Exhibit
10.1


 


Execution
Version


 


AMENDMENT NO. 4


TO


CREDIT AGREEMENT


 


THIS AMENDMENT NO. 4 TO
CREDIT AGREEMENT (this “Amendment”) dated as of September 28, 2004,
is entered into among GLADSTONE BUSINESS LOAN, LLC, as the Borrower, TAHOE
FUNDING CORP., LLC and PUBLIC SQUARE FUNDING LLC, as CP Lenders (collectively,
the “CP Lenders”), DEUTSCHE BANK AG, NEW YORK BRANCH (“Deutsche Bank”)
and KEYBANK, NATIONAL ASSOCIATION (“KeyBank”), as Committed Lenders
(collectively, the “Committed Lenders”), Deutsche Bank and KeyBank as
Managing Agents (in such capacity, collectively the “Managing Agents”)
and Deutsche Bank as Administrative Agent (in such capacity, the “Administrative
Agent”).  Capitalized terms used
herein without definition shall have the meanings ascribed thereto in the
“Credit Agreement” referred to below.


 


PRELIMINARY
STATEMENTS


 


A.                                   Reference
is made to that certain Credit Agreement dated as of May 19, 2003 among the
Borrower, Gladstone Advisers, Inc., as Servicer, the CP Lenders, the Committed
Lenders, the Managing Agents and the Administrative Agent (as amended, modified
or supplemented from time to time, including, without limitation, by that
certain Resignation, Appointment and Consent dated as of even date herewith,
and as further amended, restated, supplemented or modified from time to time,
the “Credit Agreement”).


 


B.                                     The
parties hereto have agreed to amend certain provisions of the Credit Agreement
upon the terms and conditions set forth herein.


 


SECTION 1.                                Amendment.  Subject to
the satisfaction of the conditions precedent set forth in Section 5
hereof, the parties hereto hereby agree:


 


(i)                                     to amend Section 1.1 by adding the
following new definitions in their respective alphabetical locations, to read
in their entirety as follows:


 


Moody’s Industry
Classifications: 
means the classifications as set forth in Exhibit N.


 


Non-Syndicated
Loan:  Each Loan which
is not a Qualifying Syndicated Loan.


 


Performance
Guarantor:  has the
meaning set forth in the Performance Guaranty.


 


Qualifying
Syndicated Loan:  Any
Loan designated by the Borrower as such in the Loan List.


 

















 


Swap Breakage and
Indemnity Amounts: 
means any early termination payments, taxes, indemnification payments
and any other amounts owed to a Hedge Counterparty under a Hedging Agreement that
do not constitute monthly payments.


 


(ii)                                  to delete clause (xiii) of the definition
of “Eligible Loan” and substitute the following therefor:


 


(xiii)                          the Loan
has an original term to maturity of no more than 120 months;


 


(iii)                               to add the following clauses (xx) and
(xxi) to the definition of “Eligible Loan” in appropriate numeric order
therein:


 


(xx)                              from
and after September 28, 2004, the Loan has not been amended to (A) reduce
the amount (other than by reason of the repayment thereof) or extend the time
for payment of principal or (B) reduce the rate or extend the time of payment
of interest (or any component thereof), in each case without the consent of the
Required Committed Lenders; and


 


(xxi)                           if such
Loan is a Qualifying Syndicated Loan, (a) the Borrower has purchased an
interest in such Loan from a financial institution which (A) has a short-term
debt rating equal to at least A-1 from S&P and P-1 from Moody’s or (B) has
been approved in writing by the Required Committed Lenders prior to the related
Funding Date and (b) such Loan closed not more than thirty (30) days
previously.


