exv10w8



 





Exhibit 10.8




EXECUTION COPY




TREASURY SECURED REVOLVING CREDIT AGREEMENT



dated as of June 4, 2007



among




KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY

as Borrower



THE LENDERS FROM TIME TO TIME PARTY HERETO



and




SUNTRUST BANK

as Administrative Agent




CITIBANK, N.A.

as Syndication Agent




 

 





SUNTRUST CAPITAL MARKETS, INC.

as Co-Arranger and Joint Book Manager




and

CITIGROUP CAPITAL MARKETS

as Co-Arranger and Joint Book Manager




 









 









TABLE OF CONTENTS




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






 









 







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






ii 









 






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






iii 









 






Schedules




	 	 	 	 	 	 	 
	 

	 	Schedule I
	 	-
	 	Commitment Amounts
	 

	 	Schedule II
	 	-
	 	Investment Credit Agreement
	 

	 	Schedule 4.5
	 	-
	 	Environmental Matters
	 

	 	Schedule 4.14
	 	-
	 	Subsidiaries
	 

	 	Schedule 7.1
	 	-
	 	Outstanding Indebtedness
	 

	 	Schedule 7.2
	 	-
	 	Existing Liens






Exhibits




	 	 	 	 	 	 	 
	 

	 	Exhibit A
	 	-
	 	Form of Revolving Note
	 

	 	Exhibit C
	 	-
	 	Form of Assignment and Acceptance
	 

	 	Exhibit D
	 	-
	 	Form of Subsidiary Guarantee
	 

	 	Exhibit 2.3
	 	-
	 	Form of Notice of Revolving Borrowing
	 

	 	Exhibit 2.6(b)
	 	-
	 	Form of Continuation/Conversion
	 

	 	Exhibit 3.1(c)(viii)
	 	 	 	Form of Responsible Officer’s Certificate
	 

	 	Exhibit 5.1(c)
	 	-
	 	Form of Compliance Certificate






iv 









 






TREASURY SECURED REVOLVING CREDIT AGREEMENT




          THIS TREASURY SECURED REVOLVING CREDIT AGREEMENT (this “Agreement”) is made and
entered into as of June 4, 2007, by and among KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY, a Maryland
corporation (the “Borrower”), the several banks and other financial institutions from time
to time party hereto (the “Lenders”), SUNTRUST BANK, in its capacity as Administrative
Agent for the Lenders (the “Administrative Agent”), and CITIBANK, N.A., as Syndication
Agent (“Syndication Agent”).




W I T N E S S E T H:




          WHEREAS, the Borrower has requested that Lenders establish a $100,000,000 treasury secured
revolving credit facility in favor of the Borrower;




          WHEREAS, the Borrower has entered into that certain Senior Secured Revolving Credit Agreement
(in the form of Schedule II attached hereto) dated as of the date hereof, by and among
Borrower, the several banks and financial institutions from time to time party thereto (the
“Investment Lenders”) SunTrust Bank as administrative agent and Citibank, N.A. as
syndication agent (as the same may be amended, restated, supplemented or otherwise modified from
time to time, the “Investment Credit Agreement”);




          WHEREAS, subject to the terms and conditions of this Agreement, the Lenders severally, to the
extent of their respective Commitments as defined herein, are willing to establish the requested
revolving credit facility in favor of the Borrower;




          NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained,
the Borrower, the Lenders and the Administrative Agent agree as follows:




ARTICLE I




DEFINITIONS; CONSTRUCTION




          Section 1.1. Definitions. In addition to the other terms defined herein, the
following terms used herein shall have the meanings herein specified (to be equally applicable to
both the singular and plural forms of the terms defined):




          “90-Day Treasury Securities” shall mean U.S. Government Securities of the United States
maturing within 90 days of the date of acquisition thereof.




          “Adjusted Borrowing Base” shall mean the Borrowing Base minus the aggregate amount of
Cash and Cash Equivalents included in the Investment Credit Facility Collateral.




          “Adjusted Covered Debt Amount” shall mean, on any date, the Covered Debt Amount minus
the aggregate amount of Cash and Cash Equivalents included in the Investment Credit Facility
Collateral.




 









 








          “Adjusted LIBO Rate” shall mean, with respect to each Interest Period for a Eurodollar
Borrowing, the rate per annum obtained by dividing (i) LIBOR for such Interest Period by (ii) a
percentage equal to 1.00 minus the Eurodollar Reserve Percentage.




          “Administrative Agent” shall have the meaning assigned to such term in the opening paragraph
hereof.




          “Administrative Questionnaire” shall mean, with respect to each Lender, an administrative
questionnaire in the form prepared by the Administrative Agent and submitted to the Administrative
Agent duly completed by such Lender.




          “Affiliate” shall mean, as to any Person, any other Person that directly, or indirectly
through one or more intermediaries, Controls, is Controlled by, or is under common Control with,
such Person. For the purposes of this definition, “Control” shall mean the power, directly or
indirectly, either to (i) vote 5% or more of the securities having ordinary voting power for the
election of directors (or persons performing similar functions) of a Person or (ii) direct or cause
the direction of the management and policies of a Person, whether through the ability to exercise
voting power, by control or otherwise. The terms “Controlling”, “Controlled by”, and “under common
Control with” have the meanings correlative thereto.




          “Aggregate Commitment Amount” shall mean the aggregate principal amount of the Aggregate
Commitments from time to time. On the Closing Date, the Aggregate Commitment Amount equals
$100,000,000.




          “Aggregate Commitment” shall mean, collectively, all Revolving Commitments of all Lenders at
any time outstanding.




          “Applicable Lending Office” shall mean, for each Lender and for each Type of Loan, the
“Lending Office” of such Lender (or an Affiliate of such Lender) designated for such Type of Loan
in the Administrative Questionnaire submitted by such Lender or such other office of such Lender
(or an Affiliate of such Lender) as such Lender may from time to time specify to the Administrative
Agent and the Borrower as the office by which its Loans of such Type are to be made and maintained.




          “Applicable Margin” shall mean, as of any date, with respect to all Loans outstanding on any
date, 0.00% per annum on Base Rate Loans and 0.20% per annum on LIBOR Loans.




          “Applicable Percentage” shall mean, as of any date, with respect to the commitment fee, 0.10%
per annum.




          “Approved Brokerage Account” shall have the meaning assigned to such term in the Investment
Credit Agreement.




          “Approved Fund” shall mean any Person (other than a natural Person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial loans and similar
extensions of credit in the ordinary course of its business and that is administered or




2









 







managed by (i) a Lender, (ii) an Affiliate of a Lender or (iii) an entity or an Affiliate of
an entity that administers or manages a Lender.




          “Asset Coverage Ratio” shall mean, as of any date, the ratio, determined on a consolidated
basis, without duplication, in accordance with GAAP, of (i) the value of total assets of the
Borrower and its Subsidiaries (excluding the Cash Collateral), less all liabilities (other than
Indebtedness, including Indebtedness under this Agreement and the Investment Credit Agreement) of
the Borrower and its Subsidiaries, as of such date, to (ii) the aggregate amount of Indebtedness,
excluding Indebtedness under the this Agreement and Indebtedness of any Special Purpose Subsidiary
incurred from time to time so long as such Indebtedness is non-recourse, as of such date.




          “Assignment and Acceptance” shall mean an assignment and acceptance entered into by a Lender
and an assignee (with the consent of any party whose consent is required by Section
10.4(b)) and accepted by the Administrative Agent, in the form of Exhibit C attached
hereto or any other form approved by the Administrative Agent.




          “Availability Period” shall mean the period from the Closing Date to but excluding the
Commitment Termination Date.




          “Base Rate” shall mean the higher of (i) the per annum rate which the Administrative Agent
publicly announces from time to time to be its prime lending rate, as in effect from time to time,
and (ii) the Federal Funds Rate, as in effect from time to time, plus one-half of one percent
(0.50%). The Administrative Agent’s prime lending rate is a reference rate and does not necessarily
represent the lowest or best rate charged to customers. The Administrative Agent may make
commercial loans or other loans at rates of interest at, above or below the Administrative Agent’s
prime lending rate. Each change in the Administrative Agent’s prime lending rate shall be
effective from and including the date such change is publicly announced as being effective.




          “Borrower” shall have the meaning in the introductory paragraph hereof.




          “Borrowing” shall mean a borrowing consisting of Loans of the same Class and Type, made,
converted or continued on the same date and in case of Eurodollar Loans, as to which a single
Interest Period is in effect.




          “Borrowing Base” shall have the meaning assigned to such term in Section 5.13 of the
Investment Credit Agreement.




          “Business Day” shall mean (i) any day other than a Saturday, Sunday or other day on which
commercial banks in Atlanta, Georgia and New York, New York are authorized or required by law to
close and (ii) if such day relates to a Borrowing of, a payment or prepayment of principal or
interest on, a conversion of or into, or an Interest Period for, a Eurodollar Loan or a notice with
respect to any of the foregoing, any day on which banks are not open for dealings in Dollars are
carried on in the London interbank market.




          “Capital Lease Obligations” of any Person shall mean all obligations of such Person to pay
rent or other amounts under any lease (or other arrangement conveying the right to




3









 







use) of real or personal property, or a combination thereof, which obligations are required to
be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and
the amount of such obligations shall be the capitalized amount thereof determined in accordance
with GAAP.




          “Capital Stock” of any Person shall mean any and all shares of corporate stock (however
designated) of, and any and all other equity interests and participations representing ownership
interests (including membership interests and limited liability company interests) in, such Person.




          “Cash” shall mean any immediately available funds in Dollars or in any currency other than
Dollars which is freely convertible currency.




          “Cash Collateral” shall mean the aggregate amount of all Cash and 90-day Treasury Securities,
in each case in which Administrative Agent shall have a first priority perfected security interest
through deposit accounts and/or brokerage accounts maintained with Administrative Agent or its
affiliates in form and substance satisfactory to the Administrative Agent.




          “Cash Collateral Coverage Ratio” shall mean the ratio of Cash Collateral to the aggregate
amount of the Revolving Credit Exposure of all Lenders.




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




          (a) U.S. Government Securities, in each case maturing within one year from the acquisition
thereof;




          (b) investments in commercial paper maturing within 270 days from the date of acquisition
thereof and having, at such acquisition date, a credit rating of at least A1 from S&P and at least
P1 from Moody’s;




          (c) investments in certificates of deposit, banker’s acceptances and time deposits maturing
within 180 days from the date of acquisition thereof (i) issued or guaranteed by or placed with,
and money market deposit accounts issued or offered by, any domestic office of any commercial bank
organized under the laws of the United States or America or any State thereof; provided
that such certificates of deposit, banker’s acceptances and time deposits are held in a securities
account (as defined in the Uniform Commercial Code) through which the Administrative Agent can
perfect a security interest therein and (ii) having, at such date of acquisition, a credit rating
of at least A1 from S&P and at least P1 from Moody’s;




          (d) fully collateralized repurchase agreements with a term of not more than 30 days from the
date of acquisition thereof for U.S. Government Securities and entered into with a financial
institution satisfying the criteria described in clause (c) of this definition;




          provided, that (i) in no event shall Cash Equivalents include any obligation that
provides for the payment of interest alone (for example, interest-only securities or “IOs”); (ii)
if any of Moody’s or S&P changes its rating system, then any ratings included in this definition




4









 







shall be deemed to be an equivalent rating in a successor rating category of Moody’s or S&P,
as the case may be; (iii) Cash Equivalents (other than U.S. Government Securities or repurchase
agreements) shall not include any such investment of more than 10% of total assets of the Loan
Parties in any single issuer; and (iv) in no event shall Cash Equivalents include any obligation
that is not denominated in Dollars.




          “Change in Control” shall mean the occurrence of one or more of the following events: (i) any
sale, lease, exchange or other transfer (in a single transaction or a series of related
transactions) of all or substantially all of the assets of the Borrower to any Person or “group”
(within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and
Exchange Commission thereunder in effect on the date hereof), (ii) the acquisition of ownership,
directly or indirectly, beneficially or of record, by any Person or “group” (within the meaning of
the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission
thereunder as in effect on the date hereof) of 35% or more of the outstanding shares of the voting
stock of the Borrower; (iii) occupation of a majority of the seats (other than vacant seats) on the
board of directors of the Borrower by Persons who were neither (x) nominated by the current board
of directors or (y) appointed by directors so nominated; or (iv) KA Fund Advisors, LLC (or an
Affiliate thereof approved by the Administrative Agent (such approval not to be unreasonably
withheld)) ceases to retain its advisory duties over the Borrower in effect on the Closing Date.




          “Change in Law” shall mean (i) the adoption of any applicable law, rule or regulation after
the date of this Agreement, (ii) any change in any applicable law, rule or regulation, or any
change in the interpretation or application thereof, by any Governmental Authority after the date
of this Agreement, or (iii) compliance by any Lender (or its Applicable Lending Office) (or for
purposes of Section 2.16(b), by such Lender’s parent corporation, if applicable)
with any request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.




          “Class”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the
Loans comprising such Borrowing, are Revolving Loans and when used in reference to any Commitment,
refers to whether such Commitment is a Revolving Commitment.




          “Clearing Account” shall have the meaning assigned to such term in the Investment Credit
Agreement.




          “Closing Date” shall mean the date on which the conditions precedent set forth in Section
3.1 and Section 3.2 have been satisfied or waived in accordance with Section
10.2.




          “Code” shall mean the Internal Revenue Code of 1986, as amended and in effect from time to
time.




          “Commitment” shall mean the Revolving Commitment.




          “Commitment Termination Date” shall mean the earliest of (i) June 4, 2010, (ii) the date on
which the Aggregate Commitments are terminated pursuant to Section 2.7 and (iii) the date
on which all amounts outstanding under this Agreement have been declared or have automatically
become due and payable (whether by acceleration or otherwise).




5









 








          “Compliance Certificate” shall mean a certificate from the chief executive officer or the
chief financial officer of the Borrower in the form of, and containing the certifications set forth
in, the certificate attached hereto as Exhibit 5.1(c).




          “Contractual Obligation” of any Person shall mean any provision of any security issued by such
Person or of any agreement, instrument or undertaking under which such Person is obligated or by
which it or any of the property in which it has an interest is bound.




          “Control Agreement” shall mean that certain Cash Collateral Agreement and Securities Account
Control Agreement, dated as of the Closing Date, by and among the Borrower, the Administrative
Agent and SunTrust Bank, and each other control agreement among the Borrower, the Administrative
Agent and the depository bank, custodian, securities intermediary or safekeeping intermediary at
which the account subject to such agreement is held, each as amended, restated, supplemented or
otherwise modified from time to time.




          “Covered Debt Amount” shall mean, as of any date, (i) all of the Investment Revolving Credit
Exposures of all Lenders on such date.




          “Credit Exposure” shall mean, for any Lender, the sum of (i) the outstanding principal amount
of such Lender’s Loans.




          “Default” shall mean any condition or event that, with the giving of notice or the lapse of
time or both, would constitute an Event of Default.




          “Default Interest” shall have the meaning set forth in Section 2.11(c).




          “Distributable Cash Flow” shall have the meaning assigned to such term in the Investment
Credit Agreement.




          “Dollar(s)” and the sign “$” shall mean lawful money of the United States of America.




          “Eligible Assignee” shall mean (i) a Lender; (ii) an Affiliate of a Lender; (iii) an Approved
Fund; and (iv) any other Person (other than a natural Person) approved by the Administrative Agent,
and unless an Event of Default has occurred and is continuing, the Borrower (each such approval not
to be unreasonably withheld or delayed). If the consent of the Borrower to an assignment or to an
Eligible Assignee is required hereunder (including a consent to an assignment which does not meet
the minimum assignment thresholds specified in paragraph (b)(i) of Section 10.4), the
Borrower shall be deemed to have given its consent five Business Days after the date notice thereof
has actually been delivered by the assigning Lender (through the Administrative Agent) to the
Borrower, unless such consent is expressly refused by the Borrower prior to such fifth Business
Day.




          “Environmental Laws” shall mean all laws, rules, regulations, codes, ordinances, orders,
decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into
by or with any Governmental Authority, relating in any way to the environment, preservation or
reclamation of natural resources, the management, Release or threatened Release of any Hazardous
Material or to health and safety matters.




6









 








          “Environmental Liability” shall mean any liability, contingent or otherwise (including any
liability for damages, costs of environmental investigation and remediation, costs of
administrative oversight, fines, natural resource damages, penalties or indemnities), of the
Borrower or any Subsidiary directly or indirectly resulting from or based upon (i) any actual or
alleged violation of any Environmental Law, (ii) the generation, use, handling, transportation,
storage, treatment or disposal of any Hazardous Materials, (iii) any actual or alleged exposure to
any Hazardous Materials, (iv) the Release or threatened Release of any Hazardous Materials or (v)
any contract, agreement or other consensual arrangement pursuant to which liability is assumed or
imposed with respect to any of the foregoing.




          “Equity Interests” shall mean shares of capital stock, partnership interests, membership
interests in a limited liability company, beneficial interests in a trust or other equity ownership
interests in a Person, and any warrants, options or other rights entitling the holder thereof to
purchase or acquire any such equity interest.




          “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time
to time, and any successor statute.




          “ERISA Affiliate” shall mean any trade or business (whether or not incorporated), which,
together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code
or, solely for the purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a
single employer under Section 414 of the Code.




          “ERISA Event” shall mean (i) any “reportable event”, as defined in Section 4043 of ERISA or
the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day
notice period is waived); (ii) the existence with respect to any Plan of an “accumulated funding
deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived;
(iii) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any Plan; (iv) the
incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA
with respect to the termination of any Plan; (v) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator appointed by the PBGC of any notice relating to an intention
to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (vi) the incurrence
by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or
partial withdrawal from any Plan or Multiemployer Plan; or (vii) the receipt by the Borrower or any
ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the
meaning of Title IV of ERISA.




          “Eurodollar” when used in reference to any Loan or Borrowing, refers to whether such Loan, or
the Loans comprising such Borrowing, bears interest at a rate determined by reference to the
Adjusted LIBO Rate.




          “Eurodollar Reserve Percentage” shall mean the aggregate of the maximum reserve percentages
(including, without limitation, any emergency, supplemental, special or other marginal reserves)
expressed as a decimal (rounded upwards to the next 1/100th of 1%) in effect




7









 







on any day to which the Administrative Agent is subject with respect to the Adjusted LIBO Rate
pursuant to regulations issued by the Board of Governors of the Federal Reserve System (or any
Governmental Authority succeeding to any of its principal functions) with respect to eurocurrency
funding (currently referred to as “eurocurrency liabilities” under Regulation D). Eurodollar Loans
shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements
without benefit of or credit for proration, exemptions or offsets that may be available from time
to time to any Lender under Regulation D. The Eurodollar Reserve Percentage shall be adjusted
automatically on and as of the effective date of any change in any reserve percentage.




          “Event of Default” shall have the meaning provided in Article VIII.




          “Excluded Taxes” shall mean with respect to the Administrative Agent, any Lender, or any other
recipient of any payment to be made by or on account of any obligation of the Borrower hereunder,
(i) income or franchise taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its applicable lending office
is located, (ii) any branch profits taxes imposed by the United States of America or any similar
tax imposed by any other jurisdiction in which any Lender is located and (iii) in the case of a
Foreign Lender, any withholding tax that (x) is imposed on amounts payable to such Foreign Lender
at the time such Foreign Lender becomes a party to this Agreement, (y) is imposed on amounts
payable to such Foreign Lender at any time that such Foreign Lender designates a new lending
office, other than taxes that have accrued prior to the designation of such lending office that are
otherwise not Excluded Taxes, and (z) is attributable to such Foreign Lender’s failure to comply
with Section 2.18(e).




          “Federal Funds Rate” shall mean, for any day, the rate per annum (rounded upwards, if
necessary, to the next 1/100th of 1%) equal to the weighted average of the rates on
overnight Federal funds transactions with member banks of the Federal Reserve System arranged by
Federal funds brokers, as published by the Federal Reserve Bank of New York on the next succeeding
Business Day or if such rate is not so published for any Business Day, the Federal Funds Rate for
such day shall be the average rounded upwards, if necessary, to the next 1/100th of 1% of the
quotations for such day on such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by the Administrative Agent.




          “Fee Letter” shall mean, collectively, that certain fee letter, dated as of May 7, 2007,
executed by the Administrative Agent and accepted by Borrower and that certain fee letter, dated as
of May 7, 2007, executed by the Syndication Agent and accepted by Borrower.




          “Fiscal Quarter” shall mean any fiscal quarter of the Borrower.




          “Fiscal Year” shall mean any fiscal year of the Borrower.




          “Foreign Lender” shall mean any Lender that is not a United States person under Section
7701(a)(30) of the Code.




8









 








          “GAAP” shall mean generally accepted accounting principles in the United States applied on a
consistent basis and subject to the terms of Section 1.3.




          “Governmental Authority” shall mean the government of the United States of America, any other
nation or any political subdivision thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to
government.




          “Guarantee” of or by any Person (the “guarantor”) shall mean any obligation, contingent or
otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether
directly or indirectly and including any obligation, direct or indirect, of the guarantor (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation or to purchase (or to advance or supply funds for the purchase of) any security
for the payment thereof, (ii) to purchase or lease property, securities or services for the purpose
of assuring the owner of such Indebtedness or other obligation of the payment thereof, (iii) to
maintain working capital, equity capital or any other financial statement condition or liquidity of
the primary obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation or (iv) as an account party in respect of any letter of credit or letter of guaranty
issued in support of such Indebtedness or obligation; provided, that the term “Guarantee”
shall not include endorsements for collection or deposit in the ordinary course of business. The
amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount
of the primary obligation in respect of which Guarantee is made or, if not so stated or
determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person
is required to perform thereunder) as determined by such Person in good faith. The term “Guarantee”
used as a verb has a corresponding meaning.




          “Hazardous Materials” shall mean all explosive or radioactive substances or wastes and all
hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas,
infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to
any Environmental Law.




          “Hedging Obligations” of any Person shall mean any and all obligations of such Person, whether
absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired under
(i) any and all Hedging Transactions, (ii) any and all cancellations, buy backs, reversals,
terminations or assignments of any Hedging Transactions and (iii) any and all renewals, extensions
and modifications of any Hedging Transactions and any and all substitutions for any Hedging
Transactions.




          “Hedging Transaction” of any Person shall mean any transaction (including an agreement with
respect thereto) now existing or hereafter entered into by such Person that is a rate swap, basis
swap, forward rate transaction, commodity swap, interest rate option, foreign exchange transaction,
cap transaction, floor transaction, collateral transaction, forward transaction, currency swap
transaction, cross-currency rate swap transaction, currency option or any other similar transaction
(including any option with respect to any of these transactions) or




9









 







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




          “Indebtedness” of any Person shall mean, without duplication (i) all obligations of such
Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (iii) all obligations of such Person in respect of the deferred
purchase price of property or services (other than trade payables incurred in the ordinary course
of business on terms customary in the trade), (iv) all obligations of such Person under any
conditional sale or other title retention agreement(s) relating to property acquired by such
Person, (v) Capital Lease Obligations of such Person, (vi) obligations, contingent or otherwise, of
such Person in respect of letters of credit, acceptances or similar extensions of credit, (vii)
guaranties by such Person of the type of Indebtedness described in clauses (i) through (vi) above,
(viii) all Indebtedness of a third party secured by any Lien on property owned by such Person,
whether or not such Indebtedness has been assumed by such Person, (ix) all obligations of such
Person, contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any
common stock of such Person, (x) Off-Balance Sheet Liabilities retained in connection with asset
securitization programs, Synthetic Leases, sale and leaseback transactions or other similar
obligations arising with respect to any other transaction which is the functional equivalent of or
takes the place of borrowing but which does not constitute a liability on the consolidated balance
sheet of such Person and its subsidiaries (xi) Net Mark to Market Exposure on all Hedging
Obligations, and (xii) obligations under any derivative contract including any commodity agreement,
or foreign exchange agreement. The Indebtedness of any Person shall include the Indebtedness of
any partnership or joint venture in which such Person is a general partner or a joint venturer,
except to the extent that the terms of such Indebtedness provide that such Person is not liable
therefor.




          “Indemnified Taxes” shall mean Taxes other than Excluded Taxes.




          “Information Memorandum” shall mean the confidential executive summary relating to the Loan
Parties and the transactions contemplated by this Agreement and the other Loan Documents.




          “Intercreditor Agreement” shall mean that certain Intercreditor Agreement, dated as of the
date hereof, by and among the Borrower, the Lenders, the Administrative Agent and the Investment
Lenders, the swingline lender, the issuing bank and the administrative agent under the Investment
Credit Agreement.




