Consent and Loan Documents [Amendment No. 1] - Talk Aemerica Inc., Access One Communications Corp., Talk America Holdings Inc., MCG Finance Corp. and MCG Capital Corp.
CONSENT AND AMENDMENT
TO
TALK.COM LOAN DOCUMENTS
This CONSENT AND AMENDMENT TO TALK.COM LOAN DOCUMENTS (this
"AMENDMENT") is entered into as of August 10, 2001 by and among TALK AMERICA
INC. (f/k/a Talk.com Holding Corp.) ("TALK AMERICA"), and ACCESS ONE
COMMUNICATIONS CORP. ("ACCESS ONE"), and each other Borrower under and as
defined in the Credit Agreement (defined below) (together with Talk America and
Access One, the "BORROWERS"), and TALK AMERICA HOLDINGS, INC. (f/k/a Talk.com,
Inc.) ("TALK HOLDINGS" or "GUARANTOR"), and MCG FINANCE CORPORATION (as
"ADMINISTRATIVE AGENT" and as a "TERM LENDER") and MCG CAPITAL CORPORATION
(f/k/a MCG Credit Corporation) (as a "TERM LENDER").
W I T N E S S E T H:
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WHEREAS, Borrowers, Administrative Agent and each Term Lender are
parties to that certain Credit Facility Agreement executed and effective as of
October 20, 2000 (as amended as of the date hereof, the "CREDIT AGREEMENT"); and
WHEREAS, TALK HOLDINGS and Administrative Agent are parties to that
certain Guaranty made and effective as of October 20, 2000 (as amended as of the
date hereof, the "GUARANTY"); and
WHEREAS, a certain Master Security Agreement, Collateral Assignment and
Equity Pledge (as amended as of the date hereof, the "SECURITY AGREEMENT") by
and among Talk America, Access One (and each and other signatory thereto and
each other Person that is listed on Schedule 1 thereto as of the date hereof,
collectively, the "GRANTORS") was entered into and made effective as of October
20, 2000; and
WHEREAS, each of the Borrowers, Guarantor and Grantors (collectively,
the "OBLIGORS") and Administrative Agent and each Term Lender desire to amend
the Credit Agreement, the Guaranty and the Security Agreement as set forth in
this Amendment; and
WHEREAS, Obligors, Administrative Agent and each Term Lender will
benefit directly, substantially and materially from the provisions set forth in
this Amendment;
NOW, THEREFORE, for other good and valuable consideration (the receipt
and sufficiency of which are hereby acknowledged), the parties hereto hereby
agree as follows:
1. Amendments to the Loan Documents.
1.1. Intentionally Blank.
1.2. Intentionally Blank.
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1.3. Additional Guarantor Covenants - Revised. The last
sentence of paragraph d of Section 10 of the Guaranty is hereby amended and
restated in its entirety as follows:
"FOR AVOIDANCE OF DOUBT, Guarantor also shall be entitled to receive
and accept payments and dividends from a Borrower if and to the extent
(a) such Borrower is then expressly permitted to make such payments
under the Credit Agreement and (b) either (I) Guarantor at the time of
such payment or dividend has less than $7.5 million of cash,
immediately available funds, and readily marketable securities or (II)
within 10 Business Days after receiving the proceeds of such payment or
dividend, Guarantor either uses such funds (in a manner not otherwise
prohibited by this Guaranty) to make a payment on an obligation to an
unrelated third party or returns such funds to such Borrower."