 


(iv)                              to delete the definition of “Excess
Concentration Amount” and substitute the following therefor:


 


Excess
Concentration Amount: 
On any date of determination, the sum of, without duplication, (a) the
aggregate amount by which the Outstanding Loan Balances of Eligible Loans
included as part of the Collateral, the Obligors of which are residents of any
one state, exceeds 40% of the Aggregate Outstanding Loan Balance, (b) the aggregate
amount by which the Outstanding Loan Balances of Eligible Loans included as
part of the Collateral, the Obligors of which are in the same Industry, exceeds
25% of the Aggregate Outstanding Loan Balance, (c) the aggregate amount by
which the Outstanding Loan Balance of each Eligible Loan included as part of
the Collateral exceeds the 


 


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Large Loan Limit
applicable to such Eligible Loan, (d) the aggregate amount by which the
Outstanding Loan Balances of all Eligible Loans included as part of the
Collateral whose interest payments are due and payable less frequently than
monthly exceeds 33 1/3% of the Aggregate Outstanding Loan Balance, (e) the
aggregate amount by which the Outstanding Loan Balances of all Eligible Loans included
as part of the Collateral which are PIK Loans exceeds 40% of the Aggregate
Outstanding Loan Balance, (f) the aggregate amount by which the Outstanding
Loan Balances of all Eligible Loans included as part of the Collateral which
are PIK Loans having a PIK accrual component greater than 3.0% exceeds 25% of
the Aggregate Outstanding Loan Balance, (g) the aggregate amount by which the
Outstanding Loan Balances of all Eligible Loans that have original terms to
maturity greater than 84 months exceeds 10% of the Aggregate Outstanding Loan
Balance, (h) the aggregate amount by which the Outstanding Loan Balances of
Qualifying Syndicated Loans included as part of the Collateral, for which no
Subsequent Delivery Trust Receipt (as defined in the Custody Agreement) has
been received exceeds $30,000,000 and (i) the aggregate Outstanding Loan
Balances of all Loans which (A) do not have a long-term credit rating from
either S&P or Moody’s and (B) are not priced by Standard & Poor’s Securities
Evaluations, Inc. on a quarterly basis and have not been so priced by Standard
& Poor’s Securities Evaluations, Inc. for a period in excess of (x) with
respect to the Loans described in Annex III hereof, 45 days from
September 28, 2004 or (y) otherwise, 135 days from the date such Loan
becomes a Transferred Loan, provided, however, that the requirements of
this clause (i) shall not apply to the Marcal RE Loan.


 


(v)                                 to delete the definition of “Large
Loan Limit” and substitute the following therefor:


 


Large Loan Limit:    For the Eligible Loans of the
six Obligors with the largest Outstanding Loan Balances, $15,000,000, and for
the Eligible Loans of each other Obligor, $10,000,000.


 


(vi)                              to delete the definition of “Fair
Market Value” and substitute the following therefor:


 


Fair Market Value:  With respect to each Eligible Loan, (1) to
the extent that such Eligible Loan does not have a long term credit rating from
S&P or Moody’s, the least of (a) to 


 


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the extent priced by
Standard & Poor’s Securities Evaluations, Inc., the product of (x) the
remaining principal amount of the Eligible Loan and (y) the pricing as
determined by Standard & Poor’s Securities Evaluations, Inc. in its most
recent quarterly pricing, (b) the remaining principal amount of such Eligible
Loan and (c) if such Eligible Loan has been reduced in value below the
remaining principal amount thereof (other than as a result of the allocation of
a portion of the remaining principal amount to warrants), the value of such
Eligible Loan as required by, and in accordance with, the 1940 Act, as amended,
and any orders of the SEC issued to the Originator, to be determined by the
Board of Directors of the Originator and reviewed by its auditors and (2) otherwise,
the least of (a) (x) the remaining principal amount of such Eligible Loan times
(y) the price quoted to the Borrower on such Eligible Loan from a financial
institution rated at least A-1/P-1 that makes a market in such Eligible Loan or
from a pricing service otherwise acceptable to the Managing Agents, (b) the
remaining principal amount of such Eligible Loan and (c) if such Eligible Loan
has been reduced in value below the remaining principal amount thereof (other
than as a result of the allocation of a portion of the remaining principal
amount to warrants), the value of such Eligible Loan as required by, and in
accordance with, the 1940 Act, as amended, and any orders of the SEC issued to
the Originator, to be determined by the Board of Directors of the Originator
and reviewed by its auditors.


