or any
portion thereof) or upon any other action, occurrence or circumstances whatsoever. In the event
that the Borrower or any Guarantor shall fail so to pay any such principal, premium, interest or
other amount to the Administrative Agent or a Lender, the Guarantors will pay the same forthwith,
without demand, presentment, protest or notice of any kind (all of which are waived by the
Guarantors to the fullest extent permitted by law), in lawful money of the United States, at the
place for payment specified in Loan Documents or specified by such Administrative Agent in writing,
to such Administrative Agent. The Guarantors further agree, promptly after demand, to pay to the
Administrative Agent and Lenders the costs and expenses incurred by such Administrative Agent or
Lender in connection with enforcing the rights of such Administrative Agent and Lenders against the
Borrower and any or all of the Guarantors (whether in a Bankruptcy proceeding or otherwise)
following any default in payment of any of the Guaranteed Obligations or the obligations of the
Guarantors hereunder, including, without limitation, the fees and expenses of counsel to the
Administrative Agent and such Lenders.




          SECTION 10.02. Obligations Absolute. The obligations of the Guarantors hereunder are
and shall be absolute and unconditional, irrespective of the validity, regularity or enforceability
of this Agreement, any of the Guaranteed Obligations or any of the Loan



63









 






Documents, shall not be
subject to any counterclaim, set-off, deduction or defense based upon any claim any of the
Guarantors may have against the Borrower, any other Guarantor or the Administrative Agent or any
Lender hereunder or otherwise, and shall remain in full force and effect without regard to, and
shall not be released, discharged or in any way affected by, to the fullest extent permitted by
law, any circumstance or condition whatsoever (whether or not any of the Guarantors shall have any
knowledge or notice thereof), including, without limitation:





     (a) any amendment or modification of or supplement to any of the Loan Documents or any
other instrument referred to herein or therein, or any assignment or transfer of any thereof
or of any interest therein, or any furnishing or acceptance of additional security for any
of the Guaranteed Obligations;




     (b) any waiver, consent or extension under any Loan Document or any such other
instrument, or any indulgence or other action or inaction under or in respect of, or any
extensions or renewals of, any Loan Document, any such other instrument or any Guaranteed
Obligation;




     (c) any failure, omission or delay on the part of the Administrative Agent to enforce,
assert or exercise any right, power or remedy conferred on or available to the
Administrative Agent or any Lender against the Borrower or any Guarantor, any Subsidiary of
the Borrower or any Subsidiary of any Guarantor;




     (d) any Bankruptcy, insolvency, readjustment, composition, liquidation or similar
proceeding with respect to the Borrower, any Guarantor, any Subsidiary of the Borrower or
any Subsidiary of any Guarantor or any property of the Borrower, any Guarantor or any such
Subsidiary or any unavailability of assets against which the Guaranteed Obligations, or any
of them, may be enforced;




     (e) any merger or consolidation of the Borrower, any Subsidiary of the Borrower or any
Guarantor or any of the Guarantors into or with any other Person or any sale, lease or
transfer of any or all of the assets of any of the Guarantors, the Borrower or any
Subsidiary of the Borrower or any Guarantor to any Person;




     (f) any failure on the part of the Borrower, any Guarantor or any Subsidiary of the
Borrower or any Guarantor for any reason to comply with or perform any of the terms of any
agreement with any of the Guarantors;




     (g) any exercise or non-exercise by the Administrative Agent or any Lender, of any
right, remedy, power or privilege under or in respect of any of the Loan Documents or the
Guaranteed Obligations, including, without limitation, under this Section;




     (h) any default, failure or delay, willful or otherwise, in the performance or payment
of any of the Guaranteed Obligations;




     (i) any furnishing or acceptance of security, or any release, substitution or exchange
thereof, for any of the Guaranteed Obligations;



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     (j) any failure to give notice to any of the Guarantors of the occurrence of any breach
or violation of, or any event of default or any default under or with respect to, any of the
Loan Documents or the Guaranteed Obligations;




     (k) any partial prepayment, or any assignment or transfer, of any of the Guaranteed
Obligations; or




     (l) any other circumstance (other than payment in full) which might otherwise
constitute a legal or equitable discharge or defense of a guarantor or which might in any
manner or to any extent vary the risk of such Guarantor.