1.4. Collateral Definitions under Security Agreement -
Revised. Sections 1.1(d), 1.1(i) and 2.5 of the Security Agreement are hereby
amended and restated in their entirety, respectively, as follows:
"1.1(d). Receivables, Accounts, Contracts, Money, Instruments, Chattel
Paper and Related Documents - All of such Grantor's accounts,
receivables, cash collateral accounts, lock box accounts, other deposit
accounts, security deposits, advance payments, contracts, contract
rights, leases, licenses, insurance policies, chattel paper, documents,
instruments (whether or not negotiable), money, letter of credit
rights, general intangibles and other obligations of any kind, and
whether or not arising out of or in connection with the sale or lease
of goods or the rendering of services (any and all of the foregoing
being the "Contract Rights"), and all rights of any Grantor in and to
all agreements, security agreements, guaranties, leases and other
contracts securing or otherwise relating to any such Contract Rights
(any and all such security agreements, guaranties, leases and other
contracts being the "Related Contracts"); and"
"1.1(i). Securities and Investment Property - Without limiting any of
the foregoing, all of such Grantor's right, title, interest and
benefits in, to and under all stocks and derivative securities,
options, warrants, bonds, and other securities, security entitlements,
securities accounts, financial assets and other investment property
(including all such securities representing ownership in such Grantor's
subsidiaries), whether now owned or hereafter acquired and the proceeds
and general intangibles related thereto (including all Dividends and
Distributions); and"
"2.5. Negotiable Documents, Instruments, Certificated Securities and
Chattel Paper. Contemporaneously with the execution hereof, each
Grantor has delivered to Administrative Agent possession of all
originals of all negotiable documents, certificated securities,
instruments and chattel paper (other than checks received in the
ordinary course of business) currently owned or held by such Grantor
(duly endorsed in blank, if requested by Administrative Agent). Each
Grantor shall not create any chattel paper that does not contain a
legend acceptable to Administrative Agent indicating that
Administrative Agent has a security interest in such chattel paper."
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1.5. Additional Provisions to Security Agreement. The
following new Sections 3.10, 3.11 and 3.12 shall be inserted into the Security
Agreement immediately following existing Section 3.09:
"3.10. Possession. Each Grantor shall have possession of such Grantor's
Collateral, except where expressly otherwise provided in this Security
Agreement or where Administrative Agent chooses to perfect the security
interest in such Collateral by possession in addition to the filing of
a financing statement. Where any Grantor's Collateral is in the
possession of a third party, such Grantor will notify such third party
of Administrative Agent's security interest and will use commercially
reasonable efforts to obtain an acknowledgment from the third party
that it is holding the Collateral for the benefit of Administrative
Agent. Such Grantor shall prepare any such notice to be delivered to
such third party and shall provide Administrative Agent with a copy of
such notice."
"3.11. Control. In addition to any other assurances and covenants
provided in this Security Agreement, each Grantor will cooperate with
Administrative Agent in obtaining control with respect to any
Collateral consisting of:
a. Deposit Accounts; and
b. Investment Property;
c. Letter-of-credit rights; and
d. Electronic chattel paper."
"3.12. Additional Filing Authorization. Without otherwise limiting any
other authorization included in this Agreement, each Grantor hereby
authorizes Lender from time to time to file, record and/or register
financing statements, continuation statements and other instruments and
documents (and, as applicable, any amendments thereto) necessary or
appropriate to evidence, provide notice of and/or perfect the interest
of Lender relative to all or any part of the Collateral without the
signature of such Grantor as and to the maximum extent permitted by
applicable law. A carbon, photographic or other reproduction of this
Security Agreement or any financing statement covering the Collateral
or any part thereof shall be sufficient as a financing statement where
permitted by applicable law."
2. Update of Schedules. Borrowers (on or before September 30, 2001)
shall deliver to Administrative Agent (a) each of the Schedules required to have
been delivered pursuant to any Loan Document, updated to reflect facts,
circumstances and conditions as of the date such updated Schedules are delivered
pursuant to this Section 2, and (b) a chart indicating each of the approvals
under applicable state law that Borrowers have been required to obtain as of and
after the Closing Date as a result of the transactions under the Loan Documents
(including an indication of the status of each such required approval).