 


(vii)                           to delete the definition of “Industry”
and substitute the following therefor:


 


Industry:  The industry of an Obligor as determined by
reference to the Moody’s Industry Classifications;


 


(viii)                        to amend Section 2.2(c) to insert
the phrase “(or such shorter period of time or later date as may be agreed to
by the Required Committed Lenders)” following the phrase “five (5) Business
Days prior to the proposed Funding Date”;


 


(ix)                                to amend Section 2.2(d) to delete
the phrase “three (3) Business Days prior to the proposed Funding Date” and
substitute the phrase “one (1) Business Day prior to the proposed Funding Date
(or such shorter period of time or later date as may be agreed to by the
Required Committed Lenders)” therefor;


 


4

















 


(x)                                   to amend Section 2.3(b) to delete
the phrase “at least five (5) Business Days prior to the date of such
repayment” and substitute the phrase “at least three (3) Business Days prior to
the proposed Funding Date (or such shorter period of time or later date as may
be agreed to by the Required Committed Lenders)” therefor;


 


(xi)                                to delete “Section 2.8   Settlement Procedures” in its
entirety and substitute the section set forth in Annex I therefor;


 


(xii)                             to replace all references to “CIBC” in
(A) the definitions of Federal Funds Rate, LIBO Rate and Prime
Rate and (B) Section 10.1 with references to “Deutsche Bank”;


 


(xiii)                          to amend Section 2.11 to delete the
phrase “as a result of any prepayment of an Advance (and interest thereon)” and
substitute the phrase “as a result of any prepayment of an Advance (and
interest thereon) arising under this Agreement and the Liquidity Agreements”
therefor.


 


(xiv)                         to replace the reference to
Section 7.7 in Section 3.2(a)(i) with Section 7.8;


 


(xv)                            to replace the reference to “Servicer” in
Section 7.18(a)(x) with a reference to “Performance Guarantor”;


 


(xvi)                         to add Exhibit N containing the
schedule entitled “Moody’s Industry Classifications” set forth in Annex II
hereto.


 


5

















 


SECTION 2.                                Swingline Exposure. 
The Borrower hereby covenants and agrees that it will not permit
Gladstone Capital Corporation to incur or maintain any borrowings under the
“Line of Credit” provided for pursuant to that certain Loan Agreement dated as
of June 22, 2004 between Branch Banking and Trust Company and Gladstone
Capital Corporation (the “Loan Agreement”) until the following
conditions shall be satisfied:  (i) the
definition of “CIBC Credit Agreement” contained in Section 8.11 of the
Loan Agreement shall be modified to reflect the assignment of Canadian Imperial
Bank of Commerce’s interests under the Credit Agreement to Deutsche Bank AG,
New York Branch and to permit future amendments to the Credit Agreement to be
captured under the definition thereof and (ii) the definition of “CIBC Credit
Agreement” contained in Section 1(d) of the General Security Agreement
dated as of June 22, 2004 between Branch Banking and Trust Company and
Gladstone Capital Corporation shall be modified likewise.


 


SECTION 3.                                Servicer Transition Date. 
The “Servicer Transition Date” defined in that certain Amendment No. 3
and Consent to Credit Agreement dated as of May 28, 2004 among the Borrower,
Gladstone Advisers, Inc., as Servicer, the CP Lenders, the Committed Lenders,
the Managing Agents and the Administrative Agent is hereby amended to delete
the phrase “on or around July 1, 2004” and substitute the phrase “on or
around October 1, 2004, or such later date as may be notified to the
Managing Agents in writing prior to October 1, 2004” therefor.


 


SECTION 4.                                Representations and Warranties. 
The Borrower hereby represents and warrants to each of the other parties
hereto, that:


 


(a)                                  this Amendment constitutes its legal,
valid and binding obligation, enforceable against it in accordance with its
terms; and


 


(b)                                 on the date hereof, before and after
giving effect to this Amendment, other than as amended or waived pursuant to
this Amendment, no Early Termination Event or Unmatured Termination Event has
occurred and is continuing.


 


SECTION 5.                                Conditions Precedent. 
This Amendment shall become effective on the first Business Day (the “Effective
Date”) on which the Administrative Agent or its counsel has received
counterpart signature pages of this Amendment, executed by each of the parties
hereto.