          The Guarantors covenant that their respective obligations hereunder will not be discharged
except by complete performance of the obligations contained in the Loan Documents and this
Agreement and the final payment in full of the Guaranteed Obligations. The Guarantors
unconditionally waive, to the fullest extent permitted by law (A) notice of any of the matters
referred to in this Section, (B) any and all rights which any of the Guarantors may now or
hereafter have arising under, and any right to claim a discharge of the Guarantor’s obligations
hereunder by reason of the failure or refusal by the Administrative Agent or any Lender to take any
action pursuant to any statute permitting a Guarantor to request that the Administrative Agent or
any Lender attempt to collect the Guaranteed Obligations from the Borrower, any of the Guarantors
or any other guarantor (including without limitation any rights under Sections 26-7, 26-8 or 26-9
of the North Carolina General Statutes, O.C.G.A. § 10-7-24, or any similar or successor
provisions), (C) all notices which may be required by statute, rule of law or otherwise to preserve
any of the rights of the Administrative Agent or any Lender against the Guarantors, including,
without limitation, presentment to or demand of payment from the Borrower, any of the Subsidiaries
of the Borrower or any Guarantor, or any of the other Guarantors with respect to any Loan Document
or this agreement, notice of acceptance of the Guarantors’ guarantee hereunder and/or notice to the
Borrower, any of the Subsidiaries of the Borrower or any Guarantor, or any Guarantor of default or
protest for nonpayment or dishonor, (D) any diligence in collection from or protection of or
realization upon all or any portion of the Guaranteed Obligations or any security therefor, any
liability hereunder, or any party primarily or secondarily liable for all or any portion of the
Guaranteed Obligations, and (E) any duty or obligation of the Administrative Agent or any Lender to
proceed to collect all or any portion of the Guaranteed Obligations from, or to commence an action
against, the Borrower, any Guarantor or any other Person, or to resort to any security or to any
balance of any deposit account or credit on the books of the Administrative Agent or any Lender in
favor of the Borrower, any Guarantor or any other Person, despite any notice or request of any of
the Guarantors to do so.




          SECTION 10.03. Continuing Obligations; Reinstatement. The obligations of the
Guarantors under this Article X are continuing obligations and shall continue in full force
and effect until such time as all of the Guaranteed Obligations (and any renewals and extensions
thereof) shall have been finally paid and satisfied in full. The obligations of the Guarantors
under this Article X shall continue to be effective or be automatically reinstated, as the
case may be, if any payment made by the Borrower, any Guarantor or any Subsidiary of the Borrower
or any Guarantor on, under or in respect of any of the Guaranteed Obligations is rescinded or must



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otherwise be restored or returned by the recipient upon the insolvency, Bankruptcy, dissolution,
liquidation or reorganization of the Borrower, any Guarantor or any such Subsidiary, or upon or as
a result of the appointment of a custodian, receiver, trustee or other officer with similar powers
with respect to the Borrower, any Guarantor or any such Subsidiary or any substantial part of the
property of the Borrower, any Guarantor or any such Subsidiary, or otherwise, all as though such
payment had not been made. If an event permitting the acceleration of all or any portion of the
Guaranteed Obligations shall at any time have occurred and be continuing, and such acceleration
shall at such time be stayed, enjoined or otherwise prevented for any reason, including without
limitation because of the pendency of a case or proceeding relating to the Borrower, any Guarantor
or any Subsidiary of the Borrower or any Guarantor under any Bankruptcy or insolvency law, for
purposes of this Article X and the obligations of the Guarantors hereunder,
such Guaranteed Obligations shall be deemed to have been accelerated with the same effect as
if such Guaranteed Obligations had been accelerated in accordance with the terms of the applicable
Loan Documents or of this Agreement.




          SECTION 10.04. Additional Security, Etc. The Guarantors authorize the Administrative
Agent on behalf of the Lenders without notice to or demand on the Guarantors and without affecting
their liability hereunder, from time to time (a) to obtain additional or substitute endorsers or
guarantors; (b) to exercise or refrain from exercising any rights against, and grant indulgences
to, the Borrower, any Subsidiary of the Borrower or any Guarantor, any other Guarantor or others;
and (c) to apply any sums, by whomsoever paid or however realized, to the payment of the principal
of, premium, if any, and interest on, and other obligations consisting of, the Guaranteed
Obligations. The Guarantors waive any right to require the Administrative Agent or any Lender to
proceed against any additional or substitute endorsers or guarantors or the Borrower or any of
their Subsidiaries or any other Person or to pursue any other remedy available to the
Administrative Agent or any such Lender.