          “Interest Period” shall mean with respect to any Eurodollar Borrowing, a period of one, two,
three, six months or, to the extent available to each Lender, twelve months; provided,
that:





     (i) the initial Interest Period for such Borrowing shall commence on the date of such
Borrowing (including the date of any conversion from a Borrowing of another Type), and each
Interest Period occurring thereafter in respect of such Borrowing shall commence on the day
on which the next preceding Interest Period expires;



10









 






     (ii) if any Interest Period would otherwise end on a day other than a Business Day,
such Interest Period shall be extended to the next succeeding Business Day, unless such
Business Day falls in another calendar month, in which case such Interest Period would end
on the next preceding Business Day;




     (iii) any Interest Period which begins on the last Business Day of a calendar month or
on a day for which there is no numerically corresponding day in the calendar month at the
end of such Interest Period shall end on the last Business Day of such calendar month;




     (iv) no Interest Period may extend beyond the Commitment Termination Date.



          “Investment Advisory Agreement” shall mean that certain Investment Management Agreement, dated
as of September 20, 2006, by and between Borrower and KA Fund Advisors, LLC.




          “Investment Company Act” shall mean the Investment Company Act of 1940, as amended and in
effect from time to time.




          “Investment Credit Agreement” shall have the meaning set forth in the recitals to this
Agreement.




          “Investment Credit Facility Collateral” shall mean all “Collateral” as detailed in the
Investment Credit Agreement




          “Investment Lenders” shall have the meaning set forth in the recitals to this Agreement.




          “Investment Revolving Commitment” shall mean, with respect to each Investment Lender, the
obligation of such Investment Lender to make Investment Revolving Loans in an aggregate principal
amount not exceeding the amount set forth with respect to such Investment Lender on Schedule
I to the Investment Credit Agreement, or in the case of a Person becoming an Investment Lender
after the Closing Date, the amount of the assigned “Investment Revolving Commitment” as provided in
the assignment and acceptance executed by such Person as an assignee, as the same may be increased
or decreased pursuant to terms hereof.




          “Investment Revolving Commitment Amount” shall mean the aggregate principal amount of the
Investment Revolving Commitments from time to time.




          “Revolving Credit Exposure” shall mean, with respect to any Investment Lender at any time, the
sum of the outstanding principal amount of such Investment Lender’s Investment Revolving Loans,
Investment LC Exposure and Investment Swingline Exposure.




          “Investment Revolving Loans” shall have the meaning set forth in the Investment Credit
Agreement.




          “LC Exposure” shall have the meaning assigned to such term in the Investment Credit Agreement.




11









 








          “Lenders” shall have the meaning assigned to such term in the opening paragraph of this
Agreement.




          “LIBOR” shall mean, for any applicable Interest Period with respect to any Eurodollar Loan,
the British Bankers’ Association Interest Settlement Rate per annum for deposits in Dollars for a
period equal to such Interest Period appearing on the display designated as Page 3750 on the Dow
Jones Markets Service (or such other page on that service or such other service designated by the
British Bankers’ Association for the display of such Association’s Interest Settlement Rates for
Dollar deposits) as of 11:00 a.m. (London, England time) on the day that is two Business Days prior
to the first day of the Interest Period or if such Page 3750 is unavailable for any reason at such
time, the rate which appears on the Reuters Screen ISDA Page as of such date and such time;
provided, that if the Administrative Agent determines that the relevant foregoing sources
are unavailable for the relevant Interest Period, LIBOR shall mean the rate of interest determined
by the Administrative Agent to be the average (rounded upward, if necessary, to the nearest
1/100th of 1%) of the rates per annum at which deposits in Dollars are offered to the
Administrative Agent two (2) Business Days preceding the first day of such Interest Period by
leading banks in the London interbank market as of 10:00 a.m. (New York time) for delivery on the
first day of such Interest Period, for the number of days comprised therein and in an amount
comparable to the amount of the Eurodollar Loan of the Administrative Agent.




          “Lien” shall mean any mortgage, pledge, security interest, lien (statutory or otherwise),
charge, encumbrance, hypothecation, assignment, deposit arrangement, or other arrangement having
the practical effect of the foregoing or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any conditional sale or other
title retention agreement and any capital lease having the same economic effect as any of the
foregoing).




          “Loan Documents” shall mean, collectively, this Agreement, the Notes (if any), the Subsidiary
Guarantee Agreements, the Security Documents, the Fee Letter, all Notices of Revolving Borrowing,
all Notices of Conversion/Continuation, all Compliance Certificates, the Control Agreement, and any
and all other instruments, agreements, documents, certificates and writings executed in connection
with any of the foregoing.




          “Loan Parties” shall mean the Borrower and the Subsidiary Guarantors.




          “Loans” shall mean all Revolving Loans in the aggregate or any of them, as the context shall
require.




          “Material Adverse Effect” shall mean, with respect to any event, act, condition or occurrence
of whatever nature (including any adverse determination in any litigation, arbitration, or
governmental investigation or proceeding), whether singularly or in conjunction with any other
event or events, act or acts, condition or conditions, occurrence or occurrences whether or not
related, a material adverse change in, or a material adverse effect on, (i) the business, results
of operations, financial condition, assets, liabilities or prospects of the Borrower or of the
Borrower and its Subsidiaries, taken as a whole, (ii) the ability of the Loan Parties to perform
any of their respective obligations under the Loan Documents, (iii) the rights and remedies of the




12









 







Administrative Agent and the Lenders under any of the Loan Documents or (iv) the legality,
validity or enforceability of any of the Loan Documents.




          “Material Indebtedness” shall mean Indebtedness (other than the Loans) and Hedging Obligations
of the Borrower or any of its Subsidiaries, individually or in an aggregate principal amount
exceeding $5,000,000. For purposes of determining the amount of attributed Indebtedness from
Hedging Obligations, the “principal amount” of any Hedging Obligations at any time shall be the Net
Mark-to-Market Exposure of such Hedging Obligations.




          “Moody’s” shall mean Moody’s Investors Service, Inc.




          “Multiemployer Plan” shall have the meaning set forth in Section 4001(a)(3) of ERISA.




          “Net Mark to Market Exposure” shall mean, as of any date of determination, the aggregate
amount with respect to all Hedging Obligations of the Borrower and its Subsidiaries of the excess
(if any) of all unrealized losses in respect of all such Hedging Obligations over all unrealized
profits in respect of all Hedging Transactions of the Borrower and its Subsidiaries. “Unrealized
losses” shall mean as to any Hedging Obligation, the fair market value of the cost to such Person
of replacing the Hedging Transaction giving rise to such Hedging Obligation as of the date of
determination (assuming the Hedging Transaction were to be terminated as of that date), and
“unrealized profits” means as to any Hedging Transaction, the fair market value of the gain to such
Person in respect of the Hedging Transaction as of the date of determination (assuming such Hedging
Transaction were to be terminated as of that date).




          “Notes” shall mean, collectively, the Revolving Credit Notes.




          “Notice of Conversion/Continuation” shall mean the notice given by the Borrower to the
Administrative Agent in respect of the conversion or continuation of an outstanding Borrowing as
provided in Section 2.6(b).




          “Notice of Revolving Borrowing” shall have the meaning as set forth in Section 2.3.




          “Obligations” shall mean all amounts owing by the Borrower to the Administrative Agent or any
Lender pursuant to or in connection with this Agreement or any other Loan Document, including
without limitation, all principal, interest (including any interest accruing after the filing of
any petition in bankruptcy or the commencement of any insolvency, reorganization or like proceeding
relating to the Borrower, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding), all reimbursement obligations, fees, expenses, indemnification and
reimbursement payments, costs and expenses (including all fees and expenses of counsel to the
Administrative Agent and any Lender incurred pursuant to this Agreement or any other Loan
Document), whether direct or indirect, absolute or contingent, liquidated or unliquidated, now
existing or hereafter arising hereunder or thereunder, and all Hedging Obligations owed to the
Administrative Agent, any Lender or any of their Affiliates incurred in order to limit interest
rate or fee fluctuation with respect to the Loans and all obligations and liabilities incurred in
connection with collecting and enforcing the foregoing, together with all renewals, extensions,
modifications or refinancings thereof.




13









 








          “Off-Balance Sheet Liabilities” of any Person shall mean (i) any repurchase obligation or
liability of such Person with respect to accounts or notes receivable sold by such Person, (ii) any
liability of such Person under any sale and leaseback transactions that do not create a liability
on the balance sheet of such Person, (iii) any Synthetic Lease Obligation or (iv) any obligation
arising with respect to any other transaction which is the functional equivalent of or takes the
place of borrowing but which does not constitute a liability on the balance sheet of such Person.




          “OSHA” shall mean the Occupational Safety and Health Act of 1970, as amended from time to
time, and any successor statute.




          “Other Lock-up Agreement” shall have the meaning assigned to such term in Section 7.7




          “Other Taxes” shall mean any and all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment made hereunder or from
the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.




          “Participant” shall have the meaning set forth in Section 10.4(d).




          “Payment Office” shall mean the office of the Administrative Agent located at 303 Peachtree
Street, N.E., Atlanta, Georgia 30308, or such other location as to which the Administrative Agent
shall have given written notice to the Borrower and the other Lenders.




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




          “Permitted Encumbrances” shall mean





     (i) Liens imposed by law for taxes not yet due or which are being contested in good
faith by appropriate proceedings diligently conducted and with respect to which adequate
reserves are being maintained in accordance with GAAP;




     (ii) statutory Liens of landlords, carriers, warehousemen, mechanics, materialmen and
similar Liens arising by operation of law in the ordinary course of business for amounts not
yet due or which are being contested in good faith by appropriate proceedings and with
respect to which adequate reserves are being maintained in accordance with GAAP;




     (iii) pledges and deposits made in the ordinary course of business in compliance with
workers’ compensation, unemployment insurance and other social security laws or regulations;




     (iv) deposits to secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations of a like
nature, in each case in the ordinary course of business;



14









 






     (v) judgment and attachment liens not giving rise to an Event of Default or Liens
created by or existing from any litigation or legal proceeding that are currently being
contested in good faith by appropriate proceedings and with respect to which adequate
reserves are being maintained in accordance with GAAP;




     (vi) customary rights of set-off, revocation, refund or chargeback under deposit
agreements or under the Uniform Commercial Code or common law of banks or other financial
institutions where Borrower or any of its Subsidiaries maintains deposits (other than
deposits intended as cash collateral) in the ordinary course of business;




     (vii) easements, zoning restrictions, rights-of-way and similar encumbrances on real
property imposed by law or arising in the ordinary course of business that do not secure any
monetary obligations and do not materially detract from the value of the affected property
or materially interfere with the ordinary conduct of business of the Borrower and its
Subsidiaries taken as a whole;




     (viii) Liens imposed on amounts held in the Borrower’s or its Subsidiaries’ Approved
Brokerage Accounts in accordance with option transactions or other similar transactions;
provided, that in no event shall the sum of the fair market value of the collateral
securing (A) such Liens or the obligations secured thereby and (B) the Liens or the
obligations secured thereby provided for in clause (ix) below exceed $5,000,000 in the
aggregate at any time; and




     (ix) Liens securing obligations incurred under any Clearing Account; provided, that the
custodian of such Clearing Account and the Administrative Agent have entered into an
agreement in form and substance satisfactory to the Administrative Agent which, among other
things, requires all amounts and Securities in excess of $1,000,000 to be transferred prior
to the end of each Business Day to a Collateral Account;




provided, that the term “Permitted Encumbrances” shall not include any Lien securing
Indebtedness, except for Indebtedness set forth on Schedule 7.1 hereto.



          “Person” shall mean any individual, partnership, firm, corporation, association, joint
venture, limited liability company, trust or other entity, or any Governmental Authority.




          “Plan” shall mean any employee pension benefit plan (other than a Multiemployer Plan) subject
to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in
respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would
under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.




          “Portfolio Investment” shall have the meaning assigned to such term in the Investment Credit
Agreement.




          “Pro Rata Share” shall mean with respect to the Commitment of any Lender at any time, a
percentage, the numerator of which shall be such Lender’s Commitment (or if such Commitments have
been terminated or expired or the Loans have been declared to be due and payable, such Lender’s
Credit Exposure), and the denominator of which shall be the sum of




15









 







Commitments of all Lenders (or if the Commitments have been terminated or expired or the Loans
have been declared to be due and payable, all Credit Exposure).




          “Register” has the meaning assigned to such term in clause (c) of Section
10.4.




          “Regulation D” shall mean Regulation D of the Board of Governors of the Federal Reserve
System, as the same may be in effect from time to time, and any successor regulations.




          “Related Parties” shall mean, with respect to any specified Person, such Person’s Affiliates
and the respective directors, officers, employees, agents and advisors of such Person and such
Person’s Affiliates.




          “Release” shall mean any release, spill, emission, leaking, dumping, injection, pouring,
deposit, disposal, discharge, dispersal, leaching or migration into the environment (including
ambient air, surface water, groundwater, land surface or subsurface strata) or within any building,
structure, facility or fixture.




          “Required Lenders” shall mean, at any time, Lenders holding more than 50% of the aggregate
outstanding Commitments at such time or if the Lenders have no Commitments outstanding, then
Lenders holding more than 50% of the aggregate Credit Exposure;




          “Requirement of Law” for any Person shall mean the articles or certificate of incorporation,
bylaws, partnership certificate and agreement, or limited liability company certificate of
organization and agreement, as the case may be, and other organizational and governing documents of
such Person, and any law, treaty, rule or regulation, or determination of a Governmental Authority,
in each case applicable to or binding upon such Person or any of its property or to which such
Person or any of its property is subject




          “Responsible Officer” shall mean any of the president, the chief executive officer, the chief
operating officer, the chief financial officer, the treasurer or a vice president of the Borrower
or such other representative of the Borrower as may be designated in writing by any one of the
foregoing with the consent of the Administrative Agent; and, with respect to the financial
covenants only, the chief financial officer or the treasurer of the Borrower.




          “Restricted Payment” shall mean any dividend or distribution on any class of the capital stock
of Borrower or any of its Subsidiaries, or any payment on account of, or assets set apart for a
sinking or other analogous fund for, the purchase, redemption, retirement, defeasance or other
acquisition of, any shares of capital stock or Indebtedness subordinated to the Obligations of the
Borrower or any Guarantee thereof or any options, warrants, or other rights to purchase such
capital stock or such Indebtedness, whether now or hereafter outstanding.




          “Revolving Commitment” shall mean, with respect to each Lender, the obligation of such Lender
to make Revolving Loans to the Borrower in an aggregate principal amount not exceeding the amount
set forth with respect to such Lender on Schedule I or in the case of a Person becoming a
Lender after the Closing Date, the amount of the assigned “Revolving Commitment” as provided in the
Assignment and Acceptance executed by such Person as an




16









 







assignee, or the joinder executed by such Person, in each case as such commitment may
subsequently be increased or decreased pursuant to terms hereof.




          “Revolving Commitment Amount” shall mean the aggregate principal amount of the Revolving
Commitments from time to time. On the Closing Date, the Revolving Commitment Amount equals
$100,000,000.




          “Revolving Commitment Termination Date” shall mean the earliest of (i) June 4, 2010, (ii) the
date on which the Revolving Commitments are terminated pursuant to Section 2.7 and (iii)
the date on which all amounts outstanding under this Agreement have been declared or have
automatically become due and payable (whether by acceleration or otherwise).




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




          “Revolving Credit Note” shall mean a promissory note of the Borrower payable to the order of a
requesting Lender in the principal amount of such Lender’s Revolving Commitment, in substantially
the form of Exhibit A.




          “Revolving Loan” shall mean a loan made by the Lender to the Borrower under its Revolving
Commitment, which may either be a Base Rate Loan or a Eurodollar Loan.




          “RIC” or “Regulated Investment Company” shall mean a regulated investment company as defined
in Section 851(a) of the Code that qualifies for the special tax treatment provided for by
subchapter M of the Code.




          “Right of First Offer” shall mean any provision, term or condition which gives a Person the
first option of buying or providing an offer with respect to a Security if the holder of such
Security undertakes any action to sell, transfer or otherwise liquidate, or to market or offer for
sale, or solicit offers to purchase such Security.




          “S&P” shall mean Standard & Poor’s, a Division of the McGraw Hill Companies.




          “Security Agreement” shall mean that certain Cash Collateral Agreement and Securities Account
Control Agreement, dated as of the Closing Date, executed by the Borrower granting to the
Administrative Agent for the benefit of the Lenders a security interest in the Cash Collateral, as
amended, restated, supplemented or otherwise modified from time to time.




          “Security Documents” shall mean, collectively, the Security Agreement, any other Control
Agreement, and all other instruments and agreements now or hereafter securing the whole or any part
of the Obligations or any Guarantee thereof, all UCC financing statements and all other documents,
instruments, agreements and certificates executed and delivered by any Loan Party to the
Administrative Agent and the Lenders in connection herewith.




          “Securities” means common and preferred stock, units and participations, member interests in
limited liability companies, partnership interests in partnerships, notes, bonds, debentures, trust
receipts and other obligations, instruments or evidences of indebtedness, including debt
instruments or public and private issuers and tax-exempt securities (including




17









 







warrants, rights, put and call options and other options relating thereto, representing
rights, or any combination thereof) and other property or interests commonly regarded as securities
or any form of interest or participation therein, but not including Bank Loans.




          “Securities Act” means the United States Securities Act of 1933, as amended.




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




          “Special Purpose Subsidiary” shall mean any single purpose Subsidiary created for the purpose
of holding specific assets.




          “Subsidiary” shall mean, with respect to any Person (the “parent”), any corporation,
partnership, joint venture, limited liability company, association or other entity the accounts of
which would be consolidated with those of the parent in the parent’s consolidated financial
statements if such financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, partnership, joint venture, limited liability company, association
or other entity (i) of which securities or other ownership interests representing more than 50% of
the equity or more than 50% of the ordinary voting power, or in the case of a partnership, more
than 50% of the general partnership interests are, as of such date, owned, controlled or held, or
(ii) that is, as of such date, otherwise controlled, by the parent or one or more subsidiaries of
the parent or by the parent and one or more subsidiaries of the parent. Unless otherwise indicated,
all references to “Subsidiary” hereunder shall mean a Subsidiary of the Borrower.




          “Subsidiary Guarantee Agreement” shall mean any guaranty agreement, in form and substance
satisfactory to the Agent, executed from time to time by any Subsidiary in favor of the
Administrative Agent and the Lenders, as amended, restated, supplemented or otherwise modified from
time to time.




          “Subsidiary Guarantor” shall mean any Subsidiary of Borrower that executes and delivers a
Subsidiary Guarantee Agreement on the Closing Date or from time to time pursuant to Section
5.11.




          “Swingline Exposure” shall mean, with respect to each Investment Lender, the principal amount
of the swingline loans in which such Investment Lender is legally obligated either to make a loan
or to purchase a participation in accordance with Section 2.4 of the Investment Credit Agreement,
which shall equal such Investment Lender’s Pro Rata Share of all outstanding swingline loans under
the Investment Credit Agreement.




          “Syndication Agent” shall have the meaning assigned to such term in the opening paragraph
hereof.




          “Synthetic Lease” shall mean a lease transaction under which the parties intend that (i) the
lease will be treated as an “operating lease” by the lessee pursuant to Statement of Financial
Accounting Standards No. 13, as amended and (ii) the lessee will be entitled to various tax and
other benefits ordinarily available to owners (as opposed to lessees) of like property.




18









 








          “Synthetic Lease Obligations” shall mean, with respect to any Person, the sum of (i) all
remaining rental obligations of such Person as lessee under Synthetic Leases which are attributable
to principal and, without duplication, (ii) all rental and purchase price payment obligations of
such Person under such Synthetic Leases assuming such Person exercises the option to purchase the
lease property at the end of the lease term.




          “Tag Along Rights” shall mean tag along, co-sale or other similar contractual rights that
allow a holder of a Security to join in a proposed sale of Securities by another Person and sell
all or any portion of the Securities held by such holder.




          “Taxes” shall mean any and all present or future taxes, levies, imposts, duties, deductions,
charges or withholdings imposed by any Governmental Authority.




          “Type”, when used in reference to a Loan or Borrowing, refers to whether the rate of interest
on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted
LIBO Rate or the Base Rate.




          “Underwriting Policies” shall mean those investment objectives, policies and restrictions that
are set forth in the Borrower’s 2006 annual report on Form 10K filed with the Securities and
Exchange Commission, subject to other modifications or supplements as may be adopted by the
Borrower from time to time and reflected in filings with the Securities and Exchange Commission
that do not result in a materially adverse change from those set forth in such 2006 annual report.




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




          “U.S. Government Securities” shall mean securities that are direct obligations of, and
obligations the timely payment of principal and interest on which is fully guaranteed by, the
United States or any agency or instrumentality of the United Stats the obligations of which are
backed by the full faith and credit of the United States and in the form of conventional bills,
bonds and notes.




          “Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result of a complete
or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle
E of Title IV of ERISA.




          Section 1.2. Classifications of Loans and Borrowings. For purposes of this Agreement,
Loans and Borrowings may be classified and referred to by Class (e.g. a “Revolving Loan” or
“Revolving Borrowing”), by Type (e.g. a “Eurodollar Loan”, “Base Rate Loan”, “Eurodollar Borrowing”
or “Base Rate Borrowing”) or by Class and Type (e.g. a “Revolving Eurodollar Loan” or “Revolving
Eurodollar Borrowing”).




          Section 1.3. Accounting Terms and Determination. Unless otherwise defined or
specified herein, all accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial statements required to be delivered
hereunder shall be prepared,
in accordance with GAAP as in effect from time to time, applied on a basis consistent with the
most recent audited consolidated financial statement of the Borrower





19









 







delivered pursuant to
Section 5.1(a); provided, that if the Borrower notifies the Administrative
Agent that the Borrower wishes to amend any covenant in Article VI to eliminate the effect of any
change in GAAP on the operation of such covenant (or if the Administrative Agent notifies the
Borrower that the Required Lenders wish to amend Article VI for such purpose), then the Borrower’s
compliance with such covenant shall be determined on the basis of GAAP in effect immediately before
the relevant change in GAAP became effective, until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to the Borrower and the Required Lenders.




          Section 1.4. Terms Generally. The definitions of terms herein shall apply equally to
the singular and plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The
word “will” shall be construed to have the same meaning and effect as the word “shall”. In the
computation of periods of time from a specified date to a later specified date, the word “from”
means “from and including” and the word “to” means “to but excluding”. Unless the context requires
otherwise (i) any definition of or reference to any agreement, instrument or other document herein
shall be construed as referring to such agreement, instrument or other document as it was
originally executed or as it may from time to time be amended, restated, supplemented or otherwise
modified (subject to any restrictions on such amendments, supplements or modifications set forth
herein), (ii) any reference herein to any Person shall be construed to include such Person’s
successors and permitted assigns, (iii) the words “hereof”, “herein” and “hereunder” and words of
similar import shall be construed to refer to this Agreement as a whole and not to any particular
provision hereof, (iv) all references to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles, Sections, Exhibits and Schedules to this Agreement and (v) all
references to a specific time shall be construed to refer to the time in the city and state of the
Administrative Agent’s principal office, unless otherwise indicated.




ARTICLE II



AMOUNT AND TERMS OF THE COMMITMENTS




          Section 2.1. General Description of the Facility. Subject to and upon the terms and
conditions herein set forth, the Lenders hereby establish in favor of the Borrower a revolving
credit facility pursuant to which each Lender severally agrees (to the extent of such Lender’s
Commitment) to make Loans to the Borrower in accordance with Section 2.2 and Section
2.3; provided, that in no event shall the aggregate principal amount of all outstanding
Loans exceed at any time the Aggregate Commitment Amount from time to time in effect.




          Section 2.2. Revolving Loans. Subject to the terms and conditions set forth herein,
each Lender severally agrees to make Revolving Loans, ratably in proportion to its Pro Rata Share,
to the Borrower, from time to time during the Availability Period, in an aggregate principal amount
outstanding at any time that will not result in (a) such Lender’s Revolving Credit Exposure
exceeding such Lender’s Revolving Commitment or (b) the aggregate





20









 







Revolving Credit Exposures of all
Lenders exceeding the Revolving Commitment Amount. During the Availability Period, the Borrower
shall be entitled to borrow, prepay and reborrow Revolving Loans in accordance with the terms and
conditions of this Agreement; provided, that the Borrower may not borrow or reborrow should
there exist a Default or Event of Default or should Borrower fail to maintain its status as a RIC
as required pursuant to Section 5.10.