 


SECTION 6.                                Reference to and Effect on the
Transaction Documents.


 


(a)                                  Upon the effectiveness of this Amendment,
(i) each reference in the Credit Agreement to “this Credit Agreement”, “this
Agreement”, “hereunder”, “hereof”, “herein” or words of like import shall mean
and be a reference to the Credit Agreement as amended or otherwise modified
hereby, and (ii) each reference to the Credit Agreement in any other
Transaction Document or any other document, instrument or agreement executed
and/or delivered in connection therewith, shall mean and be a reference to the
Credit Agreement as amended or otherwise modified hereby.


 


(b)                                 Except as specifically amended,
terminated or otherwise modified above, the terms and conditions of the Credit
Agreement, of all other Transaction Documents and any other documents,
instruments and agreements executed and/or delivered in 


 


6

















 


connection therewith, shall
remain in full force and effect and are hereby ratified and confirmed.


 


(c)                                  The execution, delivery and effectiveness
of this Amendment shall not operate as a waiver of any right, power or remedy
of the Administrative Agent, any Managing Agent or any Lender under the Credit
Agreement or any other Transaction Document or any other document, instrument
or agreement executed in connection therewith, nor constitute a waiver of any
provision contained therein, in each case except as specifically set forth herein.


 


SECTION 7.                                Execution in Counterparts. 
This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same instrument.  Delivery of an executed counterpart of a
signature page to this Amendment by telecopier shall be effective as delivery
of a manually executed counterpart of this Amendment.


 


SECTION 8.                                Governing Law. 
This Amendment shall be governed by and construed in accordance with the
laws of the State of New York.


 


SECTION 9.                                Headings. 
Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.


 


SECTION 10.                          Fees and Expenses.  
Seller hereby confirms its agreement to pay on demand all reasonable
costs and expenses of the Administrative Agent, Managing Agents or Lenders in
connection with the preparation, execution and delivery of this Amendment and
any of the other instruments, documents and agreements to be executed and/or
delivered in connection herewith, including, without limitation, the reasonable
fees and out-of-pocket expenses of counsel to the Administrative Agent,
Managing Agents or Lenders with respect thereto.


 


[Remainder of Page
Deliberately Left Blank]


 


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IN WITNESS WHEREOF, the
parties hereto have caused this Amendment to be duly executed by their
respective officers as of the date first above written.


 


 


	
   

  	
  GLADSTONE BUSINESS
  LOAN, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ George Stelljes III

  	
   

  
	
   

  	
   

  	
  Name:  George Stelljes III

  
	
   

  	
   

  	
  Title:  President

  



 


Signature Page to
Amendment No. 4


 

















 


	
   

  	
  TAHOE FUNDING CORP., LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/  Andrew L. Stidd

  	
   

  
	
   

  	
   

  	
  Name:  Andrew L. Stidd

  
	
   

  	
   

  	
  Title:  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DEUTSCHE BANK AG, NEW
  YORK BRANCH, as a

  Committed Lender, Managing Agent and Administrative

  Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Mark O’Keefe

  	
   

  
	
   

  	
   

  	
  Name:  Mark O’Keefe

  
	
   

  	
   

  	
  Title:  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Tina Gu

  	
   

  
	
   

  	
   

  	
  Name:  Tina Gu

  
	
   

  	
   

  	
  Title:  Vice President

  
							



 

















 


	
   

  	
  PUBLIC SQUARE FUNDING
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Evelyn Echevarria

  	
   

  
	
   

  	
   

  	
  Name:  Evelyn Echevarria

  
	
   

  	
   

  	
  Title:  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KEYBANK, NATIONAL
  ASSOCIATION, as a

  Committed Lender and Managing Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Paul E. Henson

  	
   

  
	
   

  	
   

  	
  Name:  Paul E. Henson

  
	
   

  	
   

  	
  Title:  Executive Vice President

  
						



 

















 


Annex I


 


Section 2.8                                Settlement
Procedures.