          SECTION 10.05. Information Concerning the Borrower. The Guarantors assume all
responsibility for being and keeping themselves informed of the financial condition and assets of
the Borrower, the other Guarantors and their respective Subsidiaries, and of all other
circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature,
scope and extent of the risks which the Guarantors assume and insure hereunder, and agree that
neither the Administrative Agent nor any Lender shall have any duty to advise the Guarantors of
information known to the Administrative Agent or any such Lender regarding or in any manner
relevant to any of such circumstances or risks.




          SECTION 10.06. Guarantors’ Subordination. The Guarantors hereby absolutely
subordinate, both in right of payment and in time of payment, any present and future indebtedness
of the Borrower or any Subsidiary of the Borrower or any Guarantor to any or all of the Guarantors
to the indebtedness of the Borrower or any such Subsidiary or to the Lenders (or any of them),
provided that the Guarantors may receive scheduled payments of principal, premium (if any) and
interest in respect of such present or future indebtedness so long as there is no Event of Default
then in existence.




          SECTION 10.07. Waiver of Subrogation. Notwithstanding anything herein to the
contrary, until the payment in full of the Guaranteed Obligations, the Guarantors hereby



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waive any
right of subrogation (under contract, Section 509 of the Bankruptcy Code or otherwise) or any other
right of indemnity, reimbursement or contribution and hereby waive any right to enforce any remedy
that the Administrative Agent or any Lender now has or may hereafter have against the Borrower, any
Guarantor or any endorser or any other guarantor of all or any part of the Guaranteed Obligations,
and the Guarantors hereby waive any benefit of, and any right to participate in, any security or
collateral given to the Administrative Agent or any Lender to secure payment or performance of the
Guaranteed Obligations or any other liability of the Borrower to the Administrative Agent or any
Lender. The waiver contained in this Section shall continue and survive the termination of this
Agreement and the final payment in full of the Guaranteed Obligations.




          SECTION 10.08. Enforcement. In the event that the Guarantors shall fail forthwith to
pay upon demand of the Administrative Agent or any Lender any amounts due pursuant to this
Article X or to perform or comply with or to cause performance or compliance with any other
obligation of the Guarantors under this Agreement the Administrative Agent and any Lender shall be
entitled and empowered to institute any action or proceeding at law or in equity for the collection
of the sums so due and unpaid or for the performance of or compliance with such terms, and may
prosecute any such action or proceeding to judgment or final decree and may enforce such judgment
or final decree against the Guarantors and collect in the manner provided by law out of the
property of the Guarantors, wherever situated, any monies adjudged or decreed to be payable. The
obligations of the Guarantors under this Agreement are continuing obligations and a fresh cause of
action shall arise in respect of each default hereunder.




          SECTION 10.09. Miscellaneous. Except as may otherwise be expressly agreed upon in
writing, the liability of the Guarantors under this Article X shall neither affect nor be affected
by any prior or subsequent guaranty by the Guarantors of any other indebtedness to the
Administrative Agent or the Lenders. Notwithstanding anything in this Article X to the contrary,
the maximum liability of each Guarantor hereunder shall in no event exceed the maximum amount which
could be paid out by such Guarantor without rendering such Guarantor’s obligations under this
Article X, in whole or in part, void or voidable under applicable law, including, without
limitation, (i) the Bankruptcy Code of 1978, as amended, and (ii) any applicable state or federal
law relative to fraudulent conveyances.




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




	 	 	 	 	 	 	 
	 	 	MVC CAPITAL, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 
	 	 	[CORPORATE SEAL]
	 	 




Credit
Agreement



S-1









 






	 	 	 	 	 	 	 
	 	 	INITIAL GUARANTOR	 	 
	 
	 	 	 	 	 	 
	 	 	MVC FINANCIAL SERVICES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 
	 	 	[CORPORATE SEAL]
	 	 





Credit
Agreement


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	COMMITMENTS	 	BRANCH BANKING AND TRUST COMPANY,	 	 
	 	 	as Administrative Agent and as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 	 	(SEAL)
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 






Revolver

Commitment:

$50,000,000




Lending Office

Branch Banking and Trust Company

200 West Second Street, 16th Floor

Winston-Salem, NC 27101

Attention: Greg Drabik, Vice President

Telecopy number: (336) 733-2740

Telephone number: (336) 733-2730




And a copy to:




Christopher E. Leon, Esq.

Womble Carlyle Sandridge & Rice, PLLC

One West Fourth Street

Winston-Salem, NC 27101

Telecopy number: (336) 726-6932

Telephone number: (336) 721-3518








Credit
Agreement


S-3