          Section 2.3. Procedure for Borrowings. The Borrower shall give the Administrative
Agent written notice (or telephonic notice promptly confirmed in writing) of each Borrowing
substantially in the form of Exhibit 2.3 (a “Notice of Revolving Borrowing”) (x) prior to
11:00 a.m. (New York time) on the date of each Base Rate Borrowing and (y) prior to 2:00 p.m. (New
York time) three (3) Business Days prior to the requested date of each Eurodollar Borrowing. Each
Notice of Revolving Borrowing shall be irrevocable and shall specify: (i) the aggregate principal
amount of such Borrowing, (ii) the date of such Borrowing (which shall be a Business Day), (iii)
the Class of such Loan comprising such Borrowing; (iv) the Type of such Loan comprising such
Borrowing and (v) in the case of a Eurodollar Borrowing, the duration of the initial Interest
Period applicable thereto (subject to the provisions of the definition of Interest Period). Each
Borrowing shall consist entirely of Base Rate Loans or Eurodollar Loans, as the Borrower may
request. The aggregate principal amount of each Eurodollar Borrowing shall be not less than
$1,000,000 or a larger multiple of $250,000, and the aggregate principal amount of each Base Rate
Borrowing shall not be less than $250,000 or a larger multiple of $100,000. At no time shall the
total number of Eurodollar Borrowings outstanding at any time exceed six. Promptly following the
receipt of a Notice of Revolving Borrowing in accordance herewith, the Administrative Agent shall
advise each Lender of the details thereof and the amount of such Lender’s Loan to be made as part
of the requested Borrowing.




          Section 2.4. Intentionally Omitted.



          Section 2.5. Funding of Borrowings.




          (a) Each Lender will make available each Loan to be made by it hereunder on the proposed date
thereof by wire transfer in immediately available funds by 11:00 a.m. (New York time) for
Eurodollar Borrowings and 2:00 p.m. (New York time) for Base Rate Borrowings to the Administrative
Agent at the Payment Office. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts that it receives, in like funds by the close of business
on such proposed date, to an account maintained by the Borrower with the Administrative Agent or at
the Borrower’s option, by effecting a wire transfer of such amounts to an account designated by the
Borrower to the Administrative Agent.




          (b) Unless the Administrative Agent shall have been notified by any Lender (i) for Eurodollar
Borrowings, prior to 5:00 p.m. (New York time) one (1) Business Day prior to the date of such
Eurodollar Borrowing in which such Lender is to participate, and (ii) for Base Rate Borrowings,
promptly and in no event later than 2:00 p.m. (New York time) on the day of such Base Rate
Borrowing in which such Lender is to participate that such Lender will not make available to the
Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume
that such Lender has made such amount available to the Administrative Agent on such date, and the
Administrative Agent, in reliance on such






21









 







assumption, may make available to the Borrower on such
date a corresponding amount. If such corresponding amount is not in fact made available to the
Administrative Agent by such Lender on the date of such Borrowing, the Administrative Agent shall
be entitled to recover such corresponding amount on demand from such Lender together with interest
at the Federal Funds Rate until the second Business Day after such demand and thereafter at the
Base Rate. If such Lender does not pay such corresponding amount forthwith upon the Administrative
Agent’s demand therefor, the Administrative Agent shall promptly notify the Borrower, and the
Borrower shall immediately pay such corresponding amount to the Administrative Agent together with
interest at the rate specified for such Borrowing. Nothing in this subsection shall be deemed to
relieve any Lender from its obligation to fund its Pro Rata Share of any Borrowing hereunder or to
prejudice any rights which the Borrower may have against any Lender as a result of any default by
such Lender hereunder.




          (c) All Borrowings shall be made by the Lenders on the basis of their respective Pro Rata
Shares. No Lender shall be responsible for any default by any other Lender in its obligations
hereunder, and each Lender shall be obligated to make its Loans provided to be made by it
hereunder, regardless of the failure of any other Lender to make its Loans hereunder.




          Section 2.6. Interest Elections.




          (a) Each Borrowing initially shall be of the Type specified in the applicable Notice of
Revolving Borrowing, and in the case of a Eurodollar Borrowing, shall have an initial Interest
Period as specified in such Notice of Revolving Borrowing. Thereafter, the Borrower may elect to
convert such Borrowing into a different Type or to continue such Borrowing, and in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section
2.6. The Borrower may elect different options with respect to different portions of the
affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders
holding Loans comprising such Borrowing, and the Loans comprising each such portion shall be
considered a separate Borrowing.




          (b) To make an election pursuant to this Section 2.6, the Borrower shall give the
Administrative Agent prior written notice (or telephonic notice promptly confirmed in writing) of
each Borrowing substantially in the form of Exhibit 2.6(b) (a “Notice of
Conversion/Continuation”) that is to be converted or continued, as the case may be, (x) prior to
11:00 a.m. (New York time) one (1) Business Day prior to the requested date of a conversion into a
Base Rate Borrowing and (y) prior to 2:00 p.m. (New York time) three (3) Business Days prior to a
continuation of or conversion into a Eurodollar Borrowing. Each such Notice of
Conversion/Continuation shall be irrevocable and shall specify (i) the Borrowing to which such
Notice of Continuation/Conversion applies and if different options are being elected with respect
to different portions thereof, the portions thereof that are to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) shall
be specified for each resulting Borrowing); (ii) the effective date of the election made pursuant
to such Notice of Continuation/Conversion, which shall be a Business Day, (iii) whether the
resulting Borrowing is to be a Base Rate Borrowing or a Eurodollar Borrowing; and (iv) if the
resulting Borrowing is to be a Eurodollar Borrowing, the Interest Period applicable thereto after
giving effect to such election, which shall be a period contemplated by the definition of “Interest
Period”. If any such Notice of Continuation/Conversion requests a Eurodollar Borrowing but





22









 







does not
specify an Interest Period, the Borrower shall be deemed to have selected an Interest Period of one
month. The principal amount of any resulting Borrowing shall satisfy the minimum borrowing amount
for Eurodollar Borrowings and Base Rate Borrowings set forth in Section 2.3.




          (c) If, on the expiration of any Interest Period in respect of any Eurodollar Borrowing, the
Borrower shall have failed to deliver a Notice of Conversion/ Continuation, then, unless such
Borrowing is repaid as provided herein, the Borrower shall be deemed to have elected to convert
such Borrowing to a Base Rate Borrowing. No Borrowing may be converted into, or continued as, a
Eurodollar Borrowing if a Default or an Event of Default exists, unless the Administrative Agent
and each of the Lenders shall have otherwise consented in writing. No conversion of any Eurodollar
Loans shall be permitted except on the last day of the Interest Period in respect thereof.




          (d) Upon receipt of any Notice of Conversion/Continuation, the Administrative Agent shall
promptly notify each Lender of the details thereof and of such Lender’s portion of each resulting
Borrowing.




          Section 2.7. Optional Reduction and Termination of Commitments.




          (a) Unless previously terminated, all Revolving Commitments shall terminate on the Commitment
Termination Date.




          (b) Upon at least three (3) Business Days’ prior written notice (or telephonic notice promptly
confirmed in writing) to the Administrative Agent (which notice shall be irrevocable), the Borrower
may reduce the Commitments in part or terminate the Commitments in whole; provided, that
any partial reduction shall apply to reduce proportionately and permanently the Commitment of each
Lender, any partial reduction pursuant to this Section 2.7 shall be in an amount of at
least $1,000,000 and any larger multiple of $250,000, and no such reduction shall be permitted
which would reduce the Revolving Commitments to an amount less than the outstanding Credit
Exposures of all Lenders.




          Section 2.8. Repayment of Loans. The outstanding principal amount of all Revolving
Loans shall be due and payable (together with accrued and unpaid interest thereon) on the Revolving
Commitment Termination Date.




          Section 2.9. Evidence of Indebtedness. (a) Each Lender shall maintain in accordance
with its usual practice appropriate records evidencing the Indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender from time to time, including the amounts of
principal and interest payable thereon and paid to such Lender from time to time under this
Agreement. The Administrative Agent shall maintain appropriate records in which shall be recorded
(i) the Commitment of each Lender, (ii) the amount of each Loan made hereunder by each Lender, the
Class and Type thereof and the Interest Period applicable thereto, (iii) the date of each
continuation thereof pursuant to Section 2.6, (iv) the date of each conversion of all or a
portion thereof to another Type pursuant to Section 2.6, (v) the date and amount
of any principal or interest due and payable or to become due and payable from the Borrower to each Lender
hereunder in respect of such Loans and (vi) both the date and amount






23









 







of any sum received by the
Administrative Agent hereunder from the Borrower in respect of the Loans and each Lender’s Pro Rata
Share thereof. The entries made in such records shall be prima facie evidence of the existence and
amounts of the obligations of the Borrower therein recorded; provided, that the failure or
delay of any Lender or the Administrative Agent in maintaining or making entries into any such
record or any error therein shall not in any manner affect the obligation of the Borrower to repay
the Loans (both principal and unpaid accrued interest) of such Lender in accordance with the terms
of this Agreement.




          (b) At the request of any Lender at any time, the Borrower agrees that it will execute and
deliver to such Lender a Revolving Note payable to the order of such Lender.




          Section 2.10. Prepayments




          (a) The Borrower shall have the right at any time and from time to time to prepay any
Borrowing, in whole or in part, without premium or penalty, by giving irrevocable written notice
(or telephonic notice promptly confirmed in writing) to the Administrative Agent no later than (i)
in the case of prepayment of any Eurodollar Borrowing, 2:00 p.m. (New York time) not less than
three (3) Business Days prior to any such prepayment, or (ii) in the case of any prepayment of any
Base Rate Borrowing, 11:00 a.m. on the same day of such prepayment. Each such notice shall be
irrevocable and shall specify the proposed date of such prepayment and the principal amount of each
Borrowing or portion thereof to be prepaid. Upon receipt of any such notice, the Administrative
Agent shall promptly notify each affected Lender of the contents thereof and of such Lender’s Pro
Rata Share of any such prepayment. If such notice is given, the aggregate amount specified in such
notice shall be due and payable on the date designated in such notice, together with accrued
interest to such date on the amount so prepaid in accordance with Section 2.11(c);
provided, that if a Eurodollar Borrowing is prepaid on a date other than the last day of an
Interest Period applicable thereto, the Borrower shall also pay all amounts required pursuant to
Section 2.17. Each partial prepayment of any Loan shall be in an amount that would be
permitted in the case of an advance of a Borrowing of the same Type pursuant to Section
2.2. Each prepayment of a Borrowing shall be applied ratably to the Loans comprising such
Borrowing.




          (b) If at any time the Credit Exposure of all Lenders exceeds the Aggregate Commitment Amount,
as reduced pursuant to Section 2.7 or otherwise, the Borrower shall immediately repay
Revolving Loans in an amount equal to such excess, together with all accrued
and unpaid interest on such excess amount and any amounts due under Section 2.17.
Each prepayment shall be applied ratably to the Base Rate Loans to the full extent thereof, and
then to Eurodollar Loans to the full extent thereof.




          (c) If at anytime the Borrower shall fail to maintain its status as a RIC as required pursuant
to Section 5.10, the Borrower shall immediately repay all Obligations on full.




          Section 2.11. Interest on Loans.




          (a) The Borrower shall pay interest on each Base Rate Loan at the Base Rate in effect from
time to time and on each Eurodollar Loan at the Adjusted LIBO Rate for the




24









 







applicable Interest
Period in effect for such Loan, plus, in each case, the Applicable Margin in effect from time to
time.





     (b) While an Event of Default exists or after acceleration, at the option of the
Required Lenders, the Borrower shall pay interest (“Default Interest”) with respect to all
Eurodollar Loans at the rate otherwise applicable for the then-current Interest Period plus
an additional 2% per annum until the last day of such Interest Period, and thereafter, and
with respect to all Base Rate Loans and all other Obligations hereunder (other than Loans),
at the rate in effect for Base Rate Loans, plus an additional 2% per annum.



          (c) Interest on the principal amount of all Loans shall accrue from and including the date
such Loans are made to but excluding the date of any repayment thereof. Interest on all outstanding
Base Rate Loans shall be payable quarterly in arrears on the last day of each March, June,
September and December and on the Commitment Termination Date. Interest on all outstanding
Eurodollar Loans shall be payable on the last day of each Interest Period applicable thereto, and,
in the case of any Eurodollar Loans having an Interest Period in excess of three months or 90 days,
respectively, on each day which occurs every three months or 90 days, as the case may be, after the
initial date of such Interest Period, and on the Commitment Termination Date. Interest on any Loan
which is converted into a Loan of another Type or which is repaid or prepaid shall be payable on
the date of such conversion or on the date of any such repayment or prepayment (on the amount
repaid or prepaid) thereof. All Default Interest shall be payable on demand.




          (d) The Administrative Agent shall determine each interest rate applicable to the Loans
hereunder and shall promptly notify the Borrower and the Lenders of such rate in writing (or by
telephone, promptly confirmed in writing). Any such determination shall be conclusive and binding
for all purposes, absent manifest error.




          Section 2.12. Fees.




          (a) The Borrower shall pay to the Administrative Agent for its own account fees in the amounts
and at the times previously agreed upon by the Borrower and the Administrative Agent.




          (b) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a
commitment fee, which shall accrue at the Applicable Percentage per annum on the daily amount of
the unused Commitment of such Lender during the Availability Period. For
purposes of computing commitment fees with respect to the Commitments, the Commitment of each
Lender shall be deemed used to the extent of the outstanding Loans of such Lender.




          (c) On the Closing Date, the Borrower shall pay to the Administrative Agent for its own
account fees in the amounts and at the times previously agreed upon in writing by the Borrower and
the Administrative Agent.




          (d) Accrued fees (other than the fees referenced in paragraphs (c) and (d)) shall be payable
quarterly in arrears on the last day of each March, June, September and December, commencing on
September 30, 2007 and on the Commitment Termination Date (and






25









 







if later, the date the Loans shall
be repaid in their entirety); provided further, that any such fees accruing after
the Commitment Termination Date shall be payable on demand.




          Section 2.13. Computation of Interest and Fees.




          All computations of interest and fees hereunder shall be made on the basis of a year of 360
days for the actual number of days (including the first day but excluding the last day) occurring
in the period for which such interest or fees are payable (to the extent computed on the basis of
days elapsed). Each determination by the Administrative Agent of an interest amount or fee
hereunder shall be made in good faith and, except for manifest error, shall be final, conclusive
and binding for all purposes.




          Section 2.14. Inability to Determine Interest Rates. If prior to the commencement of
any Interest Period for any Eurodollar Borrowing,





     (i) the Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances affecting the
relevant interbank market, adequate means do not exist for ascertaining LIBOR for such
Interest Period, or




     (ii) the Administrative Agent shall have received notice from the Required Lenders that
the Adjusted LIBO Rate does not adequately and fairly reflect the cost to such Lenders (or
Lender, as the case may be) of making, funding or maintaining their (or its, as the case may
be) Eurodollar Loans for such Interest Period,


the Administrative Agent shall give written notice (or telephonic notice, promptly confirmed in
writing) to the Borrower and to the Lenders as soon as practicable thereafter. Until the
Administrative Agent shall notify the Borrower and the Lenders that the circumstances giving rise
to such notice no longer exist, (i) the obligations of the Lenders to make Eurodollar Loans or to
continue or convert outstanding Loans as or into Eurodollar Loans shall be suspended and (ii) all
such affected Loans shall be converted into Base Rate Loans on the last day of the then current
Interest Period applicable thereto unless the Borrower prepays such Loans in accordance with this
Agreement. Unless the Borrower notifies the Administrative Agent at least one Business Day before
the date of any Eurodollar Borrowing for which a Notice of Revolving Borrowing has previously been
given that it elects not to borrow on such date, then such Borrowing shall be made as a Base Rate
Borrowing.




          Section 2.15. Illegality. If any Change in Law shall make it unlawful or impossible
for any Lender to make, maintain or fund any Eurodollar Loan and such Lender shall so notify the
Administrative Agent, the Administrative Agent shall promptly give notice thereof to the Borrower
and the other Lenders, whereupon until such Lender notifies the Administrative Agent and the
Borrower that the circumstances giving rise to such suspension no longer exist, the obligation of
such Lender to make Eurodollar Loans, or to continue or convert outstanding Loans as or into
Eurodollar Loans, shall be suspended. In the case of the making of a Eurodollar Borrowing, such
Lender’s Loan shall be made as a Base Rate Loan as part of the same Borrowing for the same Interest
Period and if the affected Eurodollar Loan is then outstanding, such Loan shall be converted to a
Base Rate Loan either (i) on the last day of the then current







26









 







Interest Period applicable to such
Eurodollar Loan if such Lender may lawfully continue to maintain such Loan to such date or (ii)
immediately if such Lender shall determine that it may not lawfully continue to maintain such
Eurodollar Loan to such date. Notwithstanding the foregoing, the affected Lender shall, prior to
giving such notice to the Administrative Agent, designate a different Applicable Lending Office if
such designation would avoid the need for giving such notice and if such designation would not
otherwise be disadvantageous to such Lender in the good faith exercise of its discretion.




          Section 2.16. Increased Costs.





     (a) If any Change in Law shall:




     (i) impose, modify or deem applicable any reserve, special deposit or similar
requirement that is not otherwise included in the determination of the Adjusted LIBO Rate
hereunder against assets of, deposits with or for the account of, or credit extended by, any
Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate); or




     (ii) impose on any Lender or the eurodollar interbank market any other condition
affecting this Agreement or any Eurodollar Loans made by such Lender;


and the result of either of the foregoing is to increase the cost to such Lender of making,
converting into, continuing or maintaining a Eurodollar Loan or to reduce the amount received or
receivable by such Lender hereunder (whether of principal, interest or any other amount), then the
Borrower shall promptly pay, upon written notice from and demand by such Lender on the Borrower
(with a copy of such notice and demand to the Administrative Agent), to the Administrative Agent
for the account of such Lender, within five Business Days after the date of such notice and demand,
additional amount or amounts sufficient to compensate such Lender for such additional costs
incurred or reduction suffered.




          (b) If any Lender shall have determined that on or after the date of this Agreement any Change
in Law regarding capital requirements has or would have the effect of reducing the rate of return
on such Lender’s capital (or on the capital of such Lender’s parent corporation) as a consequence
of its obligations hereunder to a level below that which such Lender or such Lender’s parent
corporation could have achieved but for such Change in Law (taking into consideration such Lender’s
policies or the policies of such Lender’s parent corporation with respect to capital adequacy)
then, from time to time, within five (5) Business
Days after receipt by the Borrower of written demand by such Lender (with a copy thereof to
the Administrative Agent), the Borrower shall pay to such Lender such additional amounts as will
compensate such Lender or such Lender’s parent corporation for any such reduction suffered.




          (c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such
Lender or such Lender’s parent corporation, as the case may be, specified in paragraph (a) or (b)
of this Section 2.16 shall be delivered to the Borrower (with a copy to the Administrative
Agent) and shall be conclusive, absent manifest error. The Borrower shall pay any such Lender, as
the case may be, such amount or amounts within five (5) Business Days after receipt thereof.





27









 








          (d) Failure or delay on the part of any Lender to demand compensation pursuant to this
Section 2.16 shall not constitute a waiver of such Lender’s right to demand such
compensation.




          Section 2.17. Funding Indemnity. In the event of (a) the payment of any principal of
a Eurodollar Loan other than on the last day of the Interest Period applicable thereto (including
as a result of an Event of Default), (b) the conversion or continuation of a Eurodollar Loan other
than on the last day of the Interest Period applicable thereto, or (c) the failure by the Borrower
to borrow, prepay, convert or continue any Eurodollar Loan on the date specified in any applicable
notice (regardless of whether such notice is withdrawn or revoked), then, in any such event, the
Borrower shall compensate each Lender, within five (5) Business Days after written demand from such
Lender, for any loss, cost or expense attributable to such event. In the case of a Eurodollar
Loan, such loss, cost or expense shall be deemed to include an amount determined by such Lender to
be the excess, if any, of (A) the amount of interest that would have accrued on the principal
amount of such Eurodollar Loan if such event had not occurred at the Adjusted LIBO Rate applicable
to such Eurodollar Loan for the period from the date of such event to the last day of the then
current Interest Period therefor (or in the case of a failure to borrow, convert or continue, for
the period that would have been the Interest Period for such Eurodollar Loan) over (B) the amount
of interest that would accrue on the principal amount of such Eurodollar Loan for the same period
if the Adjusted LIBO Rate were set on the date such Eurodollar Loan was prepaid or converted or the
date on which the Borrower failed to borrow, convert or continue such Eurodollar Loan. A
certificate as to any additional amount payable under this Section 2.17 submitted to the
Borrower by any Lender (with a copy to the Administrative Agent) shall be conclusive, absent
manifest error.




          Section 2.18. Taxes.




          (a) Any and all payments by or on account of any obligation of the Borrower hereunder shall be
made free and clear of and without deduction for any Indemnified Taxes or Other Taxes;
provided, that if the Borrower shall be required to deduct any Indemnified Taxes or Other
Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional sums payable under
this Section 2.18) the Administrative Agent or any Lender (as the case may be) shall
receive an amount equal to the sum it would have received had no such deductions been made, (ii)
the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted
to the relevant Governmental Authority in accordance with applicable law.




          (b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority
in accordance with applicable law.




          (c) The Borrower shall indemnify the Administrative Agent and each Lender, within five (5)
Business Days after written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes paid by the Administrative Agent or such Lender, as the case may be, on or with respect to
any payment by or on account of any obligation of the Borrower hereunder (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under Section
2.18) and any penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were





28









 







correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender or by the Administrative Agent on its own behalf or
on behalf of a Lender, shall be conclusive absent manifest error.




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




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





29









 








          Section 2.19. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.




          (a) The Borrower shall make each payment required to be made by it hereunder (whether of
principal, interest, or of amounts payable under Section 2.16, 2.17 or
2.18, or otherwise) prior to 12:00 noon (New York time), on the date when due, in
immediately available funds, free and clear of any defenses, rights of set-off, counterclaim or
withholding or deduction of taxes. Any amounts received after such time on any date may, in the
discretion of the Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments shall be made to the
Administrative Agent at the Payment Office, except that payments pursuant to Sections 2.16,
2.17 and 2.18 and 10.3 shall be made directly to the Persons entitled
thereto. The Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following receipt thereof. If
any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall
be extended to the next succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be made payable for the period of such extension. All payments hereunder
shall be made in Dollars.




          (b) If at any time insufficient funds are received by and available to the Administrative
Agent to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall
be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the
parties entitled thereto in accordance with the amounts of interest and fees then due to such
parties, and (ii) second, towards payment of principal then due hereunder, ratably among the
parties entitled thereto in accordance with the amounts of principal then due to such parties.




          (c) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise,
obtain payment in respect of any principal of or interest on any of its Loans that would result in
such Lender receiving payment of a greater proportion of the aggregate amount of its and accrued
interest thereon than the proportion received by any other Lender, then the Lender receiving such
greater proportion shall purchase (for cash at face value) participations in the Loans of other
Lenders to the extent necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on
their respective Loans; provided, that (i) if any such participations are purchased and all
or any portion of the payment giving rise thereto is recovered, such participations shall be
rescinded and the purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans to any assignee or participant, other than to the Borrower or any
Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). The
Borrower consents to the foregoing and agrees, to the extent it may effectively do so under
applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements
may exercise against the Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrower in the amount of
such participation.





30









 








          (d) Unless the Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of the Lenders
hereunder that the Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such payment on such date in accordance herewith and may, in reliance upon
such assumption, distribute to the Lenders the amount or amounts due. In such event, if the
Borrower has not in fact made such payment, then each of the Lenders , as the case may be,
severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed
to such Lender with interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the Administrative Agent, at the greater
of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation.




          (e) If any Lender shall fail to make any payment required to be made by it pursuant to
2.19(d) or (e), 2.18(d) or 10.3(d), then
the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof),
apply any amounts thereafter received by the Administrative Agent for the account of such Lender to
satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are
fully paid.




          Section 2.20. Intentionally Omitted.




          Section 2.21. Intentionally Omitted.



          Section 2.22. Mitigation of Obligations. If any Lender requests compensation under
Section 2.16, or if the Borrower is required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to Section 2.18, then
such Lender shall use reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the sole judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable under Section 2.16 or Section
2.18, as the case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The
Borrower hereby agrees to pay all costs and expenses incurred by any Lender in connection with such
designation or assignment.




          Section 2.23. Replacement of Lenders. If any Lender requests compensation under
Section 2.16, or if the Borrower is required to pay any additional amount to any Lender or
any Governmental Authority of the account of any Lender pursuant to Section 2.18, or if any
Lender defaults in its obligation to fund Loans hereunder, then the Borrower may, at its sole
expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the restrictions set forth
in Section 10.4(b)) all its interests, rights and obligations under this Agreement to an
assignee that shall assume such obligations (which assignee may be another Lender);
provided, that (i) the Borrower shall have received the prior written consent of the
Administrative Agent, which consent shall not be unreasonably withheld, (ii) such Lender shall have
received payment of an amount equal to the outstanding principal amount of all Loans owed to it,
accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (in the case of such outstanding principal and accrued interest) and from the Borrower (in
the case of all other amounts) and (iii) in the case of a claim for compensation







31









 







under Section
2.16 or payments required to be made pursuant to Section 2.18, such assignment will
result in a reduction in such compensation or payments. A Lender shall not be required to make any
such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease
to apply.