 


On each Payment Date, the
Servicer on behalf of the Borrower shall pay for receipt by the applicable
Lender no later than 11:00 a.m. (New York City time) to the following Persons,
from (i) the Collection Account, to the extent of available funds, (ii)
Servicer Advances, and (iii) amounts received in respect of any Hedge Agreement
during such Settlement Period (the sum of such amounts described in clauses
(i), (ii) and (iii) being the “Available
Collections”) the following amounts in the following order of
priority


 


(i)                                     FIRST, to each Hedge Counterparty, any amounts owing that
Hedge Counterparty under its respective Hedging Agreement in respect of any
Hedge Transaction(s), for the payment thereof, but excluding, to the extent the
Hedge Counterparty is not the same Person as the Administrative Agent, any Swap
Breakage and Indemnity Amounts;


 


(ii)                                  SECOND, to the Servicer, in an amount equal to any
Unreimbursed Servicer Advances, for the payment thereof;


 


(iii)                               THIRD, to the extent not paid by the Servicer, to the
Backup Servicer and any Successor Servicer, as applicable, in amount equal to
any accrued and unpaid Backup Servicing Fee and, if any, accrued and unpaid
Transition Costs, Backup Servicer Expenses and Market Servicing Fee
Differential, each for the payment thereof;


 


(iv)                              FOURTH, to the extent not paid by the Servicer, to the Collateral
Custodian in an amount equal to any accrued and unpaid Collateral Custodian Fee
and Collateral Custodian Expenses, if any, for the payment thereof;


 


(v)                                 FIFTH, to the Servicer, in an amount equal to its accrued
and unpaid Servicing Fees to the end of the preceding Settlement Period, for
the payment thereof;


 


(vi)                              SIXTH, to the Administrative Agent for payment to each
Managing Agent, on behalf of the related Lenders, in an amount equal to any
accrued and unpaid Interest, Program Fee and Liquidity Commitment Fee for such
Payment Date;


 


(vii)                           SEVENTH, to the Administrative Agent for payment to each
Managing Agent, on behalf of the related Lenders, an amount equal to the
excess, if any, of Advances Outstanding over the lesser of (i) the Borrowing
Base or (ii) the Facility Amount, together with the amount of Breakage Costs
incurred by the applicable Lenders in connection with any such payment (as such
Breakage Costs are notified to the Borrower by the applicable Lender(s));


 


(viii)                        EIGHTH, following the occurrence of the Termination Date
resulting from an Early Termination Event, to the Administrative Agent for 


 

















 


ratable payment to each
Managing Agent, on behalf of the related Lenders, in an amount to reduce
Advances Outstanding to zero and to pay any other Obligations in full;


 


(ix)                                NINTH, to each Hedge Counterparty, any Swap Breakage and
Indemnity Amounts owing that Hedge Counterparty.


 


(x)                                   TENTH, to the Administrative Agent for payment to each
Managing Agent, on behalf of the related Lenders, in the amount of unpaid
Breakage Costs (other than Breakage Costs covered in clause (vii) above) with
respect to any prepayments made on such Payment Date, Increased Costs and/or
Taxes (if any);


 


(xi)                                ELEVENTH, to the Administrative Agent, all other amounts then
due under this Agreement to the Administrative Agent, the Lenders, the Affected
Parties or Indemnified Parties, each for the payment thereof; and


 


(xii)                             TWELFTH, all remaining amounts to the Borrower.


 

















 


Annex II


 


 


Moody’s Industry
Classifications


 

















 


Annex III


 


Loans For Which
Pricing is to be Determined Within 45 Days


 


	
  Obligors

  	
   

  	
  Remaining
  Balance

  	
   

  	
  Origination
  Date

  	
   

  
	
   

  	
   

  	
  (as of
  most recent Settlement Date)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Burt’s
  Bees

  	
   

  	
  $

  	
  983,333

  	
   

  	
  11/7/2003

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Medassets

  	
  Term
  Loan A

  	
   

  	
  $

  	
  6,500,000

  	
   

  	
  3/19/2004

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Term
  Loan B

  	
   

  	
  $

  	
  1,878,315

  	
   

  	
  5/14/2004