3. Intentionally Blank.
4. Waivers re Existing Financial Covenant Default. Administrative Agent
and each Lender hereby waives any Default or Event of Default (a) under Section
7.1.3 of the Credit Agreement resulting from Borrowers' failure to be in
compliance with the Subscriber Acquisition
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Cost financial covenant set forth in Section 4.1.2 thereof with respect to LD
Only Subscribers for the period ending June 30, 2001 and (b) under Section 7.1.4
of the Credit Agreement resulting from Borrowers' failure to timely provide
Administrative Agent with the notice required by Section 4.13 thereof as a
result of the Default under Section 4.1.2 thereof.
4A. Grant of Additional Warrants. In consideration of and as a
condition to the various amendments and consents agreed to herein, Talk Holdings
hereby agrees, within 5 Business Days after the date hereof, to issue and grant
to Term Lenders (ratably based upon each such Lender's Commitment) warrants
exercisable for 150,000 shares of common stock of TALK HOLDINGS (par value $0.01
per share). Such warrants shall have the same substantive terms and conditions
as the EBITDA Shortfall Warrants issued to Term Lenders, except that (a) the
exercise price shall be $0.68 per share and (b) the warrants shall be
immediately exercisable but subject to an overall lockup period of 1 year from
the date hereof (for the warrants and warrant shares collectively) with
exceptions for (i) transfers to affiliates, (ii) transfers along with all or
part of the indebtedness under the Loan Documents, (iii) transfers to or
redemptions by Holdings or any affiliate thereof, (iv) transfers in connection
with or after a change of control of TALK HOLDINGS, and (v) transfers in a
private transaction that is subject to such transfer restrictions for the
balance of the lockup period. Such warrants shall be treated as additional
compensation for the cost and risk incurred associated with (y) the present and
future underwriting and syndicating of the Credit Facilities and (z) certain
amendments to, and consents under, the Credit Facilities, but shall in no way
affect or relieve any Borrower or TALK HOLDINGS of any of its obligations to
fully and timely perform and to repay the entire indebtedness due under the Loan
Documents.
5. Miscellaneous.
5.1. Loan Document; Definitions. This Amendment is a Loan
Document executed pursuant to the Credit Agreement and (unless otherwise
expressly indicated herein) is to be construed, administered and applied in
accordance with the terms and provisions thereof. Capitalized terms used herein
without separate definitions have the meaning ascribed to such terms (as
applicable) in the Credit Agreement or in the other Loan Documents. The rules of
construction and the number and gender provisions under Article 9 of the Credit
Agreement are also applicable herein.
5.2. Binding and Governing Law. This Amendment has been
delivered by Borrowers and the other Obligors and has been received by
Administrative Agent in the Commonwealth of Virginia. This Amendment shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors, assigns, heirs, personal representatives and executors.
This Amendment shall be governed as to its validity, interpretation,
construction and effect by the laws of the Commonwealth of Virginia (without
giving effect to the conflicts of law rules of the Commonwealth of Virginia).
5.3. Survival. All agreements, representations, warranties and
covenants of any Obligor contained herein or in any documentation required
hereunder shall survive the execution and delivery of this Amendment and (except
as otherwise expressly provided herein) will continue in full force and effect
so long as any indebtedness or other obligation of any Borrower or other Obligor
to Administrative Agent or any Term Lender remains outstanding under any of the
Loan Documents.
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5.4. Waiver of Suretyship Defenses. Each Obligor hereby waives
any and all defenses (other than the defense of payment or the defense of accord
and satisfaction) and rights of discharge based upon suretyship or impairment of
collateral (including, without limitation, lack of attachment or perfection with
respect thereto) that it, he or she may now have or may hereafter acquire with
respect to Term Lender or any of its, his or her obligations hereunder, under
any Loan Document or under any other agreement that it, he or she may have or
may hereafter enter into with Term Lender.