ARTICLE III



CONDITIONS PRECEDENT TO LOANS 




          Section 3.1. Conditions To Effectiveness. The obligations of the Lenders to make Loans
hereunder shall not become effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 10.2). The Administrative Agent and the
Borrower shall execute a notice confirming the satisfaction of such conditions and the occurrence
of the Closing Date.




          (a) The Administrative Agent shall have received all fees and other amounts due and payable on
or prior to the Closing Date, including reimbursement or payment of all out-of-pocket expenses
(including reasonable fees, charges and disbursements of counsel to the Administrative Agent)
required to be reimbursed or paid by the Borrower hereunder, under any other Loan Document and
under any agreement with the Administrative Agent or SunTrust Capital Markets, Inc., as Arranger.




          (b) The Administrative Agent shall have completed and be satisfied with all due diligence with
respect to the Borrower and its Subsidiaries, including but not limited to review of the
Underwriting Policies, risk management procedures, accounting policies, systems integrity,
compliance, management and organizational structure, and the loan and investment portfolio of the
Borrower and its Subsidiaries;




          (c) The Administrative Agent (or its counsel) shall have received the following:





     (i) a counterpart of this Agreement signed by or on behalf of each party hereto or
written evidence satisfactory to the Administrative Agent (which may include telecopy
transmission of a signed signature page of this Agreement) that such party has signed a
counterpart of this Agreement;




     (ii) duly executed Revolving Credit Notes payable to such Lender;




     (iii) duly executed originals of any Control Agreement with respect to Cash Collateral
held with any financial institution other than Administrative Agent or its affiliates.




     (iv) the duly executed Security Agreement together with other applicable documents
under the laws of the jurisdictions with respect to the perfection of the Liens granted on
the Cash Collateral under the Security Agreement, as requested by the Administrative Agent
in order to perfect such Liens;



32









 






     (v) the Subsidiary Guarantee Agreement duly executed by each Subsidiary;




     (vi) copies of duly executed payoff letters, if any, in form and substance satisfactory
to Administrative Agent, together with (a) UCC-3 or other appropriate termination
statements, in form and substance satisfactory to Administrative Agent, releasing all Liens
(other than Permitted Encumbrances) upon any of the personal property of the Borrower and
its Subsidiaries, (b) cancellations and releases, in form and substance satisfactory to the
Administrative Agent, releasing all Liens (other than Permitted Encumbrances) upon any of
the real property of the Borrower and its Subsidiaries, and (c) any other releases,
terminations or other documents reasonably required by the Administrative Agent to evidence
the payoff of Indebtedness owed by the Borrower and its Subsidiaries;




     (vii) a certificate of the Secretary or Assistant Secretary of each Loan Party in the
form of Exhibit 3.1(b)(vii), attaching and certifying copies of its bylaws and of
the resolutions of its board of directors, or partnership agreement or limited liability
company agreement, or comparable organizational documents and authorizations, authorizing
the execution, delivery and performance of the Loan Documents to which it is a party and
certifying the name, title and true signature of each officer of such Loan Party executing
the Loan Documents to which it is a party;




     (viii) certified copies of the articles or certificate of incorporation, certificate of
organization or limited partnership, or other registered organizational documents of each
Loan Party, together with certificates of good standing or existence, as may be available
from the Secretary of State of the jurisdiction of organization of such Loan Party and each
other jurisdiction where such Loan Party is required to be qualified to do business as a
foreign corporation;




     (ix) a favorable written opinion of Paul, Hastings, Janofsky & Walker, counsel to the
Loan Parties, addressed to the Administrative Agent and each of the Lenders, and covering
such matters relating to the Loan Parties, the Loan Documents and the
transactions contemplated therein as the Administrative Agent or the Required Lenders
shall reasonably request;




     (x) a certificate in the form of Exhibit 3.1(c)(x), dated the Closing Date and
signed by a Responsible Officer, certifying that (x) no Default or Event of Default exists,
(y) all representations and warranties of each Loan Party set forth in the Loan Documents
are true and correct and (z) since the date of the financial statements of the Borrower
described in Section 4.4, there shall have been no change which has had or could
reasonably be expected to have a Material Adverse Effect;




     (xi) a duly executed Notice of Revolving Borrowing;




     (xii) a duly executed funds disbursement agreement, together with a report setting
forth the sources and uses of the proceeds hereof;



33









 






     (xiii) a duly completed and executed certificate of the type described in Section
5.1(c) including calculations of the financial covenants set forth in Article VI
hereof as of February 28, 2007;




     (xiv) certified copies of all consents, approvals, authorizations, registrations and
filings and orders required or advisable to be made or obtained under any Requirement of
Law, or by any Contractual Obligation of each Loan Party, in connection with the execution,
delivery, performance, validity and enforceability of the Loan Documents or any of the
transactions contemplated thereby, and such consents, approvals, authorizations,
registrations, filings and orders shall be in full force and effect and all applicable
waiting periods shall have expired, and no investigation or inquiry by any governmental
authority regarding the Commitments or any transaction being financed with the proceeds
thereof shall be ongoing;




     (xv) copies of (A) the internally prepared quarterly financial statements of Borrower
and its Subsidiaries on a consolidated basis for the Fiscal Quarter ending on February 28,
2007, and (B) the audited consolidated financial statements for Borrower and its
Subsidiaries for the Fiscal Year ending November 30, 2006;




     (xvi) certified copies of all agreements, indentures or notes governing the terms of
any Material Indebtedness and all other material agreements, documents and instruments to
which any Loan Party or any of its assets are bound;




     (xvii) duly executed Intercreditor Agreement; and




     (xviii) duly executed copy of the Investment Credit Agreement and the documents
executed in connection therewith.



          Section 3.2. Each Credit Event. The obligation of each Lender to make a Loan on the
occasion of any Borrowing is subject to the satisfaction of the following conditions:




          (a) at the time of and immediately after giving effect to such Borrowing, no Default or Event
of Default shall exist;




          (b) at the time of and immediately after giving effect to such Borrowing, all representations
and warranties of each Loan Party set forth in the Loan Documents shall be true and correct in all
material respects on and as of the date of such Borrowing before and after giving effect thereto;




          (c) the Borrower shall have delivered the required Notice of Revolving Borrowing;




          (d) After giving effect to each Borrowing, the Borrower shall have provided sufficient Cash
Collateral such that the Cash Collateral Coverage Ratio is at least 1.01:1.00; and




          (e) the Administrative Agent shall have received such other documents, certificates,
information or legal opinions as the Administrative Agent or the Required Lenders






34









 







may reasonably
request, all in form and substance reasonably satisfactory to the Administrative Agent or the
Required Lenders.




          Each Borrowing shall be deemed to constitute a representation and warranty by the Borrower on
the date thereof as to the matters specified in paragraphs (a), (b), (c) and (d) of this
Section 3.2.




          Section 3.3. Delivery of Documents. All of the Loan Documents, certificates, legal
opinions and other documents and papers referred to in this Article III, unless otherwise
specified, shall be delivered to the Administrative Agent for the account of each of the Lenders
and, except for the Notes, in sufficient counterparts or copies for each of the Lenders and shall
be in form and substance satisfactory in all respects to the Administrative Agent.




ARTICLE IV



REPRESENTATIONS AND WARRANTIES




          The Borrower represents and warrants to the Administrative Agent and each Lender as follows:




          Section 4.1. Existence; Power. The Borrower and each of its Subsidiaries (i) is duly
organized, validly existing and in good standing as a corporation, partnership or limited liability
company under the laws of the jurisdiction of its organization, (ii) has all requisite power and
authority to carry on its business as now conducted, and (iii) is duly qualified to do business,
and is in good standing, in each jurisdiction where such qualification is required, except where a
failure to be so qualified could not reasonably be expected to result in a Material Adverse Effect.




          Section 4.2. Organizational Power; Authorization. The execution, delivery and
performance by each Loan Party of the Loan Documents to which it is a party are within such Loan
Party’s organizational powers and have been duly authorized by all necessary organizational, and if
required, shareholder, partner or member, action. This Agreement has been duly executed and
delivered by the Borrower, and constitutes, and each other Loan Document to which any Loan Party is
a party, when executed and delivered by such Loan Party, will constitute, valid and binding
obligations of the Borrower or such Loan Party (as the case may be), enforceable against it in
accordance with their respective terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditors’
rights generally and by general principles of equity.




          Section 4.3. Governmental Approvals; No Conflicts. The execution, delivery and
performance by the Borrower of this Agreement, and by each Loan Party of the other Loan Documents
to which it is a party (a) do not require any consent or approval of, registration or filing with,
or any action by, any Governmental Authority, except those as have been obtained or made and are in
full force and effect, (b) will not violate any Requirements of Law applicable to the Borrower or
any of its Subsidiaries or any judgment, order or ruling of any Governmental Authority, (c) will
not violate or result in a default under any indenture, material agreement or other material
instrument binding on the Borrower or any of its Subsidiaries or any of its assets or give rise to
a right thereunder to require any payment to be made by the Borrower or any of its





35









 







Subsidiaries and (d) will not result in the creation or imposition of any Lien on any asset of the Borrower or any
of its Subsidiaries, except Liens (if any) created under the Loan Documents.




          Section 4.4. Financial Statements. The Borrower has furnished to each Lender (i) the
audited consolidated balance sheet of the Borrower and its Subsidiaries as of November 30, 2006 and
the related consolidated statements of income, shareholders’ equity and cash flows for the Fiscal
Year then ended audited by PricewaterhouseCoopers LLP and (ii) the unaudited consolidated balance
sheet of the Borrower and its Subsidiaries as of February 28, 2007, and the related unaudited
consolidated statements of income and cash flows for the Fiscal Quarter and year-to-date period
then ending, certified by a Responsible Officer. Such financial statements fairly present the
consolidated financial condition of the Borrower and its Subsidiaries as of such dates and the
consolidated results of operations for such periods in conformity with GAAP consistently applied,
subject to year end audit adjustments and the absence of footnotes in the case of the statements
referred to in clause (ii). Since November 30, 2006, there have been no changes with respect to the
Borrower and its Subsidiaries which have had or could reasonably be expected to have, singly or in
the aggregate, a Material Adverse Effect.




          Section 4.5. Litigation and Environmental Matters.




          (a) No litigation, investigation or proceeding of or before any arbitrators or Governmental
Authorities is pending against or, to the knowledge of the Borrower, threatened against or
affecting the Borrower or any of its Subsidiaries (i) as to which there is a reasonable possibility
of an adverse determination that could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect or (ii) which in any manner draws
into question the validity or enforceability of this Agreement or any other Loan Document.




          (b) Except for the matters set forth on Schedule 4.5, neither the Borrower nor any of
its Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or
comply with any permit, license or other approval required under any Environmental Law, (ii) has
become subject to any Environmental Liability, (iii) has received notice of any claim with respect
to any Environmental Liability or (iv) knows of any basis for any Environmental Liability.




          Section 4.6. Compliance with Laws and Agreements. The Borrower and each Subsidiary is
in compliance with (a) all Requirements of Law and all judgments, decrees and orders of any
Governmental Authority applicable to each of them and (b) all indentures, agreements or other
instruments binding upon it or its properties, except where non-compliance, either singly or in the
aggregate, could not reasonably be expected to result in a Material Adverse Effect.




          Section 4.7. Investment Company Act, Etc. Neither the Borrower nor any of its
Subsidiaries is (a) registered or required to be registered as an “investment company”, as such
term is defined in the Investment Company Act, or (b) subject to any regulatory scheme limiting its
or their ability to incur debt or requiring any approval or consent from or registration or filing
with, any Governmental Authority in connection therewith, except that the Borrower is an
“investment company” that has elected to be regulated as a “business development company” as
defined in Section 2(a)(46) of the Investment Company Act and the Borrower and its





36









 







Subsidiaries are subject to regulation under the Investment Company Act as a “business development company” and as
controlled subsidiaries thereof, respectively, including under Section 18, as modified by Section
61, of the Investment Company Act.




          Section 4.8. Taxes. The Borrower and its Subsidiaries and each other Person for whose
taxes the Borrower or any Subsidiary could become liable have timely filed or caused to be filed
all Federal income tax returns and all other material tax returns that are required to be filed by
them, and have paid all taxes shown to be due and payable on such returns or on any assessments
made against it or its property and all other taxes, fees or other charges imposed on it or any of
its property by any Governmental Authority, except where the same are currently being contested in
good faith by appropriate proceedings and for which the Borrower or such Subsidiary, as the case
may be, has set aside on its books adequate reserves in accordance with GAAP. The charges,
accruals and reserves on the books of the Borrower and its Subsidiaries in respect of such taxes
are adequate, and no tax liabilities that could be materially in excess of the amount so provided
are anticipated.




          Section 4.9. Margin Regulations. None of the proceeds of any of the Loans will be
used, directly or indirectly, for any purpose that violates the provisions of Regulation U of the
Board of Governors of the Federal Reserve System. Neither the Borrower nor its Subsidiaries is
engaged principally, or as one of its important activities, in the business of extending credit for
the purpose of purchasing or carrying “margin stock”.




          Section 4.10. Underwriting Policies. The Borrower and its Subsidiaries is in
compliance with all Underwriting Policies except to the extent that the failure to so comply could
not reasonably be expected to result in a Material Adverse Effect.




          Section 4.11. ERISA. No ERISA Event has occurred or is reasonably expected to occur
that, when taken together with all other such ERISA Events for which liability is reasonably
expected to occur, could reasonably be expected to result in a Material Adverse Effect. The
present value of all accumulated benefit obligations under each Plan (based on the assumptions used
for purposes of Statement of Financial Standards No. 87) did not, as of the date of the most recent
financial statements reflecting such amounts, exceed the fair market value of the assets of such
Plan, and the present value of all accumulated benefit obligations of all underfunded Plans (based
on the assumptions used for purposes of Statement of Financial Standards No. 87) did not, as of the
date of the most recent financial statements reflecting such amounts, exceed the fair market value
of the assets of all such underfunded Plans.




          Section 4.12. Ownership of Property.




          (a) Each of the Borrower and its Subsidiaries has good title to, or valid leasehold interests
in, all of its real and personal property material to the operation of its business, including all
such properties reflected in the most recent audited consolidated balance sheet of the Borrower
referred to in Section 4.4 or purported to have been acquired by the Borrower or any
Subsidiary after said date (except as sold or otherwise disposed of in the ordinary course of
business), in each case free and clear of Liens prohibited by this Agreement. All leases that
individually or in the aggregate are material to the business or operations of the Borrower and its
Subsidiaries are valid and subsisting and are in full force.




37









 








          (b) Each of the Borrower and its Subsidiaries owns, or is licensed, or otherwise has the
right, to use, all patents, trademarks, service marks, trade names, copyrights and other
intellectual property material to its business, and the use thereof by the Borrower and its
Subsidiaries does not infringe in any material respect on the rights of any other Person.




          (c) The properties of the Borrower and its Subsidiaries are insured with financially sound and
reputable insurance companies which are not Affiliates of the Borrower, in such amounts with such
deductibles and covering such risks as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where the Borrower or any applicable
Subsidiary operates.




          Section 4.13. Disclosure. The Borrower has disclosed to the Lenders all agreements,
instruments, and corporate or other restrictions to which the Borrower or any of its Subsidiaries
is subject, and all other matters known to any of them, that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect. Neither the Information
Memorandum nor any of the reports (including without limitation all reports that the Borrower is
required to file with the Securities and Exchange Commission), financial statements, certificates
or other information furnished by or on behalf of
the Borrower to the Administrative Agent or any Lender in connection with the negotiation or
syndication of this Agreement or any other Loan Document or delivered hereunder or thereunder (as
modified or supplemented by any other information so furnished) contains any material misstatement
of fact or omits to state any material fact necessary to make the statements therein, taken as a
whole, in light of the circumstances under which they were made, not misleading.




          Section 4.14. Labor Relations. There are no strikes, lockouts or other material labor
disputes or grievances against the Borrower or any of its Subsidiaries, or, to the Borrower’s
knowledge, threatened against or affecting the Borrower or any of its Subsidiaries, and no
significant unfair labor practice, charges or grievances are pending against the Borrower or any of
its Subsidiaries, or to the Borrower’s knowledge, threatened against any of them before any
Governmental Authority. All payments due from the Borrower or any of its Subsidiaries pursuant to
the provisions of any collective bargaining agreement have been paid or accrued as a liability on
the books of the Borrower or any such Subsidiary, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect.




          Section 4.15. Subsidiaries. Schedule 4.14 sets forth the name of, the
ownership interest of the Borrower in, the jurisdiction of incorporation or organization of, and
the type of, each Subsidiary and identifies each Subsidiary that is a Subsidiary Guarantor, in each
case as of the Closing Date.




          Section 4.16. Insolvency. After giving effect to the execution and delivery of the
Loan Documents, the making of the Loans under this Agreement, neither the Borrower nor its
Subsidiaries will be “insolvent,” within the meaning of such term as defined in § 101 of Title 11
of the United States Code, as amended from time to time, or be unable to pay its debts generally as
such debts become due, or have an unreasonably small capital to engage in any business or
transaction, whether current or contemplated.





38









 








          Section 4.17. OFAC. No Loan Party (i) is a person whose property or interest in
property is blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of
September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten
to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) engages in any dealings or
transactions prohibited by Section 2 of such executive order, or is otherwise associated with any
such person in any manner violative of Section 2, or (iii) is a person on the list of Specially
Designated Nationals and Blocked Persons or subject to the limitations or prohibitions under any
other U.S. Department of Treasury’s Office of Foreign Assets Control regulation or executive order.




          Section 4.18. Patriot Act. Each Loan Party is in compliance, in all material
respects, with (i) the Trading with the Enemy Act, as amended, and each of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as
amended) and any other enabling legislation or executive order relating thereto, and (ii) the
Uniting And Strengthening America By Providing Appropriate Tools Required To Intercept And Obstruct
Terrorism (USA Patriot Act of 2001). No part of the proceeds of the Loans will be used, directly
or indirectly, for any payments to any
governmental official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order to obtain, retain or
direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt
Practices Act of 1977, as amended.




ARTICLE V



AFFIRMATIVE COVENANTS




          The Borrower covenants and agrees that so long as any Lender has a Commitment hereunder or any
Obligation remains unpaid or outstanding:




          Section 5.1. Financial Statements and Other Information. The Borrower will deliver to
the Administrative Agent:




          (a) as soon as available and in any event within 90 days after the end of each Fiscal Year of
Borrower, a copy of the annual audited report for such Fiscal Year for the Borrower and its
Subsidiaries, containing a consolidated balance sheet of the Borrower and its Subsidiaries as of
the end of such Fiscal Year and the related consolidated statements of income, stockholders’ equity
and cash flows (together with all footnotes thereto) of the Borrower and its Subsidiaries for such
Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal
Year, all in reasonable detail and reported on by PricewaterhouseCoopers LLP or other independent
public accountants of nationally recognized standing (without a “going concern” or like
qualification, exception or explanation and without any qualification or exception as to scope of
such audit) to the effect that such financial statements present fairly in all material respects
the financial condition and the results of operations of the Borrower and its Subsidiaries for such
Fiscal Year on a consolidated and consolidating basis in accordance with GAAP and that the
examination by such accountants in connection with such consolidated financial statements has been
made in accordance with generally accepted auditing standards; provided, that to the extent
that any Special Purpose Subsidiary has entered into a financing transaction, securitization or
other monetization transaction and is treated as a consolidated entity






39









 







and reflected on the
consolidated balance sheet of the Borrower and its Subsidiaries, concurrently with the delivery of
the financial statements referred to in this paragraph (a), the Borrower shall provide to the
Administrative Agent a balance sheet for each such Special Purpose Subsidiary as of the end of such
Fiscal Year and the related statements of income, stockholders’ equity and cash flows (together
with all footnotes thereto) of such Special Purpose Subsidiary for such Fiscal Year, setting forth
in each case in comparative form the figures for the previous Fiscal Year;




          (b) as soon as available and in any event within 45 days after the end of each Fiscal Quarter
of the Borrower, an unaudited consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries as of the end of such Fiscal Quarter and the related unaudited consolidated and
consolidating statements of income and cash flows of the Borrower and its Subsidiaries for such
Fiscal Quarter and the then elapsed portion of such Fiscal Year, setting
forth in each case in comparative form the figures for the corresponding quarter and the
corresponding portion of Borrower’s previous Fiscal Year, all certified by the chief financial
officer or treasurer of the Borrower as presenting fairly in all material respects the financial
condition and results of operations of the Borrower and its Subsidiaries on a consolidated basis in
accordance with GAAP, subject to normal year-end audit adjustments and the absence of footnotes;
provided, that to the extent that any Special Purpose Subsidiary has entered into a
financing transaction, securitization or other monetization transaction and is treated as a
consolidated entity and reflected on the consolidated balance sheet of the Borrower and its
Subsidiaries, concurrently with the delivery of the financial statements referred to in this
paragraph (b), the Borrower shall provide to the Administrative Agent a balance sheet for each such
Special Purpose Subsidiary as of the end of such Fiscal Quarter and the related statements of
income, stockholders’ equity and cash flows (together with all footnotes thereto) of such Special
Purpose Subsidiary for such Fiscal Quarter, setting forth in each case in comparative form the
figures for the previous Fiscal Quarter;




          (c) concurrently with the delivery of the financial statements referred to in clauses (a) and
(b) above, a Compliance Certificate signed by the principal financial officer of the Borrower;




          (d) concurrently with the delivery of the financial statements referred to in clause (a)
above, a certificate of the accounting firm that reported on such financial statements stating
whether they obtained any knowledge during the course of their examination of such financial
statements of any Default or Event of Default (which certificate may be limited to the extent
required by accounting rules or guidelines);




          (e) promptly after the same become publicly available, copies of all periodic and other
reports, proxy statements and other materials filed with the Securities and Exchange Commission, or
any Governmental Authority succeeding to any or all functions of said Commission, or with any
national securities exchange, or distributed by the Borrower to its shareholders generally, as the
case may be;




          (f) promptly following any request therefor, such other information regarding the results of
operations, business affairs, financial condition and loan and securities portfolio of






40









 







the Borrower
or any Subsidiary as the Administrative Agent or any Lender may reasonably request; and




          (g) as soon as available and in any event within five (5) Business Days after the end of each
month, a certificate from a Responsible Officer of the Borrower certifying as to the mark to market
value of the Cash Collateral as of the end of such month.




          Section 5.2. Notices of Material Events. The Borrower will furnish to the
Administrative Agent and each Lender prompt written notice of the following:




          (a) the occurrence of any Default or Event of Default;




          (b) the filing or commencement of any action, suit or proceeding by or before any arbitrator
or Governmental Authority against or, to the knowledge of the Borrower, affecting the Borrower or
any Subsidiary which, if adversely determined, could reasonably be expected to result in a Material
Adverse Effect;




          (c) the occurrence of any event or any other development by which the Borrower or any of its
Subsidiaries (i) fails to comply with any Environmental Law or to obtain, maintain or comply with
any permit, license or other approval required under any Environmental Law, (ii) becomes subject
to any Environmental Liability, (iii) receives notice of any claim with respect to any
Environmental Liability, or (iv) becomes aware of any basis for any Environmental Liability and in
each of the preceding clauses, which individually or in the aggregate, could reasonably be expected
to result in a Material Adverse Effect;




          (d) the occurrence of any ERISA Event that alone, or together with any other ERISA Events that
have occurred, could reasonably be expected to result in liability of the Borrower and its
Subsidiaries in an aggregate amount exceeding $1,000,000;




          (e) the occurrence of any default or event of default, or the receipt by Borrower or any of
its Subsidiaries of any written notice of an alleged default or event of default, respect of any
Material Indebtedness of the Borrower or any of its Subsidiaries; and




          (f) any other development that results in, or could reasonably be expected to result in, a
Material Adverse Effect.



Each notice delivered under this Section 5.2 shall be accompanied by a written statement of
a Responsible Officer setting forth the details of the event or development requiring such notice
and any action taken or proposed to be taken with respect thereto.




          Section 5.3. Existence; Conduct of Business. The Borrower will, and will cause each
of its Subsidiaries to, do or cause to be done all things necessary to preserve, renew and maintain
in full force and effect its legal existence and its respective rights, licenses, permits,
privileges, franchises, patents, copyrights, trademarks and trade names material to the conduct of
its business and will continue to engage in the same business as presently conducted or such






41









 







other
businesses that are reasonably related thereto; provided, that nothing in this Section
5.3 shall prohibit any merger, consolidation, liquidation or dissolution permitted under
Section 7.3.




          Section 5.4. Compliance with Laws, Etc. The Borrower will, and will cause each of its
Subsidiaries to, comply with all laws, rules, regulations and requirements of any Governmental
Authority applicable to its business and properties, including without limitation, all
Environmental Laws, ERISA and OSHA, except where the failure to do so, either individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse Effect.




          Section 5.5. Payment of Obligations. The Borrower will, and will cause each of its
Subsidiaries to, pay and discharge at or before maturity, all of its obligations and liabilities
(including without limitation all taxes, assessments and other governmental charges, levies and all
other claims that could result in a
statutory Lien) before the same shall become delinquent or in default, except where (a) the
validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the
Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in
accordance with GAAP and (c) the failure to make payment pending such contest could not reasonably
be expected to result in a Material Adverse Effect.




          Section 5.6. Books and Records. The Borrower will, and will cause each of its
Subsidiaries to, keep proper books of record and account in which full, true and correct entries
shall be made of all dealings and transactions in relation to its business and activities to the
extent necessary to prepare the consolidated financial statements of Borrower in conformity with
GAAP.




          Section 5.7. Visitation, Inspection, Etc. The Borrower will, and will cause each of
its Subsidiaries to, permit any representative of the Administrative Agent, or any Lender, to visit
and inspect its properties, to conduct audits of the Cash Collateral, to examine its books and
records and to make copies and take extracts therefrom, and to discuss its affairs, finances and
accounts with any of its officers and with its independent certified public accountants, all at
such reasonable times and as often as the Administrative Agent or any Lender may reasonably request
after reasonable prior notice to the Borrower; provided, however, if a Default or an Event of
Default has occurred and is continuing, no prior notice shall be required. All reasonable expenses
incurred by the Administrative Agent and, at any time after the occurrence and during the
continuance of a Default or an Event of Default, any Lenders in connection with any such visit,
inspection, audit, examination and discussions shall be borne by the Borrower; provided, however,
so long as no Default or Event of Default has occurred and is continuing, Borrower shall not be
required to pay such expenses for any visits and inspections that exceed two visits or inspections
per Fiscal Year.




          Section 5.8. Maintenance of Properties; Insurance. The Borrower will, and will cause
each of its Subsidiaries to, (a) keep and maintain all property material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted, (b) maintain with
financially sound and reputable insurance companies, insurance with respect to its properties and
business, and the properties and business of its Subsidiaries, against loss or damage of the kinds
customarily insured against by companies in the same or similar businesses






42









 







operating in the same or
similar locations, and (c) at all times shall name the Administrative Agent as additional insured
on all liability policies of the Borrower and its Subsidiaries.




          Section 5.9. Use of Proceeds. The Borrower will use the proceeds of all Revolving
Loans to support portfolio growth and preserve future investment flexibility permitted under the
Internal Revenue Code. No part of the proceeds of any Loan will be used, whether directly or
indirectly, for any purpose that would violate any rule or regulation of the Board of Governors of
the Federal Reserve System, including Regulations T, U or X.




          Section 5.10. Maintenance of RIC Status and Business Development Company.
The Borrower will maintain its status as a RIC under the Code and as a “business development
company” under the Investment Company Act.




          Section 5.11. Additional Subsidiaries; Additional Collateral. In the event that any
Person becomes a Subsidiary of Borrower after the date hereof (other than a Special Purpose
Subsidiary), Borrower will promptly notify Administrative Agent of that fact and cause such
Subsidiary to execute and deliver to Administrative Agent a counterpart of the Subsidiary Guarantee
Agreement and deliver with respect to such Subsidiary documents of the type delivered on the
Closing Date under Section 3.1(c)(vii) and Section 3.1(c)(viii) with respect to the Subsidiaries on
the Closing Date.




          Section 5.12. Compliance with Underwriting Policies. The Borrower shall, and shall
cause its Subsidiaries, to comply at all times with its Underwriting Policies.




ARTICLE VI



FINANCIAL COVENANTS




          The Borrower covenants and agrees that so long as any Lender has a Commitment hereunder or any
Obligation remains unpaid or outstanding:




          Section 6.1. Minimum Asset Coverage Ratio. The Borrower shall maintain at all times
an Asset Coverage Ratio of at least 2.50:1.0.




          Section 6.2. Minimum Liquidity. The Borrower will not permit the aggregate value of
the Portfolio Investments, as determined pursuant to Section 5.12 of the Investment Credit
Agreement, that can be converted to Cash in fewer than 10 Business Days without more than a 5%
change in price to be less than 10% of the Covered Debt Amount during any period when Adjusted
Covered Debt Amount is greater than 90% of the Adjusted Borrowing Base.




          Section 6.3. Minimum Consolidated Shareholders Equity. The Borrower will not permit
Shareholder’s Equity at the last day of any Fiscal Quarter of the Borrower to be less than the
greater of (i) 40% of the total assets of the Borrower and its Subsidiaries as at the last day of
such Fiscal Quarter (determined on a consolidated basis, without duplication, in accordance with
GAAP) and (ii) $100,000,000 plus 25% of the net proceeds of the sale of Equity Interests by
the Borrower and its Subsidiaries after the Closing Date.




43









 








          Section 6.4. Cash Collateral Coverage Ratio. The Borrower shall maintain at all times
on a consolidated basis a Cash Collateral Coverage Ratio of at least 1.01:1.00.




ARTICLE VII



NEGATIVE COVENANTS




          The Borrower covenants and agrees that so long as any Lender has a Commitment hereunder or any
Obligation remains outstanding:




          Section 7.1. Indebtedness and Preferred Equity. The Borrower will not, and will not
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Indebtedness,
except:




          (a) Indebtedness created pursuant to the Loan Documents;




          (b) Indebtedness of the Borrower and its Subsidiaries existing on the date hereof and set
forth on Schedule 7.1 and extensions, renewals and replacements of any such Indebtedness
that do not increase the outstanding principal amount thereof (immediately prior to giving effect
to such extension, renewal or replacement) or shorten the maturity or the weighted average life
thereof;




          (c) Indebtedness of the Borrower owing to any Subsidiary and of any Subsidiary owing to the
Borrower or any other Subsidiary;




          (d) Guarantees by the Borrower of Indebtedness of any Subsidiary Guarantor and by any
Subsidiary of Indebtedness of the Borrower;




          (e) Indebtedness in respect of Hedging Obligations not prohibited by Section 7.9;




          (f) other unsecured Indebtedness in an aggregate principal amount not to exceed $10,000,000 at
any time outstanding;




          (g) Indebtedness incurred by any Special Purpose Subsidiary that is non-recourse to the Loan
Parties;




          (h) Indebtedness arising in connection with the accrual of any fees and expenses required to
be paid under the Investment Advisory Agreement;




          (i) Indebtedness created pursuant to the Investment Credit Agreement.



Borrower will not, and will not permit any Subsidiary Guarantor to, issue any preferred stock or
other preferred equity interests that (i) matures or is mandatorily redeemable pursuant to a






44









 







sinking fund obligation or otherwise, (ii) is or may become redeemable or repurchaseable by
Borrower or such Subsidiary Guarantor at the option of the holder thereof, in whole or in part or
(iii) is convertible or exchangeable at the option of the holder thereof for Indebtedness or
preferred stock or any other preferred equity interests described in this paragraph, on or prior
to, in the case of clause (i), (ii) or (iii), the first anniversary of the Commitment Termination
Date.




          Section 7.2. Negative Pledge. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien on any of its assets or property
now owned or hereafter acquired or, except:




          (a) Liens securing the Obligations; provided, however, that no Liens may
secure Hedging Obligations without securing all other Obligations on a basis at least pari passu
with such Hedging Obligations and subject to the priority of payments set forth in Section 2.19
of this Agreement;




          (b) Permitted Encumbrances;




          (c) any Liens on any property or asset of the Borrower or any Subsidiary existing on the
Closing Date set forth on Schedule 7.2; provided, that such Lien shall not apply to
any other property or asset of the Borrower or any Subsidiary;




          (d) rights of set off, rights over a margin call account, any form of cash collateral or
similar arrangement, in any case for obligations incurred in respect of any Hedging Transactions so
long as such Liens do not encumber assets securing the Obligations; and




          (e) Liens securing the obligations under the security documents securing the Investment Credit
Agreement as in effect on the Closing Date.




          Section 7.3. Fundamental Changes.




          (a) The Borrower will not, and will not permit any Subsidiary Guarantor to, merge into or
consolidate into any other Person, or permit any other Person to merge into or consolidate with it,
or sell, lease, transfer or otherwise dispose of (in a single transaction or a series of
transactions) all or substantially all of its assets (in each case, whether now owned or hereafter
acquired) or all or substantially all of the stock of any of its Subsidiaries (in each case,
whether now owned or hereafter acquired) or liquidate or dissolve; provided, that if at the
time thereof and immediately after giving effect thereto, no Default or Event of Default shall have
occurred and be continuing (i) the Borrower or any Subsidiary may merge with a Person if the
Borrower (or such Subsidiary if the Borrower is not a party to such merger) is the surviving
Person, (ii) any Subsidiary may merge into another Subsidiary; provided, that if any party
to such merger is a Subsidiary Guarantor, the Subsidiary Guarantor shall be the surviving Person,
(iii) any Subsidiary may sell, transfer, lease or otherwise dispose of all or substantially all of
its assets to the Borrower or to a Subsidiary Guarantor, and (iv) any Subsidiary (other than a
Subsidiary Guarantor) may liquidate or dissolve if the Borrower determines in good faith that
such liquidation or dissolution is in the best interests of the Borrower, and is not
materially disadvantageous to the Lenders; provided, that any such merger involving a
Person that is not a wholly-owned Subsidiary immediately prior to such merger shall not be
permitted unless also permitted by Section 7.4.





45









 








          (b) The Borrower will not, and will not permit any of its Subsidiaries to, engage in any
business other than businesses of the type conducted by the Borrower and its Subsidiaries on the
date hereof and businesses reasonably related thereto. The Special Purpose Subsidiaries will not
engage in any business other than to hold such assets and conduct such business as is consistent
with its purpose and businesses reasonably related thereto




          Section 7.4. Restricted Payments.




     The Borrower will not, nor will it permit any of its Subsidiaries to, declare to make, or
agree to pay or make, directly or indirectly, any Restricted Payment, except that the Borrower may
declare and pay:



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




          (b) dividends and distributions in either case in cash or other property (excluding for this
purpose the Borrower’s common stock) in any taxable year of the Borrower in amounts not to exceed
the amount that is estimated in good faith by the Borrower to be required to (i) reduce to zero for
such taxable year or for the previous taxable year, its investment company taxable income (within
the meaning of section 852(b)(2) of the Code), and reduce to zero the tax imposed by section
852(b)(3) of the Code, and (ii) avoid federal excise taxes for such taxable year imposed by section
4982 of the Code;




          (c) dividends and distributions in respect of Distributable Cash Flow for the prior Fiscal
Quarter and for the three Fiscal Quarters immediately preceding such prior Fiscal Quarter that has
not been previously distributed in addition to the dividends and distributions permitted under the
foregoing clauses (a) and (b) subject to the requirements for such Restricted Payments in Section
7.4(c) of the Investment Credit Agreement;




          (d) dividends and distributions in each case in cash or other property (excluding for this
purpose the Borrower’s common stock) in addition to the dividends and distributions permitted under
the foregoing clauses (a), (b) and (c), so long as on the date of such Restricted Payment and after
giving effect thereto:





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




     (ii) the aggregate amount of Restricted Payments made during any taxable year of the
Borrower after the date hereof under this clause (c) shall not exceed the sum of (x) an
amount equal to 10% of the taxable income of the Borrower for such taxable year determined
under section 852(b)(2) of the Code, but without regard to subparagraphs (A), (B) or (D)
thereof, minus (y) the amount, if any, by which dividends and distributions made
during such taxable year pursuant to the foregoing clause (b) (whether in respect of such
taxable year or the previous taxable year) based upon the
Borrower’s estimate of taxable income exceeded the actual amounts specified in
subclauses (i) and (ii) of such foregoing clause (b) for such taxable year.



          (e) other Restricted Payments permitted by and subject to the terms and conditions of Section
7.4 of the Investment Credit Agreement.





46









 








     Nothing herein shall be deemed to prohibit the payment of Restricted Payments by any
Subsidiary of the Borrower to the Borrower or to any other Subsidiary Guarantor.



          Section 7.5. Sale of Assets. The Borrower will not, and will not permit any of its
Subsidiaries to, convey, sell, lease, assign, transfer or otherwise dispose of, any of its assets,
business or property, whether now owned or hereafter acquired, or, in the case of any Subsidiary,
issue or sell any shares of such Subsidiary’s common stock to any Person other than the Borrower or
another Subsidiary Guarantor (or to qualify directors if required by applicable law), except (a)
the sale or other disposition for fair market value of obsolete or worn out property or other
property not necessary for operations disposed of in the ordinary course of business; (b) the sale
of inventory, Portfolio Investments, or other investments in the ordinary course of business; and
(c) any sale or other disposition if, after giving effect thereto, the Borrower shall be in
compliance on a pro forma basis after giving effect to such sale, with the covenants contained in
Article 6, in each case recomputed as at the last day of the most recently ended Fiscal Quarter of
the Borrower for which financial statements have been provided for under Section 5.1.




          Section 7.6. Transactions with Affiliates. The Borrower will not, and will not permit
any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or
purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except (a) in the ordinary course of business at prices
and on terms and conditions not less favorable to the Borrower or such Subsidiary than could be
obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among
the Borrower and any Subsidiary Guarantor not involving any other Affiliates, (c) transactions and
transfers provided in the Investment Advisory Agreement, and the Fee Waiver Agreement,(d)
reasonable and customary fees and expenses paid to members of the board of directors (or similar
governing body) of the Borrower and its Subsidiaries that are disclosed in the quarterly filings of
Borrower, (e) Restricted Payments permitted by Section 7.4, (f) transactions in connection with the
provision of managerial assistance to affiliated Portfolio Investments, including fees or other
compensation payable in connection therewith, (g) co-investments with other advisory clients of
Borrower’s investment adviser or its Affiliate, brokerage transactions with Affiliated
broker-dealers, or other transactions with Affiliates, in each case as permitted by applicable
provisions of the Investment Company Act and the rules promulgated thereunder, and (h) any
investment in any Affiliated Portfolio Investment or an investment transaction that results in the
creation of an Affiliate.




          Section 7.7. Restrictive Agreements. The Borrower will not, and will not permit any
Subsidiary to, directly or indirectly, enter into, incur or permit to exist any agreement that
prohibits, restricts or imposes any condition upon (a) the ability of the Borrower or any
Subsidiary to create, incur or permit any Lien upon any of its assets or properties, whether now
owned or hereafter acquired, or (b) the
ability of any Subsidiary to pay dividends or other distributions with respect to its common
stock, to make or repay loans or advances to the Borrower or any other Subsidiary, to Guarantee
Indebtedness of the Borrower or any other Subsidiary or to transfer any of its property or assets
to the Borrower or any Subsidiary of the Borrower; provided, that (i) the foregoing shall
not apply to restrictions or conditions imposed by law or by this Agreement or any other Loan
Document; (ii) the foregoing shall not apply to customary restrictions and conditions contained in
agreements relating to the sale of a Subsidiary pending such sale, provided such restrictions and
conditions apply only to the Subsidiary that is







47









 







sold and such sale is permitted hereunder; (iii)
clause (a) shall not apply to restrictions or conditions imposed by any agreement relating to
secured Indebtedness permitted by this Agreement if such restrictions and conditions apply only to
the property or assets securing such Indebtedness; (iv) clause (a) shall not apply to customary
provisions in leases and other contracts restricting the assignment thereof; (v) the foregoing
shall not apply to restrictions or conditions imposed by the Investment Credit Agreement; (vi)
clause (b) shall not apply to any agreements containing provisions (other than any Right of First
Offer or Tag Along Rights) applicable to a Portfolio Investment that prohibit, restrict or impose
any condition upon the ability of the Borrower or any other Subsidiary to transfer any of its
property or assets (each a “Lock-up Agreement”); and (v) clause (b) shall not apply to any
agreements that contain a Right of First Offer or Tag Along Rights applicable to a Portfolio
Investment.




          Section 7.8. Sale and Leaseback Transactions. The Borrower will not, and will not
permit any Subsidiary Guarantor to, enter into any arrangement, directly or indirectly, whereby it
shall sell or transfer any property, real or personal, used or useful in its business, whether now
owned or hereinafter acquired, and thereafter rent or lease such property or other property that it
intends to use for substantially the same purpose or purposes as the property sold or transferred.




          Section 7.9. Hedging Transactions. The Borrower will not, and will not permit any of
the Subsidiaries to, enter into any Hedging Transaction, other than Hedging Transactions entered
into in the ordinary course of business (i) to hedge or mitigate risks to which the Borrower or any
Subsidiary is exposed in the conduct of its business or the management of its liabilities, or (ii)
with any counterparty who is or is anticipated to become, at the time that the Hedging Transaction
is entered into, a borrower from a Loan Party or the issuer of a debt or equity interest to a Loan
Party, which Hedging Transaction is entered into to hedge or mitigate risks to which such
counterparty and its affiliates are exposed in the conduct of their businesses or the management of
their liabilities, or (iii) to hedge or mitigate risks to which a Loan Party is exposed under
Hedging Transactions described in the preceding clause (ii) or to effect an offset or unwind of any
other Hedging Transaction; provided that the Loan Parties shall act in a reasonable and prudent
manner to achieve, in the aggregate, substantially offsetting Hedging Transactions under clause
(iii) with respect to the Net Mark to Market Exposure under the Hedging Transactions that are from
time to time outstanding under clause (ii). Solely for the avoidance of doubt, the Borrower
acknowledges that a Hedging Transaction entered into for speculative purposes or of a speculative
nature (which shall be deemed to include any Hedging Transaction under which the Borrower or any of
the Subsidiaries is or may become obliged to make any payment (i) in connection with the purchase
by any third party of any common stock or any Indebtedness or (ii) as a result of changes in the
market value of any common stock or any Indebtedness) is not a Hedging Transaction entered into in
the ordinary course of business to hedge or mitigate risks.




          Section 7.10. Accounting Changes. The Borrower will not, and will not permit any of
its Subsidiaries to, make any significant change in accounting treatment or reporting practices,
except as required or permitted by GAAP, or change the fiscal year of the Borrower or of any
Subsidiary Guarantor, except to change the fiscal year of a Subsidiary Guarantor to conform its
fiscal year to that of the Borrower.





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          Section 7.11. Amendment to Material Documents. Upon the occurrence and during the
continuation of an Event of Default, the Borrower will not, and will not permit any of its
Subsidiaries to, agree to or permit any amendment, modification or waiver of any provision of the
Investment Advisory Agreement if the effect of such amendment, modification or waiver is to
increase the amount of fees or other amounts payable by the Borrower or any of its Subsidiaries
under such agreements or alter the payment schedule with respect to such fees or such other amounts
without the prior written consent of the Administrative Agent.




          Section 7.12. Loans, Etc. The Borrower will not permit at any time the aggregate
amount of all unfunded commitments of the Borrower and its Subsidiaries to provide loans, advances
or Guarantees with respect to such Portfolio Investments (but excluding any “unapproved capital
expenditure amount” as defined below) to exceed the sum of (i) all cash of the Borrower and its
Subsidiaries held in deposit accounts that are subject to a Control Agreement granting the
administrative agent under the Investment Credit Agreement a first priority security interest
therein, excluding the Cash Collateral (as such term is defined in the this Agreement) plus
(ii) the difference between (x) the Investment Revolving Commitment Amount minus (y) the
Investment Revolving Credit Exposure. For purposes of this Section 7.12, “unapproved capital
expenditure amount” means the portion of any commitment that (i) may only be used for capital
expenditures (including drilling and completion of wells, the purchase of assets or other capital
expenditures) that are approved by (or consented to by) the Borrower or such Subsidiary in its sole
discretion or words of similar effect (whether under a specific approval or under a budget that
must be approved) and (ii) exceeds the amount of the capital expenditures that have been so
approved and that, if applicable, will not be paid from cash flow from operations under the
approved budget.




ARTICLE VIII



EVENTS OF DEFAULT




          Section 8.1. Events of Default. If any of the following events (each an “Event of
Default”) shall occur:




          (a) the Borrower shall fail to pay any principal of any Loan when and as the same shall become
due and payable, whether at the due date thereof or at a date fixed for prepayment or otherwise; or




          (b) the Borrower shall fail to pay any interest on any Loan or any fee or any other amount
(other than an amount payable under clause (a) of this Section 8.1) payable under this
Agreement or any other Loan Document, when and as the same shall become due and payable, and such
failure shall continue unremedied for a period of three (3) Business Days; or




          (c) any representation or warranty made or deemed made by or on behalf of the Borrower or any
Subsidiary in or in connection with this Agreement or any other Loan Document (including the
Schedules attached thereto) and any amendments or modifications hereof or waivers hereunder, or in
any certificate, report, financial statement or other document





49









 







submitted to the Administrative
Agent or the Lenders by any Loan Party or any representative of any Loan Party pursuant to or in
connection with this Agreement or any other Loan Document shall prove to be incorrect when made or
deemed made or submitted; or




          (d) the Borrower shall fail to observe or perform any covenant or agreement contained in
Sections 5.1, 5.2, or 5.3 (with respect to the Borrower’s existence) or in
Articles VI or VII; or




          (e) any Loan Party shall fail to observe or perform any covenant or agreement contained in
this Agreement (other than those referred to in clauses (a), (b) and (d) above or any other Loan
Document), and such failure shall remain unremedied for 30 days after the earlier of (i) any
officer of the Borrower becomes aware of such failure, or (ii) notice thereof shall have been given
to the Borrower by the Administrative Agent or any Lender; or




          (f) the Borrower or any Subsidiary (whether as primary obligor or as guarantor or other
surety) shall fail to pay any principal of or premium or interest on any Material Indebtedness that
is outstanding, when and as the same shall become due and payable (whether at scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument evidencing or governing
such Material Indebtedness; or any other event shall occur or condition shall exist under any
agreement or instrument relating to such Material Indebtedness and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if the effect of such
event or condition is to accelerate, or permit the acceleration of, the maturity of such
Indebtedness; or any such Material Indebtedness shall be declared to be due and payable; or
required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or
redemption), purchased or defeased, or any offer to prepay, redeem, purchase or defease such
Material Indebtedness shall be required to be made, in each case prior to the stated maturity
thereof; or




          (g) the Borrower or any Subsidiary shall (i) commence a voluntary case or other proceeding or
file any petition seeking liquidation, reorganization or other relief under any federal, state or
foreign bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the
appointment of a custodian, trustee, receiver, liquidator or other similar official of it or any
substantial part of its property, (ii) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or petition described in clause (i) of this
Section 8.1, (iii) apply for or consent to the appointment of a custodian, trustee,
receiver, liquidator or other similar official for the Borrower or any such Subsidiary or for a
substantial part of its assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of creditors, or (vi) take any
action for the purpose of effecting any of the foregoing; or




          (h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed
seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any
Subsidiary or its debts, or any substantial part of its assets, under any federal, state or
foreign bankruptcy, insolvency or other similar law now or hereafter in effect or (ii) the
appointment of a custodian, trustee, receiver, liquidator or other similar official for the
Borrower or any Subsidiary or for a substantial part of its assets, and in any such case, such
proceeding or






50









 







petition shall remain undismissed for a period of 60 days or an order or decree
approving or ordering any of the foregoing shall be entered; or




          (i) the Borrower or any Subsidiary shall become unable to pay, shall admit in writing its
inability to pay, or shall fail to pay, its debts as they become due; or




          (j) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when
taken together with other ERISA Events that have occurred, could reasonably be expected to result
in liability to the Borrower and the Subsidiaries in an aggregate amount exceeding $1,000,000; or




          (k) any judgment or order for the payment of money in excess of $5,000,000 in the aggregate
shall be rendered against the Borrower or any Subsidiary, and either (i) enforcement proceedings
shall have been commenced by any creditor upon such judgment or order or (ii) there shall be a
period of 30 consecutive days during which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect; or




          (l) any non-monetary judgment or order shall be rendered against the Borrower or any
Subsidiary that could reasonably be expected to have a Material Adverse Effect, and there shall be
a period of 30 consecutive days during which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect; or




          (m) a Change in Control shall occur or exist;




          (n) the Liens created by the Security Documents shall, at any time, not be valid and perfected
(to the extent perfection by filing, registration, recordation, possession or control is required
herein or therein) in favor of the Administrative Agent, free and clear of all other Liens (other
than Permitted Encumbrances); or




          (o) any provision of any Security Document shall for any reason cease to be valid and binding
on, or enforceable against, any Subsidiary Guarantor or the Borrower, as applicable, or any
Subsidiary Guarantor or the Borrower shall so state in writing, any Subsidiary Guarantor or the
Borrower shall seek to terminate any Security Document;



then, and in every such event (other than an event with respect to the Borrower described in clause
(f) or (g) of this Section 8.1) and at any time thereafter during the continuance of such
event, the Administrative Agent may, and upon the written request of the Required Lenders shall, by
notice to the Borrower, take any or all of the following actions, at the same or different times:
(i) terminate the Commitments, whereupon the Commitment of each Lender shall
terminate immediately; (ii) declare the principal of and any accrued interest on the Loans, and all
other Obligations owing hereunder, to be, whereupon the same shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; (iii) exercise all remedies contained in any other Loan Document and
(iv) exercise any other remedies available at law or equity; and that, if an Event of Default
specified in either clause (g) or (h) shall occur, the Commitments shall automatically terminate
and the principal of the Loans then outstanding, together with accrued interest thereon, and all
fees, and all other Obligations shall automatically become due and payable, without





51









 







presentment,
demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.