5.5. WAIVER OF LIABILITY. EACH OBLIGOR (A) AGREES THAT
ADMINISTRATIVE AGENT AND EACH TERM LENDER (AND THEIR RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS) SHALL HAVE NO LIABILITY TO ANY OBLIGOR (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES OR COSTS SUFFERED OR
INCURRED BY ANY OBLIGOR IN CONNECTION WITH OR IN ANY WAY RELATED TO THE
TRANSACTIONS CONTEMPLATED OR THE RELATIONSHIP ESTABLISHED BY ANY LOAN DOCUMENT,
OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION HEREWITH OR THEREWITH,
EXCEPT FOR FORESEEABLE ACTUAL LOSSES RESULTING DIRECTLY FROM ADMINISTRATIVE
AGENT'S OR ANY TERM LENDER'S OWN GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR FRAUD
AND (B) WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY CLAIM AGAINST
ADMINISTRATIVE AGENT OR ANY TERM LENDER (OR THEIR RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES OR AGENTS) WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE,
EXCEPT FOR CLAIMS FOR FORESEEABLE ACTUAL LOSSES RESULTING DIRECTLY FROM
ADMINISTRATIVE AGENT'S OR ANY TERM LENDER'S OWN GROSS NEGLIGENCE, WILLFUL
MISCONDUCT OR FRAUD. MOREOVER, WHETHER OR NOT SUCH DAMAGES ARE RELATED TO A
CLAIM THAT IS SUBJECT TO THE WAIVER EFFECTED ABOVE AND WHETHER OR NOT SUCH
WAIVER IS EFFECTIVE, ADMINISTRATIVE AGENT AND ANY TERM LENDER (AND THEIR
RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS) SHALL HAVE NO LIABILITY
WITH RESPECT TO (AND EACH OBLIGOR HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE
UPON ANY CLAIM FOR) ANY SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE OR
NON-FORESEEABLE DAMAGES SUFFERED BY ANY OBLIGOR IN CONNECTION WITH OR IN ANY WAY
RELATED TO THE TRANSACTIONS CONTEMPLATED OR THE RELATIONSHIP ESTABLISHED BY ANY
LOAN DOCUMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION HEREWITH OR
THEREWITH.
5.6. WAIVER OF JURY TRIAL. ADMINISTRATIVE AGENT AND EACH
OBLIGOR EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION (WHETHER AS CLAIM,
COUNTER-CLAIM, AFFIRMATIVE DEFENSE OR OTHERWISE) IN CONNECTION WITH OR IN ANY
WAY RELATED TO ANY OF THE LOAN DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), ACTIONS OR INACTIONS OF TERM
LENDER OR ANY OBLIGOR. EACH OBLIGOR ACKNOWLEDGES AND AGREES (A) THAT IT HAS
RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER
PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY), AND (B) THAT IT
HAS BEEN ADVISED BY LEGAL COUNSEL IN CONNECTION HEREWITH, AND (C) THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR TERM LENDER ENTERING INTO THE LOAN
DOCUMENTS AND FUNDING ADVANCES THEREUNDER.
5.7. Construction. The language in all parts of this Amendment
and the other Loan Documents in all cases shall be construed as a whole
according to its fair meaning.
5.8. Loan Documents. Except as modified herein or in any other
instruments or documents executed in connection herewith, (a) all terms and
conditions of the Loan Documents shall remain in effect in accordance with their
original tenor; and (b) nothing contained herein shall constitute a waiver by
Administrative Agent or of any of Administrative Agent's or any Term
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Lender's rights and remedies (including, without limitation, any of
Administrative Agent's or any Term Lender's rights or remedies as to, or any
obligations owing to Administrative Agent or any Term Lender of, any person who
may be liable to Administrative Agent or any Term Lender on account of any of
the Obligations, whether or not such person is a party hereto), all of which
rights and remedies are expressly reserved and not waived. Each agreement,
covenant, representation and warranty of each Obligor hereunder shall be deemed
to be in addition to, and not in substitution for, the agreements, covenants,
representations and warranties previously made by each such Obligor. In the
event that there shall be any inconsistency between any provisions of this
Agreement and a provision set forth in any other Loan Document, the provision
most favorable to Administrative Agent, or any Term Lender and most restrictive
as to Obligor shall govern.