ARTICLE IX



THE ADMINISTRATIVE AGENT




          Section 9.1. Appointment of Administrative Agent. Each Lender irrevocably appoints
SunTrust Bank as the Administrative Agent and authorizes it to take such actions on its behalf and
to exercise such powers as are delegated to the Administrative Agent under this Agreement and the
other Loan Documents, together with all such actions and powers that are reasonably incidental
thereto. The Administrative Agent may perform any of its duties hereunder or under the other Loan
Documents by or through any one or more sub-agents or attorneys-in-fact appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent or attorney-in-fact may
perform any and all of its duties and exercise its rights and powers through their respective
Related Parties. The exculpatory provisions set forth in this Article shall apply to any such
sub-agent or attorney-in-fact and the Related Parties of the Administrative Agent, any such
sub-agent and any such attorney-in-fact and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as well as activities
as Administrative Agent.




          Section 9.2. Nature of Duties of Administrative Agent. The Administrative Agent shall
not have any duties or obligations except those expressly set forth in this Agreement and the other
Loan Documents. Without limiting the generality of the foregoing, (a) the Administrative Agent
shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or
an Event of Default has occurred and is continuing, (b) the Administrative Agent shall not have any
duty to take any discretionary action or exercise any discretionary powers, except those
discretionary rights and powers expressly contemplated by the Loan Documents that the
Administrative Agent is required to exercise in writing by the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary under the circumstances as provided in
Section 10.2), and (c) except as expressly set forth in the Loan Documents, the
Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure
to disclose, any information relating to the Borrower or any of its Subsidiaries that is
communicated to or obtained by the Administrative Agent or any of its Affiliates in any capacity.
The Administrative Agent shall not be liable for any action taken or not taken by it, its
sub-agents or attorneys-in-fact with the
consent or at the request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section 10.2) or in
the absence of its own gross negligence or willful misconduct. The Administrative Agent shall not
be responsible for the negligence or misconduct of any sub-agents or attorneys-in-fact selected by
it with reasonable care. The Administrative Agent shall not be deemed to have knowledge of any
Default or Event of Default unless and until written notice thereof (which notice shall include an
express reference to such event being a “Default” or “Event of Default” hereunder) is given to the
Administrative Agent by the Borrower or any Lender, and the Administrative Agent shall not be
responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with any Loan Document, (ii) the contents of any
certificate, report or other document delivered hereunder or thereunder or in connection herewith
or therewith, (iii) the performance or observance of any






52









 







of the covenants, agreements, or other
terms and conditions set forth in any Loan Document, (iv) the validity, enforceability,
effectiveness or genuineness of any Loan Document or any other agreement, instrument or document,
or (v) the satisfaction of any condition set forth in Article III or elsewhere in any Loan
Document, other than to confirm receipt of items expressly required to be delivered to the
Administrative Agent. The Administrative Agent may consult with legal counsel (including counsel
for the Borrower) concerning all matters pertaining to such duties.




          Section 9.3. Lack of Reliance on the Administrative Agent. Each of the Lenders
acknowledges that it has, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each of the Lenders also acknowledges
that it will, independently and without reliance upon the Administrative Agent or any other Lender
and based on such documents and information as it has deemed appropriate, continue to make its own
decisions in taking or not taking of any action under or based on this Agreement, any related
agreement or any document furnished hereunder or thereunder.




          Section 9.4. Certain Rights of the Administrative Agent. If the Administrative Agent
shall request instructions from the Required Lenders with respect to any action or actions
(including the failure to act) in connection with this Agreement, the Administrative Agent shall be
entitled to refrain from such act or taking such act, unless and until it shall have received
instructions from such Lenders; and the Administrative Agent shall not incur liability to any
Person by reason of so refraining. Without limiting the foregoing, no Lender shall have any right
of action whatsoever against the Administrative Agent as a result of the Administrative Agent
acting or refraining from acting hereunder in accordance with the instructions of the Required
Lenders where required by the terms of this Agreement.




          Section 9.5. Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing (including any electronic
message, posting or other distribution) believed by it to be genuine and to have been signed, sent
or made by the proper Person. The Administrative Agent may also rely upon any statement made to it
orally or by telephone and believed by it to be made by the proper Person and shall not incur any
liability for
relying thereon. The Administrative Agent may consult with legal counsel (including counsel
for the Borrower), independent public accountants and other experts selected by it and shall not be
liable for any action taken or not taken by it in accordance with the advice of such counsel,
accountants or experts.




          Section 9.6. The Administrative Agent in its Individual Capacity. The bank serving as
the Administrative Agent shall have the same rights and powers under this Agreement and any other
Loan Document in its capacity as a Lender as any other Lender and may exercise or refrain from
exercising the same as though it were not the Administrative Agent; and the terms “Lenders”,
“Required Lenders”, “holders of Notes”, or any similar terms shall, unless the context clearly
otherwise indicates, include the Administrative Agent in its individual capacity. The bank acting
as the Administrative Agent and its Affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the Borrower or any Subsidiary or Affiliate of the
Borrower as if it were not the Administrative Agent hereunder.





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          Section 9.7. Successor Administrative Agent.




          (a) The Administrative Agent may resign at any time by giving notice thereof to the Lenders
and the Borrower. Upon any such resignation, the Required Lenders shall have the right to appoint
a successor Administrative Agent, subject to the approval by the Borrower provided that no Default
or Event of Default shall exist at such time. If no successor Administrative Agent shall have been
so appointed, and shall have accepted such appointment within 30 days after the retiring
Administrative Agent gives notice of resignation, then the retiring Administrative Agent may, on
behalf of the Lenders, appoint a successor Administrative Agent, which shall be a commercial bank
organized under the laws of the United States of America or any state thereof or a bank which
maintains an office in the United States, having a combined capital and surplus of at least
$500,000,000.




          (b) Upon the acceptance of its appointment as the Administrative Agent hereunder by a
successor, such successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative Agent, and the
retiring Administrative Agent shall be discharged from its duties and obligations under this
Agreement and the other Loan Documents. If within 45 days after written notice is given of the
retiring Administrative Agent’s resignation under this Section 9.7 no successor
Administrative Agent shall have been appointed and shall have accepted such appointment, then on
such 45th day (i) the retiring Administrative Agent’s resignation shall become
effective, (ii) the retiring Administrative Agent shall thereupon be discharged from its duties and
obligations under the Loan Documents and (iii) the Required Lenders shall thereafter perform all
duties of the retiring Administrative Agent under the Loan Documents until such time as the
Required Lenders appoint a successor Administrative Agent as provided above. After any retiring
Administrative Agent’s resignation hereunder, the provisions of this Article IX shall continue in
effect for the benefit of such retiring Administrative Agent and its representatives and agents in
respect of any actions taken or not taken by any of them while it was serving as the Administrative
Agent.




          Section 9.8. Authorization to Execute other Loan Documents Each Lender hereby
authorizes the Administrative Agent to execute on behalf of all Lenders (a) all Loan Documents
other than this Agreement, (b) any release of the guaranty of a Subsidiary Guarantor to the extent
expressly permitted by this Agreement, and (c) any release of collateral to the extent expressly
permitted by this Agreement.




          Section 9.9. Documentation Agent; Syndication Agent. Each Lender hereby designates
Citibank, N.A. as Syndication Agent and agrees that the Syndication Agent shall have no duties or
obligations under any Loan Documents to any Lender or any Loan Party.




ARTICLE X



MISCELLANEOUS




          Section 10.1. Notices.




          (a) Written Notices.




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



	 	 	 
	To the Borrower:

	 	Kayne Anderson Energy Development Company
	 

	 	717 Texas Avenue, Suite 3100
	 

	 	Houston, Texas 77002
	 

	 	Attention: Terry Hart
	 

	 	Telecopy Number: (713) 655-7359
	 
	 	 
	With a copy to:

	 	Paul, Hastings, Janofsky & Walker LLP
	 

	 	55 Second Street
	 

	 	San Francisco, California 94105
	 

	 	Attention: Kevin Fisher
	 

	 	Telecopy Number: (415) 856-7100
	 
	 	 
	To the Administrative Agent:

	 	SunTrust Bank
	 

	 	303 Peachtree Street, N. E.
	 

	 	Atlanta, Georgia 30308
	 

	 	Attention: Sean Drinan
	 

	 	Telecopy Number: (404) 827-6514
	 
	 	 
	With a copy to:

	 	SunTrust Bank Agency Services
	 

	 	303 Peachtree Street, N. E./25th Floor
	 

	 	Atlanta, Georgia 30308
	 

	 	Attention: Ms. Doris Folsum
	 

	 	Telecopy Number: (404) 658-4906; and
	 
	 	 
	 

	 	King & Spalding LLP
	 

	 	1180 Peachtree Street, NE
	 

	 	Atlanta, Georgia 30309
	 

	 	Attention: W. Todd Holleman
	 

	 	Telecopy Number: (404) 572-5100
	 
	 	 
	To any other Lender:

	 	the address set forth in the Assignment and Acceptance executed by such Lender





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





55









 









     (ii) Any agreement of the Administrative Agent and the Lenders herein to receive
certain notices by telephone or facsimile is solely for the convenience and at the request
of the Borrower. The Administrative Agent and the Lenders shall be entitled to rely on the
authority of any Person purporting to be a Person authorized by the Borrower to give such
notice and the Administrative Agent and Lenders shall not have any liability to the Borrower
or other Person on account of any action taken or not taken by the Administrative Agent or
the Lenders in reliance upon such telephonic or facsimile notice. The obligation of the
Borrower to repay the Loans and all other Obligations hereunder shall not be affected in any
way or to any extent by any failure of the Administrative Agent and the Lenders to receive
written confirmation of any telephonic or facsimile notice or the receipt by the
Administrative Agent and the Lenders of a confirmation which is at variance with the terms
understood by the Administrative Agent and the Lenders to be contained in any such
telephonic or facsimile notice.



          (b) Electronic Communications.





     (i) Notices and other communications to the Lenders hereunder may be delivered or
furnished by electronic communication (including e-mail and Internet or intranet websites)
pursuant to procedures approved by Administrative Agent, provided that the foregoing
shall not apply to notices to any Lender pursuant to Article 2 unless such Lender,
and Administrative Agent have agreed to receive notices under such Section by electronic
communication and have agreed to the procedures governing such communications.
Administrative Agent or Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant
to procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.




     (ii) Unless Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the sender’s receipt
of an acknowledgement from the intended recipient (such as by the “return receipt requested”
function, as available, return e-mail or other written acknowledgement); provided
that if such notice or other communication is not sent during the normal business hours of
the recipient, such notice or communication shall be deemed to have been sent at the opening
of business on the next Business Day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the deemed receipt
by the intended recipient at its e-mail address as described in the foregoing clause (i) of
notification that such notice or communication is available and identifying the website
address therefor.



          (c) The Administrative Agent shall execute, without further consent or approval of any Lender,
so long as no Default or Event of Default shall have occurred which is continuing or would result
therefrom (i) a release of the guaranty of a Subsidiary upon the sale or other disposition of such
Subsidiary permitted under the terms of this Agreement or pursuant to any consent or approval by
Required Lenders and (ii) a release of collateral upon the sale or other disposition of such
collateral permitted under the terms of this Agreement or pursuant to any consent or approval by
Required Lenders.





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          Section 10.2. Waiver; Amendments.




          (a) No failure or delay by the Administrative Agent or any Lender in exercising any right or
power hereunder or any other Loan Document, and no course of dealing between the Borrower and the
Administrative Agent or any Lender, shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power or any abandonment or discontinuance of steps to
enforce such right or power, preclude any other or further exercise thereof or the exercise of any
other right or power hereunder or thereunder. The rights and remedies of the Administrative Agent
and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive
of any rights or remedies provided by law. No waiver of any provision of this Agreement or any
other Loan Document or consent to any departure by the Borrower therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this Section 10.2, and
then such waiver or consent shall be effective only in the specific instance and for the purpose
for which given. Without limiting the generality of the foregoing, the making of a Loan shall not
be construed as a waiver of any Default or Event of Default, regardless of whether the
Administrative Agent or any Lender may have had notice or knowledge of such Default or Event of
Default at the time.




          (b) No amendment or waiver of any provision of this Agreement or the other Loan Documents, nor
consent to any departure by the Borrower therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Borrower and the Required Lenders or the Borrower and the
Administrative Agent with the consent of the Required Lenders and then such waiver or consent shall
be effective only in the specific instance and for the spe
cific purpose for which given; provided, that no amendment or waiver shall: (i)
increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the
principal amount of any Loan or reduce the rate of interest thereon, or reduce any fees payable
hereunder, without the written consent of each Lender affected thereby, (iii) postpone the date
fixed for any payment of any principal of, or interest on, any Loan or interest thereon or any fees
hereunder or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date
for the termination or reduction of any Commitment, without the written consent of each Lender
affected thereby, (iv) change Section 2.19 (b) or (c) in a manner that would alter
the pro rata sharing of payments required thereby, without the written consent of each Lender, (v)
change any of the provisions of this Section 10.2 or the definition of “Required Lenders”
or any other provision hereof specifying the number or percentage of Lenders which are required to
waive, amend or modify any rights hereunder or make any determination or grant any consent
hereunder, without the consent of each Lender; (vi) release all or substantially all of the
guarantors or limit the liability of any such guarantors under any guaranty agreement, without the
written consent of each Lender; (vii) release all or substantially all collateral (if any) securing
any of the Obligations, without the written consent of each Lender or (viii) change Section
3.2(d) or Section 6.4 or amend or waive any Event of Default that would result from a
breach thereof, without the written consent of each Lender; provided further, that
no such agreement shall amend, modify or otherwise affect the rights, duties or obligations of the
Administrative Agent without the prior written consent of such Person. Notwithstanding anything
contained herein to the contrary, this Agreement may be amended and restated without the consent of
any Lender (but with the consent of the Borrower and the Administrative Agent) if, upon giving
effect to such amendment and restatement, such Lender shall no longer be a party to this Agreement
(as so amended and restated), the Commitments of such Lender shall have terminated (but such






57









 







Lender
shall continue to be entitled to the benefits of Sections 2.16, 2.17, 2.18
and 10.3), such Lender shall have no other commitment or other obligation hereunder and
shall have been paid in full all principal, interest and other amounts owing to it or accrued for
its account under this Agreement.




          Section 10.3. Expenses; Indemnification.




          (a) The Borrower shall pay (i) all reasonable, out-of-pocket costs and expenses of the
Administrative Agent and its Affiliates, including the reasonable fees, charges and disbursements
of counsel for the Administrative Agent and its Affiliates, in connection with the syndication of
the credit facilities provided for herein, the preparation and administration of the Loan Documents
and any amendments, modifications or waivers thereof (whether or not the transactions contemplated
in this Agreement or any other Loan Document shall be consummated) and (ii) all out-of-pocket costs
and expenses (including, without limitation, the reasonable fees, charges and disbursements of
outside counsel) incurred by the Administrative Agent or any Lender in connection with the
enforcement or protection of its rights in connection with this Agreement, including its rights
under this Section 10.3, or in connection with the Loans made hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of
such Loans.




          (b) The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), and
each Lender, and each Related Party of any of the foregoing Persons (each
such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses (including the fees,
charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless
each Indemnitee from all fees and time charges and disbursements for attorneys who may be employees
of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any third party
or by the Borrower or any other Loan Party arising out of, in connection with, or as a result of
(i) the execution or delivery of this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto of their
respective obligations hereunder or thereunder or the consummation of the transactions contemplated
hereby or thereby, (ii) any Loan or the use or proposed use of the proceeds therefrom , (iii) any
actual or alleged presence or Release of Hazardous Materials on or from any property owned or
operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any
way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory, whether brought by a third party or by the Borrower or any
other Loan Party, and regardless of whether any Indemnitee is a party thereto, provided
that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses (x) are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or
willful misconduct of any Indemnitee or (y) result from a claim brought by the Borrower or any
other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations
hereunder or under any other Loan Document, if the Borrower or such Loan Party has obtained a final
and nonappealable judgment in its favor on such claim as determined by a court of competent
jurisdiction.





58









 








          (c) The Borrower shall pay, and hold the Administrative Agent and each of the Lenders harmless
from and against, any and all present and future stamp, documentary, and other similar taxes with
respect to this Agreement and any other Loan Documents, any collateral described therein, or any
payments due thereunder, and save the Administrative Agent and each Lender harmless from and
against any and all liabilities with respect to or resulting from any delay or omission to pay such
taxes.




          (d) To the extent that the Borrower fails to pay any amount required to be paid to the
Administrative Agent under clauses (a), (b) or (c) hereof, each Lender severally agrees to pay to
the Administrative Agent such Lender’s Pro Rata Share (determined as of the time that the
unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided, that
the unreimbursed expense or indemnified payment, claim, damage, liability or related expense, as
the case may be, was incurred by or asserted against the Administrative Agent in its capacity as
such.




          (e) To the extent permitted by applicable law, the Borrower shall not assert, and hereby
waives, any claim against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to actual or direct damages) arising out of, in
connection with or as a result of, this Agreement or any agreement or instrument contemplated
hereby, the transactions contemplated therein, any Loan or the use of proceeds thereof.




          (f) All amounts due under this Section 10.3 shall be payable promptly after written
demand therefor.




          Section 10.4. Successors and Assigns.




          (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns permitted hereby, except that the
Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of the Administrative Agent and each Lender, and no Lender may assign or
otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in
accordance with the provisions of paragraph (b) of this Section, (ii) by way of participation in
accordance with the provisions of paragraph (d) of this Section or (iii) by way of pledge or
assignment of a security interest subject to the restrictions of paragraph (f) of this Section (and
any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in
this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the
parties hereto, their respective successors and assigns permitted hereby, Participants to the
extent provided in paragraph (d) of this Section and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.




          (b) Any Lender may at any time assign to one or more assignees all or a portion of its rights
and obligations under this Agreement (including all or a portion of its Commitment and the Loans at
the time owing to it); provided that any such assignment shall be subject to the following
conditions:





59









 









     (i) Minimum Amounts.




     (A) in the case of an assignment of the entire remaining amount of the
assigning Lender’s Commitment and the Loans at the time owing to it or in the case
of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no
minimum amount need be assigned; and




     (B) in any case not described in paragraph (b)(i)(A) of this Section, the
aggregate amount of the Commitment (which for this purpose includes Loans and
Revolving Credit Exposure outstanding thereunder) or, if the applicable Commitment
is not then in effect, the principal outstanding balance of the Loans and Revolving
Credit Exposure of the assigning Lender subject to each such assignment (determined
as of the date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent or, if “Trade Date” is specified in the
Assignment and Acceptance, as of the Trade Date) shall not be less than $1,000,000,
unless each of the Administrative Agent and, so long as no Event of Default has
occurred and is continuing, the Borrower otherwise consents (each such consent not
to be unreasonably withheld or delayed).




     (ii) Proportionate Amounts. Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and obligations
under this Agreement with respect to the Loans, Revolving Credit Exposure or the
Commitment assigned, except that this clause (ii) shall not prohibit any Lender from
assigning all or a portion of its rights and obligations among separate Commitments on a
non-pro rata basis.




     (iii) Required Consents. No consent shall be required for any assignment
except to the extent required by paragraph (b)(i)(B) of this Section and, in addition:




     (A) the consent of the Borrower (such consent not to be unreasonably withheld
or delayed) shall be required unless (x) an Event of Default has occurred and is
continuing at the time of such assignment or (y) such assignment is to a Lender, an
Affiliate of a Lender or an Approved Fund; and




     (B) the consent of the Administrative Agent (such consent not to be
unreasonably withheld or delayed) shall be required for assignments to a Person that
is not a Lender with a Commitment.




     (iv) Assignment and Acceptance. The parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Acceptance, together with a
processing and recordation fee of $3,500, and the assignee, if it is not a Lender, shall
deliver to the Administrative Agent an Administrative Questionnaire.




     (v) No Assignment to Borrower. No such assignment shall be made to the
Borrower or any of the Borrower’s Affiliates or Subsidiaries.




     (vi) No Assignment to Natural Persons. No such assignment shall be made to a
natural person.



60









 




Subject to acceptance and recording thereof by the Administrative Agent pursuant to paragraph (c)
of this Section 10.4, from and after the effective date specified in each Assignment and
Acceptance, the assignee thereunder shall be a party to this Agreement and, to the extent of the
interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all of the assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 2.16, 2.17, 2.18 and
10.3 with respect to facts and circumstances occurring prior to the effective date of such
assignment. Any assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale
by such Lender of a participation in such rights and obligations in accordance with paragraph (d)
of this Section 10.4. If the consent of the Borrower to an assignment is required
hereunder (including a consent to an assignment which does not meet the minimum assignment
thresholds specified above), the Borrower shall be deemed to have given its consent five Business
Days after the date notice thereof has actually been delivered by the assigning Lender (through the
Administrative Agent) to the Borrower, unless such consent is expressly refused by the Borrower
prior to such fifth Business Day.




          (c) The Administrative Agent, acting solely for this purpose as an agent of the Borrower,
shall maintain at one of its offices in Atlanta, Georgia a copy of each Assignment and Acceptance
delivered to it and a register for the recordation of the names and addresses of the Lenders, and
the Commitments of, and principal amount of the Loans and Revolving Credit Exposure owing to, each
Lender pursuant to the terms hereof from time to time (the “Register”). Information
contained in the Register with respect to any Lender shall be available for inspection by such
Lender at any reasonable time and from time to time upon reasonable prior notice; information
contained in the Register shall also be available for inspection by the Borrower at any reasonable
time and from time to time upon reasonable prior notice. In establishing and maintaining the
Register, Administrative Agent shall serve as Company’s agent solely for tax purposes and solely
with respect to the actions described in this Section, and the Borrower hereby agrees that,
to the extent SunTrust Bank serves in such capacity, SunTrust Bank and its officers, directors,
employees, agents, sub-agents and affiliates shall constitute “Indemnitees.”




          (d) Any Lender may at any time, without the consent of, or notice to, the Borrower or the
Administrative Agent sell participations to any Person (other than a natural person, the Borrower
or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a
portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion
of its Commitment and/or the Loans owing to it); provided that (i) such Lender’s
obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations and (iii) the
Borrower, the Administrative Agent and the Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender’s rights and obligations under this Agreement.




          Any agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement;






61









 







provided that such
agreement or instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver with respect to the following to the
extent affecting such Participant: (i) increase the Commitment of any Lender without the written
consent of such Lender, (ii) reduce the principal amount of any Loan or reduce the rate of interest
thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected
thereby, (iii) postpone the date fixed for any payment of any principal of, or interest on, any
Loan or interest thereon or any fees hereunder or reduce the amount of, waive or excuse any such
payment, or postpone the scheduled date for the termination or reduction of any Commitment, without
the written consent of each Lender affected thereby, (iv) change Section 2.19(b) or
(c) in a manner that would alter the pro rata sharing of payments required thereby, without
the written consent of each Lender, (v) change any of the provisions of this Section 10.4
or the definition of “Required Lenders” or any other provision hereof specifying the number or
percentage of Lenders which are required to waive, amend or modify any rights hereunder or make any
determination or grant any consent hereunder, without the consent of each Lender; (vi) release any
guarantor or limit the liability of any such guarantor under any guaranty agreement without the
written consent of each Lender except to the extent such release is expressly provided under the
terms of the such guaranty agreement; or (vii) release all or substantially all collateral (if any)
securing any of the Obligations. Subject to paragraph (e) of this Section 10.4, the
Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.16,
2.17, and 2.18 to the same extent as
if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section 10.4. To the extent permitted by law, each Participant also shall be entitled
to the benefits of Section 10.7 as though it were a Lender, provided such Participant
agrees to be subject to Section 2.19 as though it were a Lender.




          (e) A Participant shall not be entitled to receive any greater payment under Section
2.16 and Section 2.18 than the applicable Lender would have been entitled to receive
with respect to the participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent. A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.18
unless the Borrower is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 2.18(e) as though it were a
Lender.




          (f) Any Lender may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such Lender, including without limitation
any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.




          Section 10.5. Governing Law; Jurisdiction; Consent to Service of Process.




          (a) This Agreement and the other Loan Documents shall be construed in accordance with and be
governed by the law (without giving effect to the conflict of law principles thereof) of the State
of New York.




          (b) The Borrower hereby irrevocably and unconditionally submits, for itself and its property,
to the exclusive jurisdiction of the United States District Court of the Southern







62









 







District of New
York, and of any state court of the State of New York sitting in New York County and any appellate
court from any thereof, in any action or proceeding arising out of or relating to this Agreement or
any other Loan Document or the transactions contemplated hereby or thereby, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard and determined in
such New York state court or, to the extent permitted by applicable law, such Federal court. Each
of the parties hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any right
that the Administrative Agent or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or any other Loan Document against the Borrower or its properties in the
courts of any jurisdiction.




          (c) The Borrower irrevocably and unconditionally waives any objection which it may now or
hereafter have to the laying of venue of any such suit, action or proceeding described in paragraph
(b) of this Section 10.5 and brought in any court referred to in paragraph (b) of this
Section 10.5. Each of the parties hereto irrevocably waives, to the fullest extent
permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action
or proceeding in any such court.




          (d) Each party to this Agreement irrevocably consents to the service of process in the manner
provided for notices in Section 10.1. Nothing in this Agreement or in any other Loan
Document will affect the right of any party hereto to serve process in any other manner permitted
by law.




          Section 10.6. WAIVER OF JURY TRIAL. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.8.




          Section 10.7. Right of Setoff. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, each Lender shall have the
right, at any time or from time to time upon the occurrence and during the continuance of an Event
of Default, without prior notice to the Borrower, any such notice being expressly waived by the
Borrower to the extent permitted by applicable law, to set off and apply against all deposits
(general or special, time or demand, provisional or final) of the Borrower at any time held or
other obligations at any time owing by such Lender to or for the credit or the account of





63









 







the Borrower against any and all Obligations held by such Lender irrespective of whether such Lender
shall have made demand hereunder and although such Obligations may be unmatured. Each Lender agrees
promptly to notify the Administrative Agent and the Borrower after any such set-off and any
application made by such Lender; provided, that the failure to give such notice shall not
affect the validity of such set-off and application. Each Lender agrees to apply all amounts
collected from any such set-off to the Obligations before applying such amounts to any other
Indebtedness or other obligations owed by the Borrower and any of its Subsidiaries to such Lender.




          Section 10.8. Counterparts; Integration. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to constitute one and the
same instrument. This Agreement, the Fee Letter, the other Loan Documents, and any separate letter
agreement(s) relating to any fees payable to the Administrative Agent constitute the entire
agreement among the parties hereto and thereto regarding the subject matters hereof and thereof and
supersede all prior agreements and understandings, oral or written, regarding such subject matters.




          Section 10.9. Survival. All covenants, agreements, representations and warranties
made by the Borrower herein and in the certificates
or other instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall survive the execution and
delivery of this Agreement and the making of any Loans, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the Administrative Agent or any
Lender may have had notice or knowledge of any Default or incorrect representation or warranty at
the time any credit is extended hereunder, and shall continue in full force and effect as long as
the principal of or any accrued interest on any Loan or any fee or any other amount payable under
this Agreement is outstanding and unpaid and so long as the Commitments have not expired or
terminated. The provisions of Sections 2.16, 2.17, 2.18, and 10.3
and Article IX shall survive and remain in full force and effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the Loans and the Commitments or the
termination of this Agreement or any provision hereof. All representations and warranties made
herein, in the certificates, reports, notices, and other documents delivered pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the other Loan Documents,
and the making of the Loans.




          Section 10.10. Severability. Any provision of this Agreement or any other Loan
Document held to be illegal, invalid or unenforceable in any jurisdiction, shall, as to such
jurisdiction, be ineffective to the extent of such illegality, invalidity or unenforceability
without affecting the legality, validity or enforceability of the remaining provisions hereof or
thereof; and the illegality, invalidity or unenforceability of a particular provision in a
particular jurisdiction shall not invalidate or render unenforceable such provision in any other
jurisdiction.




          Section 10.11. Confidentiality. Each of the Administrative Agent and each Lender
agrees to take normal and reasonable precautions to maintain the confidentiality of any information
designated in writing as confidential and provided to it by the Borrower or any Subsidiary, except
that such information may be disclosed (i) to any Related Party of the Administrative Agent or any
such Lender, including without limitation accountants, legal





64









 







counsel and other advisors, (ii) to
the extent required by applicable laws or regulations or by any subpoena or similar legal process,
(iii) to the extent requested by any regulatory agency or authority, (iv) to the extent that such
information becomes publicly available other than as a result of a breach of this Section
10.11, or which becomes available to the Administrative Agent, any Lender or any Related Party
of any of the foregoing on a nonconfidential basis from a source other than the Borrower, (v) in
connection with the exercise of any remedy hereunder or any suit, action or proceeding relating to
this Agreement or the enforcement of rights hereunder, (vi) subject to provisions substantially
similar to this Section 10.11, to any actual or prospective assignee or Participant, or
(vii) with the consent of the Borrower. Any Person required to maintain the confidentiality of any
information as provided for in this Section 10.11 shall be considered to have complied with
its obligation to do so if such Person has exercised the same degree of care to maintain the
confidentiality of such information as such Person would accord its own confidential information.




          Section 10.12. Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges
and other amounts which may be treated as interest on such Loan under applicable law (collectively,
the “Charges”), shall exceed the
maximum lawful rate of interest (the “Maximum Rate”) which may be contracted for, charged,
taken, received or reserved by a Lender holding such Loan in accordance with applicable law, the
rate of interest payable in respect of such Loan hereunder, together with all Charges payable in
respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and
Charges that would have been payable in respect of such Loan but were not payable as a result of
the operation of this Section 10.12 shall be cumulated and the interest and Charges payable
to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum
Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds
Rate to the date of repayment (to the extent permitted by applicable law), shall have been received
by such Lender.




          Section 10.13. Waiver of Effect of Corporate Seal. The Borrower represents and
warrants that neither it nor any other Loan Party is required to affix its corporate seal to this
Agreement or any other Loan Document pursuant to any Requirement of Law or regulation, agrees that
this Agreement is delivered by Borrower under seal and waives any shortening of the statute of
limitations that may result from not affixing the corporate seal to this Agreement or such other
Loan Documents.




          Section 10.14. Patriot Act. The Administrative Agent and each Lender hereby notifies
the Loan Parties that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is required to obtain, verify
and record information that identifies each Loan Party, which information includes the name and
address of such Loan Party and other information that will allow such Lender or the Administrative
Agent, as applicable, to identify such Loan Party in accordance with the Patriot Act. Each Loan
Party shall, and shall cause each of its Subsidiaries to, provide to the extent commercially
reasonable, such information and take such other actions as are reasonably requested by the
Administrative Agent or any Lender in order to assist the Administrative Agent and the Lenders in
maintaining compliance with the Patriot Act.







65









 






          Section 10.15. NO ORAL AGREEMENTS, WAIVER.






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




(remainder of page left intentionally blank)




66









 







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




	 	 	 	 	 	 	 
	 	 	KAYNE ANDERSON ENERGY	 	 
	 	 	DEVELOPMENT COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 






[SIGNATURE
PAGE TO TREASURY SECURED REVOLVING CREDIT AGREEMENT]






 









 








	 	 	 	 	 	 	 
	 	 	SUNTRUST BANK, as Administrative	 	 
	 	 	Agent and as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 






[SIGNATURE
PAGE TO TREASURY SECURED REVOLVING CREDIT AGREEMENT]





 









 








	 	 	 	 	 	 	 
	 	 	CITIBANK, N.A., as Syndication Agent and as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 






[SIGNATURE
PAGE TO TREASURY SECURED REVOLVING CREDIT AGREEMENT]




 









 








	 	 	 	 	 	 	 
	 	 	LANDESBANK BADEN-WUERTTEMBERG,	 	 
	 	 	as Co-Documentation Agent and as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 






[SIGNATURE
PAGE TO TREASURY SECURED REVOLVING CREDIT AGREEMENT]




 









 








	 	 	 	 	 	 	 
	 	 	BMO CAPITAL MARKETS FINANCING, INC., as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 






[SIGNATURE
PAGE TO TREASURY SECURED REVOLVING CREDIT AGREEMENT]




 









 








	 	 	 	 	 	 	 
	 	 	BMO CAPITAL MARKETS, as Co-Documentation Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 






[SIGNATURE
PAGE TO TREASURY SECURED REVOLVING CREDIT AGREEMENT]





 









 








	 	 	 	 	 	 	 
	 	 	CUSTODIAL TRUST COMPANY, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 






[SIGNATURE
PAGE TO TREASURY SECURED REVOLVING CREDIT AGREEMENT]





 









 








	 	 	 	 	 	 	 
	 	 	MERRILL LYNCH BANK USA, as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 






[SIGNATURE
PAGE TO TREASURY SECURED REVOLVING CREDIT AGREEMENT]





 









 








Schedule I




COMMITMENT AMOUNTS




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






 









 






SCHEDULE 4.5




ENVIRONMENTAL MATTERS




Schedule 4.5




 









 








SCHEDULE 4.14



SUBSIDIARIES




	 	 	 	 	 	 	 	 	 
	Company	 	Owner	 	 	Ownership Interests	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 





 









 






SCHEDULE 7.1



OUTSTANDING INDEBTEDNESS




 









 








SCHEDULE 7.2



EXISTING LIENS





 









 





EXHIBIT A

FORM OF REVOLVING CREDIT NOTE




	 	 	 
	[$                    ]

	 	Atlanta, Georgia
	 

	 	June 4, 2007






     FOR VALUE RECEIVED, the undersigned, KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY, a Maryland
corporation (the “Borrower”), hereby promises to pay to [name of Lender] (the
“Lender”) or its registered assigns, at the office of SunTrust Bank (“SunTrust”) at
303 Peachtree St., N.E., Atlanta, Georgia 30308, on the Revolving Commitment Termination Date (as
defined in the Treasury Secured Revolving Credit Agreement, dated as of June 4, 2007, as the same
may be amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among the Borrower, the lenders from time to time party thereto and SunTrust, as
administrative agent for the lenders, the lesser of the principal sum of [amount of such Lender’s
Revolving Commitment] and the aggregate unpaid principal amount of all Revolving Loans made by the
Lender to the Borrower pursuant to the Credit Agreement, in lawful money of the United States of
America in immediately available funds, and to pay interest from the date hereof on the principal
amount thereof from time to time outstanding, in like funds, at said office, at the rate or rates
per annum and payable on such dates as provided in the Credit Agreement. In addition, should legal
action or an attorney-at-law be utilized to collect any amount due hereunder, the Borrower further
promises to pay all costs of collection, including the reasonable attorneys’ fees of the Lender.



     Upon the occurrence of an Event of Default, the Borrower promises to pay interest, on demand,
at a rate or rates provided in the Credit Agreement.



     All borrowings evidenced by this Revolving Credit Note and all payments and prepayments of the
principal hereof and the date thereof shall be endorsed by the holder hereof on the schedule
attached hereto and made a part hereof or on a continuation thereof which shall be attached hereto
and made a part hereof, or otherwise recorded by such holder in its internal records;
provided, that the failure of the holder hereof to make such a notation or any error in
such notation shall not affect the obligations of the Borrower to make the payments of principal
and interest in accordance with the terms of this Revolving Credit Note and the Credit Agreement.



     This Revolving Credit Note is issued in connection with, and is entitled to the benefits of,
the Credit Agreement which, among other things, contains provisions for the acceleration of the
maturity hereof upon the happening of certain events, for prepayment of the principal hereof prior
to the maturity hereof and for the amendment or waiver of certain provisions of the Credit
Agreement, all upon the terms and conditions therein specified.



A-1









 





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



	 	 	 	 	 
	 	KAYNE ANDERSON ENERGY

DEVELOPMENT COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



[SIGNATURE PAGE TO REVOLVING CREDIT NOTE]





 









 








LOANS AND PAYMENTS




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






A-3









 








EXHIBIT C

FORM OF ASSIGNMENT AND ACCEPTANCE




[date to be supplied]




     Reference is made to the Treasury Secured Revolving Credit Agreement dated as of June 4, 2007
(as amended and in effect on the date hereof, the “Credit Agreement”), among Kayne Anderson
Energy Development Company, a Maryland corporation, the lenders from time to time party thereto and
SunTrust Bank, as Administrative Agent for such lenders. Terms defined in the Credit Agreement are
used herein with the same meanings.



     The [name of assignor] (the “Assignor”) hereby sells and assigns, without recourse, to
[name of assignee] (the “Assignee”), and the Assignee hereby purchases and assumes, without
recourse, from the Assignor, effective as of the Assignment Date set forth below, the interests set
forth below (the “Assigned Interest”) in the Assignor’s rights and obligations under the
Credit Agreement, including, without limitation, the interests set forth below in the Revolving
Commitment of the Assignor on the Assignment Date and Revolving Loans owing to the Assignor which
are outstanding on the Assignment Date, but excluding accrued interest and fees to and excluding
the Assignment Date. The Assignee hereby acknowledges receipt of a copy of the Credit Agreement.
From and after the Assignment Date (i) the Assignee shall be a party to and be bound by the
provisions of the Credit Agreement and, to the extent of the Assigned Interest, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent of the Assigned
Interest, relinquish its rights and be released from its obligations under the Credit Agreement.



     This Assignment and Acceptance is being delivered to the Administrative Agent together with
(i) if the Assignee is a Foreign Lender, any documentation required to be delivered by the Assignee
pursuant to Section 2.18(e) of the Credit Agreement, duly completed and executed by the Assignee,
and (ii) if the Assignee is not already a Lender under the Credit Agreement, an Administrative
Questionnaire in the form supplied by the Administrative Agent, duly completed by the Assignee.
The Assignee shall pay the fee payable to the Administrative Agent pursuant to Section 10.4(b) of
the Credit Agreement.



     The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the
Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other
adverse claim and (ii) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Acceptance and to consummate the transactions contemplated
hereby, and (b) assumes no responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the Credit Agreement or any other Credit Document,
(ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the
Credit Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any
of its Subsidiaries or Affiliates or any other Person obligated in respect of any Credit Document
or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any
other Person of any of their respective obligations under any Credit Document.



C-1









 





     The Assignee (a) represents and warrants that (i) it has full power and authority, and has
taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate
the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
meets all requirements of an Eligible Assignee under the Credit Agreement (subject to receipt of
such consents as may be required under the Credit Agreement), (iii) from and after the Effective
Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to
the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has
received a copy of the Credit Agreement, together with copies of the most recent financial
statements delivered pursuant to Section 5.1 thereof, as applicable, and such other documents and
information as it has deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance and to purchase the Assigned Interest on the basis of which it has
made such analysis and decision independently and without reliance on the Administrative Agent or
any other Lender, and (v) if it is a Foreign Lender, attached to the Assignment and Acceptance is
any documentation required to be delivered by it pursuant to the terms of the Credit Agreement,
duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and
without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Credit Documents, and (ii) it will perform in
accordance with their terms all of the obligations which by the terms of the Credit Documents are
required to be performed by it as a Lender.



     From and after the Effective Date, the Administrative Agent shall make all payments in respect
of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the
Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for
amounts which have accrued from and after the Effective Date.



     This Assignment and Acceptance shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors and assigns. This Assignment and Acceptance may be executed
in any number of counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment and Acceptance by telecopy shall be
effective as delivery of a manually executed counterpart of this Assignment and Acceptance. This
Assignment and Acceptance shall be governed by and construed in accordance with the laws of the
State of New York.



Assignment Date:




Legal Name of Assignor:




Legal Name of Assignee:




Assignee’s Address for Notices:




Effective Date of Assignment:

(“Effective Date”):




C-2









 





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





The terms set forth above are hereby agreed to:




	 	 	 	 	 
	 	[Name of Assignor], as Assignor

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

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




C-3









 







The undersigned hereby consents to the within assignment1:




	 	 	 	 	 	 	 	 	 	 	 
	KAYNE ANDERSON ENERGY 

DEVELOPMENT COMPANY	 	 	 	SunTrust Bank, as Administrative Agent:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 

Name:
	 	 	 	 	 	 

Name:
	 	 
	 

	 	Title:
	 	 	 	 	 	Title:	 	 








 




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





[SIGNATURE PAGE TO ASSIGNMENT AND ACCEPTANCE]




 









 





EXHIBIT D

SUBSIDIARY GUARANTY AGREEMENT




     THIS SUBSIDIARY GUARANTY AGREEMENT (the “Agreement”), dated as of June 4, 2007, by and
among KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY, a Maryland corporation (the “Borrower”),
each of the subsidiaries of the Borrower listed on Schedule I hereto (each such subsidiary
individually, a “Guarantor” and collectively, the “Guarantors”) and SUNTRUST BANK,
a Georgia banking corporation, as administrative agent (the “Administrative Agent”) for the
several banks and other financial institutions (the “Lenders”) from time to time party to
the Treasury Secured Revolving Credit Agreement, dated as of the date hereof, by and among the
Borrower, the Lenders, the Administrative Agent (as amended, restated, supplemented or otherwise
modified from time to time, the “Credit Agreement”; capitalized terms used herein and not
otherwise defined herein shall the meanings assigned to such terms in the Credit Agreement).



W I T N E S S E T H:




     WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to establish a revolving
credit facility in favor of the Borrower;



     WHEREAS, each of the Guarantors is a direct or indirect Subsidiary of the Borrower and will
derive substantial benefit from the making of Loans by the Lenders; and



     WHEREAS, it is a condition precedent to the obligations of the Administrative Agent and the
Lenders under the Credit Agreement that each Guarantor execute and deliver to the Administrative
Agent a Subsidiary Guaranty Agreement in the form hereof, and each Guarantor wishes to fulfill said
condition precedent;



     NOW, THEREFORE, in order to induce Lenders to extend the Loans and to make the financial
accommodations as provided for in the Credit Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:



     Section 1. Guarantee. Each Guarantor unconditionally guarantees, jointly with the
other Guarantors and severally, as a primary obligor and not merely as a surety, (i) the due and
punctual payment of all Obligations including, without limitation, (A) the principal of and
premium, if any, and interest (including interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in
such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise and (B) all other monetary obligations, including fees,
costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or allowable in



D-1









 







such proceeding), of the Loan Parties to the Administrative Agent and the Lenders under the
Credit Agreement and the other Loan Documents, (ii) the due and punctual performance of all
covenants, agreements, obligations and liabilities of the Loan Parties under or pursuant to the
Credit Agreement and the other Loan Documents; and (iii) the due and punctual payment and
performance of all obligations of the Borrower, monetary or otherwise, arising under any Hedging
Transaction incurred to limit interest rate or fee fluctuation with respect to the Loans entered
into with a counterparty that was a Lender or an Affiliate of a Lender at the time such Hedging
Transaction was entered into (each such person a “Specified Hedge Provider”; the
Administrative Agent, the Lenders and the Specified Hedge Providers, collectively, the “Secured
Parties” and each individually a “Secured Party”) (all the monetary and other
obligations referred to in the preceding clauses (i) through (iii) being collectively called the
“Guaranteed Obligations”). Each Guarantor further agrees that the Guaranteed Obligations
may be extended or renewed, in whole or in part, without notice to or further assent from such
Guarantor, and that such Guarantor will remain bound upon its guarantee notwithstanding any
extension or renewal of any Guaranteed Obligations.



     Section 2. Obligations Not Waived. To the fullest extent permitted by applicable law,
each Guarantor waives presentment or protest to, demand of or payment from the other Loan Parties
of any of the Guaranteed Obligations, and also waives notice of acceptance of its guarantee and
notice of protest for nonpayment. To the fullest extent permitted by applicable law, the
obligations of each Guarantor hereunder shall not be affected by (i) the failure of the
Administrative Agent or any Lender to assert any claim or demand or to enforce or exercise any
right or remedy against the Borrower or any other Guarantor under the provisions of the Credit
Agreement, any other Loan Document or otherwise, (ii) the failure of any Secured Party to assert
any claim or demand or to enforce or exercise any right or remedy against the Borrower or any other
Guarantor under the provisions or any instruments, agreements or documents executed in connection
with any Hedging Transaction incurred to limit interest rate or fee fluctuation with respect to the
Loans entered into with a Specified Hedge Provider (each such document, a “Hedging
Document”), (iii) any rescission, waiver, amendment or modification of, or any release from any
of the terms or provisions of, this Agreement, any other Loan Document, any Hedging Document, any
guarantee or any other agreement, including with respect to any other Guarantor under this
Agreement, or (iv) the failure to perfect any security interest in, or the release of, any of the
security held by or on behalf of the Administrative Agent or any Secured Party.



     Section 3. Guarantee of Payment. Each Guarantor further agrees that its guarantee
constitutes a guarantee of payment when due and not of collection, and waives any right to require
that any resort be had by the Administrative Agent or any Secured Party to any of the security held
for payment of the Guaranteed Obligations or to any balance of any deposit account or credit on the
books of the Administrative Agent or any Secured Party in favor of the Borrower or any other
Person.



     Section 4. No Discharge or Diminishment of Guarantee. The obligations of each
Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination
for any reason (other than the indefeasible payment in full in cash of the



D-2









 







Guaranteed Obligations), including any claim of waiver, release, surrender, alteration or
compromise of any of the Guaranteed Obligations, and shall not be subject to any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Guaranteed Obligations or otherwise. Without limiting the generality of
the foregoing, the obligations of each Guarantor hereunder shall not be discharged or impaired or
otherwise affected by the failure of the Administrative Agent or any Secured Party to assert any
claim or demand or to enforce any remedy under the Credit Agreement, any other Loan Document, any
Hedging Document or any other agreement, by any waiver or modification of any provision of any
thereof, by any default, failure or delay, willful or otherwise, in the performance of the
Guaranteed Obligations, or by any other act or omission that may or might in any manner or to the
extent vary the risk of any Guarantor or that would otherwise operate as a discharge of each
Guarantor as a matter of law or equity (other than the indefeasible payment in full in cash of all
the Obligations).



     Section 5. Defenses of Borrower Waived. To the fullest extent permitted by applicable
law, each Guarantor waives any defense based on or arising out of any defense of any Loan Party or
the unenforceability of the Guaranteed Obligations or any part thereof from any cause, or the
cessation from any cause of the liability of any Loan Party, other than the final and indefeasible
payment in full in cash of the Guaranteed Obligations. The Administrative Agent and the Secured
Parties may, at their election, foreclose on any security held by one or more of them by one or
more judicial or nonjudicial sales, accept an assignment of any such security in lieu of
foreclosure, compromise or adjust any part of the Guaranteed Obligations, make any other
accommodation with any other Loan Party or any other guarantor, without affecting or impairing in
any way the liability of any Guarantor hereunder except to the extent the Guaranteed Obligations
have been fully, finally and indefeasibly paid in cash. Pursuant to applicable law, each Guarantor
waives any defense arising out of any such election even though such election operates, pursuant to
applicable law, to impair or to extinguish any right of reimbursement or subrogation or other right
or remedy of such Guarantor against the Borrower or any other Guarantor or guarantor, as the case
may be, or any security.



     Section 6. Agreement to Pay; Subordination. In furtherance of the foregoing and not
in limitation of any other right that the Administrative Agent or any Secured Party has at law or
in equity against any Guarantor by virtue hereof, upon the failure of the Borrower or any other
Loan Party to pay any Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Guarantor hereby promises to and will
forthwith pay, or cause to be paid, to the Administrative Agent for the benefit of the Secured
Parties in cash the amount of such unpaid Obligation. Upon payment by any Guarantor of any sums to
the Administrative Agent, all rights of such Guarantor against any Loan Party arising as a result
thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall
in all respects be subordinate and junior in right of payment to the prior indefeasible payment in
full in cash of all the Guaranteed Obligations. In addition, any indebtedness of any Loan Party
now or hereafter held by any Guarantor is hereby subordinated in right of payment to the prior
payment in full in cash of the Guaranteed



D-3









 







Obligations. If any amount shall erroneously be paid to any Guarantor on account of (i) such
subrogation, contribution, reimbursement, indemnity or similar right or (ii) any such indebtedness
of any Loan Party, such amount shall be held in trust for the benefit of the Administrative Agent
and the Secured Parties and shall forthwith be paid to the Administrative Agent to be credited
against the payment of the Guaranteed Obligations, whether matured or unmatured, in accordance with
the terms of the Loan Documents.



     Section 7. Information. Each Guarantor assumes all responsibility for being and
keeping itself informed of other Loan Parties’ financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature,
scope and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees that
none of the Administrative Agent or the Secured Parties will have any duty to advise any of the
Guarantors of information known to it or any of them regarding such circumstances or risks.