5.9. Time of the Essence. Time is of the essence of each
aspect of this Agreement.
5.10. Successors. This Agreement shall be binding upon and
inure to the benefit of each Obligor, Administrative Agent and each Term Lender
and their respective successors, heirs and assigns, except that no Obligor may
assign or transfer its rights or obligations hereunder without the prior written
consent of Administrative Agent in its sole and absolute discretion. Obligor
acknowledges that Administrative Agent, from time to time, may sell
participation interests in, or assign, all or some of the Obligations to third
parties, on such terms and conditions as Administrative Agent may determine in
its discretion (subject, however, to any applicable restrictions on such
participations and assignments under the Credit Agreement), and each Obligor
specifically consents thereto.
5.11. Complete Agreement, Amendments. This Agreement, together
with the Loan Documents, contains the entire agreement among the parties with
respect to the transactions contemplated hereby, and supersedes all
negotiations, presentations, warranties, commitments, offers, contracts and
writings prior to the date hereof relating to the subject matters hereof. This
Agreement may be amended, modified, waived, discharged or terminated only by a
writing signed by the party to be charged with such amendment, modification,
waiver, discharge or termination.
5.12. Expenses. Borrowers shall pay on demand, regardless of
whether any Default or Event of Default has occurred or whether any proceeding
to enforce any Loan Document has been commenced, all fees and expenses
(including, without limitation, the reasonable fees and disbursements of
internal and external counsel to Administrative Agent) of or incurred by
Administrative Agent in connection with (a) the negotiation, preparation,
administration, filing or recording of this Agreement, and (b) the collection of
the Obligations and any and all other obligations of Borrower to Administrative
Agent or any Term Lender whether now existing or hereafter arising, or with the
preservation and enforcement of Administrative Agent's or any Term Lender's
rights and remedies in connection with the Loan Documents. This covenant shall
survive payment of the Obligations and termination of this Agreement.
5.13. Severability. Any provision hereof that is prohibited or
unenforceable in any jurisdiction shall be, as to such jurisdiction, ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
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5.14. Interest Limitation. No provision of this Agreement or
any Loan Document shall require the payment, or permit the collection, of
interest in excess of the highest rate permitted by applicable law. To the
extent that any interest received by Administrative Agent exceeds the maximum
amount permitted, such payment shall be credited to unpaid principal, provided,
however, that any excess amount remaining after full payment of principal shall
be returned to the payor.
5.15. References to "Guarantor". All references to "Guarantor"
in this Agreement shall mean each and all Guarantors (whether Guarantor is a
natural person or a legal entity, and regardless of the use of the word "it" or
similar term to refer to Guarantor), except where the context otherwise
requires. Each promise, agreement, representation, warranty and covenant made by
Guarantor herein is made and given by each Guarantor, jointly and severally, and
all rights of Guarantor hereunder are enjoyed with respect to each Guarantor,
except as expressly set forth herein.
5.16. References to "Obligor". All references to "Obligor" in
this Agreement shall mean each and all Obligors (whether Obligor is a natural
person or a legal entity, and regardless of the use of the word "it" or similar
term to refer to Obligor), except where the context otherwise requires. Each
promise, agreement, representation, warranty and covenant made by Obligor herein
is made and given by each Obligor, jointly and severally, and all rights of
Obligor hereunder are enjoyed with respect to each Obligor, except as expressly
set forth herein.
5.17. Descriptive Headings. The captions in this Agreement are
for convenience of reference only and shall not define or limit the provisions
hereof.