     Section 8. Indemnity and Subrogation. In addition to all such rights of indemnity and
subrogation as the Guarantors may have under applicable law (but subject to Section 6), the
Borrower agrees that (a) in the event a payment shall be made by any Guarantor under this
Agreement, the Borrower shall indemnify such Guarantor for the full amount of such payment and such
Guarantor shall be subrogated to the rights of the person to whom such payment shall have been made
to the extent of such payment and (b) in the event any assets of any Guarantor shall be sold to
satisfy a claim of any Secured Party under this Agreement, the Borrower shall indemnify such
Guarantor in an amount equal to the greater of the book value or the fair market value of the
assets so sold.



     Section 9. Contribution and Subrogation. Each Guarantor (a “Contributing
Guarantor”) agrees (subject to Section 6) that, in the event a payment shall be made by
any other Guarantor under this Agreement or assets of any other Guarantor shall be sold to satisfy
a claim of any Secured Party and such other Guarantor (the “Claiming Guarantor”) shall not
have been fully indemnified by the Borrower as provided in Section 8, the Contributing
Guarantor shall indemnify the Claiming Guarantor in an amount equal to the amount of such payment
or the greater of the book value or the fair market value of such assets, as the case may be, in
each case multiplied by a fraction of which the numerator shall be the net worth of the
Contributing Guarantor on the date hereof and the denominator shall be the aggregate net worth of
all the Guarantors on the date hereof (or, in the case of any Guarantor becoming a party hereto
pursuant to Section 21, the date of the Supplement hereto executed and delivered by such
Guarantor). Any Contributing Guarantor making any payment to a Claiming Guarantor pursuant to this
Section 9 shall be subrogated to the rights of such Claiming Guarantor under Section
8 to the extent of such payment.



     Section 10. Subordination. Notwithstanding any provision of this Agreement to the
contrary, all rights of the Guarantors under Section 8 and Section 9 and all other
rights of indemnity, contribution or subrogation under applicable law or otherwise shall be fully
subordinated to the indefeasible payment in full in cash of the Guaranteed Obligations. No failure
on the part of the Borrower or any Guarantor to make the payments required under applicable law or
otherwise shall in any respect limit the



D-4









 







obligations and liabilities of any Guarantor with respect to its obligations hereunder, and
each Guarantor shall remain liable for the full amount of the obligations of such Guarantor
hereunder.



     Section 11. Representations and Warranties. Each Guarantor represents and warrants as
to itself that all representations and warranties relating to it (as a Subsidiary of the Borrower)
contained in the Credit Agreement are true and correct.



     Section 12. Termination. The guarantees made hereunder (i) shall terminate when all
the Guaranteed Obligations (other than those Guaranteed Obligations relating to the Hedging
Obligations) have been paid in full in cash and the Lenders have no further commitment to lend
under the Credit Agreement and (ii) shall continue to be effective or be reinstated, as the case
may be, if at any time payment, or any part thereof, of any Obligation is rescinded or must
otherwise be restored by any Lender or any Guarantor upon the bankruptcy or reorganization of the
Borrower, any Guarantor or otherwise. In connection with the foregoing, the Administrative Agent
shall execute and deliver to such Guarantor or Guarantor’s designee, at such Guarantor’s expense,
any documents or instruments, without representation or recourse, which such Guarantor shall
reasonably request from time to time to evidence such termination and release.



     Section 13. Binding Effect; Several Agreement; Assignments. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements by or on behalf of
the Guarantors that are contained in this Agreement shall bind and inure to the benefit of each
party hereto and their respective successors and assigns. This Agreement shall become effective as
to any Guarantor when a counterpart hereof executed on behalf of such Guarantor shall have been
delivered to the Administrative Agent, and a counterpart hereof shall have been executed on behalf
of the Administrative Agent, and thereafter shall be binding upon such Guarantor and the
Administrative Agent and their respective successors and assigns, and shall inure to the benefit of
such Guarantor, the Administrative Agent and the Secured Parties, and their respective successors
and assigns, except that no Guarantor shall have the right to assign its rights or obligations
hereunder or any interest herein (and any such attempted assignment shall be void). If all of the
capital stock of a Guarantor is sold, transferred or otherwise disposed of pursuant to a
transaction permitted by the Credit Agreement, such Guarantor shall be released from its
obligations under this Agreement without further action. This Agreement shall be construed as a
separate agreement with respect to each Guarantor and may be amended, modified, supplemented,
waived or released with respect to any Guarantor without the approval of any other Guarantor and
without affecting the obligations of any other Guarantor hereunder.



     Section 14. Waivers; Amendment.



     (a) No failure or delay of the Administrative Agent of any kind in exercising any power, right
or remedy hereunder and no course of dealing between any Guarantor on the one hand the and
Administrative Agent or any holder of any Note on the other hand shall operate as a waiver thereof,
nor shall any single or partial exercise of any such



D-5









 







power, right or remedy hereunder, under any other Loan Document or under any Hedging Document,
or any abandonment or discontinuance of steps to enforce such a power, right or remedy, preclude
any other or further exercise thereof or the exercise of any other power, right or remedy. The
rights and of the Administrative Agent hereunder and of the Secured Parties under the other Loan
Documents and the Hedging Documents, as applicable, are cumulative and are not exclusive of any
rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or
consent to any departure by any Guarantor therefrom shall in any event be effective unless the same
shall be permitted by subsection (b) below, and then such waiver and consent shall be effective
only in the specific instance and for the purpose for which given. No notice or demand on any
Guarantor in any case shall entitle such Guarantor to any other or further notice in similar or
other circumstances.



     (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except
pursuant to a written agreement entered into between the Guarantors with respect to which such
waiver, amendment or modification relates and the Administrative Agent, with the prior written
consent of the Required Lenders (except as otherwise provided in the Credit Agreement).



     Section 15. Notices. All communications and notices hereunder shall be in writing and
given as provided in Section 10.1 of the Credit Agreement. All communications and notices
hereunder to each Guarantor shall be given to it at its address set forth on Schedule I
attached hereto.



     Section 16. Severability. Any provision of this Agreement held to be illegal, invalid
or unenforceable in any jurisdiction, shall, as to such jurisdiction, be ineffective to the extent
of such illegality, invalidity or unenforceability without affecting the legality, validity or
enforceability of the remaining provisions hereof or thereof; and the illegality, invalidity or
unenforceability of a particular provision in a particular jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.



     Section 17. Counterparts; Integration. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when taken together
shall constitute a single contract (subject to Section 13), and shall become effective as
provided in Section 13. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually executed counterpart of this
Agreement. This Agreement constitutes the entire agreement among the parties hereto regarding the
subject matters hereof and supersedes all prior agreements and understandings, oral or written,
regarding such subject matter.



     Section 18. Rules of Interpretation. The rules of interpretation specified in Section
1.4 of the Credit Agreement shall be applicable to this Agreement.



     Section 19. Governing Law; Jurisdiction; Consent to Service of Process.



D-6









 





     (a) This Agreement shall be construed in accordance with and be governed by the law (without
giving effect to the conflict of law principles thereof) of the State of [State].



     (b) Each Guarantor hereby irrevocably and unconditionally submits, for itself and its
property, to the exclusive jurisdiction of the United States courts located within the Southern
district in the State of New York, and any state court of the State of New York located in New
York, New York and any appellate court from any thereof, in any action or proceeding arising out of
or relating to this Agreement, any other Loan Document or any Hedging Document or the transactions
contemplated hereby or thereby, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York state court or, to the extent
permitted by applicable law, such Federal court. Each Guarantor agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that the Administrative Agent, the Issuing Bank or any Secured Party may otherwise
have to bring any action or proceeding relating to this Agreement against any Guarantor or its
properties in the courts of any jurisdiction.



     (c) Each Guarantor irrevocably and unconditionally waives any objection which it may now or
hereafter have to the laying of venue of any such suit, action or proceeding described in paragraph
(b) of this Section and brought in any court referred to in paragraph (b) of this Section. Each
party hereto irrevocably waives, to the fullest extent permitted by applicable law, the defense of
an inconvenient forum to the maintenance of such action or proceeding in any such court.



     (d) Each Guarantor irrevocably consents to the service of process in the manner provided for
notices in Section 10.1 of the Credit Agreement. Nothing in this Agreement will affect the right
of the Administrative Agent or any Secured Party to serve process in any other manner permitted by
law.



     Section 20. Waiver of Jury Trial. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY
HEDGING DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (ii) ACKNOWLEDGES THAT
IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS AND THE HEDGING



D-7









 







DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.



     Section 21. Additional Guarantors. Pursuant to Section 5.11 of the Credit Agreement,
each Subsidiary that was not in existence on the date of the Credit Agreement is required to enter
into this Agreement as a Guarantor upon becoming a Subsidiary. Upon execution and delivery after
the date hereof by the Administrative Agent and such Subsidiary of an instrument in the form of
Annex 1, such Subsidiary shall become a Guarantor hereunder with the same force and effect
as if originally named as a Guarantor herein. The execution and delivery of any instrument adding
an additional Guarantor as a party to this Agreement shall not require the consent of any other
Guarantor hereunder. The rights and obligations of each Guarantor hereunder shall remain in full
force and effect notwithstanding the addition of any new Guarantor as a party to this Agreement.



     Section 22. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Secured Party is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other Indebtedness at any time owing by
such Secured Party to or for the credit or the account of any Guarantor against any or all the
obligations of such Guarantor now or hereafter existing under this Agreement, the other Loan
Documents and the Hedging Documents held by such Secured Party, irrespective of whether or not such
Person shall have made any demand under this Agreement, any other Loan Document or any Hedging
Document and although such obligations may be unmatured. The rights of each Secured Party under
this Section 22 are in addition to other rights and remedies (including other rights of
setoff) that such Secured Party may have.



     Section 23. Savings Clause.



     (a) It is the intent of each Guarantor and the Administrative Agent that each Guarantor’s
maximum obligations hereunder shall be, but not in excess of:




     (i) in a case or proceeding commenced by or against any Guarantor under the provisions
of Title 11 of the United States Code, 11 U.S.C. §§101 et seq. (the “Bankruptcy
Code”) on or within two years from the date on which any of the Guaranteed Obligations
are incurred, the maximum amount which would not otherwise cause the Guaranteed Obligations
(or any other obligations of such Guarantor owed to the Administrative Agent or the Secured
Parties) to be avoidable or unenforceable against such Guarantor under (i) Section 548 of
the Bankruptcy Code or (ii) any state fraudulent transfer or fraudulent conveyance act or
statute applied in such case or proceeding by virtue of Section 544 of the Bankruptcy Code;
or




     (ii) in a case or proceeding commenced by or against any Guarantor under the
Bankruptcy Code subsequent to two years from the date on which any of the Guaranteed
Obligations are incurred, the maximum amount which would



D-8









 







not otherwise cause the Guaranteed Obligations (or any other obligations of such
Guarantor to the Administrative Agent or the Secured Parties) to be avoidable or
unenforceable against such Guarantor under any state fraudulent transfer or fraudulent
conveyance act or statute applied in any such case or proceeding by virtue of Section 544
of the Bankruptcy Code; or




     (iii) in a case or proceeding commenced by or against any Guarantor under any law,
statute or regulation other than the Bankruptcy Code (including, without limitation, any
other bankruptcy, reorganization, arrangement, moratorium, readjustment of debt,
dissolution, liquidation or similar debtor relief laws), the maximum amount which would not
otherwise cause the Guaranteed Obligations (or any other obligations of such Guarantor to
the Administrative Agent or the Secured Parties) to be avoidable or unenforceable against
such Guarantor under such law, statute or regulation including, without limitation, any
state fraudulent transfer or fraudulent conveyance act or statute applied in any such case
or proceeding.



     (b) The substantive laws under which the possible avoidance or unenforceability of the
Guaranteed Obligations (or any other obligations of such Guarantor to the Administrative Agent or
the Secured Parties) as may be determined in any case or proceeding shall hereinafter be referred
to as the “Avoidance Provisions”. To the extent set forth in Section 23(a)(i),
(ii), and (iii), but only to the extent that the Guaranteed Obligations would
otherwise be subject to avoidance or found unenforceable under the Avoidance Provisions, if any
Guarantor is not deemed to have received valuable consideration, fair value or reasonably
equivalent value for the Guaranteed Obligations, or if the Guaranteed Obligations would render such
Guarantor insolvent, or leave such Guarantor with an unreasonably small capital to conduct its
business, or cause such Guarantor to have incurred debts (or to have intended to have incurred
debts) beyond its ability to pay such debts as they mature, in each case as of the time any of the
Guaranteed Obligations are deemed to have been incurred under the Avoidance Provisions and after
giving effect to the contribution by such Guarantor, the maximum Guaranteed Obligations for which
such Guarantor shall be liable hereunder shall be reduced to that amount which, after giving effect
thereto, would not cause the Guaranteed Obligations (or any other obligations of such Guarantor to
the Administrative Agent or the Secured Parties), as so reduced, to be subject to avoidance or
unenforceability under the Avoidance Provisions.



     (c) This Section 23 is intended solely to preserve the rights of the Administrative
Agent and the Secured Parties hereunder to the maximum extent that would not cause the Guaranteed
Obligations of such Guarantor to be subject to avoidance or unenforceability under the Avoidance
Provisions, and neither the Guarantors nor any other Person shall have any right or claim under
this Section 23 as against the Administrative Agent or Secured Parties that would not
otherwise be available to such Person under the Avoidance Provisions.



[Signatures Follow]




D-9









 





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



	 	 	 	 	 
	 	KED MME Investment Partners, LP

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	KED MME Investment GP, LLC

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	KED LCP Investment Partners, LP

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	KED LCP Investment GP, LLC

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	KED DF Investment Partners, LP

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



[SIGNATURE PAGE TO SUBSIDIARY GUARANTY AGREEMENT]




 









 








	 	 	 	 	 
	 	KED DF Investment GP, LLC

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	KED VP Investment Partners, LP

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	KED VP Investment GP, LLC

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




D-12









 





	 	 	 	 	 
	SUNTRUST BANK, as	 	 
	Administrative Agent	 	 
	 
	 	 	 	 
	By
	 	 	 	 
	Name:

	 	 

	 	 
	Title:
	 	 	 	 






[SIGNATURE PAGE TO SUBSIDIARY GUARANTY AGREEMENT]




 









 





SCHEDULE I TO THE

SUBSIDIARY GUARANTY AGREEMENT




	 	 	 
	Guarantor(s)	 	Address
	Kayne Anderson Energy Development Company

	 	717 Texas Avenue, Suite 3100,
Houston, TX, 77002
	 
	 	 
	KED MME Investment Partners, LP

	 	717 Texas Avenue, Suite 3100,
Houston, TX, 77002
	 
	 	 
	KED MME Investment GP, LLC

	 	717 Texas Avenue, Suite 3100,
Houston, TX, 77002
	 
	 	 
	KED LCP Investment Partners, LP

	 	717 Texas Avenue, Suite 3100,
Houston, TX, 77002
	 
	 	 
	KED LCP Investment GP, LLC

	 	717 Texas Avenue, Suite 3100,
Houston, TX, 77002
	 
	 	 
	KED DF Investment Partners, LP

	 	717 Texas Avenue, Suite 3100,
Houston, TX, 77002
	 
	 	 
	KED DF Investment GP, LLC

	 	717 Texas Avenue, Suite 3100,
Houston, TX, 77002
	 
	 	 
	KED VP Investment Partners, LP

	 	717 Texas Avenue, Suite 3100,
Houston, TX, 77002
	 
	 	 
	KED VP Investment GP, LLC

	 	717 Texas Avenue, Suite 3100,
Houston, TX, 77002







D-12









 








ANNEX 1

to

SUBSIDIARY GUARANTY AGREEMENT



  SUPPLEMENT
NO. ___ dated as of                     , to the Subsidiary Guaranty Agreement, dated as
of June 4, 2007 (the “Guaranty Agreement”), among KAYNE ANDERSON ENERGY DEVELOPMENT
COMPANY, a Maryland corporation (the “Borrower”), each of the subsidiaries of the Borrower
listed on Schedule I thereto (each such subsidiary individually, a “Guarantor” and
collectively, the “Guarantors”) and SUNTRUST BANK, a Georgia banking corporation, as
administrative agent (the “Administrative Agent”) for the Lenders (as defined in the Credit
Agreement referred to below).




     Reference is made to the Treasury Secured Revolving Credit Agreement, dated as of June 4, 2007
(as amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among the Borrower, the lenders from time to time party thereto (the
“Lenders”) and SunTrust Bank, as Administrative Agent.



     Capitalized terms used herein and not otherwise defined herein shall have the meanings
assigned to such terms in the Guaranty Agreement and the Credit Agreement.



     The Guarantors have entered into the Guaranty Agreement in order to induce the Lenders to make
Loans. Pursuant to Section 5.11 of the Credit Agreement, each Subsidiary that was not in existence
or not a Guarantor on the date of the Credit Agreement is required to enter into the Guaranty
Agreement as a Guarantor upon becoming a Subsidiary. Section 21 of the Guaranty Agreement provides
that additional Subsidiaries of the Borrower may become Guarantors under the Guaranty Agreement by
execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiary
of the Borrower (the “New Guarantor”) is executing this Supplement in accordance with the
requirements of the Credit Agreement to become a Guarantor under the Guaranty Agreement in order to
induce the Lenders to make additional Loans and as consideration for Loans previously made.



     Accordingly, the Administrative Agent and the New Guarantor agree as follows:



     Joinder. In accordance with Section 21 of the Guaranty Agreement, the New Guarantor by its
signature below becomes a Guarantor under the Guaranty Agreement with the same force and effect as
if originally named therein as a Guarantor and the New Guarantor hereby (i) agrees to all the terms
and provisions of the Guaranty Agreement applicable to it as Guarantor thereunder and (ii)
represents and warrants that the representations and warranties made by it as a Guarantor
thereunder are true and correct on and as of the date hereof. Each reference to a Guarantor in the
Guaranty Agreement shall be deemed to include the New Guarantor. The Guaranty Agreement is hereby
incorporated herein by reference.



     Representations and Warranties. The New Guarantor represents and warrants to the
Administrative Agent and the Secured Parties that this Supplement has been duly



D-13









 







authorized, executed and delivered by it and that each of this Supplement and the Guaranty
Agreement constitutes its legal, valid and binding obligation, enforceable against it in accordance
with its terms.



     Binding Effect. This Supplement shall become effective when it shall have been executed by
the New Guarantor and thereafter shall be binding upon the New Guarantor and shall inure to the
benefit of the Administrative Agent and the Secured Parties. Upon the effectiveness of this
Supplement, this Supplement shall be deemed to be a part of and shall be subject to all the terms
and conditions of the Guaranty Agreement. The New Guarantor shall not have the right to assign
its rights hereunder or any interest herein without the prior written consent of the Secured
Parties.



     Governing Law. THIS SUPPLEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAW PRINCIPLES THEREOF) OF THE STATE OF NEW YORK.



     Execution in Counterparts. This Supplement may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement.



     Notices to New Guarantor. All communications and notices hereunder shall be in writing and
given as provided in Section 15 of the Guaranty Agreement. All communications and notices
hereunder to the New Guarantor shall be given to it at the address set forth under its signature
below, with a copy to the Borrower..



[Signatures Follow]




D-14









 





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



	 	 	 	 	 
	 	[NAME OF NEW GUARANTOR]

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 	 	Address:  	 	 
	 
	 	SUNTRUST BANK, as

Administrative Agent

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




 









 








EXHIBIT 2.3

FORM OF NOTICE OF REVOLVING BORROWING




[DATE]




SunTrust Bank,

  as Administrative Agent

  for the Lenders referred to below

303 Peachtree Street, N.E.

Atlanta, GA 30308




Ladies and Gentlemen:





     Reference is made to the Treasury Secured Revolving Credit Agreement dated as of June 4, 2007
(as amended and in effect on the date hereof, the “Credit Agreement”), among the
undersigned, as Borrower, the lenders from time to time party thereto, and SunTrust Bank, as
Administrative Agent. Terms defined in the Credit Agreement are used herein with the same
meanings. This notice constitutes a Notice of Revolving Borrowing, and the Borrower hereby
requests a Revolving Borrowing under the Credit Agreement, and in that connection the Borrower
specifies the following information with respect to the Revolving Borrowing requested hereby:




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







 




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





Exhibit 2.3-1




 









 





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



	 	 	 	 	 
	 	Very truly yours,



KAYNE ANDERSON ENERGY

DEVELOPMENT COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



[SIGNATURE
PAGE TO NOTICE OF REVOLVING BORROWING]





 









 









EXHIBIT 2.6(b)

FORM OF CONTINUATION/CONVERSION




[DATE]




SunTrust Bank,

  as Administrative Agent

  for the Lenders referred to below

303 Peachtree Street, N.E.

Atlanta, GA 30308




Ladies and Gentlemen:





     Reference is made to the Treasury Secured Revolving Credit Agreement dated as of June 4, 2007
(as amended and in effect on the date hereof, the “Credit Agreement”), among the
undersigned, as Borrower, the lenders named therein, and SunTrust Bank, as Administrative Agent.
Terms defined in the Credit Agreement are used herein with the same meanings. This notice
constitutes a Notice of Continuation/Conversion and the Borrower hereby requests the conversion or
continuation of a Revolving Borrowing under the Credit Agreement, and in that connection the
Borrower specifies the following information with respect to the Revolving Borrowing to be
converted or continued as requested hereby:




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





Exhibit 2.6(b)-1









 









 











	 	 	 	 	 
	 	Very truly yours,



KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



[SIGNATURE PAGE TO CONTINUATION/CONVERSION]





 









 








EXHIBIT 3.1(c)(x)

FORM OF RESPONSIBLE OFFICER’S CERTIFICATE





     Reference is made to the Treasury Secured Revolving Credit Agreement dated as of June 4, 2007
(the “Credit Agreement”), among KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY (the
“Borrower”), the lenders from time to time party thereto, and SunTrust Bank, as
Administrative Agent. Terms defined in the Credit Agreement are used herein with the same
meanings. This certificate is being delivered pursuant to Section 3.1(c)(x) of the Credit
Agreement.



     I,
                                        ,
[                        
                ] of the Borrower, DO HEREBY CERTIFY
that:



     (a) the representations and warranties of the Borrower set forth in the Credit Agreement are
true and correct on and as of the date hereof;



     (b) no Default or Event of Default has occurred and is continuing at the date hereof; and




     (c) since [the date], which is the date of the most recent financial statements described in
Section 5.1(a) of the Credit Agreement, there has been no change which has had or could reasonably
be expected to have a Material Adverse Effect.



 









 





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



	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 






[SIGNATURE PAGE TO RESPONSIBLE OFFICER’S CERTIFICATE]





 









 








EXHIBIT 5.1(c)

FORM OF COMPLIANCE CERTIFICATE




[DATE]




	 	 	 
	To:

	 	SunTrust Bank, as Administrative Agent
	 

	 	303 Peachtree St., N.E.
	 

	 	Atlanta, GA 30308
	 

	 	Attention:                     






Ladies and Gentlemen:




     Reference is made to that certain Treasury Secured Revolving Credit Agreement dated as of June
4, 2007 (as amended and in effect on the date hereof, the “Credit Agreement”), among KAYNE
ANDERSON ENERGY DEVELOPMENT COMPANY (the “Borrower”), the lenders named therein, and
SunTrust Bank, as Administrative Agent. Capitalized terms used herein and not otherwise defined
shall have the meanings assigned to such terms in the Credit Agreement.



     I,                     , being the duly elected and qualified, and acting in my capacity as
[chief executive officer][chief financial officer] of the Borrower hereby certify to the
Administrative Agent and each Lender as follows:



     1. The consolidated financial statements of the Borrower and its Subsidiaries attached hereto
for the fiscal [quarter][year] ending                                          fairly present in all material respects
the financial condition of the Borrower and its Subsidiaries as at the end of such fiscal
[quarter][year] on a consolidated basis, and the related statements of operations and cash flows of
the Borrower and its Subsidiaries for such fiscal [quarter][year], in accordance with generally
accepted accounting principles in the United States consistently applied (subject, in the case of
such quarterly financial statements, to normal year-end audit adjustments and the absence of
footnotes).



     2. The calculations set forth in Attachment 1 are computations of the financial
covenants set forth in Article VI of the Credit Agreement calculated or derived from the financial
statements referenced in clause 1 above in accordance with the terms of the Credit Agreement.



     3. The Borrower and its Subsidiaries have complied with all the terms and provisions of
Section 3.02(a) of the Sarbanes-Oxley Act as in effect on the date hereof.



     4. Based upon a review of the activities of the Borrower and its Subsidiaries and the
financial statements attached hereto during the period covered thereby, as of the date hereof,
there exists no Default or Event of Default.



Exhibit 5.1(c)-1





 









 








	 	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






Exhibit 5.1(c)-1




 









 





Attachment to Compliance Certificate




Exhibit 5.1(c)-2