5.18. Counterparts. This Agreement may be executed by one or
more of the parties on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one --- and the same
instrument.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the undersigned, by their duly authorized officers,
have executed this Amendment, as an instrument under seal (whether or not any
such seals are physically attached hereto), as of the day and year first above
written.
ATTEST: TALK AMERICA INC. (f/k/a Talk.com
Holding Corp.)
By: /s/ Craig H. Pizer By: /s/ Aloysius T. Lawn, IV
---------------------------- ------------------------------
Name: _________________________ Name: Aloysius T. Lawn, IV
Title: _________________________ Title: Executive Vice President,
General Counsel and Secretary
[SEAL]
ATTEST: ACCESS ONE COMMUNICATIONS CORP.
By: /s/ Craig H. Pizer By: /s/ Aloysius T. Lawn, IV
------------------------------ -----------------------------------
Name: _________________________ Name: Aloysius T. Lawn, IV
Title: _________________________ Title: Executive Vice President,
General Counsel and Secretary
[SEAL]
ATTEST: OMNICALL, INC.
By: /s/ Craig H. Pizer By: /s/ Aloysius T. Lawn, IV
------------------------------ ----------------------------------
Name: _________________________ Name: Aloysius T. Lawn, IV
Title: _________________________ Title: Executive Vice President,
Counsel and Secretary
[SEAL]
ATTEST: THE OTHER PHONE COMPANY, INC.
By: /s/ Craig H. Pizer By: /s/ Aloysius T. Lawn, IV
------------------------------ -----------------------------------
Name: _________________________ Name: Aloysius T. Lawn, IV
Title: _________________________ Title: Executive Vice President,
General Counsel and Secretary
[SEAL]
[SIGNATURES CONTINUE ON NEXT PAGE]
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IN WITNESS WHEREOF, the undersigned, by their duly authorized officers,
have executed this AMENDMENT, as an instrument under seal (whether or not any
such seals are physically attached hereto), as of the day and year first above
written.
ATTEST: TALK AMERICA OF VIRGINIA, INC.
(f/k/a Tel-Save Holdings of Virginia, Inc.)
By: /s/ Craig H. Pizer By: /s/ Aloysius T. Lawn, IV
------------------------------ -----------------------------------
Name: _________________________ Name: Aloysius T. Lawn, IV
Title: _________________________ Title: Executive Vice President,
General Counsel and Secretary
[SEAL]
ATTEST: TALK AMERICA HOLDINGS, INC. (f/k/a
Talk.com, Inc.)
By: /s/ Craig H. Pizer By: /s/ Aloysius T. Lawn, IV
------------------------------ -----------------------------------
Name: _________________________ Name: Aloysius T. Lawn, IV
Title: _________________________ Title: Executive Vice President,
General Counsel and Secretary
[SEAL]
[SIGNATURES CONTINUE ON NEXT PAGE]
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IN WITNESS WHEREOF, the undersigned, by their duly authorized officers,
have executed this AMENDMENT, as an instrument under seal (whether or not any
such seals are physically attached hereto), as of the day and year first above
written.
WITNESS: MCG FINANCE CORPORATION (AS
ADMINISTRATIVE AGENT)
By: /s/ Ruth Thomas By: /s/ Steven F. Tunney
----------------------------- ----------------------------------
Name: Steven F. Tunney
Title: President and Chief Operating
Officer1
WITNESS: MCG FINANCE CORPORATION (AS
TERM LENDER)
By: /s/ Ruth Thomas By: /s/ Steven F. Tunney
----------------------------- ----------------------------------
Name: Steven F. Tunney
Title: President and Chief Operating
Officer
WITNESS: MCG CAPITAL CORPORATION (As Term
LENDER, F/K/A MCG CREDIT CORPORATION)
By: /s/ Ruth Thomas By: /s/ Steven F. Tunney
----------------------------- ----------------------------------
Name: Steven F. Tunney
Title: President and Chief Operating
Officer
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